Lies, Half-Truths, and uNOpia

Utah Taxpayers AssociationWhen it comes to simply making stuff up, nobody in Utah can top the Utah Taxpayers Association. The latest effort, “uNOpia”, is no exception, a mish-mash of arglebargle designed explicitly to rile up low-information voters into a frenzy (you know, like they did in Orem last year). The arguments are about as smart as a sack of hammers and so very, very easy to pick apart.

  • Myth: The Macquarie deal is a $1.8B tax increase.
  • Fact: The Macquarie deal has an estimated cost of no more than $1,173.6M. The only way it comes up as $1.8B is if you add in inflation. Even so, none of the UTA’s figures factor in the estimated $1-1.5B in revenues to offset the cost, revenues that, shockingly, will also rise with inflation. The real cost of the deal is around $6.22/mo per residence after paying the existing bonds, a far cry from the no more than $20/mo per residence the city will be charged and less than selling the network.
  • Myth: You have to pay for the Macquarie deal even if you can’t afford it.
  • Fact: The deal includes a built-in waiver for the indigent. It’s right there in the Milestone One document.
  • Myth: UTOPIA will cut off your water if you don’t pay the utility fee.
  • Fact: Centerville bundles all utility fees and pays them in a specific order in the event of an underpayment. Right now, water is the last to be paid. The city council can (and probably will) change that. No other UTOPIA city has this kind of structure, and UTOPIA itself has zero power or say-so in this arrangement.
  • Myth: Elected officials have no say in UTOPIA if they accept the Macquarie deal.
  • Fact: The UTOPIA and UIA boards will continue to operate as they have been and seats will be filled by the cities. Seats have historically gone to mayors, city council members, or executive staff (city manager, economic development, etc). None of this changes, and Macquarie will be bound to honor all contractual obligations of the deal.
  • Myth: Utah law prohibits the utility fee.
  • Fact: It was very clearly settled during the SB190 debate that the cities absolutely may institute this kind of utility fee. This is part of why the bill was killed before it came to a floor vote. In fact, The Utah Taxpayers Association gave a favorable recommendation to the exact same kind of utility fee in Provo to pay for iProvo.
  • Myth: Large tech companies don’t locate in UTOPIA cities or use UTOPIA fiber.
  • Fact: Mozy uses UTOPIA fiber and is part of EMC, one of the largest tech companies in the world. (Full disclosure: I work for RSA Security, an EMC subsidiary. They do not endorse my efforts here.) Overstock is dropping $100M on building a new Midvale campus. Symantec relocated its PGP acquisition from Draper to Lindon, a UTOPIA city. Tell me again how large tech companies don’t pick UTOPIA cities.
  • Myth: UTOPIA causes tax increases.
  • Fact: Non-UTOPIA cities raised taxes around the same time, and many UTOPIA cities did not raise taxes. There’s a much stronger correlation between tax increases and cities who bet a little too heavily on sales tax revenues from large retail establishments.

Really, their diatribe just goes on and on like that. A lot of it is basic fact-checking stuff that’s flat-out wrong, but they know those kinds of statements will rile people up and get them too angry to consider the real facts.

The best thing you can do right now is to make sure you show up at city council meetings, let your elected officials know you support the deal, and make sure you counter any of the flat-out false talking points the opposition will be trotting out time and time again. We’re really close to having this thing in the bag, and we can’t let up until the ink dries on the final agreement.

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32 Responses to Lies, Half-Truths, and uNOpia

  1. Scott McIntyre says:

    I have a hard time not seeing the utility fee as a tax. It is money collected by the local government from all citizens and resident businesses. While it is true that there is the potential for sizable revenue sharing, that revenue is given to the cities, not the individuals who paid the fee. When was the last time your city gave you a refund?

    On the topic of the waiver for the indigent, the Macquarie representitive that spoke in Layton last month said that they strongly oppose having any sort of fee opt-out process (similar to a property tax waiver) but, if the city chose to have one, the other paying residents would have to make up the difference or the city would have to cover that shortfall.
    The count of residences that receive property tax waivers is only obtainable with a GRAMA request so I don’t have the info for all the UTOPIA cities yet.
    I do know that in Centerville, there were only 68 residents that applied for and received property tax relief last year. In addition, 604 elementry and junior high students qualified for free or reduced lunch for the recent school year.
    With 3,939 homes or apartments in Centerville, only 1.7% of residents qualified for property tax releif.
    Centerville may not be the best benchmark for estimating opt-out percentages.

    Going back to the projected cost, I have a hard time accepting any estimated total cost without knowing the details of the rate covenenats that Macquarie mentions five times in their Milestone 1 Report. (Pages 44, 67, 74 ,79, 85)
    While I am strongly adverse to rate covenenats in this deal, it is their mention of possible property leins that trigger UTOPIA nightmares.

    • Jesse says:

      Your questions are exactly why every city should vote yes by the June 27 deadline. That authorizes Macquarie to provide hard-and-fast details of every aspect of the deal.

      I think you may be confusing the waiver for the indigent (which is a part of the deal) with a general opt-out for someone who just doesn’t want to pay. The latter isn’t feasible unless the take rates are sky-high.

      • Scott McIntyre says:

        I know I have been quite critical of this deal on your blog but I would like to tell you thank you for providing a place I can go to get updates and insightful commentary.
        As a proponent of limited government and a life-long sceptic, I still am not in favor of the deal as I understand it. I am encouraged by the reports I am hearing of how Macquarie is responding and adapting to concerns that have been raised. (Getting rid of the hard-cap for the basic service, setting limits on the interest rate increases, etc…) I look forward to seeing those verbal commitments in a revised proposal.

        • Ronald D. Hunt says:

          I personally consider the deal to be very good, I very much can understand the concerns you raise with the utility fee.

          While the fee is for covering new spending, basically build out and management of the network, the cities with or without the deal still have to cover the existing bonds. The figures as I understand them indicate that the utility fee model proposed in this deal is at the end of the day a lighter tax burden then would otherwise be left from other options where cities would cease to gain any revenue from the network to offset its cost, such as if you where to shutdown or sell the network and then pass a similar utility fee to service the debt, such a fee would be larger then the end point fee that will likely come from the proposed deal.

      • Greg says:

        Everyone I’ve talked to in my neighborhood is on-board to get UTOPIA, and most are planning on going to the $35 plan. Biggest reason is that Comcast is already charging us $60 for 1/4 the speed. Even if the fee is $20, UTOPIA is the cheaper, faster, solution.

  2. Ronald D. Hunt says:

    Ohh, and I will also say that, I like the idea of the fee from the perspective of taking this cost out of the cities general funds, and making it a transparent cost that isn’t hidden within the complex of everything else a city does.

  3. Richard says:

    I received a Utah Taxpayer uNOpia postcard in the mail today specifically targeted to Orem residents. It recites much of the same rhetoric on the website, but what I find most disingenuous is that they position the end of June as the entire decision, not just another step in the process.

    I’m curious if other cities received similar direct mail, or are we the battleground that the UTA things they can FUD and bully to derail the project.

    Orem City has confirmed that their gathering tonight will be recorded and a video will be on YouTube. The open Q&A should prove interesting.

  4. Ronald D. Hunt says:

    No flyers here in Layton yet. But their appears to be a bit of money behind this thing, considering who they have hired, and the ability to offer yard signs for free, and buy city wide flyers.

  5. Richard says:

    Based on the notes from the recent Orem City Council meeting, they are asking some very good question, just like the other cities. But I don’t see them asking questions related to the mis-information peddled by the UTA.–2014.06.10.pdf

  6. Ronald D. Hunt says:

    Layton votes yes on milestone 2.

  7. Josh says:

    From what I’ve heard in Murray is right now they would vote it down 5 – 0. Sitting there listening to so many misinformed people tonight. They obviously didn’t bother to even learn the basics before saying whatever came to their mind as they stood at the mic.

  8. Anonymous says:

    I was at the Orem meeting. So were lots of angry people. I’d say it was evenly split between pro-UTOPIA/Macquarie people and people angry about UTOPIA as it is today.

    I thought that the city did a pretty good job of presenting the options that Orem has, and how much each would cost, and the pros and cons of each. The openness of the network was never mentioned. I wish the city would do a better job of justifying UTOPIA as infrastructure, and make a point of the fact that CenturyLink and Comcast are both welcome to be providers on the network. I think those arguments could convince some of the crowd that shouts out about government competing with free enterprise and the like.

    Macquarie did a pretty good job of answering the questions and dealing with the misinformation. I wish they would have spent more time running through some likely scenarios that people are in, and how they’d save money with Macquire. Are you (a) somebody with a landline and no Internet, or (b) someone with dirt-cheap DSL and a landline, or (c) someone with expensive Xfinity? Okay, let’s compare your costs today with what your costs will be if you switch to UTOPIA. I think if they showed that the vast majority of households will come out ahead, then there would be less opposition.

    And I thought that the presenters and the moderator did a really good job of dealing with the angry people, both the rational ones and the crazies.

    Nobody talked about using the city’s portion of the premium transport fees to lower the utility fee for everybody until a citizen (John Hendricks?) asked if they city was willing to do that. So it sounds like Orem is planning on having the entire Macqurie-assessed fee show up on the bill. But, of course, using the revenue from UTOPIA to service the debt or just put into the general fund is saving residents from having to pay for whatever that money is used for.

    Probably the most important take-away from the Orem meeting was that the Orem mayor and council asked the citizens to email them their opinion on how they should vote, and why. To me, that’s encouraging, since if the anti-UTOPIA crowd emails their opinions, I doubt if their reasons to vote against will be compelling or logical, if last nights open-mic questions are any indication. My impression was that the council wants to do what’s good for the city, and I think that it’ll be much easier to convince them that Macquarie is best for the city in the long run given our current situation.

    I didn’t hear any mention of FirstDigital.

    • Jeremy Bowers says:

      I also was at the Orem meeting. I’ve never been to a city council meeting before, but I was amazed at the amount of angry people. Kudos to the Macquarie and the City reps for not getting into any shouting matches with the crazy people, (I fully expected that to happen). I agree that it might have gone over better if they emphasized the fact that it will be public infrastructure that any ISP can use and sell, and we’re not trying to publicly mandate that everyone needs to use this company to get Internet service.

      I am very pro free-market, but I see fiber being run as a city provided service just like water and electrical lines. Letting Google own all the fiber is more of a lock in that I would tend to avoid.

      One other detail that came up, was that many of the people there wanted to put the Macquarie deal to a public vote. I can understand that, but this deal has a lot of little details, and I’m not sure that you can educate 100,000 people on the intricacies that are involved here. The people of Orem elected officials to be able to make that call, and I think that they will ultimately make the best choice for Orem.

      • Jesse says:

        “Let’s put it to a vote” is usually shorthand for “I’ll bet I can convince more low-information voters than you can”.

    • Eric says:

      I was also at the meeting and have spoken with many of the council members about this issue over the last couple of months. My current impression is that this most likely comes out as a 4-3 vote in favor. Mr. Andersen, Mr. Spencer and Mayor Brunst all want to vote against this. The mayor has been trying to undermine this from the beginning. However, if this made him look like a big enough hero or is politically advantageous, he may be willing to vote in favor. Mr. Andersen and Mr. Spencer both are opposed to the mere existence of Utopia and no amount of financial sense seems likely to sway their position. For all of them this seems to be an idealogical issue and they seem determined to cut their nose off to spite their face.

      Residents of Orem need to contact their city council members. This is a very tight decision after the changes the last election brought to the city council. The mayor now sits on the Utopia board while Mr. Spencer sits on the UIA board. Both are pushing the idea that we should scuttle this because something better will come along or the city could somehow do this itself for less money.

      Personally, I don’t think they are correct. This seems like a solid though not ideal solution that will help the city. I’ve not seen anything else being offered that even comes close to the benefits this provides to the city.

  9. Josh says:

    I wish Macquarie would have been at last nights meeting. I think they could have assisted in dispelling the myths and lack of knowledge by those who approached the microphone. I felt many that were answering questions were as lost as those asking the questions.

    • Jesse says:

      They really need a more charismatic speaker at these things, that’s for sure. The WVC meeting I went to was painful to sit through. Don’t read from your Powerpoint, dude.

  10. Anonymous says:

    Of the city’s portion of the revenue from premium services, I’d like the city to commit to using anything that is left over after debt service straight back into lowering the Macquarie fee, every month. Every time they get a check from Macquarie, they should make the debt payment, then divide up the left-over and reduce the next-month’s fee at each address by that amount. Keeping the money out of the general fund and only charging residents what is necessary to pay for the connection will make it less like a tax and more like a payment for goods and services received (or available, for those opting not to use it).

    • Jesse says:

      There shouldn’t even be a question on this point. Any city that doesn’t do this should be raked over the coals. Their duty is to make the fee on this thing as low as fiscally possible, no exceptions.

      • Greg says:

        Is there any way to actually get this put into the contract for the cities. I’d like to see somewhere that the city will only use those funds for UTOPIA, and once we are free of the debts, the fee goes away as long as the subscriber base stays strong. I think this would ease more residents’ minds than anything else people can say.

        • Jesse says:

          I don’t think so. How the cities collect and use the money is an internal matter and doesn’t deal with the relationship between the cities and Macquarie.

          I think it would be worthwhile to demand that the councils tie their own hands on those funds so that it goes into reducing the utility fee and then, should it happen to be large enough to produce a surplus (pie in the sky, I know) it should go back to people who had to pay utility fees first.

          • Greg says:

            I agree. The funds should be used to pay off the bond debt and then go into reducing the utility fee. Until that bond debt is paid off in full, there isn’t anything left over. Once the bond debt is paid in full, it goes to reducing the utility fee. If there is any left over, then it clearly means that the utility fee should be $0 for all residents, and the network will be operating as expected.

  11. Ronald D. Hunt says:

    Might be good to refer to the utility fee as a “take rate adjusted utility fee” or perhaps a ” take rate reduced utility fee”. This is nice short and to the point, and avoids the TLDR situation of explaining the darn thing.

    If such a clarification where built into the eventual contract itself, that would improve the situation for selling this a bit.

    Layton has a ton of support for Utopia, and from some odd places as well, right across the street from me lives one of the delegates that put Mike Lee in the senate, And he is excited for this deal, and takes no issue with the utility fee at all. And he was happy about it even before I explained the take rate adjustment.

  12. Richard says:

    I’m starting to enjoy reading the interactions of the various city councils and the folks from Utopia/Macquarie and compare those to the uNOpia/UTA crowd.

    On the one side, we have competent business and civic leaders discussing a business decision, asking excellent questions that try to cover every possible contingency to ensure the citizen’s needs are met.

    And on the other side, we we have the ravings of taxpayer advocates, socialist conspiracy theorists, and a few who are quite frankly, nuts.

    I can’t imagine a scenario where the second group comes out on top.

  13. Ronald D. Hunt says:

    CenturyLink, will fight this tooth and nail, they really can’t afford the possibility of having multiple quarters of subscriber loses on their high margin DSL lines, Their combination of extreme debt levels, preexisting problems with cord cutters, and inability to make large capital investments in their network to compete with Comcast, let alone Utopia.

    I as well am of the opinion that they can’t stop this train, However don’t underestimate them, they will throw money at this that Utopia supporters can’t come close to matching. And we have 2 more mile stones to pass for this to truly win.

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  15. UtahTeacher says:

    I was at the Orem meeting as well, but had to leave shortly into the comment period. I came away much more convinced of the merits of the Macquarie deal. (This will be a little long. =)

    1. The presenters only do a mediocre job at presenting the case. The Macquarie affiliated guy knew his stuff, but didn’t explain the big picture well enough, mumbled, and sometimes used references, acronyms, and terms that I didn’t understand. And I wasn’t a crazy, yelling uNOpia person. He assumed much more background knowledge than the audience had.

    The Orem City finance lady really knew her stuff, but really struggled to make it understandable. It’s complex, and she struggled much more than the first guy to give us clear, layman explanations. She would say, blah, blah or “and so on” on some points we didn’t understand and also get bogged down in details in other parts. The swap penalty for selling early is a big deal that I had never heard of.

    I feel like with an hour of talking with the lady and keeping her alongside as numbers back-up, any number of other people could give concise presentations of the numbers reality. Here is what you pay now for 3 or 4 sample residentsl; here is what you would pay under the Macquarie deal. Granted that many didn’t want to acknowledge the payments we are already contracted into, but I don’t think they made the $ we currently have to pay and would still pay if we shut UTOPIA down very clear.

    2. I think the finances make enormous sense for 85-90% of Orem residents. It would not be as high if we were debating whether to start the network today, but we are locked into the debt and the proposal presents a clear way to achieve build-out, thus making profitability possible, thus making it possible to reduce our fees and debt service.

    There was one particular loud young guy in front who had to be talked to by the cops, but the majority of the loud opponents were 50+-year-olds. The few older residents who do not use and understand internet services are the ones who come out worse for this $240 a year. But I think accomodations are possible.

    3. I was not aware of the indigent fee waivers Jesse mentioned, but the Macquarie guy made it clear they didn’t care if the city provided relief for various people as long as they got their total money. Brunst ran on not raising taxes yet and instead using new incoming revenue to cover the existing UTOPIA debt for longer. (The couple of comments he made at the meeting sounded to me like he was tentatively in favor of the agreement, which differs from some comments above.) At the presentation, I think I understood right that the city is basically paying $12 per household anyway on the current debt, but it’s coming out of the general fund where it’s less transparent.

    Why not cover all or a portion of the fee for affected seniors from that money being spent right now? Doesn’t Orem still save money from the general fund?

    4. I think the suggestions above to make the fee something that decreases as revenue increases are the key to this. The fees charged by Macquarie will increase with inflation, a fact attacked by the first public commenters. If they applied all new revenue immediately to the household fee each time, reducing that ahead of accelerating debt payoff or any other behind the scenes cost, I think that the public would have a tangible vision of the end in sight. Couldn’t Orem figure out something like for every X amount of increased subscriptions, we will reduce the fee by a dollar because the revenue will cover the costs we owe to Macquarie? That would make a lot of people breathe easier.

    5. As a member of the UIA since we moved a few years ago, I was relieved to hear that they will most likely leave us as we are. I’m less excited about them rolling us into the same deal and just crediting us for the $2700 for the first third of the contract, but can still deal with that alternative. The UIA stuff went right over the head of most in attendance, but the few of us asking questions about that got good answers I think.

    6. My take is that the Hans Anderson, UTA folks will get a LOT of traction from the biggest tax increase ever and shutting off your water bill stuff. I was late to a ward activity even though I left the meeting early, and the few people I talked to about where I had been had very little knowledge or interest in UTOPIA. A fellow teacher looking to ditch Comcast this week found that her address had UTOPIA to the curb, but was turned off by the $2700 hookup. She opted to go with Century Link bit of fiber instead.

    The costs and benefits have to be explained much better to the public at large I think.

  16. Ronald D. Hunt says:

    Much of this agreement suffers from TLDR(to long didn’t read) problems.

    UTA is abusing the heck out of this, people understand “tax hike”, people understand “$1.8 Bajillion dollars”.

    Those who would like to support this deal need to get back to basics. The simple things…

    Ubiquitous/universal access to quality network services.

    Increased competition forces CenturyLink and Comcast to lower prices and improve services.

    Even those who don’t take services on Utopia will see benefit from services on their existing providers.

    This deal has a lower cost to the tax payer then alternative options.

    Also Not just simplification of terms, but the way in which they are presented makes a difference. The term “take rate adjusted utility fee”, solicits someone hearing it to inquire what it means, rather then having a large prefaced explanation pushed onto them after using the plain term “utility fee”. Also prefacing it in this fashion in all official references to the fee, would subject UTA to explaining it in their own materials or risk causing confusion in their own supporters.

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  19. Steve says:

    I live in Orem and pay taxes for Utopia, but they do not even cover where I live in Orem! They had great internet and service when I lived in Provo 3 yrs ago. Now I am stuck with Comcast or Century Link. Get full coverage in Orem if you are going to tax the whole City!!!

    • Jesse says:

      Full coverage is the plan. You’ll get 3Mbps/3Mbps with a 20GB cap included with the utility fee, and you can upgrade to as high as 1Gbps for around $70/mo.

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