I got to do a follow-up presentation on the financial aspects of UTOPIA at tonight's White City Community Council meeting. This included estimated participation rates and the impact on housing values. While it's not a slam dunk, it looks like a very solid picture for meeting the debt obligations by the end of the first year.
The project will probably cost somewhere in the neighborhood of $2.5M or so. This is based on 1,834 homes in the township and a cost of $1,176 per home per the 2003 UTOPIA white paper. I estimated down the costs of wiring each home due to the significant amount of aerial runs in the neighborhood and adjusted up again to guess the costs of running cable from 9000 S and the Union Pacific Railroad to 9800 S and 700 E. When converted to a 20-year bond at 6%, this means an annual bond payment of around $215K.
What determines the break-even point is subscriber numbers. UTOPIA is currently seeing a 21% participation rate though there is not yet a completely built-out city. Provo experienced a 30% take rate in the first year despite the HomeNet bankruptcy. If White City would likely be in the middle because it's solidly middle class (the average household income is slightly above the county average) and there is little variation between households given the rather small size, under a square mile. UTOPIA also does very little promotion of the service, so subscriber numbers can be boosted through getting the word out.
To further analyze the participation rates, we also need to figure out how many services each subscriber is picking up. UTOPIA currently shows an average of about 2 subscribed services per subscriber. This translates into $480/year per subscriber. At a 25% participation rate, just between UTOPIA and iProvo, the project breaks even. Given that it wouldn't be much work to get the word out about the services, I'm thinking White City might actually exceed the break even point early and generate surplus revenues.
What remains now is to have a representative from UTOPIA come on down and speak with the Council concerning how to join and what political ramifications are involved by joining. Certainly the council doesn't want to spend capital for this project if it means giving up a local substation, preserving the township designation or fighting the Jordan School District split. Hopefully we'll have someone on hand and bring this thing to pass!
Want to see my most recent presentation? Go ahead and download it. (PowerPoint presentation, 51K)
Speaking of white papers and presentations, I'm having a devil of a time getting much current information about UTOPIA. Their website is rather outdated… either that or they haven't had any news for a year! Anyway, I'm particularly interested in how it's doing so far. Such as take rates for the first, second, and third years and so on. Basically more of the same type of information you have in your powerpoint. Any resources you can suggest?
I've cobbled together information from the June 2006 annual report, the 2003 white paper and various news articles. (A recent article in the Clipper is where I got the 21% take rate for UTOPIA.) I think there should be a new annual report released Real Soon Now(TM), though you are correct that the website doesn't see updates all that frequently. The lack of raw data is sometimes a hindrance and UTOPIA could really use a streamlined "here's our best case for new cities" resource center.
If you look at the list of UTOPIA board members, you could probably talk to them to get some of this information. I've heard that they're generally very helpful when it comes to providing as much information as possible.
UTOPIA board members: http://www.utopianet.org/what/agency/organization.html
Okay thats really helpful. UTOPIA definately leaves a lot to be desired in terms of marketing. I'm whilling to bet that if anyone besides tech lovers knew about it, it could see a take rate of closer to 70% in many areas. iProvo managed to achieve that anyway.
That's my suspicion as well. Let me know if there's anything else I can do to help.
Okay thats really helpful. UTOPIA definately leaves a lot to be desired in terms of marketing.
That’s one of my issues with them right now. One of the few I might add.
I’ve spoken with other’s working for cities such as Midvale and Murray. It’s interesting to see how little the residents knew about Utopia. One Tech had to tell his neighbors the service was available. They had no idea!
One guy responded, “Oh, is that what that orange cable going into the ground in front of my house was for?”. ::grinz::
They really need to work harder at telling people. Might help for the cities to pitch in and do a little advertising there as well. I don’t think there is anything preventing them from doing so.
Anyway, it was a great presentation Jesse. I appreciate the chance to chat with you and hear your thoughts.
This week I’m speaking with Mayor Newton again about Utopia. I’m hoping to get him and the City Council out to a few tours and perhaps to listen to your presentation if you still don’t mind 🙂
It’s going to be a long road until they finally “get it” 🙂