UTOPIA in limbo with split vote of owner cities

Friday , June 27, 2014 - 5:47 PM

Standard-Examiner staff

Perry voted to stay with a plan proposed to rehabilitate UTOPIA while three other cities, including Centerville, bailed.

Which leaves the box score at 6-5, six cities voting for phase two in Macquarie Capital’s $300 million plan to save the struggling fiber optic company, and five cities bowing out. Perry and Orem finished the voting Thursday night, Perry voting yea to Orem’s nay, officially fogging the Macquarie plan’s future.

The most controversial part of the Australian finance giant’s vision was the mandate that all residents of a UTOPIA city pay a fee.

Even if they don’t subscribe, they would pay an $18-20 monthly utility fee to UTOPIA to pass on to Macquarie, as Macquarie’s plan stands now. .

The “forced fee” as it’s come to be called, would assess in some three years, after the $300 million build-out Macquarie planned to finish the long-stalled fiber-optic Internet highway.

Voting for the Macquarie plan are Perry, Brigham City, Tremonton, Layton, West Valley City and Midvale.

Voting no, and facing the prospect of forever paying off their UTOPIA bonds with tax money instead of subscriber fees, were Orem, Lindon, Payson, Centerville, and Murray. Murray and Centerville voted no Tuesday night.

Perry and Orem voted at roughly the same time Thursday evening with opposing outcomes. Perry was unanimously in favor, 4-0 with one council member absent. Orem’s seven member council went 6-1 against Macquarie’s plans.

The Macquarie proposal will now be scaled back, re-evaluated, and there’s an outside possibility it could be scuttled, said Wayne Pyle, city manager at West Valley City, and chairman of UTOPIA’s board of directors.

“Sure, that’s possible, if we don’t have enough scale,” he said Friday about the 6-5 vote of the cities being a death knell.

The six cities remaining amount to 60 percent of the addresses tied to the Macquarie plan, roughly 100,000, he said, or 100,000 subscribers.

In the past the goal of the roughly 15-year-old UTOPIA network has been plotted at 153,000 subscribers with less than 20,000 signed up through years of missteps and delays.

But talking with a Macquarie executive Thursday night after the voting was in, Pyle said Macquarie for now is just talking about reevaluation.

“We knew some of the cities would possibly opt out,” said Pyle. “So now we’ll reevaluate, run the numbers again. We’re just going to have to see.”

As to whether Macquarie might budge on the “forced fee,” Pyle said, “I can’t really speak to what they might be considering regarding that issue. But that really hurt the chances of continuing the full scale of the project.

“It’s something we’re going to have to look at a little harder.”

West Valley City and Layton have been the strongest proponents for UTOPIA’s future plans and most avid spokesmen. Pyle’s assistant city manager, Paul Isaac, was named UTOPIA’s director earlier this year after Todd Marriott stepped down shortly after Macquarie’s involvement was announced.

Both cities are paying in the neighborhood of $2 million a year for their UTOPIA bonds, which all 11 cities committed to in starting UTOPIA, bonds which typically run another 25 years or more. Brigham City pays $435,000 a year while Perry is committed to just over $100,000 annually.

Layton’s City Council in voting for the Macquarie plan on June 5 had no residents speak to the plan, either for or against, according to the city recorder’s office, as the council quietly opted to stay the course.

Perry Mayor Karen Cronin said 15 citizens spoke at their city council meeting Thursday night, mostly against the proposal. “People are very concerned .... and the majority are adamant about the forced utility fee,” she said.

“But we think it can be run with an opt-out provision on the fee,” she said. “And we hope to vett that out in going forward.”

Contact reporter Tim Gurrister at 801-625-4238, tgurrister@standard.net. Follow him on Twitter at @tgurrister

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