July 25, 2014
In June, the Coalition for the New Economy reported leaders in Utah proposed partnering the state’s ailing government-owned broadband network (GON), UTOPIA, with an Australian finance firm, Macquarie Capital. We noted the agreement would allow the 11 localities to retain ownership of the system (Macquarie would manage and finish building the system), but would also require residents pay an $18-$20 “utility fee,” regardless of whether they subscribe to UTOPIA’s internet service. (The new fee would help defray new construction costs.)
Leaders in the 11 cities and counties had to vote to approve the plan.
According to the Salt Lake Tribune, by late June six cities (West Valley City, Layton, Midvale, Brigham City, Perry and Tremonton) had voted to continue to study the plan. What these votes mean is that Macquarie will “continue detailed studies on taking over and completing UTOPIA broadband in just those six cities.” (Emphasis added.) These studies will include “more detailed engineering and construction plans along with a look at financing, bonding and legal issues” and themselves will cost nearly $1 million, officials said.
Five cities – Orem, Lindon, Payson, Murray and Centerville – voted against moving forward. Their votes mean their residents won’t have to pay the utility tax and the cities will be able to look into “other proposals” to help the system out of its financial difficulties. In the meantime, residents who subscribe to UTOPIA will still get service and the cities will continue to pay their share of the existing UTOPIA debt. (The Standard Examiner looks at what that debt burden looks like for one UTOPIA city.)
Orem City Council Member Hans Andersen clearly regrets his city’s decision to ever join UTOPIA. Before casting a vote against moving forward, he said the city “made a moral failure and made a business failure” and was “asleep at the wheel” when it joined UTOPIA. Orem council members voted 6-1 against the deal, in part, because they believe it violates state law. Other members cited a survey that showed 71 percent of city residents are against the Macquarie proposal.
According to the Salt Lake Tribune, the six cities who opted to move forward can still opt out. The newspaper reported, “Some of the six cities that are moving forward warned Monday that if costs increase significantly, they also would withdraw support — and would want another quick vote to halt ongoing studies.” Already last week Layton Mayor Bob Stevenson – whose city is one of the six – offered a plan that would allow his constituents to opt out of the $18-$20 utility tax.
But, generally, officials in the six cities believe a partnership with Macquerie will ultimately save residents money. However, as CNE illustrated, Macquarie’s record in Australia isn’t very good.
We’re glad West Valley City, Layton, Midvale, Brigham City, Perry and Tremonton still have a way out of this disastrous deal.
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