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UTOPIA Officials Believe Project Viable Despite Salt Lake Decision

UTOPIA Officials Believe Project Viable Despite Salt Lake Decision

Posted - Apr. 14, 2004 at 7:57 a.m.



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SALT LAKE CITY (AP) -- UTOPIA officials believe the fiber-optic network remains financially feasible despite the Salt Lake City Council decision Tuesday night not to pledge tax revenue for it.

UTOPIA President Paul Morris said he will investigate the funding numbers further, but, "It should work. We're going to press forward with the cities that we have."

Cities not pledging tax revenue will not be able to join the project until it is in place in those communities that do put up the money.

Opponents, including competing telecommunication companies, say it is unfair to private business and also too great a financial risk to the communities.

Supporters say the venture will draw business to the participating cities.

The Salt Lake City decision "surprises me, given what they stand to lose and what they would have stood to gain with UTOPIA," said Paul Larsen, Brigham City planning and economic development coordinator.

"The sucking sound that Salt Lake will hear after UTOPIA is built is those businesses leaving Salt Lake and heading to cities that have better infrastructure," he said.

The council voted 4-2 to remain with the project but not to commit $4.1 million a year for 17 years to pay off construction debt.

Morris said the cities' financial backing was to get the company a lower interest rate on the bonds; he doesn't anticipate any city will need to actually pay out the money.

"The council has recognized there's a significant risk to taxpayers," said Jerry Fenn, president of public policy for Qwest, one of UTOPIA's competitors and opponents. He believes the network will not succeed without Salt Lake City.

After the vote, Fenn renewed his company's pledge to expand broadband service to 90 percent of city households by the end of the year if the city streamlines the permitting process.

The Cedar City Council made a similar split decision last week, voting against committing funds. Mayor Gerald Sherratt said afterward, "I regard this vote as one of the most unfortunate in the history of the city. We have 20 percent of our people at the poverty level. UTOPIA would have brought good wages to our city.... People would have come here from everywhere."

Both cities still may end up participating in the network, but not for three to five years. If UTOPIA proves successful, bonds could be issued without the guarantee. But the non-pledging cities would not reap any possible excess revenue, either.

One estimate suggested UTOPIA needed 150,000 potential household or business subscribers to be viable. With some cities dropping out, the costs are lower and 120,000 may be enough. The 11 cities provide 140,000.

The 11 cities pledging to share their portion of UTOPIA's construction debt are Brigham City, Centerville, Layton, Lindon, Midvale, Murray, Orem, Payson, Perry, Tremonton and West Valley City.

In addition to Salt Lake City and Cedar City, communities choosing to participate but without pledging money are Cedar Hills, Riverton, Roy and Taylorsville.

South Jordan backed out of the project altogether.

(Copyright 2004 by The Associated Press. All Rights Reserved.)

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