Without question, the 11 pledging members of the Utah Telecommunications Open Infrastructure Agency (UTOPIA) have shouldered an incredible risk.

They've promised to back $202 million in bonds with sales tax revenue to build a fiber-optic network that data, phone and television providers can use to deliver their services.

The hope is that they'll never have to fork over a dime — that revenues will pay those debts.

Smaller cities — Tremonton, Payson, Lindon, Brigham City and Centerville — have pledged in the $250,000 to $330,000 range. Murray, Layton, Orem and West Valley have pledged between $1.2 million and $2.8 million.

If UTOPIA's pledging members are put on the line for repaying those bonds, it could represent a serious hardship for those cities.

Now, city councils in member cities are being asked to take on more debt over a longer period to bail the network out of what UTOPIA officials call a "bad loan" from the federal government.

But, officials say, restructuring the consortium's bonds should give UTOPIA the boost it needs to make progress and secure a bright future.

UTOPIA currently has just over 7,000 customers in the six cities where services have begun: Murray, Midvale, West Valley, Orem, Lindon and Payson.

Five other cities — Tremonton, Brigham City, Perry, Layton and Centerville — are waiting for service to begin while construction continues.

Construction is 95 percent to 99 percent completed in Lindon, Payson and Tremonton.

Perry, Orem and Murray are about 50 percent completed, Midvale is at 40 percent, Brigham City is at 33 percent, Centerville is at 25 percent and Layton and West Valley are at 15 percent completion.

Riverton, Cedar Hills, Vineyard, Cedar City and Washington have joined the consortium as non-pledging members, which means they won't see service until revenues grow enough to pay for construction.

Vineyard and Washington joined in 2007.

UTOPIA operations run about $300,000 a month, said Jim Reams, Orem city manager and interim UTOPIA director. But the consortium has reached the break-even point with its 7,000 subscribers.

That means that any new subscribers will help pay down debt.

Success stories

It's fairly easy to track down success stories from current customers. Orem City Hall is connected to the network and saves $50,000 a month, said Reams.

"That money goes back into city operations that are more beneficial than paying for phones," Reams says.

Just a few years ago, Alexander's Print Advantage in Lindon sent employees back and forth by car to its largest customers, ferrying entire computer hard drives that stored colossal data files containing books and graphics-heavy posters.

Then Lindon joined UTOPIA.

Company leaders successfully pushed to get UTOPIA's high-speed fiber-optic pipes laid to Alexander's sooner than scheduled.

Now, staggering amounts of digital information sweep into and out of Alexander's every day, a technological trick impossible without the controversial private-public project.

"We were really killing our connection," Alexander's chief technology officer Dan Mortimer said. 'We have three customers who do a significant amount of data transfers every day. We were uploading a couple hundred major files a day and overwhelming our capacity."

Alexander's set up a 10-megabit pipe through UTOPIA for 60 percent of the cost of the T-1 line that had struggled to keep up with the print shop's needs.

The T-1 line could handle just 1.5 megabits per second.

Mortimer lives in American Fork, which doesn't have UTOPIA. He'd like to see it come to his town so his home Internet connection could speed up at a cheaper price, too.

The big problem at home comes when his wife wants to upload pictures to an Internet service or a blog. Residential Internet connections through Qwest and Comcast allow upload speeds far slower than their download speeds.

"Whenever we need to push anything out from our home, the connection really crawls," Mortimer said. "That's not the case with the UTOPIA system."

Then there's Laura Lewis, a principal with Lewis, Young, Robertson and Burningham, which handles public finance for UTOPIA and about 15 of Utah's 25 most populous cities.

Lewis lives in Murray, and when she and a friend from Sandy each bought iPods, they decided to download some movies.

Lewis' friend's download took five hours.

Lewis' download took five minutes.

Life, near-death

"The early years are a big challenge," Lewis said.

Not only did UTOPIA seek support from member cities, but from the U.S. Department of Agriculture's Rural Utilities Service, which provides loans to rural areas to get certain utilities.

The original pledging cities were approved for a $67 million loan July 14, 2006.

But negotiating the loan's closing took 18 months, Lewis said.

The funding delay meant work stopped, marketing stopped and new hookups stopped, she said.

Paul Cutler, UTOPIA's interim deputy director, said the delay cost UTOPIA millions of dollars.

"(The agency) failed to make good on its promise to loan money in timely manner," Cutler said. "It's really disappointing there's so little accountability in Washington."

Requests from the Deseret Morning News for information from the Rural Utilities Service about the loan received no response by Friday evening.

Lewis said RUS funded $21 million and approved future contracts but refused to provide the money, saying that UTOPIA wasn't meeting its projections.

In a cause-and-effect circus, UTOPIA wasn't meeting projections because RUS took a year and a half to complete its funding, she said.

"I've worked with federal agencies," Lewis said. "I've never seen anything as deplorable as this. They're going to be the death of UTOPIA."

The new plan

So UTOPIA's new and restructured bonds are designed to cut RUS loose. That means that UTOPIA needs to pay the federal agency $21 million, plus the $11 million to vendors RUS was expected to pay. After various other expenses are finalized, UTOPIA will be left with $10 million in operating capital, Lewis said.

UTOPIA spokeswoman Maura 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.

That should help nicely with cash flow and construction costs, Reams said.

For the first two years of the restructured bonds, bond investors can't call, or redeem, the bonds. That means UTOPIA has two years to breathe easily.

The business models tell them the plan should work.

"Hopefully, it makes us breathe easier forever," Reams says.

In the mean time, city councils are scheduling public hearings on the restructured bonds throughout April and May.

Residents can check their city Web sites for public hearing information.

UTOPIA is also in the process of hiring a new executive director and chief operating officer. Decisions from among a crop of candidates is expected in April.

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