UTOPIA: the Buck Stops with the Cities
I want to go on record now, to state that Utah should not bail out cities for the huge indebtedness they will incur because of their involvement with UTOPIA.
In 2004, the Legislature warned the cities that they would lose their shirts on UTOPIA, but several cities went ahead anyway. The argument was, “How dare the State interfere!” Exactly. They made their bed.
UTOPIA clearly has failed. (It has abandoned its reason for being – complete build out; its product is inferior to the competition; and its new financing scheme laughably balances, by proposing to charge customers an installation fee of $1,000 for what currently can’t be given away for free. Somewhere, Ken Lay is saying, "Now that's chutzpah!"). To play out the string a little longer, though, UTOPIA wants to tap into more debt, backed by the full faith and credit of the cities, of course. For a project that has failed in every measure, cities are using one credit card to pay off another.
Make no mistake; the cities clearly know that UTOPIA is in a death spiral. However, they don’t want to face the music now. Instead of currently facing the financial consequences of stepping into a competitive arena they know nothing about, cities are lining up to increase their future indebtedness to the staggering amount of $500 million – more than doubling the stakes. Pointing out the joke of the whole thing, the refinancing scheme makes only the merest pretense of moving forward, by allocating just $11 million to new build, which is not enough money to build anything. (Before being sold off, the Charter system in little old St. George struggled, because of inadequate investment. And Charter had invested over $20 million on upgrades to its existing system there. To put things on more of a Wasatch Front scale, Comcast recently has invested $500 million to upgrade its Utah system).
In order to mask their problems for a little while longer, cities are piling huge sums of debt on the taxpayers. Given the budgets of the pledging cities, the $500 million indebtedness is enormous. It will hurt them, and it could hurt the State. The cities are in trouble, and they are making decisions that will put their citizens in real jeopardy.
I guarantee that those cities will marshal all of their considerable political clout, to petition the State to bail them out of their financial straits. They will say, “A different city council got us in this mess. We are innocent. Please bail us out.”
My answer: no. At times, cities need assistance from the State. But not when they knowingly make horrible decisions, just to avoid accountability. Every one of these cities clearly knows what it currently is doing. Each city is hiding from accountability – for a season – by burying its problems under a pile of money.
In 2004, the Legislature warned the cities that they would lose their shirts on UTOPIA, but several cities went ahead anyway. The argument was, “How dare the State interfere!” Exactly. They made their bed.
UTOPIA clearly has failed. (It has abandoned its reason for being – complete build out; its product is inferior to the competition; and its new financing scheme laughably balances, by proposing to charge customers an installation fee of $1,000 for what currently can’t be given away for free. Somewhere, Ken Lay is saying, "Now that's chutzpah!"). To play out the string a little longer, though, UTOPIA wants to tap into more debt, backed by the full faith and credit of the cities, of course. For a project that has failed in every measure, cities are using one credit card to pay off another.
Make no mistake; the cities clearly know that UTOPIA is in a death spiral. However, they don’t want to face the music now. Instead of currently facing the financial consequences of stepping into a competitive arena they know nothing about, cities are lining up to increase their future indebtedness to the staggering amount of $500 million – more than doubling the stakes. Pointing out the joke of the whole thing, the refinancing scheme makes only the merest pretense of moving forward, by allocating just $11 million to new build, which is not enough money to build anything. (Before being sold off, the Charter system in little old St. George struggled, because of inadequate investment. And Charter had invested over $20 million on upgrades to its existing system there. To put things on more of a Wasatch Front scale, Comcast recently has invested $500 million to upgrade its Utah system).
In order to mask their problems for a little while longer, cities are piling huge sums of debt on the taxpayers. Given the budgets of the pledging cities, the $500 million indebtedness is enormous. It will hurt them, and it could hurt the State. The cities are in trouble, and they are making decisions that will put their citizens in real jeopardy.
I guarantee that those cities will marshal all of their considerable political clout, to petition the State to bail them out of their financial straits. They will say, “A different city council got us in this mess. We are innocent. Please bail us out.”
My answer: no. At times, cities need assistance from the State. But not when they knowingly make horrible decisions, just to avoid accountability. Every one of these cities clearly knows what it currently is doing. Each city is hiding from accountability – for a season – by burying its problems under a pile of money.
posted by steve u. at 4/23/2008
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