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Lindon City turns down UTOPIA deal

By Benjamin Wood | Posted - Jun 18th, 2014 @ 8:45am

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LINDON — The Lindon City Council on Tuesday unanimously rejected a partnership with a private investment group to offer high-speed Internet service as a city utility.

Lindon is the first of 11 UTOPIA member cities to reject the proposal by Australia-based Macquarie Capital Group, which would see the group assume management of the embattled fiber-optic network for 30 years in exchange for payment in the form of a monthly $18 to $20 utility fee from residents.

Layton, West Valley City. and Midvale have already voted to move forward to the next phase of the agreement. The remaining seven cities have been given a deadline of June 27 to either reject or continue in negotiations.

"I find no persuasive reason to move forward," Lindon City Councilman Matt Bean said. "There are many reasons not to move forward and to vote against moving forward."

The Utah Telecommunications Open Infrastructure Agency began 12 years ago as a means to bring high-speed Internet, phone and television services to individuals and businesses along the Wasatch Front. But low sign-ups and stalled construction have left the network incomplete, serving a small base of customers and languishing in debt.

The vote followed more than an hour of public debate, during which council members and residents voiced their frustrations on the pending deal with Macquarie, the troubled history of UTOPIA, and the perceived lack of alternative options.

Resident Dennis Wilson compared the utility fee proposal to being asked to bail out a neighbor for the debt of building an extravagant home.


Wilson said he doesn't have Internet service, and many residents are not in a financial position to purchase it.

"When we go out and start imposing, forcing people to pay for something they couldn’t afford in the first place, I don’t think that’s right," he said.

Bruce Armstrong argued that residents are already under an obligation to pay for the network in the form of city sales tax revenue that is currently being used to pay down initial UTOPIA debt and monthly operating shortfalls.

"The city is subsidizing every connection now," Armstrong said. "Whether it comes out of sales tax or a utility fee, it’s money that Lindon residents are paying."

Other residents suggested the partnering cities had erred in their original creation of UTOPIA and questioned whether the network should be accepted as a loss and abandoned.

"It is definitely not the proper role of government. We have no right competing with the private sector," Jeff Wilson said. "It comes a time you say, 'You know what? This is just plain wrong. It’s time to walk away.'"

David Shaw, a Lindon resident who has also served as general counsel for UTOPIA, said fiber connectivity is one of the reasons he lives in his current home, and his family would likely move if the network went dark.

Shaw said he occasionally uses his city's police and fire services, and his children occasionally take advantage of the city's swimming pool and parks. But he said that he uses the city's water, sewer, trash and fiber-optic Internet services on a daily basis.

It comes a time you say, 'You know what? This is just plain wrong. It’s time to walk away.'

–Jeff Wilson

"There has always been a capital problem on this project," he said. "What Macquarie is proposing is they will bring the capital to finish the network."

Public comment regularly circled back to the utility fee structure, and prior to the vote, city staff presented the results of an unscientific survey showing that 70 percent of respondents were against imposing a mandatory fee.

Councilwoman Carolyn Lundberg said the key issue in evaluating the Macquarie deal is the public's willingness to take on a universal utility fee, and the results of the city's survey show broad opposition to that aspect of the deal.

"We owe it to our (residents) to represent them regardless of personal opinion," Lundberg said.


Nearby in Orem, city leaders were similarly presented Tuesday with the preliminary results of a resident survey showing split support for the Macquarie proposal and 71 percent opposition to a utility fee.

The Orem City Council did not vote on moving forward but discussed the proposal at length during its afternoon work session.

"As I wade through what are the key components, what are the key issues that cause me trouble, it kind of boils down to the mandatory cost for every resident and the 30- year timeframe," Orem City Councilman Mark Seastrand said. "Those are the two big sticking points."

Orem Mayor Richard Brunst also expressed concern that the city could commit itself to an agreement that could then be challenged through referendums or legal action by residents or legislation at the state level. If that were to happen, he said, the city would still be required to pay the costs associated with pursuing the Macquarie deal.

"Once we’re set in stone and we start building, it doesn’t matter what happens. We owe that money," Brunst said.

He also commented that most cities in the country that have pursued a fiber optic network have done so as single municipalities with the input of residents.

"It would be wonderful if it was just our city making this decision and the (residents) had the right to vote on it," the mayor said.

Councilman Tom Macdonald said he was concerned that city leaders were being compelled to make a decision by June 27. He anticipated that the council could take the time necessary to explore its options and still be allowed to move forward if it later chose to do so.

"On June 27 if we’re not part of the party going forward and on July 2 we want to be part of the party, I’m sure they would take us and our wallets," Macdonald said. "I’m not positive there’s a gun to my head on this June 27 date."

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