Cities asked to boost money for UTOPIA
Initially, 11 cities pledged $202 million in sales-tax revenue to back the bonds issued to build a network that would bring cutting-edge, high-speed Internet right to the doors of their businesses and homes.
Now those cities and others that have joined UTOPIA are considering refinancing the bonds. The move would provide millions more for network construction, but it also would require the cities to pledge more tax revenue to back the bonds.
The Lindon and Centerville city councils are holding public hearings on the matter tonight. If they approve the change, each would see their pledges increase by $50,000 a year.
Centerville has been a member of UTOPIA since 2004. It pledged $4.8 million over 20 years, said Blaine Lutz, the city's financial director. The new pledge amount would be $7.7 million over 32 years.
Payson will consider the subject in its City Council meeting on Wednesday, and UTOPIA is on the agenda in Brigham City and Layton on Thursday. The other UTOPIA cities are expected to discuss the proposal to issue new bonds within the next three weeks.
The Utah Taxpayers Association criticized the plan, which would extend the time to repay the bonds from 20 years to 33 years, association spokesman Royce Van Tassell said.
"The first bonding put $202 million at risk in sales-tax pledges," Van Tassell said. "The new bond structure increases the risk to $351 million."
UTOPIA spokeswoman Maura Carabello said the extended life of the new bonds does raise the pledge amounts but also makes them more secure. The new bonds will be structured with lower payments in the first few years, graduating to much higher payments at the end of the 33-year term. That would decrease the pressure on the system to generate revenue right away.
"It's a rather common finance structure and a proven finance structure," Carabello said.
UTOPIA's board of directors voted earlier this month to issue $189 million in new bonds. Some of that money would retire $135 million of the initial bonds issued by the project. About $20 million would be created to fund more construction, Carabello said.
Brigham City Mayor LouAnn Christensen said the new bonds will bridge a gap in funding.
"There have been a number of challenges come our way," she said, "but we believe this addresses those challenges and gives us the best opportunity to succeed."
Christensen, who is a member of the UTOPIA board, said more than $50 million in expected outside funding has been delayed, but the refinancing would allow construction to move ahead in her city, where 34 percent of the build-out is complete but no homes or businesses are hooked up to the network.
Recent comments
Centerville city posted the public notice so deep in the city website...
Arthur Dent | April 1, 2008 at 10:19 p.m.
I told UTOPIA at every public meeting they held in cities they were...
Lone Voice | April 1, 2008 at 9:58 p.m.
This is what happens to a venture that was designed after the iProvo...
All The Same | April 1, 2008 at 9:38 p.m.
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