October 14, 2010

Centerville and Layton leaders remain committed to moving forward with UTOPIA, the fiber-optic network expected to bring economic development to their respective communities.

UTOPIA is asking its member communities to commit to an additional $62 million to help develop and expand the system. The Centerville City Council will discuss the additional commitment at a meeting set for 7 p.m. Tuesday, while the Layton City Council is to discuss the item at a meeting at 7 p.m. Thursday.

Nine cities belonging to UTOPIA have put the request for additional financing for the network up for consideration this month, Layton City Manager Alex Jensen said.

The cities involved with UTOPIA are being asked to approve about a 12 percent increase in financial risk to make the network work, Jensen said.

The Utah Infrastructure Agency has put together a five-year plan that will get UTOPIA at a breakeven operation cost within two years by growing the network of subscribers, Jensen said.

However, that plan comes with its critics, as the Utah Taxpayers Association rallies residents to oppose additional funding for UTOPIA.

“This is ongoing,” Centerville Assistant City Manager Blaine Lutz said of the taxpayer association’s challenge to the service designed to provide enhanced Internet service for businesses and homes.

If UTOPIA fails, Lutz said, it leaves Centerville taxpayers on the hook to repay $16 million. UTOPIA originally issued $185 million in bonds to fund the network. Over 30 years, total payments would amount to $503 million.

Proponents say the $62 million will allow the network to expand and generate the revenue through subscription fees needed to repay both the original debt and the new bonds.

If subscription fees fall short, UTOPIA cities have pledged sales tax revenues to repay the original $185 million and would use franchise tax fees to repay the $62 million bond.

If cities do not go forward with the latest arrangement and halt the project, original pledging cities will be looking at having to share in paying back the debt, Centerville City Manager Steve Thacker said.

He said he finds irony in the association’s request, since it would result in taxpayers having to pay more.

What Centerville and Layton are considering is a “small additional risk” compared to what is at stake, Thacker said.

Layton Mayor Steve Curtis said UTOPIA has had to fight frivolous lawsuits, costing the project revenues. It is pursuing every avenue to survive, including receiving $20 million in federal stimulus money, he said.

“If (UTOPIA) did happen to shut down, there is the possibility of re-sell, but you’re not going to get the investment out of it that you have put into it. The taxpayer would lose,” Curtis said.

Going forward is the best way to protect the investment that has been made by taxpayers, he said.

The choice UTOPIA cities face is to allow the network to die, leaving pledging cities with a debt to pay back and nothing to show for it, or go forward with a realistic, legitimate plan, to roll out the network, Jensen said.