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UTOPIA leader: Solvency is in sight

January 16th, 2015

Article was originally published in the Standard Examiner on January 16, 2014

SALT LAKE CITY — The infusion of $10 million from a legal settlement with the federal government and a steady, but slow, take rate has at least one official from the Utah Telecommunication Open Infrastructure Agency (UTOPIA) suggesting there is light at the end of the tunnel financially for the fiber-to-home coalition.

“Even as we speak, our revenue picture is frankly outstanding,” Paul Isaac, acting director of UTOPIA, told the Standard-Examiner recently when pressed on the operational status of the network as it heads into the 2015 year.

Isaac said money derived from legal action against Rural Utilities Services will allow continued build out of the system, which in turn will continue to build the operational base for the 11-city network. He said, on the current trajectory the network could be breaking even on the operational side within two years. Layton, Centerville, Tremonton, Brigham City and Perry are among participating cities in the network.

UTOPIA has been operating at a loss for years and participating cities were asked to stop the shortfall, with funding above and beyond existing bond commitments. Some of the participating cities have chosen not to fund operational costs.

Centerville officials pledged money until Jan. 1, 2015 and have made no commitment to fund the shortfall this year. Mayor Paul Cutler has said the council will have to address the operating shortfall in coming council sessions. Centerville City Manager Steve Thacker indicated the city has reserves to potentially fund more payments, but the decision on whether to tap into those reserves to make payments will be made by council members.

Some cities, like Lindon and Payson, have already opted not to help address operational losses by the agency.

Layton budgeted $247,011 for UTOPIA’s operating expenses in the 2013-14 fiscal year and currently has $213,723 in the budget for the 2014-15 fiscal year, which ends June 30, according to Finance Director Tracy Probert.

Isaac, who works as assistant city manager for West Valley City, said UTOPIA will bill Centerville and other participating cities soon for first quarter operational costs. He said he struggles to know why some cities can’t see hope and a more stable future, given current trends.

“It’s beyond me sometimes why some of these cities can see the numbers and can’t see the progress we’re making,” Isaac said. He said WVC, for example, will benefit significantly from not having to make operational payments. “I’m frankly optimistic. If we could show some unity within these cities it would help,” he said.

Alex Jensen, city manager for Layton, said talk of the network going dark is not realistic any more. He said he remains confident cities who have kept the network operational financially will continue to support the organization. He said discussions about the fairness of some communities being in the network, but not making payments on operational costs, will be addressed in the future.

“The existing situation … it’s not tenable financially,” Jensen said.

In the meantime, Layton and five other cities are continuing to pursue talks with Macquarie, an Australian investment company who has made an initial offer to take over management of the troubled network, complete the fiber build out to all of the communities and to potentially reduce the bond encumbrance on participating communities in a shorter fashion, than is currently outlined.

Macquarie drafted a new offer to participating cities this week and Jensen and Layton City Attorney Gary Crane said they will review major deal points with Mayor Bob Stevenson. Both declined to specify any details of the latest offer.

Crane did say the six cities will have to make a decision on the second milestone and whether to move forward by the end of February or the beginning of March.

Pressed to describe the status of talks, Jensen described the latest offer as a “positive direction.”