The 11 cities that have agreed to be part of a public fiber-optic cable utility have been forced to cancel and reschedule public hearings on a proposed refinancing plan.

Public hearings regarding the plan to go after $181 million in new bonds had been scheduled for this week and last week, said the group's interim director Jim Reams.

However, the Utah Telecommunications Open Infrastructure Agency (UTOPIA) failed to notify the public that the plan also requires cities to set aside up to $504 million in sales tax in case the project is unable to pay for itself.

The cities had previously been required to set aside up to $202 million, with each city setting aside a proportion relative to its population.

UTOPIA, therefore, had to start the notification process anew.

The $504 million, calculated by adding a percentage to the cities' required withholdings, will guarantee the bonding. The total amount will likely be less than $504 million, said Kane Loader, a member of the UTOPIA board and Midvale's city manager.

So far, UTOPIA hasn't had to use any of the tax money set aside by cities, despite the utilities' debt incursion and under-performance. UTOPIA is in the black, but just barely, Reams said.

"We view this as our only opportunity to move ahead," Loader said. "We're hanging our hat on this."

The new bonding is part of an overhaul of UTOPIA that changes the group's focus toward market-driven construction. The plan, approved by UTOPIA's board March 17, would also bring advertising in-house and would require that 40 percent of households in a neighborhood commit to using the service before fiber-optic cable is laid, Reams told the Midvale City Council.

The laying of fiber-optic cable increases Internet speeds to up to 100 megabits per second. Speeds of up to 7 megabytes are available from other high-speed Internet providers, but at least one provider has plans to increase its speeds in the near future, said an official from Qwest Corporation.

Public hearings have not been held about the refinance and little information has been made publicly available. The UTOPIA Web site — utopia.org — has posted no information about the refinance.

Cities affected would be Brigham City, Centerville, Layton, Lindon, Midvale, Murray, Orem, Payson, Perry, Tremonton and West Valley City. Notices of public hearings are often posted on city Web sites and also at city offices.

The public hearings are scheduled to wrap up by the first of May. If the refinancing is approved, UTOPIA will use new bond money to pay off $135 million in old bonds. About $20 million of the remaining funds is planned to finance new construction.

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E-mail: rpalmer@desnews.com