December 12, 2009
The young salesman who showed up three months ago on Robert Bambrick’s porch in Brigham City spoke enthusiastically about the products Utopia’s fiber-optic system could offer — ultra-fast Internet, state-of-the-art television and phone service.
All Bambrick had to do to take the first steps toward that high-tech paradise was pay $3,000 up front — or $25 a month for 20 years, for a total of $6,000 — to hook up his home. Internet, television and phone service would be extra.
What he doesn’t remember hearing was that a special service district set up for Utopia would place a lien on his home if he chose the monthly payment.
“I’ll say this, the young lad had a good sales pitch,” said Bambrick, an 80-year-old retired Thiokol engineer. “He told us it would be great for our grandkids. They’d have access to all kinds of stuff that would help with their homework.”
Bambrick signed up — as did some 1,600 other city residents who agreed to join the district set up by Brigham City officials. Only later did Bambrick and some others learn about the liens.
Utopia, short for the Utah Telecommunication Open Infrastructure Agency, sees special service districts throughout its 10 other member Utah communities as a way to help it build the network. Brigham City is the first to be set up under that way.
“We’re not just hoping to use this model — it is the model we’re going to use,” said Todd Marriott, Utopia’s CEO. “It is a model that is going to work. It is groundbreaking.”
For Utopia’s critics, including the Utah Taxpayers Association, that approach represents one of the last-gasp attempts by a near bankrupt fiber-optic network to keep financially afloat.
“Right now, they are not even covering their operating expenses,” said UTA spokesman Royce Van Tassell.
Yet many who signed on didn’t find out about the liens until last week when they received a UTA mailer.
“We’ve been contacted by over 100 people and only five or six of them said they were told about the liens,” Van Tassell said. “Most of those who contacted us said had they known, it would have been a deal breaker.”
Bambrick says he feels betrayed by Utopia and its promoters in city government.
“I worked all my life to pay off my home. Had I known, there would have been no way that I would have allowed someone to place a lien on my home for something like an Internet connection.”
Carolyn Norman, who works in a group home for disabled teenagers, said she, too, was never told the full story.
“They said they needed me to sign the paper so they could have access to my property,” Norman said. “No one ever said anything about someone putting a lien on my home.”
Norman contacted Brigham City last week asking to be get out of the contract.
“They told me I was too late. The time for getting out was passed.”
Utopia’s CEO Marriott agreed.
“The time is over to cancel those contracts. Those who committed are in it [the special service district] now. They had every opportunity to rescind and didn’t do it.”
Van Tassell noted that Utopia initially promised that if the 11-member cities were to back its bonds, everyone would get service. “They haven’t kept any of their promises.”
He said Brigham City will be spending several hundred thousand to set up the special service district, adding even more debt to the $17.1 million it has pledged to back the network’s bonds.
“Once again they are drinking the Utopia Kool-Aid,” he said. “They are not only drinking it, they are swimming in it.”
Cities frequently use special service districts for various purposes, including putting in curbs and gutters or other neighborhood improvements.
Brigham City’s district intends to sell about $5.5 million in bonds. Money to pay those off will come from residents who signed up. In the meantime, the bonds will be secured by the liens.
Paul Larsen, who is Brigham City’s representative on the Utopia board, said he has heard both: that some residents were told about the liens and some were not.
“Our perspective is, it was disclosed in the documents.”
And he said concerned Brigham City residents need not worry.
“We have a lot of experience with special service districts. We’ve never gone and foreclosed on a property [when the payments weren’t made]. The city always has waited until the property changes hands to bring the account current.”
One Brigham City resident who knew about the liens was Mayor-elect Dennis Fife.
When a salesman showed up at his door, Fife, who holds an MBA, a doctorate in chemistry and recently completed a law degree, said he asked for a copy of the contract. He read it during the sales pitch.
“I was the one who brought up the issue of the lien,” Fife said, adding in all fairness the salesman could have planned to bring up the point later in his presentation. “I will say this, there are parts of the contract that I believe should have been presented in bold type so that people could more easily have been made aware of what they were signing.”
Fife signed up, lien and all. However, he said one thing about the Utopia marketing effort particularly bothered him.
“When I was campaigning door-to-door I met a couple of elderly widows who had signed up. I don’t think they really knew what they were signing,” Fife said. “They didn’t even have computers.”