LAYTON – City officials have introduced a new consumer option to talks about a potential bid by an Australian company to take over operation of the beleaguered Utah Telecommunication Open Infrastructure Agency.
During an hour-and-half power point presentation on Wednesday, Mayor Bob Stevenson included the possibility of a consumer opt-out option for residents as part of any deal with Macquerie, an investment company exploring a possible deal with the fiber-to-home network’s 11 cities to build out and manage the network for 30 years.
The option would allow residents to opt out of a projected $18-20 monthly utility fee, which is considered a key element in talks in any takeover bid for UTOPIA.
Stevenson offered few specifics but said officials are working hard to find out how an opt-out might work. In one part of his presentation, he projected there could be as many as 37 residences in the community where people did not have phone or Internet service.
As outlined, any deal with Macquerie would come with a forced fee to be borne by city taxpayers via their utility bills. It is similar to a pattern that happened in Provo when Google bought iProvo for $1 and then imposed a monthly fee of $10 on the utility bills of each residence.
Traditionally any opt-out program requires people to go through a formal process where they are required to actively pursue a way out of an otherwise mandated program.
Wednesday’s meeting at Northridge High School was the second meeting this week in which city officials sought input from residents on the future of UTOPIA. Combined the two events drew approximately 650 residents, according to one official.
Layton is currently in the information gathering stage with Macquerie in identifying all options. City councils in Layton, West Valley, Midvale, Brigham City, Tremonton and Perry have all agreed to pursue discussions with the Australian company while Lindon, Orem, Payson, Murray and Centerville leaders all voted no to the proposal.
Stevenson admits the city is in a pickle with UTOPIA in its current state. As one of the original 11-pledging cities, Layton is committed to pay yearly on a 30-year bond. The city’s commitment for the 2014-2015 fiscal year is $2.23 million, according to Tracy Probert, city finance director. The amount increases 2 percent every year until 2040. The revenue is drawn from the city’s sales tax revenue and amounts to a $12 per-month payment per resident, according to Stevenson.
However, none of that bond revenue helps UTOPIA in its current financial state. The fiber network is operating on a shortfall of $2.4 million a year and does not have revenue to finish its build out, without an infusion of new revenue. Layton’s build out is at approximately 12 percent.
“We’re in a situation, with no money to build out in Layton City everything stays status quo. We have to continue to make payments until 2040,” City Stevenson said.
Even if Macquerie does become a city dance partner in the future with UTOPIA, the city will still be required to make bond payments associated with the network, Stevenson stressed.
Macquarie is an investment company that has promised to pump millions in capital and expertise into finishing construction of the network within 30 months. The company has launched an engineering and feasibility study of completing the 11-city network. The firm has talked about a private/public partnership in finishing and managing the network for a 30-year period.
Financing has been a problem for UTOPIA since its inception in 2002.. A legislative audit released in 2012 showed UTOPIA had negative net assets of $120 million.