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!