Minutes of the Centerville City Council work session held Tuesday, April 15, 2008 at 5:15 p.m. in the Centerville City Council Chambers, 250 North Main, Centerville, Utah.

MEMBERS PRESENT
  Mayor:                           Ronald G. Russell (arrived at 5:20 p.m.)
 
Council Members:       Justin Y. Allen
                                         Ken Averett
                                         Paul A. Cutler
                                         Sherri Lyn Lindstrom (Mayor Pro Tem)
                                         Lawrence Wright

STAFF OR OTHER CITY
 OFFICIALS PRESENT
                                         Steve Thacker, City Manager
                                         Blaine Lutz, Finance Director/Assistant City Manager
                                         Lisa Romney, City Attorney
                                        Jason Oldroyd, City Attorney’s Office
                                        Randy Randall, Public Works Director
                                        Karrie Carlson, Recording Secretary

OTHER INDIVIDUALS
                                        Alex Jensen, UTOPIA Board Chair
                                        Tyler Dallas, Qwest
                                        Scott Danise, Comcast
                                        Royce Van Tassell, Utah Taxpayers Association
                                        Steve Allen, Citizen
                                        Steve Oberbeck, Media

UTOPIA ISSUES

The Council and City staff members and visitors were welcomed by Mayor Pro Tem Lindstrom. Alex Jensen, UTOPIA Board Chair, was introduced and asked to reviewed some of the problems UTOPIA has experienced with the deployment and funding of the network. Councilman Paul Cutler was also introduced as the Deputy Interim Director of UTOPIA.  Mr. Jensen explained the management of UTOPIA is being restructured, and a refinancing package is being proposed. The interim management is working with consultants and service providers to develop a new marketing plan that will ensure the project moves forward and is completed. Mr. Jensen expressed that approval of the refinancing proposal is critical for UTOPIA to complete the project. Councilman Cutler added that in areas where the deployment has been completed, the comments and reaction from the public are very positive regarding service options, cost, and customer service. Based on this reaction, UTOPIA believes they have a viable project worth completing. Mr. Jensen explained that many cities joined UTOPIA because of service complaints from local residents and business owners concerning incumbent service providers that were not offering adequate products for residential and business needs.  The UTOPIA Board is confident they have learned from past mistakes and are taking appropriate action to restructure new management and secure new financing that will enable UTOPIA to complete the project.
 
QUESTIONS AND COMMENTS FROM THE COUNCIL 

Mr. Jensen  and Mr. Cutler responded to questions and comments from Steve Thacker, City Manager, regarding the search for a new Executive Director, changing service providers, and future strategic planning. Councilman Wright expressed concern that UTOPIA is not forthcoming with proprietary information related to culpability issues. Mr. Jensen stated that UTOPIA is willing to share the confidential information with UTOPIA cities and their officials, but does not want the incumbent providers to have such information. Councilman Wright also expressed concern about the proposed UTOPIA business model and expressed the need for a performance clause to be written into the contract before the refinancing package is approved.  He also wants to ensure the network is ubiquitous for everyone. Mr. Jensen expressed that it is one of UTOPIA’s primary goals to make the new network available and affordable for all users.

Mayor Russell reviewed the proposed refinancing package of $185 million and asked if this will be adequate to complete the network. Mr. Jensen stated that because most of the infrastructure is in place in many areas, the additional money will primarily be used to pay off past debt, interest and existing obligations, plus $11 million to complete the deployment of the rest of the basic network (i.e., rings and hubs). Mayor Russell also asked if fiber technology will remain viable during the entire extended pledge period. Councilman Cutler explained that there will need to be updates to the electronic components during the term of the bond, but the infrastructure will retain its value.

Mayor Russell asked what happens if some UTOPIA cities do not vote to support the new refinancing package. Mr. Jensen explained that the proposal is the best model to start with, but UTOPIA is prepared to be flexible to modify and fine tune the plan as necessary. Councilwoman Lindstrom expressed concern about the proposed connection fee range from $1500 to $3500 per connection. Mr. Jensen stated that this is just a projection, but could adjust to a lower rate over time—i.e., to provide funding for the conduit and fiber that is still needed in the unbuilt neighborhoods. He added that the fee needs to be enough to secure the success of UTOPIA over time. Councilwoman Lindstrom suggested forming a Control Board made up of a few members from UTOPIA cities to review the progress of the new restructuring. Councilman Averett expressed the need to ensure UTOPIA will find the right business model and marketing strategy to ensure the success of this project moving forward.

RECESS TO CITY COUNCIL MEETING

At 6:55 p.m. the Council agreed to continue this discussion after the City Council meeting if time allowed.

RETURN TO UTOPIA WORK SESSION

At 9:15 p.m. after the City Council meeting was adjourned, the Council reconvened the UTOPIA work session.

UTOPIA HUBS/NODES

Randy Randall showed a map of where the UTOPIA hubs and nodes will exist within Centerville City. Mr. Randall responded to questions from the Council regarding which hubs serve specific areas of the city. The Council discussed placing certain conditions or performance-based criteria on approval of the new financing proposal. Lisa Romney, City Attorney, advised that the lender may not approve the refinancing package if UTOPIA cities place conditions on their pledge. It was noted that Centerville City is only one of several UTOPIA cities to vote on the refinancing plan and it may become a mute point if the other cities don’t agree with the idea of the performance standard.

CONNECTION FEE

UTOPIA has estimated it may cost approximately $1500 to $3500 for a connection fee. They have discussed offering a finance plan to help make these costs more affordable—i.e., the option to pay the fee over several years. Cities could possibly form Special Improvement Districts (SID) to cover the costs of the connection. Steve Thacker, City Manager, explained that 50% of residents in a SID area would need to agree before an SID would be approved. Staff recommend more research of the legal aspects. The Council also discussed the possibility of trying to guarantee a resident’s initial investment in the connection fee if UTOPIA fails and ultimately is not able to provide service. The City Attorney did not think this was a viable option for the cities either and would be problematic.

UTOPIA EXECUTIVE BOARD

Councilman Cutler responded to questions regarding the recruitment of a new UTOPIA Director.

At 10:10 p.m. Councilman Wright made a motion to adjourn the meeting. The motion was seconded by Councilwoman Lindstrom and passed by unanimous vote.

              
Marilyn Holje, City Recorder    Date Approved

      
Karrie Carlson, Recording Secretary