For Immediate Release                                      
June 10, 2014

For more information contact
Royce Van Tassel, Utah Taxpayers Association
Doug MacDonald, Econowest Associates, Inc.

New UTOPIA Proposal Is Bad For Utopia Residents and Cities
According to New Economic Analysis

 An economic analysis of the new financing and build out proposal from UTOPIA, the troubled 11 city Utah broadband consortium, and Macquarie, the Australian investment banking firm, is fraught with risk and problems according to an economic analysis by the Utah economic consulting firm Econowest Associates, Inc.

“The Macquarie proposal to UTOPIA’s 11 member cities will be a significant new burden on taxpayers in those cities,” said Econowest economist and study author Doug Macdonald. “If UTOPIA cities approve this deal, it will be adding significant debt increases to residents and businesses in the form of a mandatory fee. It’s hard to justify such a high cost venture that has such a low probability of success.”

The analysis by Econowest Associates points to several major questions about the proposal. Among the issues highlighted in the Econowest study:

.                  New Debt Obligations for UTOPIA cities and residents will be as high as $1.8 Billion over 30 years.

.                  A new mandatory fee or tax will be required of every household and business in UTOPIA cities even if they have an existing service or do not want the new service.

.                  The mandatory fee or tax will cost each resident on average over $12,000 over the life of the project.

.                  Households will be subsidizing business connections due to the pricing structure.

.                  The probability of success in reaching the projected usage or utilization goal by residents is low, based on the historic use of the system in most UTOPIA cities.

.                  The current UTOPIA debt of $355 million has a small chance of being repaid.

.                  The complexity of the proposed plan and the poor track record by UTOPIA managers and officials should make residents and elected officials wary of the current promises.

“Econowest Associates, Inc. has done a thorough and independent review of the UTOPIA and Macquarie Milestone 1 proposal. It raises many questions, and points out the risk and uncertainty of this very expensive proposal,” said Royce Van Tassell, President of the Utah Taxpayers Association. “Given the rapid changes in the technology industry, and the lack of expertise by government in this business, the prudent course of action is to let the private sector, not cities and residents of Utah, provide this service and finance it from private funds.”

For the complete Econowest Associates, Inc. report click here or