PROVO — A city councilman says he's alarmed Broadweave Networks used its security deposit to make its November payment for the iProvo network.

But another councilman says he thinks it's just a sign of growing pains.

The City Council learned Tuesday that South Jordan-based Broadweave — the company that agreed to buy the city's fiber optic network for $40.6 million in July — used a security deposit to make its Nov. 15 bond payment of $277,000. City Councilman Steve Turley said the development worries him.

"I'm concerned they're not keeping their obligation," he said. "And I hope that it doesn't foreshadow bad news down the road."

But City Councilman George Stewart said he isn't concerned, because the bond payment was made.

"I'm not alarmed," he said. "I would be alarmed if it would continue, but ... we have $6 million in reserve."

According to the agreement, Broadweave assumed control of the iProvo network, as well as the city's monthly bond payments of $277,000 for the next 19 years. Broadweave also agreed to put up a security deposit, in case it missed a payment, and $6 million in letters of credit.

Broadweave President Steve Christensen said the company looked at the troubled economic market and decided to use its deposits with the city as payment in order to preserve its internal capital.

"Our current decision is a cash preservation decision to give the company sufficient capital to fund the company's rapid and continued growth," he said in an e-mailed response.

Christensen also said Broadweave has just added its 1,000th new customer since taking over the network.

Provo spokeswoman Helen Anderson said they'd prefer Broadweave not opt to make the bond payment with the security deposit, but city administrators understand the company's decision. But she said there are other indicators the company is flourishing.

"We'll continue monitoring their performance as we have been all along," Anderson said.

Stewart said he can understand Broadweave's decision because it cost the city $800 to add a new customer to the network, which can create a short-term "cash flow issue." Besides, he said, the security deposit will be replenished with money from the letters of credit.

"My biggest concern is that they be successful," he said. "And they are being successful."

Turley, on the other hand, said he's suspicious of the numbers Broadweave is touting.

"I have a really tough time believing that Provo was having extreme difficulty adding 30 customers a month and they're adding 250 customers a month," he said.

The City Council will have to wait and see if the check is in the mail for December's payment, he said.

"A pattern of nonpayment is nothing we want right now," Turley said.

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