4 cities OK UTOPIA refinance; Payson shoots it down
6 others cities still undecided
Midvale, Lindon and Tremonton council members voted in favor of the proposal despite protests from many citizens and representatives from Comcast, Qwest and the Utah Taxpayers Association. Other residents, including UTOPIA subscribers and business people, were in favor of the plan.
West Valley City narrowly voted in favor, 4-3 after a lengthy discussion. Representatives from Qwest and Comcast attended the meeting and a handful of residents commented during the public hearing. Hours later, council members Corey Rushton, Mike Winder and Carolynn Burt voted against committing the funds to UTOPIA.
Orem will meet May 2 to discuss UTOPIA further. The council there postponed a decision Tuesday.
Centerville council members discussed the issue extensively then tabled a decision until April 29.
"I'm definitely against this UTOPIA farce," Walter Reynolds told the Midvale City Council. "There are so many things that you could be using this money for, for the good of the community, but you're gambling it away."
The other six cities that met Tuesday had a similar choice, with each city's pledge amount being determined by population count.
The refinance would trade $121 million in 20-year bonds for $189 million in 33-year bonds. UTOPIA hopes to garner at least $11 million in new capital, which it will use to build the second phase of its municipal fiber-optic network.
It also hopes to repay the federal government and pay contractors for work already completed.
Before the Midvale City Council meeting and public hearing on the refinance, city manager Kane Loader said the refinance was the only good option. If it fails, UTOPIA will be forced to sell its partial network for pennies on the dollar, he said.
Opponents of the refinance have said UTOPIA should cut its losses now rather than "throwing good money after bad."
Loader, like representatives from each of the other cities, is a member of the UTOPIA board of directors, which voted earlier this month to implement the plan.
With Payson out of the game, the total taxpayer risk in the finance plan is about $490 million. Cities will only have to pay on that risk if UTOPIA is unable to pay for its bonds. Thus far, no tax money has been used.
Brigham City, Layton, Murray and Perry have yet to vote on the refinance. Murray will vote on Monday, the others on Thursday. If more than a few cities pull out, UTOPIA may have to go back to the finance drawing board, said UTOPIA public relations representative Melissa Johnson. Each city that leaves takes with it possible capital.
If only a few cities vote down the proposal, however, the plan will move forward, Johnson said.
The need to refinance comes four years after the 11 cities agreed to be part of UTOPIA. Since then, UTOPIA has fallen far short of its projections. Its operating costs are now breaking even, but the public telecommunication utility is facing bond payments it is unable to meet.
UTOPIA admits it has made mistakes but is confident that new financing partners and a large-scale advertising plan will keep it afloat.
"For me personally, (UTOPIA) has provided a great benefit," Todd Seager told the Lindon City Council. "I work from home in a tech job and I would not be able to do that without UTOPIA."
Contributing: Jens Dana, Sara Israelsen-Hartley, Amy Choate-Nielsen, Joseph M. Dougherty and Laura Riddle
E-mail: rpalmer@desnews.com
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