Utah Panel Amends Bill That Would Have Ended UTOPIA/Macquarie Deal
A Utah State Senate bill, which officials of a state broadband network said would kill a proposed deal with an Australian firm to help the financially troubled Utah Telecommunication Open Infrastructure Agency (UTOPIA) continue, was amended (http://1.usa.gov/1mDnCbo) by the Business and Labor Committee Monday to allow the proposed public-partnership to remain viable. Reflecting uncertainty by state legislators about the viability of UTOPIA, which as of last year was $214.8 million in debt and losing money (CD Jan 24/13 p16), SenCommittee Chairman Curtis Bramble (R) said he joined other committee members in letting the amended SB-190 go forward “reluctantly."
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As originally proposed (http://1.usa.gov/1nU1Ziy) by Sen. John Valentine, also a Republican, the measure would have barred cities that are part of the UTOPIA network from charging their residents a utilities tax to fund the service. Spurring the measure, Valentine said, was ambiguity about whether state law bars municipalities from collecting utilities surcharges to pay for telecom services. That put in question whether the surcharge Provo is charging taxpayers for its municipal fiber network, even after its $1 sale of the network to Google (CD April 22 p4), is allowed. Valentine’s bill would make it clear that Provo and UTOPIA could charge a utilities tax to pay off the projects’ current debts. The original bill would have explicitly barred utility taxes from being used for networks in the future.
Gary Crane, city attorney for Layton City, one of UTOPIA’s 11 member cities, told the committee that the original version of the bill would bring negotiations for a public-private partnership with the Australian company, Macquarie Capital, “to a halt.” The bill is the latest in a spate of measures to make it harder for municipalities to build their own networks. Details of the agreement are still being ironed out, Crane said.
UTOPIA cities would remain responsible for paying off existing debt, said a pre-development agreement. Macquarie would build out and maintain the system for 30 years and assume all construction, operation and maintenance costs. The cities meanwhile would pay Macquarie through an added utilities fee for all residents. All residents would receive a basic level of service for that fee, regardless of whether they subscribe to additional services. UTOPIA and Macquarie would also share revenue if the network eventually produces receipts in excess of the base payment. Crane told the committee that if the utilities tax mechanism is explicitly barred, “I want to be clear. It would end the deal.”
Advocates for UTOPIA urged that the bill be amended to allow the agency to collect utility taxes in the future. President Pete Ashdown of Salt Lake City-based ISP XMission said it would be unfair to allow Provo to levy the tax but not UTOPIA cities. “If you allow Provo to give a $40 million asset to one of the wealthiest companies in America [Google] for a dollar, but you don’t allow UTOPIA to contract with Macquarie to provide broadband to 120,000 homes and businesses, you're being discriminatory,” he said. Spencer Stokes, a Macquarie consultant, told the committee the company backs the amended bill. A company spokeswoman declined further comment.
Valentine, after meeting with mayors involved in UTOPIA, agreed to amend the bill so as to not scuttle UTOPIA’s potential deal. Bramble also backed the measure, but said “I'm not persuaded that with or without this bill, the [UTOPIA] model where you build the pipe or the highway and ask providers to come on [will work]. I haven’t seen a model that’s worked.” Crane said that unlike other municipal projects that tried to build a network from scratch, Macquarie would take an already partially built network, build it out and then return it to public hands.(kmurakami@warren-news.com)