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CITY OF OREMCITY COUNCIL MEETING

56 North State Street Orem, UtahAugust 14, 2012

5:00 P.M. STUDY SESSION

CONDUCTING Mayor James Evans

ELECTED OFFICIALS Councilmembers Hans Andersen, Margaret Black, Karen A. McCandless, Mark E. Seastrand, Mary Street, and Brent Sumner

APPOINTED STAFF Bruce Chesnut, City Manager; Jamie Davidson, Assistant City Manager; Greg Stephens, City Attorney; Richard Manning, Administrative Services Director; Stanford Sainsbury, Development Services Director; Mike Larsen, Public Safety Director; Karl Hirst, Recreation Director; Chris Tschirki, Public Works Director; Donna Weaver, City Recorder; and Rachelle Conner, Deputy City Recorder

REVIEW OF AGENDA ITEMS

The Council and staff reviewed the agenda items.

CITY COUNCIL NEW BUSINESS

The Council adjourned at 5:55 p.m. to the City Council Chambers for the regular meeting.

6:00 P.M. REGULAR SESSION

CONDUCTING Mayor James Evans

ELECTED OFFICIALS Councilmembers Hans Andersen, Margaret Black, Karen A. McCandless, Mark E. Seastrand, Mary Street, and Brent Sumner

APPOINTED STAFF Bruce Chesnut, City Manager; Jamie Davidson, Assistant City Manager; Greg Stephens, City Attorney; Richard Manning, Administrative Services Director; Stanford Sainsbury, Development Services Director; Mike Larsen, Public Safety Director; Karl Hirst, Recreation Director; Chris Tschirki, Public Works Director; Donna Weaver, City Recorder; and Rachelle Conner, Deputy City Recorder

INVOCATION /

City Council Minutes – August 14, 2012 (p.1)

INSPIRATIONAL THOUGHT Dick Brunst

PLEDGE OF ALLEGIANCE David Spencer

APPROVAL OF MINUTES

City Council Meeting of July 10, 2012, Joint Orem/Provo City Council Meeting of July 12, 2012, and the Special City Council Meeting of July 31, 2012

Mr. Seastrand moved to approve the minutes of the July 10, 2012, meeting of the Orem City Council, the July 12, 2012, Joint Orem/Provo City Council Meeting, and the Special City Council Meeting of July 31, 2012. Mrs. McCandless seconded the motion. Those voting aye: Councilmembers Hans Andersen, Margaret Black, Jim Evans, Karen A. McCandless, Mark E. Seastrand, Mary Street, and Brent Sumner.

MAYOR’S REPORT/ITEMS REFERRED BY COUNCIL

Upcoming EventsThe Mayor referred the Council to the upcoming events listed in the agenda packet.

Upcoming Agenda ItemsThe Mayor referred the Council to the upcoming agenda items listed in the agenda packet.

Appointments to Boards and CommissionsThere were no new appointments.

Recognition of New Neighborhoods in Action OfficersNo new Neighborhood in Action officers were recognized.

CONSENT ITEMS

There were no consent items.

SCHEDULED ITEMS

6:00 P.M. PUBLIC HEARINGORDINANCE - A mending Section 22-6-10 of the Orem City Code by Approving Subsection (M) Relating to Historical Barns and Sheds in a Residential Zone

Stanford Sainsbury, Development Services Director, presented a Planning Commission recommendation that the City Council, by ordinance, amend Section 22-6-10 of the Orem City Code by approving subsection (M) as it relates to historical barns and sheds in residential zones.

The City of Orem was, at one time, a major location for orchards within Utah Valley. Over the years, many of these orchards have been replaced with development. There are a few remnant orchards remaining in the city along with their accessory buildings that were/are used for equipment or produce storage.


The applicant, John Crandall, owns a lot with a home and a historical barn structure. Mr. Crandall inquired with the City about subdividing a lot for the house and one for the barn. However, removal of the barn would then be required as it would not sit on a lot with a dwelling. Due to the historical nature of the barn and ties to his family’s orchard operation, he declined to subdivide the lot into two lots.

The applicant has now submitted an application to amend Section 22 of the Orem City Code to permit historical barns and sheds to exist on their own lot absent a dwelling. The proposed text is as follows:

22-6-10(M)M. Historical Barns and Sheds on Residential Lots. In an effort to preserve barns and sheds that are a part of Orem’s historical heritage, a barn or shed built before 1940 (hereinafter referred to as an “historical barn or shed”) that was used in conjunction with fruit farming and that becomes non-conforming due to the subdivision of property on which it is located (because it becomes the primary structure/use on a residential lot due to the subdivision) may continue as a legal non-conforming use subject to the following requirements: 1. The historical barn or shed shall continue to be used in association with fruit farming and/or personal use. The shed may be used to store equipment, supplies, machinery, packaging, crates, tools, tractors, sprayers, mowers, sprays, etc. in support of fruit farming. The barn or shed may also be used for personal use and storage. However, the barn or shed may not be used for any commercial use other than fruit farming.

2. The historical barn or shed must be the only primary use on the lot on which it is located 3. The historical shed shall be maintained in a clean and neat manner. Weeds shall be mowed or

removed. Other than currently licensed vehicles, no items of any kind including vehicles, supplies, debris, tools, packaging, equipment, containers, paper, boxes, tractors, sprayers, trash, tires, etc., shall be stored or left outside the historical shed or barn.

4. No signage shall be allowed on a lot on which an historical barn or shed is located other than the restoration of an historical wall sign that is painted on the barn or shed where the sign is more than fifty years old.

5. The historical shed or barn shall be removed before any residential dwelling may be built on the lot.

6. When a residential lot is created that contains an historical barn or shed, all other requirements for subdivided residential lots shall be required and enforced.

7. Any animals on the lot shall meet the requirements of Section 22-6-10C.8. The minimum size of the shed or barn must be at least 150 square feet.9. The historical shed or barn shall be maintained and preserved so as to be safe for current use.

The roof shall be maintained and repaired so as to maintain a dry interior. 10. The owner of the lot shall demolish the shed or barn and remove all evidence of the shed or

barn if the building is determined to be unsafe by the Chief Building Official of Orem as outlined in the “The Uniform Code for the Abatement of Dangerous Buildings.”

11. The owner shall remove any historical barn or shed that fails to comply with any of the above provisions.

Mayor Evans opened the public hearing.

Chris Spencer, resident, stated the City should allow him to keep his barn, so they can move on tonight.

Bob Womack, resident, wanted to go on record saying this venue is too small for the crowd that is present. There are people in the aisles, standing in the doorways, and standing out in the hallways, that are uncomfortable and will have a lot of difficulty hearing and understanding the


proceedings. Utah has an Open Meetings Law, and he did not think this meeting is quite open to everyone that is here.

Mayor Evans said they thought about moving the meeting; however, all of the notices listed the Council Chambers as the location.

Mr. Chesnut noted that moving the meeting would cause a problem with recording the meeting. Also, if they changed the address, they would have many people complaining that it was moved because the City was trying to hide where it was going to be held. The notices that were mailed out listed this location, so the City decided to keep it at this building. He agreed there is a large crowd tonight, and it is inconvenient.

Mayor Evans reminded the Council to speak clearly into their microphones so everyone can hear.

Mr. Womack stated he is on record as having stated that he considers the venue insufficient as is Mr. Chesnut, who likewise feels that the venue is not going to be adequate.

Trent Bowen, resident, said he knows the Crandalls and has purchased fruit from them. Mr. Bowen said his father was one of the founders of the Historic Preservation Advisory Commission in Orem and coming from that experience. He said thinks this is a wonderful thing and expressed his hope that they will preserve that heritage in the city.

Mayor Evans closed the public hearing.

Mrs. McCandless moved, by ordinance, to amend Section 22-6-10 of the Orem City Code by approving subsection (M) as it relates to historical barns and sheds in residential zones. Mrs. Street seconded the motion. Those voting aye: Mr. Andersen, Mrs. Black, Mr. Evans, Mrs. McCandless, Mr. Seastrand, Mrs. Street, and Mr. Sumner. The motion passed unanimously.

6:00 P.M. PUBLIC HEARINGRESOLUTION – Setting a Property Tax Rate in Excess of the Certified Tax Rate; Approving and Adopting the Final Budget for Fiscal Year 2012-2013, Adopting Compensation Programs, Adopting Fees and Charges, Setting the Franchise Tax, Municipal Energy Sales and Use Tax, Telecommunications License Tax, and Transient Room Tax and E-911 Fee Rates

Bruce Chesnut, City Manager, presented a staff recommendation that the City Council, by resolution, adopt a property tax rate in excess of the certified tax rate, approve and adopt the Final Budget for Fiscal Year 2012-2013, adopt the compensation programs, adopt the fees and charges schedule, franchise tax, municipal energy sales and use tax, telecommunications license tax, and transient room tax and E-911 fee rates.

11On May 8, 2012, the City Council received the tentative budget for the Fiscal Year 2012-2013. A budget work session was held on May 22, 2012, to discuss the budget. In addition, two public hearings were held to review CDBG budget requests. In the May 8 th City Council meeting, the City Manager, Bruce Chesnut, recommended that the City Council consider a


property tax increase for operations for the first time since 1978. Accordingly, Mr. Chesnut recommended that public hearings be set for June 12, 2012, and June 19, 2012, to discuss and tentatively adopt a working budget, and for August 14, 2012, to hold a Truth in Taxation hearing to consider a property tax rate increase in excess of the certified tax rate and to adopt a Final Budget.

The national and local economies have shown some signs of improvement over the past year; however, it is commonly accepted that any recovery will be a slow process. The Fiscal Year 2012-2013 Proposed Budget is a balanced budget that was formulated with this environment in mind as it recognizes that the continued pressure of the UTOPIA debt guarantee obligation combined with the rising costs of operational expenditures such as wages, benefits, insurance, gas, oil, and fleet replacement cannot be addressed by the anticipated increases in property tax and sales tax revenues nor any other revenues available to the General Fund of the City.

Public hearings on the budget were held on June 12, 2012, and June 19, 2012, during which the City Council received significant public input, primarily concerning the proposed property tax rate increase. Following the public hearing on June 19th, the City Council adopted a Tentative Budget.

Tonight, the City Council will receive input from the public regarding the proposed property tax increase and the proposed Final Budget. State statue specifies that a property tax rate and a Final Budget must be adopted by August 17, 2012.

Mr. Chesnut clarified that the proposed property tax increase is only for Orem’s portion of the tax, which is approximately twenty-one percent of the total property tax bill. This would be approximately $8 per month for the average home.

Mr. Chesnut then reviewed the reason the City is proposing a tax increase, which included: Sales tax has dropped over $3.8 million

o Personnel, operations, and capital projects have been cut to balance the budget with the loss of sales tax revenue

The commitment to financially support the UTOPIA debt began in 2004o Obligation the City has with bond holders to pay the bond that was issuedo If this is not paid, the bond holders will go after the sales tax revenue

The property tax will NOT be used to pay for the Center for Story The City has numerous funds

o The General Fund Specific Revenue Sources

Sales Taxo Down 3.8 million since 2007

Building Permit Feeso Down since 2006

Starting to come back a little bit Franchise Tax Property Tax

o Utility Funds Water


Sewer Storm Water Streetlighting

These funds operate as independent businesses within the community

Jamie Davidson, Assistant City Manager, explained how the property valuation works in terms of property tax collected by the City. Cities set a certified tax rate and only receive that amount. They do not receive more money just because the valuation of properties goes up. Cities only receive more money when there is new growth in the community.

Mr. Chesnut noted that Orem has lost revenue in sales tax and building permits in the last four years. The City has cut personnel by twenty-five positions in the operations and cut the operational budget $1.5 million. They have averaged reductions in capital projects each year. The City has cut an average of $3.5 million over the last four years, which equals $14 million.

Mrs. McCandless asked Mr. Chesnut whether the proposed property tax increase includes any employee raises. Mr. Chesnut indicated it does not. At the June 19, 2012, meeting, the City Council asked that any of the merit increases be taken out of the reserve account.

Mr. Andersen asked where the $350,000 for liability was taken out of before. Mr. Chesnut said it was taken out of the General Fund.

Mayor Evans indicated there are many people who want to comment this evening. He asked those present to be respectful to the speakers even if they have a differing opinion.

Mayor Evans opened the public hearing.

Bob Womack, resident, stated he does not shop on the Internet, and the reason his sales tax revenue is down is because he does not have income to shop. His property value has dropped, but his property taxes have stayed level. He does not know the issue with the City’s revenue, but he has a huge issue with his revenue.

Wayne Burr, resident, asked the City Council not to raise the property taxes. If the City Council raises it tonight, it will be three times the amount of the Alpine School District bond. He noted State law allows for the residents to put a referendum on the ballot to vote on the property tax increase, and he will be able to get the 3,200 signatures needed to put this issue on the ballot. This increase will move Orem from having one of the lowest rates to one of the highest. He told the audience to look for the red clipboards in the room to provide their information if the property tax increase is approved. There is less tax revenue in the city because people are not spending. They do not have the money. This is not a good time to raise taxes because people cannot afford it.

Bob Wright, resident, read a statement concerning the UTOPIA audit. He reaffirmed his desire to have the City use part of the $30 million they have in savings to pay off its share of the bond and get out from under this obligation entirely. This would save the sales tax revenue payments. This could be a loan to UTOPIA


Mayor Evans asked Richard Manning, Administrative Services Director, to clarify what the $30 million can be used for. Mr. Manning indicated the $30 million is the sum total of the City’s cash used for day-to-day operations, including funds from the water utility and sewer utility. The City has a “pay-as-you-go philosophy where possible and saves money to pay for future projects, so the it is not necessary to bond for those projects. The $30 million also includes money that is held for bonds, that does not even belong to the City. Some construction projects have large bonds that the City holds for the contractors. A lot of that money does not belong to the General Fund, and it would be against the rules of accounting for cities to utilize the money in the manner proposed by Mr. Wright.

Christine Larsen, resident, stated that Mr. Chesnut had said the increase is twenty-one percent, but her bill says 50.55 percent. Mr. Chesnut clarified that the increase is approximately 50 percent; however, that increase is just on Orem’s portion of the tax, which is about twenty-one percent of the total property tax bill.

Ms. Larsen said her bill goes from $153 to $322, so that does not make any sense to her. She questioned who does the property valuations. Mr. Chesnut indicated the Utah County Assessor’s office is responsible for the valuations.

Ben Jenkins, resident, indicated that he came this evening because it is a matter of principle. He questioned the proper role of government. The school bond was a citywide vote, and what is happening tonight is an Internet vote. He would put a school expense as a city expense before he would consider someone browsing the Internet as a city expense. He is discouraged tonight because he feels this is a dog and pony show. The $9 increase may not seem like much to some people, but it is a lot to him. He would join Netflix if he had an extra $9 each month, but he does not. He recommended the City provide incentives to get more businesses rather than increasing taxes so no new businesses want to come to Orem. He expressed his hope that the City Council will listen to the residents before deciding to raise the taxes.

Brad Daw, resident, said his heart goes out to the City Councilmembers because it is difficult to be in a room with people who do not agree with them. When UTOPIA was first proposed he thought it was a great idea, but now he does not feel that way. He invited those present to read the recent UTOPIA audit. He noted Orem is a member of a consortium of cities, and there has got to be buyer’s remorse in those cities as well. He expressed his hope that the cities can get together to change the agreement. They are not going down the path they thought they were, and it is time to rethink this thing. They can either make the tough decision now or an even tougher decision five years from now. He thanked the Councilmembers for everything they do.

Gary Bascom, resident, stated that he is representing about fifty taxpayers from his neighborhood. He complimented the City for its nice parks and all of the good things they are doing but said now is not the time to raise taxes. UTOPIA is a problem. The City is obligated to some tremendous financial bondage and the City has to bail UTOPIA out if it cannot succeed. He asked the Mayor what the penalty would be if the for Orem if the Council decides not to support UTOPIA.


Mayor Evans replied that the bond payment has to be made regardless of whether UTOPIA succeeds. The City has an agreement that states the bondholders can ask the state to garnish the sales tax if the payment is not made.

Mr. Chesnut indicated the City does have control over where they go with UTOPIA in the future. Staff is working with a lot of people and other member cities on that. There is a past obligation that the City cannot get out of, and that is what they need to address.Mr. Bascom asked why the City cannot come up with a class action suit against UTOPIA and say they want out. The City is bound to pay $184,000 each month to pay for this, and it is crazy to support this kind of a company. It is a tax on the City’s resources.

Mr. Davidson gave a simple explanation of how UTOPIA works, saying it is like the cities involved in UTOPIA got together and bought a house. Then the cities got together and formed a management company for the house and called it UTOPIA. The cities own the house, and they control the management company as a group of cities. Therefore, they are responsible for the mortgage on that house. The important factor is that it is the City’s house and the City’s UTOPIA.

Gary Anderson, resident, asked whether the ongoing operating costs for the Center for Story will be taken out of the General Fund and how much that will cost each year.

Mr. Chesnut said the estimated cost for maintenance is $40,000 each year, which includes the power and the gas. A number of companies have come forward, offering to set up an endowment to pay for those costs.

Gary Anderson then stated that Mr. Chesnut has said this tax increase is an average of $8.40 a month. Mr. Anderson has not heard anything about the fee increases that were approved in the tentative budget, which would raise the monthly payment to $15.00 per month.

Mr. Chesnut explained that there is a proposed increase in the water and sewer fees. The Council did not approve the increase in the street lighting fee and decreased the solid waste fee. The net total in fee increases is $.30 per month.

Justin Schauers, resident, said raising property tax is targeting homeowners. UTOPIA was supposed to be taken out of sales tax. Those who own property are already shouldering too much. The property values have gone down, but the property taxes are going up. The City got involved in a business venture that should have been left to the private sector and is now asking the homeowner to pick up the slack. The residents of Orem feel the tax increase is being shoved down their throats. The $8 per month increase is based on a home valued at $184,000. In 2007, the average home in Orem was selling for $207,000. By raising taxes in a down market, they can assure themselves extra revenues as home values go back up. He asked about people who also own rentals and small businesses. He falls into all three categories and was horrified when he saw all of his tax bills. He concluded that people will think twice about buying a home in Orem and may think about selling and moving somewhere else, investors will look elsewhere to put their money, landlords will have to raise the rents to pay for the property tax increase, and business owners will have to pass that cost onto the customers. This seems like a really odd thing to do. UTOPIA is something that will continue to drain the City for years to come. He


questioned how many times the property tax will have to be raised in order to plug those holes. This is not the right thing to do.

Royce Van Tassell, Utah Tax Payers Association, expressed appreciation to the City for the open and forthright manner it has shown in the process of this property tax hike. That is not always the case. This is the third pledging member city of UTOPIA in the last three years to go through the Truth in Taxation hearing, and the amount of the increase is almost identical to the debt amount payment. Mr. Tassel noted that Orem is the first city to acknowledge the explicit connection and is to be commended for that during this process. He said he has had good discussions with the City leaders, but there have been many good proposals made showing other ways to balance the budget without a fifty percent tax hike. It is disappointing that the City Council feels it is necessary and appropriate to provide a $1 million subsidy to the owners of the University Mall. Those kinds of subsidies are difficult for people to understand, especially when so many in Orem are grateful to even have a job and are struggling economically. He is under no illusion about what the outcome of this meeting will be, and he is disappointed that the City could not find a way to make this a smaller tax increase. Members of the legislature have communicated with him the conversations they have had with City leaders, and there are ways to make this a much smaller tax increase or even eliminate it. He expressed his hope that the Council will listen to the residents and take the more difficult path.

Paul Washburn, resident, said he has spoken in this room for thirty years, and this is the only time he has not supported a tax increase. He helped to see the two road bonds pass and has been supportive of increases in the Franchise Tax. Each time, there was a logical reason to make those happen. The elephant in this room is UTOPIA. The Councilmembers who voted to approve UTOPIA said they would oversee this new venture and take the responsibility to make sure it did not get out of hand. It was a bad decision that has failed miserably. He feels bad about it, but the City is sitting on a $200 million project that has no net worth. The tax increase of $200 to each home is regrettable. He feels bad about it, and it is going to hit his home as well. Mr. Washburn said he finished an office building in 2004, just in time for the collapse. He has been fairly fortunate to have fifty percent of the building occupied. According to the County Auditor, his tax increase will be $15,000 to $17,000 per year for his building. He cannot raise the rents to cover this. His rents do not even cover the payment. This is a little hard to swallow, particularly since he had had to pay $3.5 million to clean up a private garbage dump the last four years. He wished those overseeing this would have done a better job. UTOPIA is a monument to gullibility and arrogance. The City needs to find a way to get out of it, and raising taxes and sending the message to those at UTOPIA that it is business as usual is not the way to get it done. He said he realizes the City is in a tough spot. Everyone is. He does not know anyone who has had a raise in the past four years. Most of the people he knows are lucky if they had the same money they had four years ago. The City has to find another way to do this and honor its obligation not to let this get out of control. He asked the Council not to burden the residents with this.

Leonard Laxton, resident, stated that he is does not speak for everyone; however, there are at least 500 people at this meeting who would like to be heard. He has personally been required to make adjustments in his own living by a reduction of force. He has neighbors and retirees on limited incomes and neighbors who have lost homes and jobs. It is not just the unemployed. He asked the City Council to redistribute the funds they already have. The residents’ burden is heavy, and they cannot handle anymore.


Curtis Harris, resident, said he is disappointed with the tax increase. Some of the figures that were shown were about sales tax and building permit revenues dropping. The City made a commitment in 2004 when the sales tax was similar to what they have now. Shortly after that commitment, there was a spike in revenue. They should be celebrating a surplus from that time period rather than looking at it as unable to fulfill its commitments for this and having to raise property taxes to meet those needs. That was a time period that is similar to now when there were similar revenues. It has been stated that Orem will have the fourth highest property tax in Utah County. That is not something to be happy about. There should have been some accountability in 2004 prior to signing that bond. They talk about a City that focuses on pay as they go, but they are willing to guarantee a bond. That is not something that should have been done. The City should not be making payments unless certain criteria are met. This is something that could have been done in 2004 when the bond was issued.

Phil Brown, resident, stated that Mr. Chesnut said there would not be any employee pay raises this year.

Mr. Chesnut clarified that he said the property tax would not be used to fund those pay raises.

Mr. Brown said he thinks the City is trying to sneak something through by not owing up to the fact that there is going to be give raises to the employees.

Mr. Chesnut explained that the City Council, on June 19th, talked about using other sources to look at merit increases up to two percent for employees based on performance. That has not been approved until they adopt the final budget.

Mr. Brown stated that he does not want to look like he is hardcore; however, there are many employees who are making over $100,000. That two percent tax is not going to give the people that really deserve a pay raise any money at all. That money is going to go to the higher echelon people. There are people on the lower end who need those pay raises much more than a City librarian making a total compensation of $166,000. He asked why the City Library has 8 people making over $100,000, and the City thinks the Center for Story is going to be accommodated into that without having a pay raise for a bunch of people in there. The City is playing games there. Mr. Brown declared that UTOPIA has been in the red for 9 years. Last year there were $18 million in losses. The City has gotten into private enterprise. He then said he was glad the City kicked everyone out of the trailers and built a beautiful complex at Midtown Village. Again, the City is moving into private enterprise. People are losing money and are going bankrupt. The City cannot go in and bail everyone out. He was in a business that went bankrupt, and the City did not go in and bail his company out. He suggested the City use Chapter 11 bankruptcy to get this thing reorganized and back on. There are ways to make this back in the black, but they need to go on a much different plan than they are. A shotgun approach to this is just going to lose more money. Jared Jardine, resident, said the big thing that happened between the last meeting and this meeting is the release of the UTOPIA. He noted that UTOPIA did not have any records they could audit. They had to go and talk to people because there were no records. This is a case of bureaucrats and politicians pretending to be business owners. It will never make it. If they continue going for another year, they will be another $18 million in the hole. They talk about


how the City has this obligation, but this is just for the past debt. He asked about the $18 million for this year. The fact is that this $100 property tax increase will not come close to covering the City’s UTOPIA obligation. In another five to ten years, the obligation is more than this property tax anyway, so they will raise taxes again. He wondered if the City would charge a UTOPIA fee once it was available throughout the whole city. He expressed his opinion that the cities should force UTOPIA to liquidate. They have a net worth of -$120 million. That is $60 million better than the debt they are obligated to, which is $185 million. The City needs to put a stop to this. Each person who has UTOPIA will be subsidized $1,100 from the property tax increase if this were to pass. That is just not right. People should not be able to sign up for Internet access and have 11 of their neighbors pay $100 each to ensure a nice Internet connection. There has not been a single year that UTOPIA has had more revenue than operating expenses. The UTOPIA people have sent letters to the editor acting like UTOPIA is on the cusp of success. This is just not true. The audit said they need a take rate of thirty percent in every area to succeed. They only have a thirty percent take rate in one area, which is Lindon. That take rate was determined at the beginning of the process. Mr. Jardine questioned what the take rate would be now. He asked the City Council to cut the ties with UTOPIA.

Bonny Coombs, resident, noted that fifteen years ago the residents entrusted the City with $10 million to reconstruct the roads on 800 East and 800 South. She served on a citizen’s committee in reference to this project, and it was a real eye opener to her to see it being run like a candy shop. Everyone wanted a little piece of the pie, and Orem was initially handing it out right and left. The construction workers were bragging about the money they were making on this project, and it was no surprise when the City ran out of money before the project was completed. The project ran out before the landscape was completed near her home. She came to the City Council to plead her case. The Mayor did listen to her. Even though the City did not have any money left in that fund, they found creative ways to landscape that part of the city, which is one of the few entrances from Provo. City employees built a block wall that ended up being as good as the overpriced ones they paid for. The City employees came out and got information from local businesses because they had never built a block wall before. This is one of the most beautiful block walls. They also laid sod they got from a baseball park that was being torn up. Government gets smart when it runs lean. Money seems to get in the way of creativity. When Orem City has a lot of money to spend, it seems like it gets wasted. Ms. Coombs noted that property taxes never go down. Raising them is a dangerous proposition. All the people in this room, at one point, hope to own their homes free and clear. There is only one thing that can get in the way of that someday, and that is if the tax man comes in and takes their homes. This happened to her grandfather in the 1930s. He had his home with a mortgage. He had a job but he was not getting as much money. The bank did not foreclose, but the tax man did.

Benjamin Devey, resident, asked who of those present were living on a fixed income and who were there to object to the property tax increase. He stated that in the previous Council meeting Mr. Andersen proposed many options to cut the current budget, and he could not get a seconding vote from any of the other Councilmembers. Mr. Devey proposed that the City Council use this meeting to discuss every one of Mr. Andersen’s proposals to make it transparent to the public. He said he is opposed to a property tax increase.


Claude Richards, resident, advised that UTOPIA is a failing business because it is wrong in practice, and it is wrong in principle. Mr. Richards quoted from an essay entitled “The Law”. Orem City has taken it upon itself to go into business in competition with other private businesses and has used the force of government to give its own business the upper hand. In so doing, it is picking the winners and losers and the market is no longer free. They have grown accustomed to seeing the Federal government doing this, by picking the banks and the vehicle manufactures that are too big to fail, by forcing the citizens to pay for abortions, and by other numerous projects the government wants to do. They have not been accustomed to seeing their neighbors and friends on the Orem City Council do this to them. He paraphrased a quote from Abraham Lincoln regarding making individuals pay for their neighbors Internet. Mr. Richards said he cannot in good conscience partake of UTOPIA because it is founded on wrong moral principles. Much has been said about how UTOPIA has changed, how the problems have been solved, and how it will someday become profitable. First of all, the change is a vapor of smoke. Secondly, even if it became profitable, it is still morally wrong. It corrupts the very law they depend on for the protection the residents rely on, and everyone loses. With respect, he called upon the Orem City Council to do the following:

Find a way to pay this installment from the current budgeto Ways have been suggested and the City Council should give them serious

consideration Assign the City Attorneys to find a way to mitigate the losses and get the City out of

UTOPIAo If there are penalties for getting out, maybe those are penalties the City should

pay for entangling themselves in an enterprise that is morally wrong If the individual Councilmembers are going to sit on the Council that is charged with

protecting the property rights, they need to understand the concept of legalized plunder of which UTOPIA is an example

Caralee Wolfley, resident, said she bought her first home twenty-eight years ago. Integrity is what someone says and does when no one else is looking. She does not know anything about UTOPIA, but she wanted to go on record stating that when she has an obligation she takes care of it. The City is obligated to pay for it, and the City would be dishonest by declaring bankruptcy. She is a single mom, and she has taught her children to live with their means. She expects the leaders of the City to lead out and play the card that is in their hands. The City is on a fixed budget and has the obligation to live within its budget.

Alice Johansen, Duane’s Auto Wrecking, indicated Orem City has made a great case for how minimal this tax is for the homeowners, but they have not addressed the impact it will have on businesses. This is hurting the businesses that are bringing in the sales tax. This is wrong.

Duane Johansen, Duane’s Auto Wrecking, noted he has owned his business for thirty-two years. The State doubled his property tax 4 years ago, and the City is now wanting to raise his portion by $1,500-1,600. He said he knows Orem’s sales tax is down because his sales tax is down 50 percent from last year. He is going to have to lay people off and not buy any new equipment this year. He is going to have to work on Saturdays, too, so he does not “bleed to death.” He asked the City Council to help them out.


Dave Clyde, resident, said Orem is a family-friendly city. He has lived here for forty-two years and agrees with most of what has been said. The proper role of government is to provide essential services and to avoid making decisions for the residents. He recommended the City Council make a document that would limit the authority of the City Council when it impacts the tax payers without the tax payers’ consent. He said the City should consider filing bankruptcyArlea Neimer-Talbo, thanked the City Council for the work they do for the residents. She said she received the first property valuation on her home, and it was high. She then received an amended valuation that was even higher. She owns residential and commercial property, and the taxes are high. The economy is bad. People have lost their jobs, businesses are closing and restaurants are struggling with higher costs for food, utilities, and gas. The increase in tax on struggling businesses will cause more of those to close. The City employees need a raise just like everyone else, but the City cannot afford the raises. The City needs to find a way to spend less rather than increase taxes. She noted she has been paying into a fund for a storm water treatment plant. She questioned whether that money is going into a separate fund for when that plant will be built. Mr. Manning replied that the storm water fees do go into a separate account.

Michael Arnold, resident, read a statement from Dana Layton stating her opposition to the property tax increase. Mr. Arnold then said he echoes those comments. He had attended the previous meeting and stayed until the end. He said he hopes the City Council is listening, and the outcome of this meeting is different from the last one. Mr. Arnold indicated Orem has the CARE Tax, so his wife shops in Provo to avoid paying that increase in sales tax. He expressed appreciation for the cuts that have been made; however, they are obviously not sufficient or people would not be here to talk about this. Everyone is cutting back, and the City should do the same. Mr. Arnold said Mr. Andersen tried to show ways they could cut the budget, but none of the Councilmembers would even entertain his suggestions.

Ann Kendall, resident, asked if the Orem City head librarian really makes $160,000 in compensation and benefits. She said if that is true, then perhaps the compensation package is a little high and should be looked at. She then noted UTOPIA is a bad deal, and she had tried to convince former Councilmember Doug Forsyth that is was a bad deal in the very beginning. She said Mr. Andersen is opposed to the tax increase. She asked him how he proposes to get the City out of UTOPIA without a tax increase. She said she does not think it is right for the City to claim bankruptcy.

Sterling Bascom, resident, put a copy of the UTOPIA audit on the overhead. He said lived in Orem when they built the big water tanks on the hill, and that was a big thing. The City now has plenty of water because of the forethought that went into that. When UTOPIA first started, it was hard to get Internet into the homes. He said he does not want a tax increase, but there are times when it is necessary.

Chris Spencer, resident, said it is time to sell the house. He started a business, opened it in Orem, and now he regrets it. UTOPIA is something that should have been left to the private sector. No one should be forced to pay more for a venture the City went forward with. There should have been better management with UTOPIA. Many employees in the City make more than $100,000 per year, and there are many people in the audience who would be willing to take those jobs for half the pay.


Bob Hawkins, resident, noted he is on a fixed income. He met many of the Councilmembers during the last campaign, and he learned about UTOPIA. He even tried to help out by signing up, but the hookup fees were not cost effective. There are many people who are concerned about the property tax increase. He urged the City Council to be careful and find an alternate way to pay for this.

Mike Swenson, resident, thanked the City Council for listening. He strongly encouraged the City Council to vote against the property tax increase. The economy is struggling to come out of a recession. Any tax increase causes undo pressure on the frazzled economy. Without question, the people most hurt by this increase are young families, low-income, fixed-come, moderate-income families, and small business owners. He said eighty percent of the tax increase will go to UTOPIA. This is unacceptable. He said he agreed with Keven Stratton who said that every effort should be made to transfer UTOPIA to the private sector. If the City Council votes to approve to the property tax increase, they must be prepared for an aggressive effort from the residents of Orem to vote them out of office.

Mr. Chesnut clarified that the bond payments go to the bond holders and not UTOPIA.

Dick Brunst, resident, indicated he spoke with many of the Councilmembers a few months ago and encouraged the City Council not to increase the City fees, property tax fees, and salaries at the same time. Over the last six months he has worked hard to come up with ways to help UTOPIA. He has been an enthusiastic supporter of getting fiber to the homes. However, his enthusiasm has soured when he saw the cost and the risk it puts on the backs of the residents of Orem. UTOPIA in its present form is a business and not a utility. It only services about nine percent of the community. It lost $185 million over the past nine years, so it has become too costly to continue to support. It is a losing business that needs to be changed immediately or stopped quickly. Orem residents cannot afford to continue to pay the yearly losses. He put the City on notice that the residents of Orem will no longer allow the Council to use the residents’ funds to pay for UTOPIA. He gave statistics from the audit. Mr. Brunst stated that he plans to run for Mayor next year because it has to stop.

Dana Johnson, resident, asked what the proposed pay increase would be. Mr. Chesnut indicated it would be $301,000 if everyone received a 2 percent increase.

Mr. Johnson said that saying this tax is not paying UTOPIA would be saying that his mortgage payment is not paying for his house because it is only going to the bank. That is an incorrect and inaccurate statement. He expressed admiration to those who have spoken who have started businesses. Many of them are making less now than they did when they started their businesses. The people running UTOPIA are working forty hours a week and are guaranteed high salaries. A big way the City can stop this is by getting rid of UTOPIA. Chapter 11 is legal, ethical, and a way out. The City should not think about pay raises. They should look at pay cuts.

Jason Messick, resident, indicated he has been with UTOPIA since the beginning. He has looked into all of the facts, rather than the misinformation being provided by the Sutherland Institute. He noted he is a disabled vet on a very limited fixed-income; however, he can afford to support Orem City’s advancement into the future by paying for two UTOPIA connections. He said he is


not in favor of the fifty percent property tax increase, but he is in favor of infrastructure for the future. UTOPIA may need to be restructured, but throwing it away would be a grave mistake. The Sutherland Institute and Utah Tax Payers Association are nothing more than a political party. They have nothing to do with Utah taxes. Mr. Messick indicated he believes in the City of Orem. Orem used to be on the cutting edge of technology when they had WordPerfect. He urged the City Council to reschedule this meeting to get supporters to come and speak.

Les Campbell, former Councilmember, stated he was on the City Council when they voted 7 to 0 to get involved with UTOPIA. It is amazing to him how bright people become after the fact. He can remember meeting after meeting after meeting when there would be five or nine people in attendance when they discussed UTOPIA. The City Council thought they were doing good, thorough research. The Mayor would go to meetings, the City Manager would go to meetings, and the City Council was also involved in many meetings. They had open houses for people to attend. However, not one-third of the people present tonight showed up to show any concern until after the vote was taken. He said he is sorry for that. He has chosen to live in Orem. He loved Orem and all it stands for. He suggested the residents help save this so the take rates go up. That is a possibility if they overcome their pride and their arrogance and their emotions. He said he understands that some people are struggling. Mr. Campbell then noted everyone needs to sit down together and pound this out. It would be nice if the residents who came to this meeting would work together to find a solution.

Eric Royer, resident, said he is against UTOPIA. They came to his door, and he told them he was not interested in that service. He and his wife try to do their shopping in Orem and spend their money in Orem. The Ford Motor Company did not take the bail outs like some of the other companies did. He expressed his hope that the Orem City Council will be like the Ford company and not take a bail out by raising the taxes. Resident can vote the Councilmembers out of office, and a lot of the people here will want to do that if the Councilmembers vote for a property tax increase.

Sharon Mead, resident, said her wages have been frozen, her company laid people off, and they all took a five-percent wage cut. She said it is unfathomable to her that the City is even considering raises because everyone else is thinking of laying off. UTOPIA is competing against a free market. If this were a free market, UTOPIA would be gone. They are under water so far, and she does not know how the cities will disentangle themselves. When the UTOPIA salesman came to her door, she told him she did not want it, need it, nor could she afford it. The City is forcing her to pay publicly for something she chose not to have privately. That sounds like communism to her, and that is wrong.

Amylynn Hahn, resident, said she spent some time with a Councilmember earlier that day to learn more about UTOPIA. She asked how much of the City budget is currently making the bond payment, and if this property tax increase is just making up the difference.

Mr. Manning stated that this year’s payment will be $2.8 million and will grow two percent each year through the year 2040. At that time, it will be $4.7 million.

Ms. Hahn asked whether this will be the only property tax increase that is needed, or if the City will have to raise them again in a few more years and a few more years after that to keep up with


the increased payments. Mayor Evans indicated if revenues did not pick up, the City will be looking at something else down the road, such as an increase or cutting services.

Ms. Hahn said that is not an appealing process to her. She said she is not against raising taxes; however, she is against this one because there is no end in sight. It will just keep going up, and she does not want to keep attending these meetings. She noted she would like to vote for some of the Councilmembers again, and she does not want to come across to harshly. She wondered how the City would pay for this if raising the taxes were not an option.

Marcus Jessop, resident, thanked the City Council for allowing the residents to speak. He heard about this meeting because of a robocall and expressed his opinion that the City should have been more transparent about this. He said he does not want to pay for a service he does not want. He voted for Jason Chaffetz because people in Congress hate him. He makes tough decisions. If this Council cannot make those tough decisions, the residents will have to find someone else to do it.

Cathy Blackham, resident, thanked the Councilmembers for allowing her to speak and asked them to vote no on the property tax increase. She said she owns her home, and it is paid for. She works two jobs and earns less than $30,000 a year. Internet, cell phones, and cable are a luxuries, so she does not have them in her home. She lives within her budget, and she always has. She would expect the City to also live within its means. She said it is irresponsible for this Council to commit her to something that she does not really need. She does not work for anything nice. She works to pay for bills and food.

John English, resident, stated he found out about this meeting at the bottom of his property tax bill. He signed up for UTOPIA in the beginning, and he thinks it is a great thing. He noted he is making the same amount that he was four years ago, but his bills have all gone up. He asked the City Council not to increase the taxes and to come up with a better way to pay for it.

Phillip McCabe, resident, said it is clear that the City Council has a mandate. There are two thousand residents that will be behind the City Council if they vote against this tax increase. There will have to be hard decisions made, and the residents will support those decisions.

Karen Warner, resident, advised that she is a widow on a fixed income, and she would love to vote herself a two percent raise in salary. It might not be a big deal for some to pay $8 a month, but it is a big deal for her. She said she does not think it is right for government to be involved in private enterprise. She noted the City Council has heard the residents and knows how they feel about the property tax increase. They do not want the tax increase.

Steve Diamond, resident, said he ran for City Council four years ago to stop UTOPIA from continuing. This is not the proper role of government. The UTOPIA contract does not have any time limits or oversight other than whether the money is being spent. UTOPIA basically has an incentive to not build the system. The contractor gets more money every year if they do not build the system. This is picking winners and losers, and that is not the role of government. Mr. Diamond indicated Midtown Village has $5 million of the City’s money in it because they were picking a winner and a loser. He indicated when he did contracting, the City required him to do impact fees, and if he did not pay those fees, he could not build what he wanted to build. He


questioned if the City charged Midtown impact fees to build this system. He stated they did not, and they gave them $5 million to build the parking garage. The City is doing the same thing with UTOPIA. They are giving them money to do something that is not the proper role of government, and they are going to force a property tax increase on the residents. He indicated he is subsidizing the people who are using UTOPIA.

Dave Young, resident, noted that one point is being missed. This is a fifty percent tax increase which is unconscionable, considering the economy they are in. He asked the City Council not to raise taxes and to do something to address UTOPIA.Mayor Evans asked Mr. Chesnut to clarify the comments made about Midtown Village.

Mr. Chesnut replied that the City did not give Midtown $5 million. The City allowed Midtown to use the City’s bonding capacity for the parking garage. Midtown has been making all of the payments on those bonds and has not missed one payment. If they did miss a payment, the City would take over the project. The City has not paid any City money into that project.

Dave Spencer, resident, asked what the City Council and staff has done since the June 19 th

meeting to ease the pain that this property tax would cause. He had asked the Council and City Manager to go to all of the department heads to see if they could cut the present proposed budget. Mr. Spencer said he read through the budget again and if each department cut 1 percent out of the budget, it would be $8.87 million. Even if they cut it one half percent, they would still be above the UTOPIA payment, and they would not have to raise taxes. The UTOPIA audit stated UTOPIA has a net loss of $120 million. The proposed property tax raise only covers the payment for today. He questioned if the City Council will have to go back to the residents in a year from now to ask for more money. Mr. Spencer read from a newspaper article regarding UTOPIA. He said he understands representative government and how it works. He is running for City Council next year, so he can represent the people of Orem.

Jason Christensen, Provo resident, said he attended a meeting a few years ago and advised the City Council at that time to steer away from UTOPIA because of the monstrosity Provo is dealing with. He advised the City Council to listen to Mr. Andersen’s ideas such as cutting the subsidy for the mall and the Toyota dealership. They should not lay this burden on the taxpayer.

Mark Stanley, resident, expressed concern that UTOPIA is not available in many parts of the city, and that is not right. The City is paying for a dead horse. The City Councilmembers can vote any way they would like, but he would like them to find ways to make cuts. He has in his own home. He rides his bike to and from work to save money. He does a lot of things to save money, and he does not think UTOPIA is necessary.

Aaron Campbell, resident, indicated that because of a robocall he made last May, he was asked to “man up”. He has thought for the last few months about how he can be more than just a pain to the City. He said there is misperception about the City of Orem, and who it is. He said he is the City of Orem; his thirteen year old daughter is the City of Orem. All of the residents are the City of Orem. There are 90,000 residents who are the City of Orem. A $90 million corporation with 500 employees is not the City of Orem. Most of the residents feel the corporation of Orem is off track and is not serving the needs of the residents. Mr. Campbell stated that he loves Orem. He was born and raised here. With the exception of one bad vote, his parents have done a lot for


the residents of Orem. Public service and civic action are in his blood. He said he will continue to fight the fight his parents started twenty-five years ago. He is going to put more pressure on the corporation of Orem and the City Council to do what is in the best needs of the actual residents of Orem. He said he is going to do a few things on his own. He is going to continue to inform and activate his fellow citizens. The corporation of Orem has a serious problem telling the truth in a timely fashion to the residents. They have got to communicate better with the residents, and if the City does not, he will. He said he will go door-to-door to every home in the city and register them to vote, inform them, and get them to the polls next November. These are bad economic times. The businesses in Orem need help. He is a political consultant and a business consultant. He will do his best to help all of the businesses that come forward. He will help with their marketing plans and help promote their products and services to help them stay in Orem. He said if the corporation of Orem will not help the residents, he will. He said he can pay the tax increase, and he does not have UTOPIA. He said he will provide tax relief to those that cannot afford UTOPIA. He called on those who love UTOPIA to help those residents in Orem who cannot afford the tax increase. Mr. Campbell stated that he will be back in one year. He has $5,000 and a group of employees, and he will do more to help the City of Orem than a $90 million corporation with 500 employees.

Jeremy Robertson, resident, noted that he is not planning to run for City Council next year. He is frustrated with the fact that he does not have UTOPIA in his neighborhood. He would sign up if it were available to him. He has been waiting for several years to get it. He will likely get it if it comes in six months. He said the infrastructure idea is a valuable goal and could be very beneficial to the City of Orem. He expressed his frustration with how it has been carried out this far.

Dallas Powell, resident and business owner, said he has a software company, and it is critical for his company to have Internet access. He provides software for courts, and the attorneys use it to file documents electronically to the courts. He uses Comcast, and it works fine for him. He does not lose sleep over the fact that he does not have UTOPIA at his business office. He thought he might like it but found out it was four times the cost for businesses. He expressed his opinion that fiber optics is not a utility like water and sewer. It is nice to have, but it is not a necessity. He recognized that Orem is committed and dedicated to dealing with this problem, but they need to deal with the current issues at hand and somehow fund them. It sends a message to residents, if the taxes are raised, and there is no plan in place, that something is wrong. They have to have a plan for how to deal with the problem and cut it off. Raising taxes without having a plan is irresponsible. He requested the City Council reevaluate the employee raises.

Michael Malone, resident, stated that he works as a computer programmer, and he has an online computer business. He is the epitome of the Internet user. He uses Comcast and does not see a need for the City to invest in a project like UTOPIA. This should be left to private enterprise. Google is currently working to provide fiber optic Internet to communities for free. They are fronting the cost for installation themselves, they will host it themselves, and they will provide the actual Internet to the end users for free. They are doing this in Kansas City right now. He bought his current residence in 2007 at the height of the market, and he has lost $30,000 in the value of his home. At the time, everyone thought that investing in a home was a good investment.


Linda Jardine, resident, said she wanted to go on record as saying this proposed City property tax is the wrong way to go. It is unnecessary. It is time to cut the budget further. UTOPIA was supposed to be paid for by sales tax revenue, not property tax. She quoted from the UTOPIA audit. Higher property taxes will not attract new businesses to the community. Reducing the tax burden and government regulations is the key to jumpstarting the economy. The government needs to stop spending so much. According to the audit, over one-third of the residents who signed up with UTOPIA have dropped it. From November 2010 to July 2012, UTOPIA has only gained 281 new subscribers in Orem. Those new subscribers add up to approximately $180,000 a year. The total UTOPIA deficit is $120 million. They lost $18 million last year alone. It is time to liquidate UTOPIA and get out of it. UTOPIA has never been able to cover operating costs, and the cost of bonding interest is now dwarfing operating expenses. This is bad business practice in general and is based on an incorrect principle to begin with. Government should never be in the businesses of competing with the private sector. It is important that Orem minimize its losses, not dig itself deeper. She appreciates the service of the Councilmembers. They are responsible to the people, and it is up to them to make the tough decisions. She asked them not to raise the taxes.

Linda Hendrickson, resident, stated that thirty years ago her husband took her daughter from her and she did not know where to look for her. Her second husband did the same thing to her fifteen years ago. There is not a more frustrating feeling in the world than not knowing where to look to find that child. She noted she feels frustrated now. She listens to talk radio and hears what is going on in the world today. She knows what is going on in the city, and she feels she is that mother looking for that child again and there is nothing more frustrating in the world. The City is doing something to her that she has no control over. She does not have UTOPIA because she cannot afford it, but now she is having to pay for it. It is a service she will not use. The CARE Tax gave a school a grant, but it did not help her or her children. When her children were young, she could not afford to send them to dance. Although, she would have loved to have done that. If the CARE tax was a scholarship for children, it would help more. UTOPIA is not a question of good or bad. The bottom line is that it is not government and should not be done by government. When she took her kids to get ice cream they always got the single scoop. The Center for Story is a double decker ice cream cone. She voted to discontinue the Center for Story or find someone in the private sector who is willing to do that.

James Fawcett, resident, indicated his brother lives in a city in California that is not doing very well. His brother talks about the potholes in the street that cannot be repaired because of the financial problems in the city. Mr. Fawcett would always tell him he should live in a conservative city like Orem because they have a slush fund, and they are doing great. The City Council takes care of the residents, and they are not in that mess. Then Mr. Fawcett opens his tax bill and sees that his home value went down $5,000 in value but his taxes went up $7.00 per month. That is a problem, and he is no longer bragging to his brother. Mr. Fawcett then gave statistics on the City’s finances over the last few years. Marilyn Hale, resident, said she feels strongly that no government should be involved in private industry. Many people have said that the City has an obligation, but not much is being said about UTOPIA not living up to its end of the bargain. There should be a legal way to break the contract. It was a mistake for the City to get involved in this in the first place. UTOPIA has been going for ten years, and only thirty-eight percent of the city has access to the service. The water


project was previously mentioned. She asked whether the UTOPIA project has a time limit placed upon it. In addition, the concept was wrong and there is no accountability on its part, but the City is still expected to do its part. She said if there is a bond, there should have been a set amount. With this company running further and further into the red, have they not exceeded that bond. There is integrity here to be had in many different ways, not just that the City has to pay its part. There are other things that need to be held up.

Mark Christensen, resident, stated that the residents elect public officials for the purpose of informing themselves on the issues and then making the decisions they believe is correct. He suspects there are a few of the residents here who have spent more time informing themselves on the issues than the Council has. However, he trusts that the Council knows more about the issues than he does. He also hopes they will make a decision that is consistent with what their conscience tells them is the right thing to do. Whether they agree or disagree with him, he would hope they would do what they feel is right. He would never ask an elected official to do something that they do not believe is right. The current Council has inherited a pretty difficult problem with UTOPIA. The City has an obligation to bond holders. He said he recognizes that UTOPIA is the City. It is not someone else, and declaring any form of bankruptcy is not the right thing to do. Staff has shown that pretty deep cuts have already been made within Orem City. He said he has never worked as an employee of a municipal government or a city, but he has worked with cities in Utah County for twenty years. He knows that many people have concerns about the out-of-control spending by the Federal Government. However, he does not believe that city governments have that same problem. He expressed his belief that Orem City is managed well, and the vote taken a number of years ago has created a problem for them now. What he has not heard is what services will be cut if money is not raised to pay the bond obligation. The City will not be able to do the same things they are currently doing for the residents of Orem with $3 million less in funding. If there are services the public does not value, then they should be cut. But if not, the City has to meet the bond obligation and if that means raising taxes then it has to be done. However, he would not like to pay more taxes.

Mark Hornberger, resident, said he has lived in Orem for many years. It is an interesting night when someone comes to a Council meeting knowing the City Councilmembers has already made up their minds, if history has anything to prove. They already know how they are going to vote, and this is just a formality so they can make the vote. That is what makes the residents mad. He said there are thousands of people against the property tax increase. UTOPIA was not a tax subsidized program and should never be. Mr. Andersen ran as a conservative and got elected as a conservative. He is looking at solving the problem by cutting the City budget. He wants to take money elsewhere rather than raising taxes. If the other Councilmembers could rally behind him and get some creative thinking here, maybe they could do this without a tax increase. That is the first thing that needs to be looked at. The City Manager and attorneys are telling the Council that they have to do this, so there is no one looking outside the box. He questioned who is spending extra time looking for a secondary solution. There have been some great solutions offered by the public tonight, and he thinks the Council should vote no this evening and work overtime to find a solution. Mr. Hornberger said Mr. Sumner was elected as a conservative who was sick and tired of the direction the City was going. If Mr. Sumner votes for the tax increase, he is following the same pattern. Mr. Hornberger then stated that Mrs. Street should not vote on this issue because she is on the UTOPIA board. Mr. Hornberger indicated the Council cannot raise the taxes tonight because the whole citizenry is going to try to stop that. He said they need to cut


the City budget, require UTOPIA to live up to its end on the bargain, and try to find a way to get out of the problem like Provo did with iProvo. He said they need to use the high priced attorneys to figure out a way to get out of this. That is what they are there for, so the City should use them. In a worst case scenario, they can do what they just hoisted on the city by making them opt out of UTOPIA. He said he is not for that, but a least they would get something for their money.

Mrs. Street clarified that she was asked by the members of the City Council to serve on the UTOPIA board. She is not compensated for that service. It is one of the jobs she does in her responsibility in serving the City. She is there to provide the kind of oversight and input for the City and to bring that information back. This is a challenging job, and she has tried to give input and find solutions. When the Council has the opportunity to speak, she will address this more.

Melba Gifford, resident, thanked the City for putting the notice on the utility bills so everyone could know, and kudos to everyone who does robocalls or takes time to do surveys. She said she took around a petition and only had four people say no to signing it. People are worried about how the Council responds to things because millions of dollars are disappearing. There may be good reasons for this, but when she hears about the mismanagement of money or millions disappearing, she becomes suspicious of people in management. She thanked the City Council for not having the Center for Story as part of the budget. She is a storyteller, but it would not be fair for her entitlement to be paid for but not someone else’s. She said she was humiliated when she heard on national television that part of the stimulus fund went to Utah Storytelling. Ms. Gifford said the City is getting a negative reputation because the people do not think the City listens to them anyway.

John VanCott, resident, indicated he was a realtor before UTOPIA began. Dynamic City rented warehouse space from one of his clients. In those beginning meetings, Dynamic City, which kind of evolved into UTOPIA in some ways, stated their goal was never to be a profit-making business. Their business plan was to get money from government entities to build infrastructure. That is still where it is today. UTOPIA does not see itself as a marketing company. They expect their affiliates to be the marketers, and the cities as well if they want to. UTOPIA just wants to install the infrastructure. Mr. VanCott stated that a couple of years ago, his friend Lonnie Brown signed up for UTOPIA. UTOPIA told him the costs would be approximately $109 per month for what his friend wanted. UTOPIA told his friend they would get back with him in a couple of months to see what his usage was. About six months later, he had never seen a bill but he was using the Internet. He called UTOPIA and still never got a bill. About eighteen months into it, he still had not gotten a bill. He had the service for five years and never paid a bill to UTOPIA. He has two neighbors who are past UTOPIA subscribers that were not satisfied with the Xmission service so they canceled. Now they want to get back with UTOPIA. They called the offices and were on the phone for thirty minutes and then were told that they have an open portal. They were told to call the service providers to sign up, but they would not pay for the UTOPIA services.

Martha Jo Clark, resident, agreed that the property tax is a very dangerous tax. It is not based upon a person’s ability to pay and has long-ranging consequences. She asked how many subscribers Orem has.


Mr. Chesnut indicated that thirty-eight percent of the residents have it available, and thirty percent of those have subscribed.

Ms. Clark then said the growth of UTOPIA is based on subscribers having access to it. She has two friends who tried to get on it but did not have access. The growth is based on people’s willingness to pay the fee and have it come to their homes when it is available in their area. UTOPIA is competing with Internet companies who have the speed, as has been indicated quite a bit, at a much lower cost than what UTOPIA is charging.

Mayor Evans clarified that the individuals said they could get by with the speeds they are currently using and did not have to have the speeds that UTOPIA provides. UTOPIAs speed is faster.

Ms. Clark questioned if there is a point where UTOPIA will be profitable when they are competing with the other companies. She asked if there is any reason to continue with a contract and questioned whether they should cut their losses now or after they invest more money. She expressed concern that UTOPIA will never be profitable and will always need a bail out.

Byron Workman, resident, said he is proud to be from Orem, but he is not proud today. He said shame on the City for what they have done to the residents. He said there is no reason the City Council should be raising taxes to pay for a failed venture. It makes him sick. He has never been to a City Council meeting before. He works at 4:00 a.m. five days a week, and he gets home at 6:00 or 7:00 p.m. if he is lucky. He is tired, and he does not want to be here. He said every time he voted, he would just check the boxes for City Council, but he will never do that again. He is going to hold the City Council responsible. He is going to look them in the face, and they will have to explain to him how they are spending his money. He works hard for his money, and he will never again look past City government.

Robert Barnes, resident, noted that every time he has worked with the City over anything it has been a fight. The City is anti-development. He uses UTOPIA, but this cost is too much. He stated he will drop UTOPIA. He runs his own business, and his income is down seventy-five percent from four years ago. However, the City Council is going to raise taxes fifty percent. He questioned whether that seems right. The City needs to find a way not to pay UTOPIA until the job is complete.

Mary Greer, resident, said she does not agree with the property tax increase. She can afford it, but she do not have access to UTOPIA. She does not believe the City should be in this kind of business, and they should get out of it. She suggested the City use the two large marquees for the high school to advertise the City Council meetings. She learned about the meeting tonight because of a robocall. She said if the City has $30 million in savings for new projects, they should use that money to pay off the loan. The City budget should take a cut. She stated she has a PhD in Molecular Biology and makes less than one-third of the City Librarian. She has not had a raise in six years, and she now pays for many of her benefits that she did not have to before. All of the residents have taken a lot of cuts, and she thinks it would be proper to ask the City Council and employees to look at making cuts. It is unheard of to give someone a raise at this time.


Judy Cox, resident, indicated that a friend of hers filed a GRAMA request to get the agreements with UTOPIA. She has not had a chance to read all of them yet, but one of the agreements was for Michael Kennedy, a Washington D.C. lobbyist, who has been paid in the past to lobby on UTOPIA’s behalf. She asked is the City is still paying for a lobbyist, and if so, how much. She then questioned how that was going for the City. She asked what the purpose was for getting federal funding to put UTOPIA in the Nielsen’s Grove Park. She assumed there was a specific purpose for that, such as monitoring water or electricity. She asked why the park, which is one block from her home, has UTOPIA, but she still cannot get it. Ms. Cox said the entire state is shouldering the cost of the audit that was just done on UTOPIA, and they will have to continue to shoulder the costs of the audits for this organization. In the free market, that would be self-regulating. Ms. Cox said she expects the City Council to trust Mr. Chesnut. They hired him. He is a City employee, and she expects the Council to trust him just like she trusts her children. She also expects the Council to verify. If they have not done their due diligence like one of the Councilmembers has, they need to. There have been other ways shown to cut the budget.

Phil Hornberger, resident, commented that most of the current Council did not vote for UTOPIA originally, but many of them did vote when they doubled down on UTOPIA and increased the bond. He said it would be nice to hear from the Council on what options they have instead of raising taxes and why raising taxes is the best option. He noted that Mrs. Street sits on the UTOPIA board, and UTOPIA came with new management in 2008. They had a plan to improve the take rate; however, the numbers are still failing and UTOPIA is still losing money. He asked what the City can and is doing to hold UTOPIA’s feet to the fire to make sure they are trying to improve as a business. He questioned what things UTOPIA is doing so the City does not have to have this discussion five years down the road. When it comes back, the City will have to hold this meeting in an auditorium. The payment that is coming up is just to make the bond payment. It is not to improve UTOPIA or the service. There are a lot of people who want to sign up for UTOPIA that cannot get it. There are people who want to sign up, but it costs $2,500 even if it is in front of their house. That affects the take rate. He asked what the City is doing to improve these issues, so the City can improve the situation they are in. A lot of ideas have been given, and he would like to hear from the City Council. He encouraged the City Council to take the time to look at other options.

Afton Miller, resident, said she wanted to go on record to say that filing for bankruptcy is not a lack of integrity. She is thankful to live in a country that has legal bankruptcy for individuals, businesses, and cities. There is no shame in using these legal instruments, and they are ethical instruments. Stockton and San Bernardino, California have both filed bankruptcy because they were mismanaged. This is mismanagement, and bankruptcy should seriously be considered. Ms. Miller said she has UTOPIA, and she received a letter asking the residents to let their voice be heard at the Truth in Taxation hearing. The letter stated that at past meetings the vocal minority against UTOPIA has been present. Ms. Miller indicated this vocal representation is a representation of many people. It is not a vocal minority. There is not room enough for all of the people who would like to be there. Ms. Miller said she was talked into UTOPIA, and it was supposed to be wonderful. It was a $3,000 fee, and she has a twenty-year lien on her home. The payment is $25 per month for the faster Internet. It sounds like the swindle of an old lady. She said if she had known about the burden this is placing on the residents, she never would have signed up for it. Years ago in California, people were so sick of their property taxes being increased, that they passed Proposition 13. They had to do without hours in the library and the


roads were not repaired. Many things are bad in California and part of it is because they passed Prop 13. The City should seriously consider bankruptcy.

Nada Stevenson, resident, said she came because she did not have anything else to do. She noted she has lived in Orem since 1995. She knew ten years ago that UTOPIA was basket of worms. She tried to talk to people about it, but they would not listen. She questioned how it got the name UTOPIA. She said she is worried about the Councilmembers because they remind her of a jury. There is always one that holds out, and then they have to start this all over again. She has seen a lot of things that have happened in this town, and she would like to place a bomb under the monstrosity on State Street. She suggested the City Council give everyone a number so they did not have to stand in line to speak for so long. She is frustrated about a lot of things in Orem, and she does not have time to explain it all to them. She invited each of the Councilmembers to meet with her so she can tell them how to get more money by enforcing the laws that are already here. They will not have to raise taxes, because they will have so much money they can all go to Disneyland.

Rich Reimschussel, resident, said he has been a proponent for UTOPIA since it began. He calls UTOPIA every year and asks when he can get it to his home. Every time he is told it is on next year’s agenda. They always have an excuse. He questioned why the City has a twenty-one percent interest in the project, but it is not into all of the city yet. The wire is in the street by his house. He was told it would be $2,700 to bring the wire from the middle of the street to his home. He was also told there would be a lien on his house until it was paid. He will not go with UTOPIA, and he will look for other sources. He said he is against the tax increase. He encouraged the City Council to find out what UTOPIA has been doing with his money for the last ten years.

Robin Devey, resident, thanked the City Councilmembers for their service to the city. She said the Council is getting hammered pretty hard tonight; however, she is frustrated and looks at what the City Council is doing vote after vote. She does not see their interest in decreasing the size of government. Mr. Andersen is the only one who is on the side of the people. He is looking at how the City can save money and cut the budget. Mr. Andersen presented eleven different items for how they can cut the budget, and he could not get a second on any of his motions. The Council gets a free lunch during their work sessions that the residents pay for. Mr. Andersen presented cutting those lunches and no one seconded that motion. They should be looking at every item they can cut before they raise taxes on the people. There are people hurting in the city, and this is not the time to raise taxes.

Alan Christopherson, resident, stated that he has lived in Orem for fifty years. Everyone needs to recognize that the residents are opposed to having things forced upon them. He is against taxes to pay for UTOPIA. He cannot have it anyway, because it is not available in his neighborhood. One of the real issues is government taking away their freedom. The Recycle Program is another way the freedom is being taken away. A lot of people did not know that they had to opt out of it. His wife’s parents had their freedom taken away from them in Germany, so they came to America. The citizens need to stand up for freedom and live as brothers and sisters in this great City of Orem. His wife works as a crossing guard for the City, and they love it here. However, he is opposed to having his freedom taken away.


David Herring, resident, asked Mrs. Street if she gets paid for being on the UTOPIA board. He was told that she did not. Mr. Herring then noted he owns a business in Orem. His first business was an Internet service provider for websites. They did hosting and was on the iProvo network. That network was unreliable, and it never got better. He ended up switching to AT&T. It was unfortunate because he loved iProvo when it worked. He has tried it again, under private ownership, and it is far better than when it was under government ownership. The speed is the same, but it is reliable. His family in Orem that has UTOPIA does not need it. It is a luxury item, so when it goes down it is not a big deal to them. It does go down frequently. If the City is trying to justify this as some sort of business development, no business is going to want a service that has a ten percent down time. They will go to Comcast. He asked the City Councilmembers what their philosophy on government is and if they are making their decisions based on that philosophy.

Christina Mutch, resident, said she is opposed to the tax. She is on a fixed income, and life gets difficult. She said she has looked into UTOPIA and found that ten other cities are paying for UTOPIA. After the thirty years of payments, UTOPIA will cost $500 million. That is a lot of money. An average of $97 a year is what it will be to pay this $2.8 million each year. If the City cannot come up with more revenue next year, she will have to come up with another $97 to pay for it. She said she will have to do this for twenty-eight more years. That is stupid. The City needs to bail on this. It is not the residents’ obligation. It is the City Council’s obligation. There was no vote of the people on this. If they have to file Chapter 11, then do it. Otherwise she will move somewhere that does not charge her $4,000 in taxes each year.

Gary Downey, resident, said he is a Lieutenant for the City of Orem and has worked there for twenty-eight years. His son has a Master’s Degree, and is a police officer in Sandy. Mr. Downey said he is not rich, and if the residents think the officers are getting rich off of them, that is not the case. He noted his career is almost over. He will not be rich, and he will not be poor, but he will not be where he wants to be at his retirement. He heard someone say that they would take his job for fifty percent of what he makes. In a few years, they can have his job for fifty percent of what he makes, and they can see how long they will last. The job has affected his life. He has heard the Councilmembers get ripped into tonight for being serious and professional, but he appreciates that they are. He knows they will have the best interest of Orem City, and whether or not there is a tax increase will not affect him that much. UTOPIA is what it is. He understands more about it because he has attended some of the meetings and has listened. It is not just something they can get out of. He indicated he would vote for most of the Councilmembers, but there is someone that he would not vote for. There was a comment made by the Councilmember that Mr. Downey did not appreciate. He expressed appreciation to the City Councilmembers and supports what they do.

Dawnell Zobell, resident, said she is disappointed that the residents did not hear about this meeting until recently. She signed up for UTOPIA at the beginning. She was told that her rates would never increase because she was a guinea pig. The rate started going up and when she called them she was told that they have a new billing system and they did not have any record of that promise. She and all of her neighbors have dropped UTOPIA. The service has been terrible, and they did not like it at all. She knows there have been improvements, but there is still a long way to go. She attended meetings with UTOPIA and felt like she was just shoved to the side. She has served this community and received an award for being the Volunteer of the Year. She


loves this city. She ran the girls softball program for many years, and they were always in the black. She said there must be some way the City can break the contract with UTOPIA. She noted she would like to see some way to resolve this without increasing taxes by fifty percent.

Peter Green, resident, said he was excited about UTOPIA when he first heard about it years ago. The speed was exciting. The first clue that something was wrong was when they dug a trench to bring it to his home instead of utilizing the telephone pole. The bond and the interest are the issues here. It is wrong to make people pay who are not getting service. It is also not right to give the service to people who do not want it. Things can be done to cut budget, and he would like to have Mr. Andersen raise his motions again to see if any minds have been changed. He does not accept any change in UTOPIA as long as they have the current Board of Directors. He was dismayed with the audit because it suggested the new subscribers pay for their connection fees. That cannot work and shows a lack of business understanding. It is difficult to compete with Comcast and Centurylink, when they are offering $20 teaser rates. They need to get some sort of corporate turnaround artist in there who understands the technology and understands business, too. They need to drop the idea that it is a fiber technology company and just use those assets that are out there as quickly as possible and turn them into money producing assets rather than money consuming assets. Nathan Guinn, resident, said he came tonight to state his opposition to UTOPIA. As he has been listening to the reasons and thoughts that everyone has been sharing, he is humiliated that they are discussing something that has nothing to do with bettering his life or the life of his family. They are not talking about water, sewer, police, fire, or things that have to do with their safety or well-being. They are talking about the Internet. He does not need UTOPIA. The basic service already exists out there. This is not something the City needs, so they should just get out of it. He suggested they salvage what they can and then leave. He said the City needs to turn its attention to what the residents really need. Cable and Internet are luxuries and are not a tax. Melodee Andersen, Councilmember Andersen’s wife, stated that Provo has a fiber optic company and did not join together with any other city to do this. Provo is into its network $40-45 million and is fully wired. They have tried to sell the company, but that has not worked. Orem is only one third wired and is struggling now. Orem is into in $119 million with many other cities. A few years ago, Orem had the option of opting out. Payson did opt out, so they are just paying off the debt they had incurred to that point. There were five of the current Councilmembers who voted to approve UIA, to incur more debt. She said she may have some of her figures off, but UIA is just a second mortgage for UTOPIA. She said there have been about seventy-five people who have spoken tonight, and only three of them said they were fine with a tax increase. That is representative of the people, so this whole Council should be voting against this tax. Mr. Chesnut said he would cut the budget if the Council told him to. She knows there are ways to cut the budget, and it is not cutting the police, the parks, the fire department, which are necessary things. It is fluff that the people tonight have said they do not want or need. The economy is terrible, and Orem is doing the same thing they have done in Washington D.C., which is overspending. The Prophet of the Mormon Church has said to stay out of debt, and this City is not staying out of debt.

Brent Preece, resident, said he was at the first meeting when they voted on UTOPIA. There were many people there, and there were people there against UTOPIA who gave warnings about getting involved. This meeting was foretold in that meeting. Socialism does not work. It has not


worked for 6,000 years. Cities are important. They need to have planning, infrastructure, roads, but the City does not build those. It is the private enterprise that they get to do it. This thing is not going to be resolved, and it never will. They need to stop it. He does not know what they have to do because is it hard to get out of a bond, but they need to get out of this. He hates to see bankruptcy. He does not like that either, but they have to get out.

Leslie Nelson, resident, stated that she had a few ideas occur to her while listening to the other residents. She asked the City Council to give her a refund because she has bad knees, and she is not going to play softball. She is not going to swim the pools because it gives her ear infections. She questioned if she could get a refund on her taxes because she is not using those services. She also does not drive on every street in Orem, so she wondered why she is paying for those streets. She is an excellent driver, so she does not need a policeman following her around. She lives in a great neighborhood, and she has not called the police on her neighbors, so why is she paying for that. She has never started a fire in her house, so she does not need the fire department. She does not understand why the City Council is here because her money is her money and why she is paying them to do anything. In fact, she questioned why they even have a city. She wondered why they cannot just keep what they earned all by themselves. She said some of the talk they have heard tonight is every bit as silly as what she has just said. If anybody wants to swim, maybe they should just all build their own swimming pools or dig their own wells. There is a lot of emotion going on because people are afraid. She said it is important for the City to invest. She has owned a business in Orem for twenty-seven years, and she has had some financial reversals in her business and her income has been reduced. However, she has given increases to her employees because they are part of her business, and they are important to her. She believes that if she did not treat her employees right, her business would not be as strong. She is not only in favor of the tax increase on her property of fifty percent of the small amount Orem gets, but she is also in favor of using part of the reserve to pay for Orem City’s employees to have a small increase. People who are making $50,000 a year would see a very small increase in their salaries. It is not a lot to the resident’s, and it is something that makes sense to maintain the kind of strong city they have and to pay for forward thinking infrastructure that will help them individually and as businesses to help attract more businesses to Orem. She thanked the City Council for sitting there and listening to the comments.

Mark Bowden, resident, said he is not understanding how this can be happening if the City owns UTOPIA. It does not sound like the other cities are very happy either. He said the cities should get together to try to restructure the debt and figure out a way to make this work. He is not going to say that everyone is poor and everyone is hurting because the City Council already knows that. Something has to change.

Tom Hover, resident, stated the UTOPIA line came up his street and stopped at the water pump house. The City Council is hearing from the residents, and Mrs. Street is telling the newspapers that the UTOPIA audit is no big deal, and UTOPIA is doing fine. Maybe they can read the water meters at the pump house with UTOPIA. He has to think that maybe the City itself has gotten so entrenched in the City workings, that it has forgotten about the people’s workings. He questioned whether the City has made a commitment so strong that now they cannot back away from it or find another solution. Private enterprise could probably serve the needs of the City as well as UTOPIA. He does not need UTOPIA. In fact, when they were right next to his house and turned west instead of going over to Palisade, he was kind of happy. A lot of people would say


he is not a very forward thinking person, but he has adequate access to the Internet. He asked why the Council is not really listening to the residents. He felt like the last two times he was here it was just talking to the brick wall. He has talked with Mr. Seastrand and felt that Mr. Seastrand was initially looking for alternatives, but Mr. Hover does not know if he still is or not. The City attorneys are the same way. He does not see any emotion, humanness, or concern about people. He wished the City Councilmembers would really think about the fact that they are people. He said the Councilmembers could be rock stars if they just support the people of Orem and not keep burdening them with more taxes this year or next year or for twenty-eight more years.

Keith Kuder, resident, stated he is honored to live in Orem, and he is a customer of UTOPIA. There is mismanagement within the organization because they were not billing him for three consecutive months. He called them, and they said he has to pay $150 that he failed to pay them after he had agreed with them to automatically withdraw the funds from his bank account. It takes a lot of courage to stand up here and speak. He stands with politicians all of the time whispering in their ears, and it has been a privilege to do that. He traveled the state of Utah with Morgan Philpot last year. Mr. Kuder said the last time he spoke in a city council meeting he was a teenager in California. He asked for a police chief to stand up for the people in Los Angeles and said they needed new blood. The chief resigned the next day. Mr. Kuder warned that if the Council votes for the tax increase, when he posts on Facebook he gets 100,000 views. There are hundreds of people at this meeting, and they speak to their neighbors, children, parents, and family members. Orem is not the same as other cities, and some have gotten assistance from the federal government. Orem has been paying a lobbying dollars to lobby Congressman Jason Chaffetz, but he is not going to help them out. They all should know that. Mr. Kuder helped Mr. Chaffetz into office, and Mr. Chaffetz was not elected to bail out private pet projects. It is a luxury to have Internet to the home, and Mr. Kuder pays for it. However, the taxpayers in Orem should not have to pay for this. He thanked the Councilmembers for their time and urged them to vote no. He said if they do not, he will work with others across the city to make sure their tenure is done. Should they decide to vote yes, they should retire gracefully with their heads down.

Dennis Clark, resident, said he supports the tax increase. He is a UTOPIA customer, and he finds that the service is better than any service he has ever had. He found that private enterprise is not interested in providing a fiber network. He has a slightly different experience than many of the people who have spoken this evening. He has a son who lives in Seoul, Korea, which is the most wired nation in the world. They have better Internet then he has with UTOPIA. They have it because the government saw a need for it. They saw the need for it in education, private learning, and entertainment. They regard it as a utility, which is how he regards it. He is a retired librarian and because he is retired and living off his pension, he does not have a lot of money. He is able to pay for his bills, and he is willing to pay more for the same reasons he is willing to pay for public schools and roads. If the City is going to do something like this, he believes it should be done right. It should be done for the betterment of the entire community. He does not have a Facebook account, so he cannot threaten the Council with 100,000 readers of his posts; however, the City Council does have his support and they should not be thinking about retirement. They should be thinking about the future.

Alyssa Owens, resident, said she has enjoyed UTOPIA but she came here tonight because she does not feel like people should pay for something they do not have. People should not be forced to pay for something that is failing. She has read the numbers and wonders why Orem’s bond is


so high when there are so many cities involved. She questioned who the bondholders are and wondered if they have any risk. She does not see any proof that UTOPIA is going to change. The City needs to live the proper role of government, and if they do not know what that is, they have not been listening tonight.

Dan Holdaway, resident and Orem Police Officer, indicated that he has been in law enforcement for ten years. When he started in law enforcement he did not work for Orem nor live in Orem. He made two conscious choices to come to Orem because in law enforcement this is known as one of the better police departments. That is not only because of the officers and the leadership of the department, but also because of the City. He chose to move to Orem because he likes the community and what it has done for him as an employee. He wanted to let the Councilmembers know that he appreciates what they have done for him, for his family, for his law enforcement family, and his City family. He is aware of many changes the City has made in the last four or five years in his department alone that has saved the City approximately $200,000 a year. It is his current responsibility to lock up the City Center twice a week. When he works graveyards, it is their responsibly to clean the floors. Those are choices the City has made to cut the costs without putting that burden on the residents. The City Council is receiving a lot more information about this decision that other people are not aware of, and he believes the Council will make an educated decision about what to do. He expressed his support for that decision.

Doug Boyd, resident, said he has never been to a Council meeting before, and it has been very interesting. He said he has two questions, which were how they got here and whether the City Councilmembers can honestly look inside their hearts and say this is going to end. He said he called UTOPIA and was told that it would not be in his neighborhood. It is not in two thirds of the areas in Orem, and it does not even sound like a good idea. This was a bad choice, and they have to make a good choice now. This is a big sink hole that just keeps going further and further.

Mayor Evans closed the public hearing.

**Mayor Evans called for a break at 10:55 p.m.

**The meeting resumed at 11:08 p.m.

Mrs. Black asked staff to explain what has been done to restructure the UTOPIA loan. Mr. Manning explained that in December 2011 UTOPIA was able to refinance its existing debt. This locked in the amount owed to the penny, so the City would know its exact obligation through 2040. They did not know that before. If the system were to grow and bring on more subscribers, it would offset the amounts the cities have to pay.

Mrs. Black then noted that someone had implied there would be a property tax increase every year to cover this debt. She questioned how long this property tax increase would cover the debt. Mr. Manning indicated it would cover the UTOPIA debt until 2023, and if UTOPIA has the growth it is projecting it would take it through to 2039.

Mrs. Street indicated there were a number of comments about the model being used and the upfront connection fee being onerous.


Mr. Manning said there are now three different options for signing up. The first is to pay $2,750 up front. The second it to finance over time, which would be $3,000 and could be paid off early. The third is to do a lease option and pay for two years. This is based upon the same model people have with their cell phones. UTOPIA is betting that they will like the service and will not want to change after the two years. If someone chooses the finance option, there is a notice of interest placed on the home until it is paid.

Mr. Sumner stated that he has been one of the toughest critics of UTOPIA because of its various marketing plans and sales approach. UTOPIA changed it, and it is more compatible to the residents. He signed up and his lease option for two years with the Internet and phone is $25 cheaper than Centurylink and is better service. Mr. Sumner said there has been some confusion as to the percentage amount on the property tax increase.

Mr. Chesnut reiterated that the increase is only on Orem’s portion of the tax bill.

Mr. Sumner then referred to Mr. Wright’s comment about the $30 million in surplus. Mr. Sumner asked what that is used for.

Mr. Manning said that on any given day the City has $30 million invested. Every single week, they will bring a portion of those funds into the checking account. All of the sales tax goes directly into savings, so they will see infusions there constantly. The City pulls them out for day-to-day operating needs. The City has an $80 million budget, and it is spent pretty consistently throughout the year. Payroll is met every two weeks, and that account houses the City’s daily operating expenses. The City also holds money for people who are developing and have to post bonds for their projects. Sometimes those bonds are very large and do not belong to the City. Some of the balance includes deposits paid for utility accounts. Not all of the money is accessible by the City. That is the combined amount that belongs to various funds. In those funds, the City has money set aside for emergencies and future projects.

Mrs. Street indicated she wants to address some of the misconceptions, some of the differences in philosophy, and she would like to educate those present with what she knows about UTOPIA and the process. UTOPIA has become a very political issue that is dominating the budget discussion, but it should never have been a political issue at all. She said she was elected to the City Council in 2009, and she began serving on the UTOPIA board in September of 2010. She was asked by then City Manager Jim Reams to serve on the board. She asked Mr. Reams if this would be a conflict of interest, and he told her it would not, and the board thought it would be a good idea to have one of the Councilmembers be there to give the City’s perspective on what is happening. Mrs. Street said she was a little taken aback when someone challenged her right to vote on this issue because of a conflict of interest. Serving on the board has helped her become educated about UTOPIA, and she is able to bring information back to the City. She has heard many times tonight that UTOPIA is a private enterprise that the City never should have been involved in. That is a basic misperception of what it is, how it works, and what the City’s roles are. She looks at UTOPIA as a great opportunity that has some things that should be done differently. For the people who think the City should declare bankruptcy, they should be careful what they wish for. A bond rating is very important to cities if they want to bond for projects such as sewer treatment plants. Declaring bankruptcy is really not an option. Mrs. Street stated that this is not a failed enterprise. It is pretty much on track. The initial plan as it was laid out is


a very consumer oriented model of deployment. It was based on take rates and rolling out infrastructure. Mrs. Street then gave an analogy of a road. All of the cities in UTOPIA agreed to build a road. The road started in different cities and different portions got built. The funding that has been released as it goes is to pay for sections of the road. They do not have the full value of the road yet because all of the sections of the road are not connected yet. This project has been rolled out in phases. In terms of being a phased project, it is very expensive to say they are going to pay for different chunks. These infrastructure projects are very heavy end front loaded on costs. That is why private enterprise typically does not do them. That is where UTOPIA is. They are in the middle of the public infrastructure. There are people who are saying to stop doing it, which means the City would end up with a half-built road. She also heard that people do not want to pay for something they do not have access to. Mrs. Street agreed with them 100 percent. She stated that staff looks very hard to find solutions to resolve these problems and to help make things go smoother. They have a citizens committee, and Mrs. Street encouraged everyone present to attend those meetings. Some of the feedback they have received from that committee is that the City needs to finish the deployment. Orem is a member of a consortium of cities. They have signed a contract, which says UTOPIA deployment only has so much money to use at a time, which means they get phased chunks of deployment. That is where they are right now. She is hearing very clearly that there are many people who are not happy with where they are right now, and they want it to be fully rolled out. That is the only way the heavy front loaded cost of building it gets equalized by the number of users. There are things they can choose to do as a city, such as saying the City is going to own Orem’s schedule for going forward and still be good partners with the other member cities. It would be a change in course, and she is an advocate for changing the course. It requires that the members of the Council get together and make a plan to move forward. There are studies that need to be done before any decision is made, and it is more work. It is something they should be looking at to make UTOPIA more successful. It makes it more difficult when robocalls go out with misinformation about it being a failed enterprise that is bankrupt. She has heard tonight that the UTOPIA service is a bad service. UTOPIA is not a service. It is fiber in the street. It is the mechanism in which the companies can hook on to provide those services to the residents. In the future, it will not just be consumer applications that ride the fiber in the street. It will be Public Safety applications and water metering applications and many cities across the country are using this to enhance the level of municipal services they provide. That is the next step the City needs to be taking to make sure it is enhancing its ability to provide public safety for the community. That will be enabled by fiber. Not everyone is going to agree on this issue or on her position on fiber or the need for it to be publicly owned. Several people commented that this will never be profitable. She questioned whether the residents expect the sewer lines to be profitable. Sewer lines are not a profit center for the City nor should they be. The City just recovers the cost to provide that infrastructure. Mrs. Street gave an example of working at a grocery store when she was younger and had to manually enter the price of the products. A customer came in once and told her that one day people would carry plastic cards to pay for food, and the money would come directly out of their checking accounts. She thought he was crazy. There was no such thing as Internet then, and she had an 8-track tape player. There are applications and reasons why fiber makes sense that they have not even talked about tonight. It enables education, public safety, and the ability to provide better municipal services. Mrs. Street said she appreciates the comments that she paid property tax to the school district long before she had children in school, and she realized she benefitted from that because other children attend school. She gets frustrated and emotional and shares the residents and concerns. She addressed the residents who commented


tonight that they are listening to her, watching her, and thinking about her involvement with UTOPIA or her votes and are making their decisions whether or not to vote for her. She said she will not make a decision based on whether or not these people will vote for her. However, she would like them to make a commitment with that passion to take the time to learn as much about these issues so they can put their energy into helping find solutions and helping to solve problems. They need to put the rhetoric away and agree to disagree if they necessary. They just need to realize that they are all in this together.

Mr. Seastrand thanked those present for coming tonight. This has been a unique experience. There has been a lot said this evening about UTOPIA. There are many differing opinions about it, but that is not the real reason they are here tonight. He stated they are here tonight to determine how to address the $3 million shortfall the City is facing. There are two or three assumptions that need to be cleared up before they can progress any further. It has been implied by a number of organizations and individuals that the City should just not pay the bond debt. The City has had many people look at ways to address the contract and look for ways to alleviate the pressures of UTOPIA. To his knowledge, they have not found a way. This is an obligation the City has to pay. The UTOPIA debt was something that was agreed upon, and the money has been spent. The bond holders have expectations, and the City has requirements to pay the debt. For clarification, he asked various individuals in the meeting if they had been able to see any way the City does not have to pay the UTOPIA payment. Greg Stephens (City Attorney), Hans Andersen (Councilmember), Aaron Campbell (resident), Dick Brunst (resident), Dave Spencer (resident), and a representative from the Sutherland Institute all said there is no way the City did not have to make the payment.

Mark Hornberger stated that since the agreement says it has to be paid for with sales tax, the City should cancel sales tax.

Mr. Seastrand confirmed that he does not see a way to get out of paying this debt obligation. He said he sees four ways of paying this obligation. The first is to pay for it out of savings. The second is to pay for it with additional budget cuts. The third is to pay for it with a tax increase, and the fourth is a combination thereof. He asked staff whether they can use CARE Tax funds to pay this obligation. He was informed that was not an option.

Mr. Seastrand then wondered if they could use the savings in the Water Fund to pay for it. Mr. Manning stated there is a mechanism in place where the City Council could bring money from an Enterprise Fund, which is a water utility, into the General Fund for purposes of the General Fund.

Mr. Seastrand said the result for doing that would be depleting those resources that are needed for that fund. Another option would be to take it out of savings. However, the impact on that would be a reduction in the City’s ability to complete future projects that have been planned or may need in a go forward plan. There is one fund they have looked at in the past, which is the General Fund reserves. There is a State requirement that limits the amount that can be in there and also requires a minimum amount. It cannot drop below five percent, or the State will require the City to increase property taxes.

Mr. Chesnut indicated the reserve fund is currently at nine percent.


Mr. Seastrand said there is a possibility of taking it out of savings. The challenge is that the debt payment for UTOPIA is long-term. They are looking out for the next twenty-nine years. The City does not have a long-term solution in pulling it out of savings. The reality is that while savings is an option, using them might create a greater problem as they go forward in the impact of not having sufficient funds to address the issues that come up in the day-today operations of the city. Using savings is a factor to consider, but there are pros and cons with that scenario. As they look at the other things that are remaining, they have the option of reducing budgets, and as was stated, they could take ten percent out of each of the budgets. They could reduce personnel or reduce a number of things that have been thrown out on the table. Those are options that the City Council is going to look at. They have been talking about them for a while. Everyone needs to realize that those options also have a significant impact on the City’s ability to provide services to the residents. It is not an easy decision, and there are challenges with each of those. That is the decision they are here to discuss tonight. It is not a matter of whether they should continue with UTOPIA or not. That is not the issue. The issue tonight is that there is a $3.5 million shortfall in the budget that the City Council needs to address by looking at the options they have in trying to go forward with that. While they have spent a lot of time on the discussion about the pros and cons of UTOPIA and whether it should be or should not be continued, the reality is that the City has that obligation to pay whether they want to or not. The City Council can only address the issue in terms of how best to go forward. That is his perspective in terms of how he thinks they should be looking at the challenges and issues ahead of them.

Mrs. McCandless thanked Mr. Seastrand and Mrs. Street for their comments. She said there are two issues that have come up this evening. The first is the UTOPIA philosophy and whether the City should have done it or not and where should they go with it now. The bigger issue this evening is what they do about a budget shortfall at this time. She reiterated that the Center for Story is not part of any tax increase proposal. It is funded from voter approved CARE Tax monies and from private donations. Those will fund the construction costs, and as Mr. Chesnut has said, there is a business that is in the process of working through a commitment to pay for the maintenance costs associated with that. Mrs. McCandless said she was on the City Council in 2004, and she was one of the Councilmembers who voted unanimously to go forward with UTOPIA. One Councilmember was not there that evening, and two of the Councilmembers have since passed away. That leaves four members of this community who are still around who voted for UTOPIA in 2004. She said if the Councilmembers had thought they would be having this meeting tonight because of UTOPIA, they would not have approved it then. That is obvious. However, they did the best they could at that time with the information they had. The Councilmembers agonized over it, and that vote was one of the most stressful votes she has ever made. She said Mr. Campbell was correct when he said the thing the City can now do to help UTOPIA the most is to subscribe. The Councilmembers at the time did the best they could. They tried. They did not wake up the morning of the vote and question how they were going to stick it to the Orem residents that night. They wanted to do what they thought was best for the community. The Monday morning quarterback thing is easy, but UTOPIA did not work out like they thought it would. She expressed her support for the concept of UTOPIA and believes that data and technology infrastructure is an appropriate governmental function. Like Mrs. Street said, they will have to agree to disagree on that issue. She thanked the residents who contacted her and offered suggestions. As Mr. Seastrand said, the City is limited in what its options are. One option is to increase property tax. The other is to cut the budget. She received a lot of


suggestions on how that budget should be cut. It was interesting as she talked to one person who did not believe Orem should cut the snow plowing budget, and the very next day she got an email from a gentleman who suggested the City cut snow plowing. She has had people tell her that salaries and employees should be cut, that the park grass should be allowed to die, and not to mow the lawns. While some of those might not be her top choices in cutting the budget if she were the one cutting the budget, she appreciates the efforts of those who thought it through and offered suggestions. That told her what those residents would be comfortable living with in this community. Mrs. McCandless clarified that cities do not get extra dollars when property values increase. The City gets a set amount of revenue unless new construction comes in and that property is assessed. The bottom line is that the City has a multimillion dollar annual pledge payment that they have to make, and they cannot get out of it. As Mr. Stephens said, if the City stops making the bond payment, the bondholders can demand the State garnish Orem’s sales tax revenues. The City has used General Fund reserves to pay the pledge payments, and the balance is down to nine percent. She remembered years ago when they were getting letters from the State saying the reserves were too high. She expressed her opinion that the City has reached a point with the reserves that it would be unwise for the City to continue to use reserves to pay that amount. One of the questions tonight was how the Councilmembers responded to Mr. Andersen’s proposed motions. She recalled that the City Council did not have those motions prior to the meeting. She knew about some of the issues because she was sitting by Mr. Andersen and asked him for a copy of his information during the meeting. She said her decision tonight will be based on facts. The City has more expenses than it has revenue right now. Her decision will be based on what she feels is right for the entire community. She represents those present, but she also represents the many people who are not here this evening. She said she will also base her decision on what she stands for because that is why the residents elected her. Mrs. McCandless stated that one of the suggestions was to cut was the six percent employee match. She explained that Orem opted out of the Social Security System in 1980, and Orem employees do not pay into the system. The match is the portion the City would pay if it was part of Social Security. Because the employees are allowed to decide how those funds are invested rather than leaving it to the federal government, it makes those funds vulnerable. She finds it ironic that those who would advocate the privatization and personal choice of Social Security monies are so quick to want to cut Orem’s program. She said she is not willing to cut that match, she is not willing to cut the number of City employees, nor will she cut the operational funds of the City any further. She knows how much has already been cut. She remembers meeting with former City Manager Jim Reams, when the economy first turned down, and he said the City numbers are not what they need to be, so they needed to cut. He talked about eliminating positions and cutting employees. The City Council was willing to make those cuts if needed, but through employees taking early retirements, it was not necessary. However, like Mr. Chesnut said this evening, there are twenty-five fewer position now. Other employees have had to pick up that work. She will not cut the level of service Orem residents have come to expect, deserve, and demand. She listens to people who say they love Orem, and she questions what it is that they love about Orem. Even the people who are opposed to the tax increase this evening have said they love Orem. The residents do make Orem great. People care about each other and their neighbors. Orem is also great because there is an infrastructure in place to help support those neighbors taking care of each other and helping. Some possible scenarios for cuts would be to cut the writing lab at the library, cut $175,000 and stop salting the roads, cut $325,000 and eliminate Neighborhood Preservation. At the last Council meeting, they were admonished by the members of the public in attendance to increase the enforcement of illegal apartments. They can


decide not to fill the positions that come open in Public Safety because of retirements. They can eliminate Summerfest. They can close the library or cut hours back. They can stop having swimming lessons at the Rec Center or get rid of merit badge opportunities. They can get rid of crossing guards at school cross walks. They can stop repairing pot holes in the roads or just say they will get to it when they can. They can close the Senior Center, or only open it for a few hours at lunch time to make sure the seniors get lunch. They can close the classes and programs for the seniors. There are cuts that can be made, but it will negatively affect the quality of life in this community. She said she will advocate keeping the $975,000 payment for the University Mall agreement. The mall is Orem’s golden goose. It brings in many times the amount of sales tax revenue than the City puts out in the $975,000 the City may give them. This year, the City is not anticipating using those funds. She clarified that the agreement is between Woodbury Corporation and Orem City. It is not with Nordstrom. She expressed her opinion that the property taxes are lower and the City service level is higher largely in part because of the sales tax generated by the University Mall. She stated she is afraid if they reprogram that $975,000, Orem effectively terminates the agreement that is in place. State law no longer allows cities to draft similar types of agreements, so those opportunities will be lost. She was going to talk about how the City came about to the property tax, but if the residents really want to know her thoughts, they can read the June 19th meeting minutes that talks about how the City looked at taxes, fees, utility fees, and iProvo. iProvo is a utility, so Provo can use utility funds. Mrs. McCandless said after listening to staff it become apparent to her that Orem cannot do a utility fee. It would be dishonest to charge a water utility fee to pay for UTOPIA. Just like it would have been wrong for the City to say staff is proposing a property tax increase to pay for public safety or parks when that property tax was going to go for UTOPIA. Even Mr. Van Tassel said he appreciated how Orem said this increase was for UTOPIA. Mrs. McCandless said to those who have politically threatened her, she really hopes they are not wanting her to put her political self-interests ahead of any other thing in the community. She knows some of the people tonight. She watched her neighbors clap when someone threatened the Councilmembers that if they voted a certain way they would work to get them off the council. That hurt to watch her former relief society president in her ward clap. However, that is life. She expressed her hope that these people are actually better than to think the Councilmembers should put their political lives over anything else.

Mr. Sumner commented that he knew it would be a tough night when his wife kissed him goodbye and said, “It suck to be you.” He said he is a terrible politician, but he wanted to get on this Council to serve. He has been in business in Orem for thirty-five years, and he thought he could add something to the Council and make some good decisions. However, he also needs to be able to look at himself in the mirror and know he has done the very best he can with the knowledge he has. It has been communicated that the Councilmembers are all stone-faced up here, and they have already made up their minds. That is so untrue. It is not the City against the residents. They are all in this together. If the property tax increase is approved, his taxes will go up as well. In fact, his will be a little heavier than many of the people here tonight. Some people have said they have been cut back on their jobs or been laid off. Mr. Sumner said he has taken a forty percent cut with his current position. He reiterated that they are all in this together. Les Campbell said they need to sit down and just work this out. That includes the Council, staff, and residents. He said he believes that UTOPIA can be a good thing for Orem once they get a handle on things. There have been some terrible mistakes made, and he has been a big critic of UTOPIA because of its marketing, sales, and approach. That has been corrected somewhat, but they have


a long way to go. Every member on the City Council is pushing staff to make this a revenue in the black, but it is going to take years. Mr. Seastrand said the issue tonight is that the City has to pay the $2.8 million. They cannot get out of that. He said he likes Steve Diamond’s comments about setting goals and marketing strategies. The City is pushing for that, and things are getting better. He signed up for it because it was affordable and not because he is an Orem City Councilmember. He saved $25 a month going with UTOPIA over Centurylink. They are getting very competitive now. Some of the residents are shaking their heads, but he is willing to show them his bills. Mr. Sumner stated that a lot of this tonight is compromise. He does not think anyone should go out of here tonight getting everything they want. Politics and citizenship is a compromise. He said he is worried about the residents with the property tax going up if this passes because his taxes are going up, too. He expressed concern for the increase to businesses. It concerns him for the future of new business coming in and the possibility that they will stay away because of higher taxes. Commercial property tax is almost double that of the residential tax. Duane Johansen has been in business forever, and it breaks Mr. Sumner’s heart that a $1,500-1,800 will push Mr. Johansen out of business or make him sell. Mr. Sumner said he does have some legitimate concerns about residents, but he also has a serious concern about the business rate. He noted the no one here tonight should get everything they want. This is about compromise. He said he would like the other Councilmembers to think about various issues. He proposed that they address the vehicle replacement, employee pay raises, and reduce the percentage of the property tax increase. It will put some pressure on staff to make the budget work, but those are three areas they can look at to save some money.

Mrs. Black said she has studied and studied this, while the residents come and think the Council is flying by the seat of their pants and have not even thought about any of this. Someone just asked her if she has a conscience. Mrs. Black stated that she does have a conscience. She wants to do what is right and let the consequences follow. That is her philosophy, and she needs to be able to look in the mirror at night and know that she studied this, made every effort to find out all of the information, and then made the best decision that she could. If she can do that, she can feel okay. As they have looked at these things, they have been presented with options that are not workable. A property tax increase is not anybody’s favorite option or desire. An increase will affect her, too. Her property value went up $30,000, so she will be paying even more. The Councilmembers are regular citizens just like everybody else, so they are in this together trying to do their best. As she has been on the Council for the past five years, she has seen severe cuts made in the budget every year that were painful. It is not like staff has been cutting the fluff out. The fluff is long gone. The pain has been occurring for five years, and it has not been fun for anyone in the City to see this happen. A lot of things that really needed to happen have been put off. There gets to be a point where not doing something is more expensive than doing it. She said that Mr. Andersen gave several suggestions for cutting, which has been referred to tonight, and the Council did go through those. Some people are acting like Mr. Andersen is one person and the other six people will not go along with him. Mrs. Black stated there are reasons that each of those proposals should not be thought about in such a simplistic way. There have been reasons for each of these that the other Councilmembers were not ready to go in that direction. Mrs. McCandless has mentioned several of those reasons. They may talk about that again as they go on through the night. Her concern with moving on with the City of Orem is putting the City on a sustainable path. The Council can put something off for a year, or not water the parks this year, but they will have lost a lot of infrastructure by doing that. That is a loss of money to the City. All of the things the Council considers for possible budget cuts have real consequences. The


residents need to realize that those consequences can be serious and may be something they do not really want. For example, if the property tax is not approved, future cuts would have to come from the $43 million portion of the General Fund budget. They are not talking about $80 or $90 million. Legally, this is where they will be dealing with it. The General Fund budget would include positions, programs, and operations in the areas of police, fire, library, streets, parks, Senior Citizens Center, and support services such as legal, personnel, accounting, and Development Services. That is where the cuts will occur, and they will be real cuts. They will be difficult cuts, and they will be cuts the residents will not like. Orem is known for its great quality of life, and they want to keep it that way. People like to be in Orem. She had a lot of people who write to her and say they love being in Orem with its wonderful parks, great City services, excellent employees who treat the Orem customers well, and Orem’s taxes and fees are among the lowest in the state. With the proposed increase, the taxes are still lower than Provo’s. Her daughter who lives in Pennsylvania pays over $9,000 yearly in property taxes, and her community has a volunteer fire department and a library the size of a house. Orem has it pretty good here. Mrs. Black said she sympathizes greatly with those who have come up to say the affordability is difficult. She is concerned about that. She also noticed on the back of her property tax notice that if people do have a problem with paying their property taxes, there are methods to receive help. Mrs. Black said the question they need to ask themselves is what kind of city they want. It is a balance the City is trying to find. They do not want to overcharge their residents, but they need to pay their debts. It has been well established that the UTOPIA debt has to be paid, so they need to find a way to do it. The sales tax revenue has gone down nearly $4 million for the last four years, and they do not project them to come back up to the high level they were at. There has been a lot of economic development going on in this valley, and Orem is no longer the “only game in town”. Another cause is that Internet sales have taken away from the sales tax base. The City needs to have a good balance between the sales tax and the property tax. The property tax is a more sustainable level of funding. Sales tax is volatile. When she came on the City Council five years ago, Jim Reams told the Council that at some point they will need to consider increasing the property tax because the City needs a stable source of income in addition to the more volatile sales tax. The City has not increased property taxes for thirty-four years. People have talked about it taking place after tha, but that was the residents who voted on a bond, which is different than the City Council increasing the property tax. People have also asked the City Council to be courageous. To her, tonight in this room, being courageous would be to say there should be a property tax increase.

Mayor Evans said the reason he is on the City Council is because he loves Orem, and he wanted to see what he could do to help serve right now. He liked what Mr. Sumner said about compromise. Mayor Evans indicated his property tax would go up $200 a month if this were approved, and he does not want to have to pay it just like everyone else. However, he feels that for the value of the services he has received over the years, it is worth it. He has gotten the same feedback from everyone present. He has heard from the business community this week, and it has made him really think about how this affects them as well. He was on the Council eighteen years ago, and the employees knew he always supported salary increases when times were good. The employees in the company where he works are mad because they are only getting a 1.5 to 3 percent increase, and they are used to getting an 8 to 9 percent increase. Everyone has ratcheted down. Orem’s employees are hardworking and they do need something, but may because of what he has heard, they should do the incrementally. He suggested they do a property tax increase of $1.7 to $2 million and then ask staff to find the rest. He said this is the hardest thing


he will say all night, but he proposed that they hold off on the salary increase for another year. That hurts him more than anything else. He sees what the employees do. He knows what they do. He has watched them over the years. However, because of the feedback he has received, he would suggest they postpone the raises for one more year. Mayor Evans indicated Mr. Chesnut is the Chief Executive Officer (CEO) of this City, and the Council needs to trust him to work with the department heads to figure out where they make the cuts that will cause the least amount of impact. It will hurt. It will cut into muscle and bone, but it will let them see where this would be best. They could then do a smaller property tax increase. After the comments tonight, he is leaning towards a compromise.

Mr. Sumner noted that Orem City employees are the greatest. He is a State employee, and for the first time in five years, the Legislature gave them a one percent raise. That sounds good, but his take home is $12 less a month. They took the raise money and put it in the insurance program, so his is a negative cash flow. His point is that if the employees do not get a pay raise, it will not affect their insurance.

Mr. Andersen said he does not know most of the people who mentioned his name tonight, and he did not stack this deck here tonight. He indicated that he loves this country. People can express their opinions, and no one is going to get shot as they walk out of here tonight. He loves that there are differences of opinion at these meetings. These are the questions they want to ask their future candidates, if they agree with the residents. The reason each of the Councilmembers ran is because they thought they had the majority, and their opinion was the one that was going to win. He ran because he thought he could win. Mr. Andersen relayed a story of his son who told him no one wanted to be his friend. Mr. Andersen advised that with as many 6 to 1 votes that have been taken, he feels the same way—that no one wants to be his friend. He gave a history of UTOPIA. Mr. Andersen said that David White is a Certified Public Accountant (CPA), and when he stood up he said there should be a limit on what the City Council should do to the residents. Mr. Andersen said when he found out what was going on last July and August, he asked who turned these people loose with that big of a checkbook. He then gave options for cutting the budget, which included:

Cutting the mall subsidy - $975,000o The mall has received $13 million over the last twelve yearso Mr. Andersen’s son was on the City Council when they voted on this in the first

place, and his son voted against it then. Mr. Andersen said he is still voting against it

o The biggest landlord in the city should not be handed $1 million a year Cut the convention and travel costs - $200,000 Orem City credit card fees should be passed onto the users - $200,000 Delay purchase of half of the computer equipment - $80,000 Reduce the insurance benefits for the highly compensated – $608,000

o Employees making over $90,000 would pay $450 per month for health insurance Cut the retirement benefit match for the top 58 employees

o Every City employee has a minimum of 17.9 percent and maximum of 32 percent that is paid for by the residents

o The 6 percent is a bonus on top of that Cut the two percent pay increase - $576,000 Cut organization dues such as Utah League of Cities and Towns - $146,000


Travel and food - $200,000 Eliminate Commission for Economic Development in Orem (CEDO) - $175,000 Eliminate the retirement match for everyone - $960,000 Have the 284 employees who make over $70,000 pay $250 - $800,000 Have the employees making over $70,000 pay $350 - $1.2 million Cut the pay of all Councilmembers that paid for UTOPIA (humor) - $170,000 Cut the highly compensated that make over $100,000 a year by $10,000 per year -

$900,000 Sell the City’s surplus property

o He was told that had already been done and the money used elsewhere

Mr. Andersen advised that if the City Council does not vote the way the residents want, they can fire some people. They can take notes. That is what happened in Provo. They fired seven of their Councilmembers over two years. Mr. Andersen stated that if the residents do not want to fire them, but they still want the City to cut taxes and start taking some of this stuff serious, State law allows the residents to do a referendum. State law says the City Council can raise taxes without the residents’ vote. The City has let them vote on a couple of road deals, but they did not get to vote on this one because it was a foregone conclusion of how the residents would vote on it. The residents can sign a referendum petition that Mr. Burr is already working on. If they get 3,129 votes in the next 45 days, this property tax increase that is being proposed is frozen. It is stopped. If the residents want to stop it, they can help Mr. Burr get the 3,129 votes with petitions. It will be frozen until the residents of the city are allowed to vote on it. He got upset when he ran for office because he thought the City was not being transparent. He saw this coming a year ago. He was ticked because not many residents knew they had $125 million in debt and there was a $2.8 million payment due this year and the money was not in the budget. A lot of friends told him he should never say he will never raise taxes. He was ticked, and he said he would not raise taxes unless the residents vote for it. This referendum gives the residents a chance to do that. Mr. Andersen stated there are differences of opinions up here, and they had differences of opinion here tonight. If enough of the residents want to get involved, they can do it. If they do not, it will keep right on going.

Mr. Brunst said the City is responsible to pay for the UTOPIA debt. He recommended the City Council use the 4 extra percent in the General Fund reserves to pay the UTOPIA debt this year, and hold off on the property tax increase for 1 year. If they raise property taxes by the amount required right now, and they stretch that over 30 years, that is $100 million in property taxes the residents are paying. If in fact they use the difference between the 5 and 9 percent for this year, and did not raise the property taxes, he is thinking there could be some changes in how they fund UTOPIA in the next 12 months. He does not know that, but he asked whether they could put the increase of for 1 year and use the reserves.

Mr. Chesnut stated that the General Fund reserves has just over $4 million. Mr. Chesnut said 4 percent of that amount would be approximately $1.5 million.

Mrs. Street said she wanted to address ongoing funding of UTOPIA. She questioned how the City changes where they are with UTOPIA, and go from it being perceived as a problem to it being successful. The answer is they need a ubiquitous employment of the network so everyone has equal access to it and anyone who wants to subscribe to it can. Doing that would require


Orem City to take an extra step of ownership of the infrastructure. The City already owns the infrastructure that is in Orem. Finishing the deployment would entail coming up with a model where they say that in order to finish building it out they will have to pay for that ahead of time instead of continuing on the same measured program they have in partnership with the other UTOPIA Cities. How that happens will not be decided tonight. It is an option and not a foregone conclusion. It is something they have to talk about and get public input on to figure out if it makes sense. All of the Councilmembers may not have the same opinion of this, but that is the way she feels about it. This is the way to address the problem and generate the revenues. The upfront costs of all the infrastructure start to pay for themselves as all the subscribers are able to sign on. At some point, there is an apex they reach because they have it ubiquitously available throughout the city, they have enough people that do want to sign up so the fees not only pay the cost of where they are, but they also reach a point where they start to have enough money to pay for the things that were done in the past as well. That should be the goal. They want to be self-sustaining and completely pay for it. That does not mean they quit in the middle. It means they make a commitment to move forward, and do it on the City’s schedule. That is what they should be addressing as they move forward. A year from now as they are having budget discussions, she would like to see the City in a better spot than they are in right now. Mrs. Street said she does not think that shows any lack of commitment to the UTOPIA partners. That is a recognition that the world is a different place than it was when the original UTOPIA partners created the consortium, and they have a new reality. She said she views UTOPIA and fiber as an economic development engine. One of the directives the City Council has given to the City Manager to focus on is reducing expenses and increasing revenues. She asked what control City staff has over revenues. It requires a lot of work, and in order for staff to have any impact on increasing revenues and decreasing costs, they have to be very hard working and creative. The City needs to focus on economic development, and they need to have people, resources, and money focusing on economic development. They also need to have people, resources, and money focusing on development and redevelopment. The City gets money to run the City from sales tax and property tax. Property tax comes from new development or perhaps redevelopment within the city. That does not happen without people working to make that happen. The philosophy of use it up, wear it out, make it do, or do without does not work with people. She said they need to invest in the resources they have as a city that can help grow the city. There are many ways a city can grow, and that is what the employees are here to help the City to do. She is not in favor of doing anything that will hinder the employees from doing their jobs and being creative. She said it is important to invest in the employees, take input from the community, and understand how to solve the problems. Part of the problem they need to solve is increasing revenue, so they can afford to pay for the services they all want. They enjoy using the parks, they enjoy having the water flow, they enjoy the roads, and they want to continue to be able to pay for them, so they can continue to use them. She is really concerned when they start talking about doing things that put the city in jeopardy of not being able to retain the type of employees that they need to run the organization. She said in her business they are spending money on people because that is the most important asset her organization has. Mrs. Street stated that perhaps vehicle replacements can be put on hold, but she is not in favor of doing things to make people less productive. Mrs. Street said she would like to address some of Mr. Andersen’s proposals. It is her understanding that allowing residents to automatically register a credit card for automatic billing actually increases the City’s ability to collect the fees. She said she has a lot of her bills set up to be paid that way, so her bills are paid on time. The credit card fee might cost the City more money, because people may not pay their bills. As far as the mall subsidy goes, a tool that


is used by many communities to help encourage economic development in their communities is RDAs and CDAs. The whole thing about RDAs and CDAs is the City’s ability to increase the value of the community by $100 or more in sales tax that that City is willing to pay a portion of that back to the business. It does not make sense for a community to say they are standing on principle and will not use those tools. Other communities are doing it and that is where the businesses will go. The City needs to have every arrow in its quiver available to decide whether or not it makes sense to use them. The University Mall has been a major economic engine. The City is not just competing against a bad economy. They are competing with the growth in North Utah County. They are competing against the communities of American Fork and Lehi. She loves those communities, but she lives in Orem. She questioned what they can do as a community to remain competitive, as retail sales moves to north Utah County. She supports the University Mall, and she does not want them to have a vacancy there. She wants to be able to save the money in reserves to use to attract the kind of business that will put sales tax revenues into the coffers. Mrs. Street said she does not know what delaying the vehicles and computers will do to hurt the employees’ ability to do their job. She would leave that up to staff to tell her. There were a few other things Mr. Andersen presented such as asking the employees to pay more for their insurance. One of the philosophical statements for her is that one of the most important aspects the City has is the knowledge and the people who make things work in the city. She does not want to penalize them or take things away from them at the very time they are asking them to work harder and smarter and solve problems they have never had before. She wants the employees to be incented to work harder, smarter, and to solve problems.

Mr. Seastrand said his focus is to try to come up with solutions to address the budget shortfall they have. He expressed appreciation for Mayor Evans’s comments and wanted to add to them. When he looks at the three options of dealing with savings, budget costs, or property tax increase, he is not comfortable using savings to fund long-term commitments such as pay increases. That is not a prudent way to fund future payroll expenses. He would suggest not using savings as a way to fund pay increase. There are opportunities for cost improvements which can be used for a bonus.

Mr. Seastrand moved, by resolution, to increase the property tax by $1.7 million, use $1 million from reserves, and cut the budget by $1 million. Mayor Evans seconded the motion.

Mr. Chesnut stated there are two elements of the property tax. One is the general tort liability portion and the other is the general property tax increase. He wanted to make sure this was a total increase that includes the tort liability. Mr. Seastrand stated that is what he is proposing. It would be a total increase of $1.7 million.

Mr. Seastrand asked Mr. Chesnut what his thoughts are on the motion. Mr. Chesnut replied the cuts staff would make with that proposal would be to take out the compensation increase, which is in the General Fund at $321,000, the vehicle replacement, which is $600,000 , and they would balance the rest out of reserves. Those would be the cuts for this budget year. Going into next budget year, they will have to come up with the ongoing cuts to balance the budget.

Mr. Seastrand questioned whether that would provide some opportunity, if there are additional cost cutting approaches, that could be utilized for employee incentives. Mr. Chesnut stated there could potentially be. They would have to look at that.


Mrs. McCandless clarified they are asking for $1.7 property tax, $600,000 reserves, and $600,000 from the vehicle replacement, and $301,000 for employee compensation.

Mr. Stephens advised that his understanding is that the City Council will include what staff is calling the tort liability question on the property tax increase. He said that is not money that can be used for General Fund purposes. It can be used for insurance premiums, to pay claims against the City, and pay judgments against the City. They cannot use it to make the UTOPIA payment or for other General Fund purposes.

Mr. Manning stated he approved a check that day for $500,000 for liability insurance. The tort liability would help offset that. They have been paying it with General Fund monies. This frees up working capital within the General Fund.

Mr. Andersen questioned whether this motion involves a property tax increase or just cutting expenditures. He was told it was a combination of both.

Mrs. McCandless said she is very concerned with the reserves getting that low. She recalled when one of the sewer buildings blew up. She said she is also concerned about what other things they would cut from the budget. She was on the Council when they cut vehicle replacement year after year, and she remembered Mr. Reams saying it would come back to bite them The City ended up spending a lot of extra money on vehicles. Mrs. McCandless then said Mrs. Street had articulated her feelings about employee compensation.

Mr. Andersen noted he thought the employee compensation was $576,000. Mr. Chesnut explained the $301,000 is what would come out of the General Fund. The rest would come out of the Enterprise Funds. If the General fund employees do not get a raise, the other employees will not get one either. Mrs. Street said they are looking at $330,000 in compensation for the General Fund. That is $3.34 per individual that lives in Orem. That would help them in retaining employees and paying them to do the job they are asked to do. She said she feels strongly about that, and questioned whether there are other things they can look at cutting besides cutting on people. It is just like the residents do not want the Council cutting on them for the property tax. The City needs the employees to do a good job looking out for the best interests of the city.

Mayor Evans clarified that they are not reducing salaries. They are just not giving the raises.

Mayor Evans called for a vote. Those voting aye: Mayor Evans, Mr. Seastrand, and Mr. Sumner. Those voting nay: Mr. Andersen, Mrs. Black, Mrs. McCandless, and Mrs. Street. The motion failed for lack of a majority vote.

Mrs. Black moved to increase the property tax $2 million, use reserves, cut the vehicle replacement, and include employee compensation. Mrs. McCandless seconded the motion.

Mr. Chesnut stated he loves the employees, and he will battle to the end of the earth for them, but funding ongoing compensation with one-time money becomes complicated.

Mrs. Black clarified that is why she raised the property tax increase to $2 million. Mr. Chesnut stated that compensation would then become part of the property tax increase.


Mr. Davidson said one of the challenges staff is facing in recommending a $2 million increase and adjustment with ongoing money is they still have $1.35 million to figure out on the one-time side. It puts them in a tenuous situation to try to figure it out. He asked the City Council to allow staff the flexibility to determine going forward when and how much these compensations and adjustments can be made in a prudent way, rather than requiring them to do something and placing staff in an awkward situation short term. He asked the City Council to allow staff the opportunity to see how they can make this work with the $2 million in ongoing money and $1.35 million in one-time money. Mr. Manning stated in this fiscal year, 2013, whatever is not provided in the property tax will be covered out of reserves. In fiscal year 2014, that same amount of money will be covered out of ongoing revenues, which means staff will reduce their expenses that amount. They will cut $1.3 or $1.6 million from that point on.

Mr. Davidson advised if they do compensation, they automatically load that into the base for future years. It becomes something they have to deal with immediately above and beyond the cuts they are talking about. He suggested they not load on-going compensation into next year’s base. He said there might be some things they can do on a short-term basis from an incentive perspective that is more fiscally prudent than moving forward with long-term compensation adjustments.

Mr. Sumner asked whether an example of that would be if the insurance premiums do not go up they could offer something to the employees like they did last year. Mr. Chesnut said yes.

Mrs. Black withdrew her motion, and Mrs. McCandless withdrew her second.

Mr. Seastrand stated a challenge for him is that he appreciates the employees. The City has a very good value for the employee dollars they have. He said it is difficult to not all be in this together. The City is going to ask for a property tax increase, so they also have to ask the employees to hold off on a pay raise this year. The Council needs to try to preserve the benefits the employees have because that is what they signed on for, but they just cannot afford the pay increase this year.

Mr. Seastrand moved to put Mrs. Black’s motion back on the table with no guaranteed pay increase. The motion failed for lack of a second.

Mrs. Black stated one of the vehicles on the list for replacement was an ambulance, and she would be concerned with not having that ambulance. Mr. Chesnut advised that is $125,000. They would have to take more money out of reserves if they wanted to keep the ambulance.

Mrs. Black said she thinks the ambulance is really important to the city.

Mayor Evans moved, by resolution, to increase the property tax by $1.7 million, cut the budget by $1 million, have the balance come from reserves, and keep $125,000 available for ambulance replacement, to adopt a property tax rate in excess of the certified tax rate, approve and adopt the Final Budget for Fiscal Year 2012-2013, adopt the compensation programs, adopt the fees and charges schedule, franchise tax, municipal energy sales and use tax, telecommunications license tax, and transient room tax and E-911 fee rates. Mr. Sumner seconded the motion.


Mayor Evans agreed to add that to his motion.

Mrs. Street asked Mr. Chesnut to put up the fee comparison on the overhead. She compared where Orem is right now. She said she has lived in Orem for eighteen years. She noted whatever happens with the parks affects everyone. Whatever happens with the ambulances affects them all. Whether the residents’ children play baseball or not, the entire community benefits by having baseball fields. She asked those present to take a look where Orem is on the comparison chart. The reason she is bringing this up in the middle of a motion is because she wants the residents to realize that the very work the City employees have done to make sure that the revenues that come from water go to water costs. When the residents look at the costs that are associated with living in Orem, staff is trying very hard to make sure that the cost of providing those services is actually off set by the revenues. There is no padding. They need to look at the overall cost of living in the city and the overall costs of the services they have. There are people in the community that choose to live in Orem because they like having a park next to every elementary school. That was a decision that was made by a City Council a long time ago. There are cities in the areas that do not have nice parks. Orem’s Recreation Center does not get subsidized. It is one of the few that is self-sustaining. In most communities they have to subsidize the Rec Center. There may be some here that say they do not want the City to provide parks. However, Mrs. Street said she was elected to represent 90,000 residents in the City of Orem, so whether or not those present want the City to pay for a park, it is balanced.

Mr. Chesnut asked the City Council to allow staff to look at the complete list of vehicles and prioritize those rather than identify a specific piece of equipment for replacement. He recommended they cut $475,000 out of the vehicle replacement and let staff determine what is replaced.

Mayor Evans agreed to that change.

Mayor Evans called for a vote. Those voting aye: Councilmembers Margaret Black, Jim Evans, Mark E. Seastrand, and Brent Sumner. Those voting nay: Mr. Andersen, Mrs. McCandless, and Mrs. Street. The motion carried with a majority vote of 4 to 3.

Mrs. Black expressed concern that the City Council is kicking this can down the road, and they will have to come back and address this again. It would have been far better to address it all at once.

MOTION - Authorizing the Mayor to Sign the Residential Solid Waste Collection and Disposal Agreement Between the City of Orem and Waste Management of Utah

Jamie Davidson, Assistant City Manager, presented a staff request that the City Council, by motion, authorize the Mayor to sign the Residential Solid Waste Collection and Disposal Agreement between the City of Orem and Waste Management of Utah, effective July 1, 2012.

1The City of Orem’s current residential waste and disposal agreement with Waste Management of Utah expired on June 30, 2012. In January 2012, the City issued a “request for proposal” (RFP) inviting proposals for solid waste, recycling and green waste collection services. The City received four RFP responses from qualified service providers. Based on the following selection criteria, namely (1) a defined operations plan/proposed service approach, (2) contractor


capacity/qualifications, (3) quality assurance and equipment, experience and references, (4) alternate proposals, and (5) price/cost, the City awarded the service contract to Waste Management of Utah.

The new service agreement with Waste Management of Utah has an initial eight-year term, beginning July 1, 2012, and, at the City’s option, the agreement may be extended for an additional three-year term thereafter. The agreement grants Waste Management an exclusive franchise, license and privilege to collect, remove and dispose of “residential solid waste” in the corporate limits of the City of Orem. The agreement also includes the roll out of residential “opt out” recycling, beginning September 1, 2012. Finally, the agreement continues the City’s “opt in” green waste program.

As represented during the FY 2013 budget process, the contract pricing provided to the City by Waste Management as part of the RFP process has resulted in the City reducing its residential solid waste fee from $10.60/month to $10.10/month and its recycling fee from $3.55/month to $3.05/month.

Mr. Seastrand moved to authorize the Mayor to sign the Residential Solid Waste Collection and Disposal Agreement between the City of Orem and Waste Management of Utah, effective July 1, 2012. Mrs. Black Mrs. Black seconded the motion. Those voting aye: Councilmembers Margaret Black, Jim Evans, Karen A. McCandless, Mark E. Seastrand, Mary Street, and Brent Sumner. Those voting nay: Mr. Andersen. The motion carried with a majority vote of 6 to 1.

PERSONAL APPEARANCES

Time was allotted for the public to express their ideas, concerns, and comments on items not on the agenda.

COMMUNICATION ITEMS

There were no communication items.

CITY MANAGER INFORMATION ITEMS

There were no information items.

ADJOURNMENT

Mrs. McCandless moved to adjourn the meeting. seconded the motion. Those voting aye: Councilmembers Hans Andersen, Margaret Black, Jim Evans, Karen A. McCandless, Mark E. Seastrand, Mary Street, and Brent Sumner. Mrs. Black seconded the motion. Those voting aye: Mr. Andersen, Mrs. Black, Mr. Evans, Mrs. McCandless, Mr. Seastrand, Mrs. Street, and Mr. Sumner. The motion passed unanimously.

The meeting adjourned at 1:50 a.m.


Donna R. Weaver, City Recorder

Approved: August 28, 2012


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