Orem pledges $24M bond to fund UTOPIA construction

Published: Thursday, Feb. 28 2013 5:03 p.m. MST

UTOPIA employees Rob Leckie, left, Janet Rose and JD Cook work in the Network Operations Center at UTOPIA in West Valley City.

Michael Brandy, Deseret News

Enlarge photo»

OREM — Orem will continue to support the UTOPIA fiber-optic network, pledging this week to stick to its commitment to offer a $24 million bond to fund construction costs and offering up additional funds to cover operational deficits.

People have criticized Orem's decision, arguing that the City Council didn't vote on it and the issue was never opened up for public comment.

But Richard Manning, Orem's administrative services director and chairman of the Utah Infrastructure Agency, said the $24 million was part of an amount the council had already committed to and while the council was not unanimous on the issue during its work session Tuesday, it generally voiced support in proceeding with the payment.

"The council gave approval in 2010 for issuing up to $65 million (in bonds)," Manning said. "This was just checking back to say, 'Here's the report, are you still OK?' because they already have said it's alright."

Manning said the City Council also approved the decision to use city money to cover operation costs for UTOPIA, or Utah Telecommunication Open Infrastructure Agency. He said the city will initially loan the agency $53,000 a month, but the amount will shrink as UTOPIA gains users and is able to cover its own expenses.

The council's decision to help fund UTOPIA operations will impact this year's budget and next year's, Manning said.

He estimated that the agency will be able to support itself and pay back the money loaned, plus interest, within four years. He said the money that will go to UTOPIA was already allotted in the Orem budget for another purpose and was not needed.

"(UTOPIA) has asked for this extra money from us, and we've been billed for it and we are going to pay it," Manning said. "We didn't need to amend budget in the process because the bottom line stayed the same."

Ryan Roberts, local government supervisor at the Utah State Auditor’s Office, said decisions to amend a budget that don't increase spending must take place in a public meeting, which Orem did.

While such a decision doesn't require a public hearing, all formal budget amendments must eventually be voted on by a city council. Roberts spoke with officials in Orem who explained that they handle such amendments by bundling them all together and voting on them at the end of the year.

The telecommunications agency has begun going to the cities belonging to the Utah Infrastructure Agency — which is made up of cities who are not only members of UTOPIA but have also pledged additional funds to support the project — to ask them to help cover operations costs. A company spokesman said $3 million in bonds were used to fund operations between May 2011 and June 2012 and approaching cities for additional funding is a temporary solution until further bonds are approved.

City councils in both Tremonton and Murray have recently voted against providing additional UTOPIA funding to cover operations costs.

E-mail: emorgan@desnews.com

Twitter: DNewsCrimeTeam

Get The Deseret News Everywhere

Subscribe

Mobile

RSS