For the second time in less than a month, officials of the beleaguered UTOPIA fiber-optics network failed to convince Payson City Council members to increase the city's sales-tax pledge to back its new $185 million refinancing plan.

Among reasons cited were UTOPIA's failure to present a business plan for when the build-out will be completed and more details on its marketing strategy, as well as the ongoing economic downturn and its impact on the city's finances.

"We were hoping to see if UTOPIA had a plan to move forward," said Payson Councilman Brad Daley. "But they didn't convince us of the fact that anything is going to change."

Four years after Payson opted into the multimillion dollar deal, the network has spent $90 million to date but only passed fiber to the curbs of 42,000 residences and businesses in the 11 cities, with 7,200 paying customers, or a 27.8 percent subscription rate. UTOPIA had previously projected bringing connections to 70,000 households and businesses, with a 40 percent subscription rate.

Lower-than-expected subscriber counts and revenue shortfalls had threatened UTOPIA's ability to continue to make payments on its bonds, and if it defaulted, the 11 cities would be on the hook for $504 million, according to the Utah Taxpayers Association. To avoid that, UTOPIA asked the cities to increase their tax pledges so it could obtain $185 million in new bonds to retire $135 million in existing debt with Bank of America and the federal government. The term of the new loan, to be provided by KeyBank, also extends the cities' risk from the current 20 years to 32 years.

UTOPIA, whose construction is one-third completed, has projected it will bring fiber to the curb of 180,000 homes in the 11 cities but remains unclear when that will be completed.

And that's a source of frustration for Mayor Burtis Bills and several Payson council members, who heard testimony from officials for UTOPIA and its opponents, Qwest, Comcast and the Utah Taxpayers Association on Monday.

"I've visited with several residents who are still pro-UTOPIA, but have reservations about extending our tax pledge for more and longer. I share those reservations. I'm happy with UTOPIA's service most of the time, but UTOPIA would need to bring in $1.6 million in revenue to avoid calling on bonds, or at least 53,000 subscribers," said Brent Grotegut, a Payson councilman who serves as trustee on the UTOPIA board. "At what point does it become a money pit, and at what point will we divert much needed funds for other purposes to UTOPIA?"

Daley agreed. Holding up Comcast's and Qwest's mailed fliers that advertise triple play service packages for $65 a month and $91 per month respectively, Daley said at Monday's meeting he had hoped that UTOPIA would come to the council members with similar ads and show its marketing plan.

"Utopia's marketing plan is whatever its service providers' plans are. Do we have faith in the network, or is it the service providers we're upset with? It's a bit of both. UTOPIA is the one controlling the marionette's dance. The decision we're faced with tonight is whether by extending our pledge and accepting the refinance, we'll get something better than what we've had in the past," he said.

But Todd W. Marriott, who was appointed executive director and CEO of UTOPIA on Monday, disputed the council members' criticism. "We're disappointed with Payson's vote, but we know it's an uphill battle. They wanted new information about our marketing strategy, but we can't give that information in public meetings," Marriott said. "We're still in the process of getting our restructuring completed, and will shortly be announcing some additional triple play providers who are coming on board on UTOPIA.

"We're not a money-making entity. We need to be effective in the way we spend money, and we've put in place things that will make us more accountable," he said.

Of the 11 Utah cities that have pledged their sales tax revenues to back UTOPIA's bond payments, 10, including Orem and Lindon, agreed to increase their sales tax pledges by $55 million and extend their guarantees to 32 years. If UTOPIA defaults on its bond payments and calls on all the tax pledges, then Payson will be liable to pay $259,920 per year for 18 years, according to David Tuckett, Payson city attorney.

In light of Payson's vote on Monday, and the new bond structure that would result in the 10 remaining UTOPIA cities shouldering more of the burden to back the refinancing plan, UTOPIA project manager Paul Recanzone said the group is now in discussions with Payson to "determine what is an equitable amount of risk that the city should bear under the new plan."