That's what City Attorney Robert West told the Municipal Council's iProvo panel Tuesday morning, and reiterated to the Municipal Council at a Tuesday night study session.
"When you sell a business, you do not want to create the impression that this is a fire sale," West said in justifying why there was no specific request for proposal (RFP) to sell.
However, the city has to conduct a public hearing on the system's sale to Broadweave Networks for $40.6 million, West and Council Attorney Neil Lindberg said. That hearing is scheduled for May 27.
Meanwhile, some are concerned that Broadweave is not putting down much cash for the network.
"There is no skin in the game from these folks," said Rep. Steve Clark, R-Provo. "They are coming in without cash to take over a $40 million asset."
Municipal Councilman Steve Turley said the sales agreement leaves the city holding the bond - and the liability - for at least 17 years.
But Steve Christensen, Broadweave's chief executive, said the deal is backed up by Sorensen Capital, whose head, Fraser Bullock, is also a Broadweave founder. He said Sorensen has hundreds of millions of dollars it can call upon to honor the debt the company has agreed to assume over the next several years.
"Smart people with smart money have looked at our business model, dug deep into our business model," Christensen said, and they have been satisfied.
The flap over whether the city should have sought bidders for the beleaguered system arose last week. Pete Ashdown, chief executive of Internet provider Xmission, questioned the legitimacy of the sale on the grounds that an April 2007 RFP only sought interested retail providers, not someone who was interested in buying the network.
But West said Tuesday the RFP was written broadly enough to be interpreted as soliciting any proposal, including sale. And he said several other people expressed that interest.
Plus, he said anyone can approach the city with an offer to buy public property even if there is no RFP published.
Ashdown, contacted Tuesday, said the public nature of iProvo required the city to be more open in its desire to sell the system, both in advertising the desire to sell it and showing how many offers were received, so people would know that Broadweave is the best possible deal.
"This is not a private business," Ashdown said. "This is a public asset."
dmeyers@sltrib.com
Provo's decision to sell iProvo may halt a state investigation of the troubled network's finances. Debbie Empey, state audit director, said the Office of the Utah State Auditor was preparing its report on iProvo's payments from retail providers when the sale was announced. As a result, she said the report is on hold until the sale closes. If the sale is completed, Empey said the report will likely not be published because it will have been rendered moot. The auditors began looking at iProvo's books in January after receiving a complaint that some of the network's providers were behind in their payments to the city. The city's financial report showed that providers owed the city $1 million.
The iProvo deal
Broadweave would take over payments on Provo's $39.5 million bond for the next 19 years. The city also would pay $2.9 million to close the telecommunication account, but Provo Finance Director John Borget said the value to the city would come from using the system for municipal purposes.
