Broadweave officials hit with tough questions
A special City Council-appointed committee, a veritable who's who among local businessmen and politicians, met Tuesday morning to review Broadweave's proposal to assume control of the city's fiber optic network for $40.6 million, essentially relieving the city of its financial obligations. Then the City Council rehashed the issue at a special study session in the evening.
According to the agreement, the city will receive the sum of the $40.6 million payment by taking out a loan, said Provo Finance Director John Borget. If the City Council approves the deal by June 30, Broadweave will make an initial payment of $268,000 on July 1, then another payment on $268,000 on July 15.
Then they will make regular monthly payments of $277,000 for the next 19 years to pay off Provo's bonds, plus interest, for a total of about $63 million.
The money will also go to pay off $2.9 million the city will need up front to close the sale, as well as transfers made from the city's energy department to subsidize iProvo throughout the years.
At both meetings, committee members and city council members said they had good feelings about Broadweave and what it would bring to a network that has experienced slow growth rates and mounting costs. Recent reports provided by City Councilman George Stewart show iProvo continues to lose subscribers.
In April, 229 subscribers left the network, bringing the number of subscriptions to about 10,250. Stewart also provided a report showing that the city transferred $12.3 million between 2001 and 2005 from the city energy fund to keep iProvo afloat. The city also approved a $1.2 million transfer to iProvo from general fund sales tax receipts, bringing total iProvo investments to about $13.5 million.
The city has limited options in a situation like that, said Rep. Steve Clark, R-Provo, at the morning session.
"Under that scenario, we need to sell it," he said.
But for all the good committee members and City Council members see in Broadweave's proposed acquisition of the network, that didn't keep them from casting a scrutinizing eye over the terms of the sales agreement.
Clark said it appears Broadweave isn't assuming enough risk.
"There's no skin in the game from these folks," he said. "They're walking in with no dime down and taking over a $40 million asset."
Recent comments
Government getting snookered. Again!
"High offers...
Sagacious Inquisitor | May 14, 2008 at 12:03 p.m.
As to the current service providers - they made it very clear in...
Correction | May 14, 2008 at 10:58 a.m.
You can't have it both ways....if you want to get out and sell...
iProvo customer | May 14, 2008 at 9:53 a.m.
