Provo to write off $5.4M in iProvo debt

Provo to write off $5.4M in iProvo debt

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PROVO — The likelihood the fiber-optic network built as iProvo will not turn a profit anytime soon has the city poised to write off a $5.4 million loan from the power department's energy fund.

Provo began building a fiber-optic ring to connect city utilities in 2004, then issued a $39.5 million bond to expand the network to every home and business in the city. The network has been functional, though operating in the red, since it was completed.

Provo later sold the network to what is now Veracity Communications, but payments to the city on that sale have been less than the city needed to cover bond payments for some time. The gap-covering loan from the Energy Fund, belonging to Provo City Power, grew from $3.7 million to $5,357,316 by the time the city levied a new utility fee on residents and businesses in November to offset insufficient bond repayment revenue.

The new "Telecom Debt Charge" is set to run 15 years — until the iProvo bond is repaid — and costs homeowners $5.35 per month and commercial customers $10 per month plus 2.3 percent of their electricity bill.

Writing off the loan comes at the recommendation of the city's auditors and has the support of the city's finance director, John Borget. The City Council voted 7-0 to put the recommendation on its Jan. 17 agenda in the form of a resolution.

Borget said the power department's board agrees with the plan to write off the loan but wants some of its investment back if the city ends up owning the network again and either operates it at a profit, or profits by re-selling the network.

Mayor John Curtis said he supports "memorializing" the energy department's investment in the network but could only support payments back to the energy fund if the new supplemental utility fee goes away first.

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