The Irvine City Council, citing fears that pending state legislation could cost it money, rejected its staff’s top ranked firms and instead awarded one of the lowest-rated companies a contract to help upgrade wireless communications inside the Great Park.
“It was interesting that after staff, going out for the RFP (request for proposal), ranking the providers, we had the number one ranked business (recommended by staff) … then members of the council deciding to abandon that and choosing the number six provider,” Mayor Pro Tem Lynn Schott said at the July 25 council meeting. There were a total of eight businesses on the list.
The new contractor, 5Bars Communities, will arrange for wireless companies like AT&T and Verizon to provide service inside the 1.1-square-mile Great Park. City council members said they rejected the top-ranked bidders because pending state legislation could cost the city money if it doesn’t have Great Park wireless contracts in place by the time the new law goes into effect. The bill, which still needs final legislative approval and the signature of Gov. Jerry Brown, also would take away the city's ability to say where new, small cell phone transmitters are located in all cities.
City council members said they thought 5Bars could help the city more than other firms because the company could immediately begin implementing the wireless upgrades.
However, an executive with the number one ranked company told Voice of OC Wednesday her firm also could have begun working immediately.
The Great Park contract initially was up for a vote at the April 25 meeting of both the Great Park Board of Directors and the City Council, which, once a month, acts as the park board before the regular council meeting. The board decided to recommend the council cancel the RFPs and start contract negotiations with 5Bars Communities. Both of those meetings resulted in a 3-1 vote -- Schott voted no and Councilman Jeff Lalloway was absent.
It wasn’t until July 25 -- with almost no discussion outside of Schott renewing her concerns -- that the City Council voted 4-1 to enter into a contract with 5Bars. Schott voted no.
The staff report for the April board meeting recommended Connected Nation Exchange (CNX) for approval, but Councilwoman Christina Shea moved to go with 5Bars Communities because she said she feared the pending state legislation will take away local control of wireless infrastructure and set rates that cities will have to use, which could cut into income.
Shea, during the April 25 Great Park board meeting, said the staff recommendation and request for proposal for a consulting firm that would design a master plan after identifying city assets, then look to contract with wireless carriers to build infrastructure at the Great Park, would take too long.
Because of state Senate Bill 649, Shea said they needed to act quickly to retain control and revenue. The bill was introduced by Sen. Ben Hueso (D-San Diego) in February and sponsored by the national lobbyist group Cellular Telecommunications and Internet Association (CTIA). 5Bars is a member of the association, but CNX is not.
“My concern about what’s being proposed is a little bit of a piecemeal approach,” Shea said. “Because of state law, we don’t have time to do that. We need to go straight to a vendor.”
However, CNX Senior Executive Leader Angela Stacy said in a Wednesday telephone interview, because the council voted April 25 to cancel the request for proposal and go with 5Bars, it delayed the project because the contract wasn’t awarded until July 25.
“To a certain degree, what they have done here is delay themselves about 100 days,” Stacy said, adding that her firm was ready to get to work the next day if it had been awarded the contract in April. “There’s really no difference between 5Bars and … what we’re offering.”
A grandfather clause in the Hueso bill allows cities to keep any agreements made with wireless providers like AT&T or Verizon before the legislation becomes law.
Shea’s suggestion and subsequent motion drew the ire of Schott.
“I guess I’m wondering what’s the point of having staff go out to an RFP,” Schott said at the April 25 board meeting. “We’d be hiring essentially a contract provider who would then give us advice on how to build … I see a conflict of interest there.”
“I have much of the same concerns as Council Member Schott,” Councilwoman Melissa Fox said. “But I also have a strong fear of the Hueso bill.”
Under the proposed legislation, wireless companies won’t need city approval, in most cases, to install small cell transmitters and the state would control the rates and terms that Go with them, according to the July 25 staff report.
The Hueso bill would cap what cities could charge wifi firms at $250 annually for each small cell transmitter. The wireless industry, through the CTIA, is looking to push similar legislation through at least 20 other states.
Mayor Don Wagner said they should go with 5Bars because the company offers protection against the Hueso bill, but didn’t specify what kind of protection.
“5Bars does give us explicit protection,” Wagner said at the April meeting. “It’s really too late to award this contract and later evaluate the effect of this ruinous piece of legislation.”
Despite the council’s belief that 5Bars can guarantee protection against the Hueso bill, Stacy said there’s no such protection in the contract.
“There’s nothing in the physical contract that mentions (Senate bill) 649 or protections thereof,” Stacy said. “There’s no implied or state guarantee in the contract.”
In rating their potential contractors, city staff said 5Bars wasn’t even called in for an interview because they weren’t ranked in the top three firms. The company was ranked sixth out of eight firms. There was no mention of the firm’s explicit protection against the Hueso bill in the staff report either.
Fox, who was uncertain about going against the staff recommendation at the April 25 meeting, asked if there was a representative from 5Bars available to speak.
“Doesn’t that disadvantage the other companies that applied?” Schott asked.
“We already heard from CNX,” Wagner said.
Although they did hear from CNX Director of Business Development Sean Broderick earlier in the board meeting, he only offered his thanks to the city for being recommended by staff. Broderick was not called back up to address any of the concerns raised by the council.
However, Monnie McGaffigan, president of 5Bars Communities was there to address the council’s concerns and said they should be worried about the proposed legislation.
“First of all, your main fear is well-founded with the Hueso bill coming. It is a train that left the station,” McGaffigan said. “If in fact this bill passes, you lose complete control of not only the aesthetics, but also the revenue stream.”
Small cells are a new technology being deployed by the wireless industry to help roll in “5G,” the next generation of cell phones. The transmitters are being built on telephone poles, streetlights and city buildings and use relatively low-power frequencies, which is why the industry is looking to install a quarter of a million small cells throughout the country in the coming years. The size of the transmitters are about as small as a briefcase and the supporting equipment boxes could be as large as a refrigerator.
The current generation of cell phones use high-powered antennas erected on large towers around cities. Many cities in Orange County have aesthetic requirements in the permit process, which is why many antennas look like palm or pine trees.
Meanwhile, the Hueso legislation has pitted city halls across the state against wireless industry giants like AT&T and Verizon -- who are members of CTIA -- in a battle in Sacramento. Even so, it passed the Senate with just one “no” vote and currently is in the Assembly Appropriations Committee. The Legislature returns from vacation Aug. 21.
Opponents of the Hueso bill, like the League of California Cities, argue it’s essentially a giveaway to the wireless industry to increase their bottom lines. Hueso received a total of $38,000 in campaign contributions in 2016 from all wireless organizations, according to the San Diego Union. CTIA contributed $13,000 of the total. No Irvine council member reported contributions this year or last year from 5Bars, CNX or CTIA.
The CTIA, which sponsored the Hueso bill, and its supporters say it will lead to job creation and spur investment in wireless infrastructure.
Spencer Custodio is a Voice of OC reporter who covers south Orange County and Fullerton. You can reach him at email@example.com.