BALANCE SHEET BLOG – HOLLYWOOD, FL


WiFi Mess Update: May 27, 2010
May 27, 2010, 6:33 PM
Filed under: WiFi

May 27, 2010

We had a meeting earlier this week with senior city staff and a Commissioner about problems with the City’s WiFi project.  There was much heated discussion. They believe our report (dated May 23)  has misled you, the public. We disagree on the facts and think you should know where we differ.

The red printing represents our understanding of senior staff’s views expressed at our meeting. The blue print is our differing view.

City Staff: The Balance Sheet has misrepresented the facts. We have had numerous meetings with JCI and its consultants. We believe the WiFi system can be made to work. The City’s money is not at risk because if the project doesn’t work, we will sue for breach of contract.

The Balance Sheet: We don’t question that staff and Commissioners have worked hard on this project. However, we believe that staff never should have brought the JCI contract to the Commission for approval because it was incomplete, poorly drafted, and highly unfavorable to the city. Yet staff assured the Commission that this contract would cost the city nothing because JCI guaranteed, with “shortfall checks” if necessary, that WiFi would save the City $23 million over 15 years. This was simply untrue. We believe that the Commission needs to be able to rely on city staff especially when it comes to costly matters like this WiFi project.

City Staff: The Balance Sheet is wrong in saying the contract amendment was worse than the original contract. In fact,the amendment was better because it provides some “measured savings” which form the basis for “shortfall checks.” The original contract identified no “measured savings.”

The Balance Sheet: We did not say the amendment was worse than the original contract. What we said is that the amendment is worse than what city staff SAID was in the original contract. City staff told the Commission that the contract not only guaranteed city savings of $23 million, but if the savings did not materialize, JCI would make up the difference in a shortfall check. What city staff said was not true.

City Staff: The Balance Sheet said there were five costly maintenance agreements associated with this project. This was wrong. There are only three and they will cost no more than 5% to 10% of the project. Compared to the $23 million savings, this is a small amount.

The Balance Sheet: We are glad to learn the cost of these ongoing contracts, since it has not been defined until now. There may be three instead of five, but we note that the JCI contract documents identify five ongoing obligations: (1) network maintenance contract, (2) JCI Service contract, (3) water meter maintenance agreement, (4) parking meter annual maintenance, (5) Internet Service Provider (ISP). Please note that 5%-!0% could be in the range of $650,000-$1,300,000 over the life of the contract. Maybe about $100,000 a year, or more. These costs may be a small percentage overall, but the dollar amount is significant and should have been considered in the original presentation.

City Staff: Shortfall checks are not important. Either the network will be made to work in which case the city will save $23 million, or the city will sue for breach of contract.

The Balance Sheet: We see other possible scenarios in which shortfall checks would be very important. Getting the network to work now could require an additional investment, money not originally included in the cost. How much and who will pay? Moreover, parts of the project may work, and others may not, either now or in the future. Fifteen years is a long time for technology like this when new developments are constantly occurring. And finally, what about the cost of litigation?

City Staff: The Balance Sheet claims that the city will lose $23 million on this project and the city will have no savings from WiFi for 15 years. When the network is up and running the City will be saving the full $23 million over the 15 years. But everybody who reads your article thinks the city is losing $23 million.

The Balance Sheet: We said that there are no savings to date, yet the city is obligated to pay the bank $1.4 million this year. As for future years, we offered questions. Will the city have sufficient savings to cover the loan two or ten years from now? If the network is made to work reliably over the long term, the city should have savings to offset loan payments. If the network breaks down or if some of the components can’t be made to work throughout the entire city, for example, then the anticipated savings will fall short. Where will the money be found to cover the loan payments in such a case? No one can foresee the future of this project. We believe questions are appropriate.

City Staff: We are on top of these issues and have been working on them consistently. As members of the public, you may not be aware of all that we are doing, but that does not mean we are doing nothing.

The Balance Sheet: It’s true we have no way of knowing everything. But we have looked into this project extensively to uncover facts, not fiction. After numerous e-mail exchanges during the past two years, our first in-person meeting with the IT Director was in January 2010, the second in April 2010, to get updated and express our concerns. Both times he assured us JCI was going to make everything right and would pay the city a shortfall check for any anticipated savings that were not realized. Yet there was nothing in writing from JCI to back up these promises. We met with the City Manager and City Attorney at the end of April and at that time, the manager said he agreed with us that the City Commission needed to be involved and WiFi would be put on the Commission agenda. The matter is now on the June 2 Commission agenda, set for 4 PM.

Comments Off on WiFi Mess Update: May 27, 2010





Comments are closed.