The Senate Site UTOPIA: Why didn’t they tell us?

UTOPIA: Why didn’t they tell us?

Posted in 2012, Featured on Tuesday, September 18th, 2012 at 10:28 PM 10 Comments

By John L. Valentine
Utah State Senator, District 14

Imagine it’s June of 2012, and you are the management of UTOPIA, Utah’s largest municipal telecom venture. You’re reviewing the final draft of an as yet unpublished, but scathing report by the Legislative Auditor General. Your second largest member city – Orem – is proposing to raise property taxes by 50 percent, and they are explicitly blaming your organization.

You are failing to meet your internal goal of 450 new subscribers each month. In fact, you’re not even getting half way to that goal. (You are actually getting only 190 subscribers per month with an aggressive marketing effort.) Your operating expenses continue to exceed your operating revenues. You can’t pay your interest expenses without borrowing more money. You are, in essence, paying your mortgage with a credit card.

Lastly, you have less than 6 months of operating capital left.

What would you do?

Because it’s now September 2012, we don’t have to imagine what UTOPIA’s management did, and didn’t do. We know . . . . They didn’t notify their member cities of the impending cash crunch . . . They didn’t notify the Legislative Auditor General of the impending cash crunch . . . They did not tell the taxpayers of the need to borrow more money just to operate.

Instead, they hired Wilkinson Ferrari, a PR firm, to help them through the audit’s PR debacle. And then they waited until Tuesday August 28 to tell Orem City that UTOPIA would be out of operating capital by September 30.

UTOPIA consciously decided to wait until two weeks after the Truth in Taxation hearing where hundreds of Orem residents filled city hall to protest Orem’s UTOPIA property tax hike before announcing that they’ll need to pony up more money, increase their debt and do it immediately! The City Council agendas of Layton, Payson, Lindon, West Valley City and Midvale (all UTOPIA cities) did not include a UTOPIA presentation in August. My guess is that city council members in the other cities didn’t know about UTOPIA’s impending cash crunch either.

UTOPIA’s solution? They want their member cities to authorize ten million dollars in additional debt without even adopting a written plan to get them out of this mess. UTOPIA is soon to be out of money; it does not earn enough to pay its day to day operating costs even if someone else (the taxpayers) pays off all of the debt! It’s possible that UTOPIA’s management didn’t deliberately wait. Under that scenario, UTOPIA’s management suddenly discovered after the public hearings that their operating cash is all but gone. They tell us that we should be glad that the money did not run out in June. As bad as it looks for them to have waited, assuming that they waited is much better than assuming that they just didn’t know.

In either case, it’s clear that the longer they operate, the deeper they dig the financial hole. Taxpayers should not have to backstop this financial failure any further . . . nor should they stomach UTOPIA’s lack of transparency. Come on, at least tell us in a timely manner what is going on. If you are not even going to tell your member cities, then the time has come for the City Councils of the UTOPIA cities to reject UTOPIA’s latest bailout scheme. Please ask your city officials to not authorize an additional Ten Million Dollars in debt just to dig a deeper grave for UTOPIA.

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John Valentine presently represents Orem, Lindon, Pleasant Grove, American Fork and Cedar Hills in the Utah Senate. Senator Valentine is the Chairman of the Business and Labor Committee.


Published as a guest opinion in the Standard Examiner and the Daily Herald.

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10 Comments to “UTOPIA: Why didn’t they tell us?”

  1. Senator Palpatine says:

    . If all cities would have supported this, if You didn’t let COMCAST and QWEST/CENTURY LINK Have the monopolies in UTAH, and if the state government would have been fair, then UTOPIA might have worked. You know a lot of things revolve around the internet right? You have to file for a job online, and file most stuff relating to the government online. etc. Now tell me, do you know the average speed in Japan? 600 MB/S . They have 1 GB internet. Now tell me this: do you know the average speed in the USA? around 60 and up for half the people ( RESIDENTIAL ) Now tell me : do you know the average residential speed in UTAH? around 10. Know why? Your letting Comcast / CENTURY LINK have the monopoly and cheat us. Because what else is there to get besides COMCAST/ CENTURY LINK? NOTHING! JAPAN IS AHEAD OF UTAH 1000 MEGA BYTES AHEAD OF THE AVERAGE UTAH USER!!! AND MOST THE PEOPLE IN OUR COUNTRY ARE 60 + MB/S AHEAD OF US!! Don’t you see the internet has and will be the future ? UTAH Government is most likely being paid off by CENTURY LINK/ COMCAST because they want to rip UTAHANS off because they know they will lose hundreds when people git rid of the old technology of everything they offer. Don’t you understand more people would want to move here if we had New technology like the rest of the world? Would you want to move to a place permanently with no electricity? or how about dial up only? That time is pretty much coming up on us. In days where you use internet for everything, watching movies, doing homework, playing games, filling out job applications, and people who might work at home, streaming music, hosting websites, using VOIP , like SKYPE, or Magic Jack, The possibilities are endless. And you act like this is bad Senator. You are a disgrace and need to be kicked out of office Senator Valentine. So I put a vote of no confidence in Senator Valentine. Have a nice day. Utah won’t survive if you keep helping businesses hold their monopolies.

    • Aaron Jones says:

      not so fast bucko. Why are we subsidizing this utopia to begin with? palpatine sounds like he’s on the utopia payroll, or the PR group pushing it? if these so called ‘monopolies’ want to bring higher bandwidth – they can leverage that service directly to the end user. Utopia has chosen to instead, fore residents to pay for its ‘technological’ shortcomings and its busness ‘plan’ shortcomings.

      as for the rest of the much hyped ballyhoo in palentine’s ramble representing a blame game – it doesn’t wash.

  2. matt says:

    This makes me so glad I live in Provo… Anybody who has dealt with Utopia can tell you that they are in bad shape (clueless? Try asking them for a map of where you can move to be a customer of theirs) but I didn’t know it was THIS bad.


  3. Senator Palpatine says:

    I forgot to put in some stuff, anyway …. Imagine your living in a place that needs more jobs, more people working, more businesses. Sound familiar? UTAH ding ding ding. Now imagine if the state was actually fair , and didn’t let Comcast or Century Link, or any other company for that matter pay them off. Then everything would be fair, and Utopia could actually have a chance at working, and let the people decide who wants what. Now imagine stuff people could actually afford. Now imagine property value going up in Utah , because people would actually want to live here more.

    Here’s the information I found : #1 Average user speed in the world. : South Korea
    Average Connection Speed: 17.5 Mbps (NOT the top speed just the average user)

    #2: Japan
    Average Connection Speed: 9.1 Mbps

    ETC ETC…… Our average User speed is 3 !! Were not even in the top 9

    But my point is …… We can change Utah …… we can increase property value …. Why pay for something when you can get more at the same price or maybe a little more, but 9 x more the speed, which is comparable to a store giving you 1 apple for 99 cents or I can go to the next store and pay 2 dollars and get 9 apples. But the state says no to them selling , because the business is so big , they have ” paid off” the state.

    I guess it’s ok for Obama to spend 5.4 trillion dollars, but it’s not ok for us to spend quite A LOT less than that to better our state and raise the value of our state. Which you know that it WILL raise the value of our state, when you think about most everyone uses the internet for something, like I mentioned previously.

  4. Jesse Harris says:

    Sen. Valentine, your opinion is unfortunately ill-informed. You’ve relied on news articles that didn’t contact UTOPIA directly, and you apparently didn’t see fit to fill that knowledge gap either.

    The first gap here is the assumption that cities don’t know what’s going on because UTOPIA is keeping them in the dark. The reality is that each city has a member on UTOPIA’s board that is supposed to be monitoring the project and reporting back to their city. If the members of the city council feel as if they don’t know what’s going on, they need to either hold their board member to a higher standard or find a new one.

    The second gap is your ignorance of the operating capital situation. Yes, UTOPIA currently doesn’t generate sufficient revenue to cover operating expenses. Part of the UIA is to cover that gap while they expand the network. They’ve budgeted an amount to be drawn down for this purpose each fiscal year. The last draw was supposed to last through June 30, 2012. Instead, it has lasted until this month, almost 25% longer than planned. If you knew how the UIA was structured, you’d understand this.

    I’m not sure what you’re referring to when you mention $10M in additional debt. Are you talking about a new bond, or are you mis-characterizing the property tax increase to pay for existing debt service as additional debt? I think some clarity is required here.

    I should also point out that there is a much deeper and fundamental tax issue here that you’ve chosen to ignore: the continuing shift from reliance on volatile sales taxes to stable property taxes. Orem happens to be one of the cities that bet heavily on sales taxes and lost. Taylorsville and West Valley City are also on that list. Instead of taking the opportunity to address this, you decided to jump on the bandwagon to blame an easy target.

    What really steams me is that you could have easily found out these things on your own by talking to UTOPIA. Instead, you read a few headlines, formed an opinion, and ran with it. That’s irresponsible enough for a citizen to do, but a high-profile elected official doing it? That’s shameful. I would strongly encourage you to sit down with UTOPIA and find out a bit more about how and what they’re doing.

  5. charlesH says:

    Valentine is either misinformed or lying. He says:

    “They didn’t notify their member cities of the impending cash crunch ”
    “They did not tell the taxpayers of the need to borrow more money just to operate.”
    “My guess is that city council members in the other cities didn’t know about UTOPIA’s impending cash crunch either.”

    When UIA as set up (2010 or before”) it was planned that Utopia would receive diminishing operational support for 2011/12 (phase 1), 2012/13 (phase 2), and 2013/14 (phase 3) while the network was built out.

    From the UIA presentation to Orem city council 8/27/2012:
    UIA approved to issue up to $65M in debt
    1) have approved $29.5M
    2) Received $17M in stimulus grant
    3)Each of first three tranches of debt planned to contain operational support for UTOPIA
    Phase 1) $4.5 M; Phase 2) $2.65M; and Phase 3) 100K

    Phase 1 began June 2011 plan was to issue next round of debt June 2012
    UTOPIA runs out of operational funds September 30.
    The phase 1 funds for July 2011 to Jun 2012 were stretched into September (this is good). phase 2 which was for June 2012/13 will of course be needed as planned.

    Of course Orem (and other member cities) new that phase 2 was going to be needed. That is why it was included in Orem’s 2012/13 budget proposal.

    So which is it Mr. Valantine? Are you misinformed or simply lying? Did you contact Utopia/Orem management for clarification before you went public with your accusations? Which part of the phrase “bear false witness” don’t you understand?

    I call on Valentine to issue a full contrite public apology to Utopia/UIA/Orem management teams. He has falsely accused them of misleading the taxpayers he represents when in fact, it is he who misleads.

    The vast majority of the taxpayers he represents fully understand the meaning of the words “bear false witness” both in theory and in practice. To publicly accuse others of misdeeds without (apparently) bothering to gather the facts and give those accused a chance to respond is reprehensible. Beneath the dignity of any citizen let alone one elected to represent them in public office.

  6. Jemmyn Buchanan says:

    The internet has become an essential utility. Although there is something to be said in allowing the market to bring new innovation to a technology like this, we also have a monopoly in many areas of the state (century link and comcast) which does not allow innovation. Since the internet is the backbone of how we communicate there must be a balance between free market and allowing rural areas to connect where there is not enough demand to pay for the service. Typically with other utilities this is where the government has stepped in. I don’t think the question is: Do we continue to help UTOPIA grow? It should be: how to we ensure transparency while we help it grow.

  7. Amy says:

    I had Comcast, but the customer service and tech support was so incredibly bad. Every time their service was down, I would call and they would claim they weren’t having any issues. Then a sales guy came walking through my neighborhood in Orem and said, “Have you been having any interruptions in service? We’ve been upgrading the lines in your area.”

    When I cancelled my service they made the check out to “The estate of” and my name as if I were dead. I vowed I would never ever do business with Comcast again.

    Utopia wasn’t available where I lived in Orem.

    I now have CenturyLink. I call tech support and got someone in the Philippines. I work with them a lot so I know the accent. The girl sounded like she is reading a script. I’d ask her a question, she would pause and go completely quite for 10 or 20 seconds and then go back to reading her script. She couldn’t answer a question that wasn’t on there.

    I’m only getting 7Mbps down and 896k up. That’s a pretty crumby upload speed.

    The problem is I now live in Taylorsville, so I can’t get Utopia where I could get 50Mbps up and down.

    CenturyLink and Comcast do have a monopoly. The Internet is an essential utility. I work on an internal IT help desk for a company, and I can tell you from experience remote employees who have VOIP phones and UTOPIA have no issues. I can’t get the things to work with CenturyLink. Thy probably want people to buy their home phone service instead. Mr. Valentine I would recommend you try Utopia out yourself, and maybe you would see why we actually need it.

    A free market solution would be nice, if the market was actually free. In reality it’s not. That’s why I only have two crumby options: Comcast, and CenturyLink.

  8. PAtrick says:

    Wow… how can you call subsidizing a company over 90% with public funds a free market solution? You must live in Orem..
    By the way, why don’t you all research how many management salaries at Utopia are over 100K annually. Then, why don’t you find out how many city managers have been offered jobs at Utopia, where they would make more than then their current salary for only working a few days a week. Once the average citizen sees this, im sure they would change their mind very fast about supporting this..

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