There's good news and bad news about iProvo.

The bad news -- the amount of money iProvo is using is creeping upward as the fiber-optic network grows, and it could get bigger tonight when the Provo Municipal Council votes on loaning more than $600,000 of the city's new investment fund to buy equipment.

The good news is this loan has nothing to do with the debt service of other loans; it's a business transaction between two departments to cover an anticipated equipment purchase.

"This isn't some kind of hidden subsidy of the iProvo project," Mayor Lewis Billings said; the internal fund is in place for a money-swap like this with assured revenue coming in.

The money will be used to purchase set-top boxes, which every television getting video service from iProvo needs. The city will lease the boxes to MStar and Veracity, which will then charge a monthly rental fee to all subscribers who have one.

The city buys those for a number of reasons, said Energy Department Director Kevin Garlick. Provo has easier access to certain capital than would private corporations, it provides continuity among equipment should a subscriber switch providers or a provider leave, and it's part of how the city has chosen to set up iProvo, with Provo owning all of the infrastructure and the service providers only providing the service.

"It's actually a positive to the user, and we need all the positives to the user that we can find," Municipal Council Chairman George Stewart said.

This is the second time in four months iProvo has needed an interdepartmental loan to cover expenses; in March the Municipal Council approved a $980,000 loan to make the first payment on the $39.5 million bond the city took out to pay for building the fiber-optic network. The 2006-2007 budget, which will be discussed and probably approved tonight, also includes a $2.1 million loan to continue making payments on the bond.

"This has nothing to do with that," Billings said, emphasizing this is not a loan to cover shortages. "Regardless of that issue, this set-top box thing has always been planned to be funded."

Depending on subscriptions, it is still possible more money will be loaned to iProvo, he said, and Garlick said a line of credit may be established to continue to buy the boxes.

For the council, it's another look at a project that's already been a hot issue during campaigns and meetings and will likely continue.

Stewart, who has been vocal in his concern about loaning city money to fund iProvo's operations, said this loan doesn't bother him because the money's not going to pay the project's bills.

"This is really a separate revenue stream," he said. "You have something of value that's backing it up."

Thus far, the mood seems to be gung-ho in moving forward. Councilwoman Cindy Clark said at this point, the city needs to do "whatever it's going to take to make it successful."

"The city has gone so far with it and made it a huge investment, that in order for it to succeed, I think that we need to support it in whatever it needs," she said.

Councilwoman Cynthia Dayton, who voted for iProvo in 2001, agreed.

"We're in this iProvo," she said. "We need to see if we can make this work. I think that at this point, we need to do our best to keep things moving."

It hasn't gone exactly as planned, she said. The number of people signing up has been slower, which has affected the revenues. The city anticipated some of the costs it's now seeing, she said, although not all.

"I think anytime you have a startup company, you're going to have surprises," Dayton said. "The real question is have you foreseen enough of them to remain solvent, and I think that so far, we're not too far out of the ballpark."

She estimated that the next year will show if iProvo is a viable project, since buildout is almost finished, the service providers are established and the march to 10,000 subscribers has begun.

That may not be enough to make iProvo self-supporting, Garlick said.

He estimated between 12,000 and 14,000 subscribers could be necessary to accomplish that, and thus far the project's got half of that, with 6,053 subscribers. That's not to say iProvo can't get there, he said; the mood in the city is cautiously optimistic. It's more of a wait-and-see situation.

The good news, he said, is that buildout is almost complete and almost every homeowner and business owner can sign up. As to a big what-if -- what if iProvo never becomes self-supporting and how long should the city support it -- he's not thinking about that.

"There's not a lot of effort focused on what-ifs," he said. "We're more focused on just trying to continue to build the business."

Heidi Toth can be reached at 344-2543 or htoth@heraldextra.com.

This story appeared in The Daily Herald on page D1.