June 7, 2004 Special Work Meeting Minutes
The Lindon City Council held a special work meeting on Monday, June 7, 2004, at 4:00 P.M. in the Lindon City Center, City Council Chambers, at 100 North State Street, Lindon Utah.
Conducting: Larry A. Ellertson, Mayor
PRESENT
Larry A. Ellertson, Mayor
Toby Bath, Councilmember
Lindsey Bayless, Councilmember
Jeff Acerson, Councilmember
Bruce Carpenter, Councilmember
Ott Dameron, City Administrator/Recorder
ABSENT
Jerald I. Hatch
The meeting began at 4:11 P.M.
WORK SESSION
The Mayor and City Council will meet with officials from UTOPIA in a study session to gather information and have questions answered before the final public hearing which is scheduled for June 15, 2004.
Mayor Ellertson expressed appreciation to Roger Black of UTOPIA for attending this meeting to discuss these important issues with the Council. He turned the time over to Mr. Black for his presentation. Mr. Black explained that the Council had seen several presentations of the financing plan for the 11 city build out and the results of the Dean and Company review of the smaller 11 city build out and suggested that he just answer questions from the Mayor and Council. However, he then began to explain the financing plan relative to the city’s pledge.
Mr. Black said the city has until July of 2007 to have the total pledge amount ready for the back stop to the bonds. He said the 11 pledging cities will need to pledge only 20% of the pledge amount for the initial deployment of the system. The initial deployment will cover about 2,000 to 3,000 dwellings and give UTOPIA time to evaluate the take rates, work out any "bugs", and determine costs. The initial deployment will measure the results against the feasibility studies and the review by Dean and Company. This should be in place by November 2004 and will cost approximately 25 million dollars.
Assuming the initial deployment proves successful, then Phase I will proceed. This will include approximately 50,000 homes and businesses and will be a stand alone project, meaning that if no further deployment takes place, Phase I could survive on its own. Deployment of Phase I will cost an additional 65 million dollars.
Construction will begin in 6 of the 11 cities during Phase I of the project. These cities are Orem, Payson, Lindon, West Valley, Murray, and Midvale. The financing assumes a variable rate in the beginning similar to a construction loan for a home, which then translates to permanent financing at a fixed rate after construction.
Councilmember Bayless asked when the whole community of Lindon would have access to the fiber optic system. Mr. Black replied that the plan is to have all 11 pledging cities built out in 4.5 years.
Mayor Ellertson asked if the 20% of the city’s pledge amount will be at risk during the initial deployment. Mr. Black said that the capitalized interest will take care of the initial debt structure. The Mayor asked when Phase I would be completed. Mr. Black estimated 14 months from September 2004.
Discussion then turned to the amended Interlocal Agreement. Mr. Black indicated that the agreement had been scrutinized by all the member cities’ attorneys and board members. Several recent changes were reviewed. It was explained that any income from the project would only be shared by the pledging cities while any royalties paid would be shared by all founding members.
A question was asked about the exclusive contract with AT&T. Mr. Black explained that the AT&T contract would allow exclusivity for only 9 months after the validation of the system is complete and the system is deemed "service ready." Before Phase I is completed, other providers will be on line and offering services along with AT&T.
No further questions were asked, and the Mayor again thanked Mr. Black for coming today.
Upon consensus, the meeting was adjourned at 5:09 p.m.
APPROVED - June 15, 2004 | 
