The Legislative Auditor General has published an audit of UTOPIA, and, as expected, it drags a fair amount of ancient history back into the spotlight. The report concludes that additional accountability will alleviate the problems that UTOPIA has experienced, but it missed the mark on a number of points.
While the report does mention the state law that requires a wholesale model, it neglects to also include that UTOPIA was prohibited by statute from bonding for more than 50% of total construction costs. Omitting this crucial detail creates a number of problems in the later analysis. For one, it insinuates that the current bond amount would have been enough to build the entire network. This is patently false. The approach in the beginning was to hook up as many users as possible using the initial bond money, then use the revenues to build out the remainder of the network. This false premise only serves to color the rest of the report.
The failure to take in the big picture doesn’t end there. The report seems to characterize the pursuit of RUS funds as some kind of hasty money grab. The reality is that UTOPIA had always planned to have two separate pools of money, one based on sales tax pledges and the other based on system revenues. In the search for system revenue money, they found the RUS loan program which fit their criteria.
There’s also no mention of how the bond market went sideways and drove UTOPIA’s interests costs much higher than planned, just a mention that it did. For those of you that have been paying attention, you may recall that UTOPIA’s bonds were tied to the Libor. You may also recall that this rate, which drives much of the interest rate market, is in the midst of an unprecedented worldwide manipulation scandal. Failing to note that financial fraud is the cause of the increased interests costs is negligent at best.
The report fails to make a distinction between the different phases of UTOPIA’s lifetime. While the effects of poor early planning are still being felt, the report doesn’t seem to explore if the course of the agency has changed since its management did in 2008. Instead, everything is lumped into one big pile. Failing to distinguish between those distinct approaches to management and deployment of the network eliminates needed context and fails to help answer the question as to if the situation has been improving or not.
Stranded infrastructure is cited as a huge liability, but nothing is said as to why that infrastructure is and remains stranded. The biggest holes right now are Perry and Payson. Neither city opted to join the UIA, and Payson wouldn’t even vote for the refinance in 2008. Both cities have effectively sent the message that they’d rather make another city pay for their infrastructure. Without that nuance, the report makes it look like UTOPIA is leaving stranded investments just sitting around like some kind of Keystone Kop rather than navigating treacherous waters as a few rogue member cities try to play hardball.
Centerville is receiving a harsh treatment since the city has been build out almost fully despite not having pre-committed take rates, but nothing is said regarding the ARRA funds that built it out. Because that grant was reserved for exclusively rural areas and had a time limit on use, it made perfect sense to build out the city with or without demand. It’s another example where omitting details makes the situation look a lot worse than it is.
Now that the criticisms are out of the way, there’s a lot of valid points being made. Documentation was and in many cases still is kind of sloppy. This only serves to reinforce my long-held point that UTOPIA needs to get more information into the public view, something it has never done very well at. Failing to properly document everything is likely why there have been a number of execution issues, and the lack of public review means good ideas on how to improve operations may not be getting heard.
Many of the problem with controls come right back onto the cities themselves. Many of them simply are not taking responsibility for the network and are not participating as if they own it. Payson hasn’t even bothered to send a board member to meetings on a regular basis for several years. This leaves UTOPIA in a position of trying to do what needs to be done on an ad hoc basis. If there’s disorder in their processes, it’s because the cities want to pretend it doesn’t exist. Imagine if they ran a police department that way.
The rate of subscriber growth is way below where is needs to be, even if revenues are growing at a healthy clip. The UIA money has been set aside for about two years now, but construction seems to be more-or-less stagnant. Even supporters of the network are starting to throw up their hands and figure that i’s never going to happen. Those are the most valuable asset for getting people signed up, and UTOPIA can’t afford to lose them. Letting the committed money sit unused for so long means more bleeding when there should be more digging. The significant interest in Orem especially needs to be addressed and met.
One particularly delicious point to be made is on UTOPIA’s adherence to budgets. The Utah Taxpayers Association has repeatedly stated that UTOPIA fails to meet its budgets on a regular basis. The audit found, however, that this was the case in only two our of eleven years. Odds of the UTA owning up to sucking at math and publishing a correction (or, better yet, an apology)? Well, I won’t be seeing a Vegas bookie anytime soon if you know what I mean.
Most disappointing about this audit is that the omission of critical facts and lack of distinction between pre-2008 and post-2008 has lead the news organizations to universally paint the picture as hopeless. The audit fails to detail the trajectory that UTOPIA is following, and the bad-news-hungry media has latched onto the more salacious details without doing any real research of their own. I’d like to pretend to be surprised, but this reflects exactly what the editorial boards have been doing for almost a decade. UTOPIA puts on a game face for it, but a snarky blogger like me doesn’t have to deal in such pleasantries. (Sorry, reporter friends, but you sometimes kind of suck.)