PROVO Less than a week out from a public hearing on the proposed $40.6 million sale of iProvo to Broadweave Networks, the City Council is still missing information some members deem essential to their decision.
The City Council is slated to hold a public hearing May 27 on the proposed sale of iProvo to Broadweave a South Jordan-based company that provides voice, video, data and other communication services. The city has provided the council with copies of the asset purchase agreement and draft copies of some of the 12 accompanying exhibits to the agreement. But the council has yet to see completed exhibits, which include essential documents such as the security agreement and surety agreement between Provo and Broadweave.
With the meeting date closing in fast, City Councilman Steve Turley said he doesn't feel like he has enough time to digest all the material.
"I'm feeling like I'm trying to eat an elephant," he said. "We're dying."
The asset purchase agreement sets forth provisions for sale of the city-owned fiber optic network to Broadweave, but the exhibits also lay out essential details. For instance, Exhibit D is expected to specify that Sorenson Capital will front $6 million for the next two years to guarantee Broadweave will pay Provo's bond payments. After three years, the fund guarantee will be reduced to $3 million. Exhibit D is also expected to guarantee "hair trigger" language that allows the city to access the security deposit immediately upon default of the note.
A city-appointed committee, organized to review and make recommendations to the City Council on the iProvo sale, examined the terms of the asset purchase agreement and synopses of the 12 exhibits Thursday morning. The committee, composed of local businessmen and politicians, called the terms "a good deal," but committee members were quick to add one caveat: The devil's in the details.
Based on what Sen. Curt Bramble, R-Provo, has seen so far, he said he supports moving forward with the sale, but the final language of the exhibits will ultimately determine whether it's "a good deal, a bad deal, sweetheart deal."
"It looks like a good deal," he said. "But it's going to be a function of the details in the exhibits."
Assistant City Attorney Ryan Wood said the legal department is working hard to complete those exhibits. Provo spokeswoman Helen Anderson said the city intends to get the exhibits in the City Council members' hands before their May 27 meeting.
Under the basic tenets of the asset purchase agreement and the exhibits, the city will receive the $40.6 million through an owner-financed loan, and Broadweave will pay the city's bond payments, plus interest, for a grand total of $63.5 million over the next 19 years.
The city will receive dedicated capacity to connect facilities and other services on the network for $300,000 per year. But the exhibits are also expected to provide a provision to allow Provo to regain ownership of the network, including any improvements made to the system, should Broadweave go bankrupt.
Broadweave CEO Steve Christensen also announced the company will replace the home gateways on iProvo's network with technology that can support session initialization protocol, a protocol for handling telephone service on packet-based network.
While most of the committee members expressed favor for the deal, City Councilman George Stewart read a statement from Rep. Steve Clark, R-Provo, a committee member who was absent, stating he still had reservations.
Clark could not be reached for comment, but in previous meetings he stated "there's no skin in the game from (Broadweave)." He also said he didn't think the city received as many bids to buy the network as if it would have if it specified such in the request for proposal it posted in April 2007 in local newspapers and on the city's Web site.
Turley echoed Clark's sentiment at the committee meeting Thursday.
"I don't know if there are people who would have responded if we had made our intentions a little clearer," he said.
Wood said the city didn't say it was selling the network because it didn't know it would be selling then. City officials were just looking for proposals for services or other opportunities on the network. He said asking for bids now could hurt the city's chances of sealing the deal with Broadweave.
"You've got a bird in the hand," he said. "Do you want a few in the bush?"
Acting telecom manager Kevin Garlick said they received six to eight proposals from companies, including Mstar, that were interested in buying the network. They spent hundreds of hours considering each proposal he said.
"What you've got before you is the best proposal," he said.
Stewart said if the city opts not to sell the network, it would potentially cost the city between $2.6 and $3.4 million annually for the next five years.
City Councilwoman Midge Johnson said that would impact tax payers, including those who don't use iProvo.
"If we don't go through with (the sale) then we are likely to raise everyone's fees ... to make up for the deficit," she said.
Though the clock is ticking down to a public hearing, and a possible decision on whether to sell the network, City Councilwoman Sherrie Hall Everett said she's not prepared to make a decision until she gets all the information she needs, including the complete body of the exhibits.
"Am I panicked yet? No," she said. "I for one am not prepared to vote for or against something at this time until I have all the information."
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