Municipal fiber network
Feasibility of a city-built fiber network. A consultant estimated about $71 million in bonds plus about $8 million startup costs; on Oct. 6, 2020 council members favored a wholesale model over retail. On Oct. 27 consultants recommended partnering with retail providers (45% take rate, about $9 million surplus over 20 years); on Dec. 1 financing parameters pledging franchise and sales tax were previewed.
- Where it stands
- Proposed
- Type
- Public project
- Location
- Citywide
- Applicant
- Lehi City
Every hearing and vote
October 6, 2020 · City Council work session
Fiber feasibility study from Magellan Advisors
Discussed
John Honker of Magellan reported that many cities build a fiber network and lease it to providers. Based on a survey and market study, he said state rules are heavy for a city retail product and lighter for a wholesale model, that telecommunications companies often oppose city-run projects, and that this creates political risk. A wholesale/partner build would run about two years of construction beginning in 2022, with first customers in March 2022 (as recorded) and about three more years to reach most of the market. The network bond would total about $71 million, plus about $8 million in startup costs for engineering and working capital. City Administrator Walker said a retail model would require starting public notices now. Council Members Koivisto, Southwick, Condie and Albrecht said they prefer wholesale; Council Member Albrecht wanted more detail. Choosing wholesale now would not preclude retail later.
October 27, 2020 · City Council
Fiber feasibility study follow-up from Magellan Advisors
Discussed
John Honker said regulatory risk suggests the city avoid retail internet service and partner with one or more retail providers. With a 45 percent take rate and competitive fees he estimated about $9 million of surplus over 20 years. He said the main difference between a city-built network and a UTOPIA-built one is control, and ownership allows other uses such as schools and transportation. Council Member Condie recalled a UTOPIA estimate of about $50 million, roughly $30 million less than Magellan's figure; Mr. Honker said the estimates may not be comparable because Magellan included equipment, working capital and contingencies. Mayor Johnson said UTOPIA was given different information than Magellan had and that he prefers the wholesale model for its moderate risk and city control. City Administrator Walker said the payment obligation is the same under either ownership and rates could be lowered after the bond is repaid.
December 1, 2020 · City Council work session
Fiber network financing parameters
Discussed
City Administrator Walker previewed a parameters resolution to be voted on the following week. Financial advisor Laura Lewis said it would pledge franchise and sales tax to win a better bond rating and lower interest rate, though the expectation is that telecommunications revenue pays off the bond, and it would preserve flexibility for other sales-tax bonds. Street Superintendent Brad Benson also reported a sewer line and easement problem delaying road construction on Triumph Boulevard and suggested paving in spring.