S.L. given a low-risk option on UTOPIA
But council still appears unlikely to give green light
Wexford Capital, LLC, a private Connecticut-based venture capital firm that already has ties to the proposed Utah Telecommunications Open Infrastructure Agency, is offering to cut the city's potential initial costs for the publicly owned fiber optic network.
While final details of Wexford's deal are still being hammered out, the company's verbal offer to cover 75 percent of the city's costs the first 10 years would come in exchange for 75 percent of the city's UTOPIA profits for 25 years. That plan would slash the city's potential costs to $7.7 million from $28.7 million in the first decade of UTOPIA's operation.
A week ago, the company first offered a slightly different written deal, saying it would cover half the city's costs for 10 years in exchange for half of the city's profits for 15 to 25 years.
Proponents say the offer shows that the private sector realizes UTOPIA will make money.
"This is an exciting opportunity for Salt Lake City," said UTOPIA director Paul Morris. "The fact that they would back a significant portion of the tax pledge shows their belief in the network."
"We're investing without the benefit of any guarantees," said Wexford Capital principal and general counsel Arthur Amron from his office in Greenwich, "but we think the (UTOPIA) project is innovative and exciting."
City Council Chairwoman Jill Remington Love said Wexford's offer to take away taxpayers' risk is intriguing. "But if there is an investor that will take away that risk, is it because (UTOPIA) is such a good deal that maybe we shouldn't pass up getting that revenue?"
Still, Love concedes that even with the new deal, UTOPIA is probably dead in Salt Lake City. She said she expects when the council decides Tuesday if Salt Lake is in or out, at least three members will vote against UTOPIA.
"There are three pretty solid no's," she said.
Those three no votes would effectively kill the network in Salt Lake City.
Councilman Dale Lambert has recused himself from the vote because as an attorney, he has represented telecommunications clients that could stand to benefit from the UTOPIA decision.
His recusal leaves only six voting council members. A three-three tie would mean Salt Lake City is out.
Councilmen Dave Buhler and Eric Jergensen are two of those three no votes, and some council members say Van Turner is the third. Turner, for the record, noted: "I need to be swayed a little bit more if I'm going to vote yes."
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