LAYTON -- A healthy chunk of the city's 2013-2014 budget for the coming fiscal year includes an ongoing commitment to the Utah Telecommunication Open Infrastructure Agency.
The city's projected $53.1 million budget includes $2,531,531 in potential payments to the fiber-to-home network. Exact numbers could actually come in at less than that, depending on the amount of the city's debt service for UTOPIA, City Manager Alex Jensen said. The figures translate into a $342,000 payment from the city's general fund to the Utah Infrastructure Agency and approximately $2.3 million in pledged funds for UTOPIA debt.
UIA funding is used for operational costs, while the pledge is targeted at existing debt.
UTOPIA members include Tremonton, Brigham City, Perry, Layton and Centerville. All of those communities except Perry and Tremonton are also members of the Utah Infrastructure Agency, which was formed among eight pledging communities to deal with the organization's financial woes.
Jensen doesn't discount Layton's financial commitment to the fiber network, but he said city officials have been able to meet commitments to the infrastructure agency without a loss of services in the community.
"Do I want to get rid of the $2.5 million? Yes," Jensen said. "It has not caused one single decrease in the level of service the city has offered. Nobody has suffered. No citizen has suffered in terms of having something taken away from them. We haven't asked for a tax increase."
UTOPIA's build-out in Layton is an ongoing process. Fiber has been extended to some commercial spots in the community, but the build-out has not reached a number of residential areas. He said UTOPIA will continue to build in the commercial community, but it will eventually reach residential areas as well.
Jensen, who headed the UTOPIA board at one point, continues to believe the network will work and is ahead of its time.
"My own view is the day is getting closer, and the time is closer every single day, that a fiber network for telecommunications is a basic essential infrastructure. I think anybody that has eyes to see and is willing to see will recognize that in order to stay economically competitive, a business has to have access to this kind of infrastructure," Jensen said.
He said fiber is expensive, so there is no cheap way to install a network. That cost includes a potential residential connection fee of approximately $2,700 per household. In Centerville, where build-out is almost complete, officials offered residents options to pay monthly on that connection fee in a 10- or 20-year plan. Jensen expects the same options will eventually be in place in Layton.
The UTOPIA funding was approved as part of a tentative budget approved in the first council meeting in May. Final consideration of the budget is scheduled June 20 when a public hearing is set for 7 p.m., which will be followed by a vote to finalize the 2013-2014 spending plan. The city's fiscal year runs from July 1 to June 30.
A legislative audit in 2012 showed UTOPIA has negative net assets of $120 million. Jensen and other UTOPIA officials said the audit only shows the mistakes the agency made, but didn't reflect the direction the group is currently taking.
Bonds for the fiber network are backed by sales tax revenue pledges from participating municipalities. Local pledge amounts ranged in 2012 from $2.146 million a year for Layton to $427,697 for Centerville, $324,459 for Tremonton, $430,039 for Brigham City and $104,494 for Perry. The pledge goes up approximately 2 percent a year over the 25-year lifespan of UTOPIA's existing bonds, said Blaine Lutz, financial director for Centerville, and a participating member of the UTOPIA board.
Royce Van Tassell, vice president of the Utah Taxpayers Association, said UTOPIA is a mistake and will continue to be a financial boondoggle for participating communities. He said there are no performance metrics participants can point to that suggest they have turned the corner.