They're either in, out or somewhere in between. As several Utah cities make up their minds, supporters of the tax dollar-backed fiber optic network say UTOPIA will happen.

Having faced an onslaught of scrutiny by the Legislature last month, cities participating in the Utah Telecommunications Open Infrastructure Agency rallied together Wednesday for the first time since the end of the legislative session to assess what will happen next.

Initially intended to limit how cities can use tax money toward telecommunications networks, Senate Bill 66 came out of the House and Senate markedly different. Packed with changes, amendments and compromises, UTOPIA Executive Director Paul Morris told UTOPIA board members the final bill was like "going through the tax code."

Morris said the bill's language is so confusing that several city attorneys have called his office, asking for assistance.

"We now know it's crystal-clear in the law that we can do this," Morris said.

So far, 10 cities have voted to pledge tax dollars to back bonds for the $540 million fiber-optic network. Three have voted to be part of it without pledging any money. Four remain undecided. Organizers of the network say the system would have 10 times the bandwidth of current broadband data services, enough to offer households Internet, video and telephone service on a single line. Supporters said building UTOPIA would provide educational and economic opportunities to participating cities. If built, UTOPIA would allow private companies such as AT&T to compete on the network for customers.

But opponents, among them Qwest and Comcast, say it is unfair to use public tax dollars to compete against private companies. Some Qwest and Comcast employees have said they worry that UTOPIA could put them out of work.

Some city officials, particularly in the smaller cities, worry about pledging 39 percent of their annual sales tax revenue to back the bonds to build the network. Although the money will be kept by the cities, it will have to be held untouched in escrow for about 20 years. In a worst-case scenario, those cities risk losing that money if UTOPIA falls flat.

SB66, if signed by Gov. Olene Walker, will allow existing UTOPIA cities to move forward but not allow any new cities to join. Cities will need a vote of their respective city councils on their willingness to pledge sales tax dollars before April 15. After that, the bill requires those cities to take the funding decision to a vote of their residents next November.

Several weeks ago, the South Jordan City Council voted to pull out of UTOPIA, simply out of cost concerns. City officials said the small community receives little sales-tax revenue and that investing in UTOPIA would cut into city services.

But an alternative has cropped up that allows some smaller cities to remain founding UTOPIA members but not have to pledge sales tax.

On Monday, the Taylorsville City Council voted to stay in UTOPIA but not pledge any funds. This means the city will be allowed to build into the network three years down the road. During a public hearing Tuesday, the Riverton City Council also appeared to be leaning toward this option. The cities of Roy and Salt Lake City may follow this path, Morris told board members.

If these cities choose not to commit, Morris said UTOPIA will help them seek bond funding after three years. By that time, Morris said UTOPIA would have built enough of a "track record" to allow for a lower interest rate. Currently, UTOPIA faces interest rates as high as 10 to 12 percent due to risk. Morris said he takes heart in news that Provo City's iProvo project just received bonds for its network at 5.1 percent.

Many city officials have said UTOPIA has been driven by a lack of sufficient broadband services provided by Qwest and Comcast.

During the Taylorsville hearing Monday, several small business owners complained that Qwest and Comcast have not kept up with their needs, putting some in a hard financial position.

"This is simply not sound public policy," Qwest spokesman Eric Isom, also a Taylorsville resident, told the city council of the use of tax money. Isom said Qwest is also aggressively expanding its networks to meet customer needs.

Several council members questioned Qwest's timing for expansion in light of UTOPIA.

View Comments

Councilman Russ Wall said although he was against putting up tax money toward UTOPIA, "I think it's a perfect opportunity to get Qwest and the others a chance to show what they can do."

Councilman Bud Catlin told Qwest officials that UTOPIA "ought to be a wake-up call."

Cities who vote to build the first networks will be presented a final finance plan by May, which will include exact figures on costs and debt. Morris said a 30-day period will be given to allow cities to hold public hearings. By the end of June, cities will then vote on the final bonds before construction can begin.


Join the Conversation
Looking for comments?
Find comments in their new home! Click the buttons at the top or within the article to view them — or use the button below for quick access.