LAFAYETTE — The city’s telecommunication service is on track to be profitable by 2015, Lafayette Utilities System Director Terry Huval told the City-Parish Council on Tuesday in a presentation requested by a councilman who questioned the system’s viability.
LUS Fiber is making enough money to cover operating expenses and some debt repayment and should be fully self-sustaining in three years, Huval said.
“We’ve gotten past the tough part,” Huval said.
Huval gave a similar presentation to the news media last week.
Tuesday’s presentation came at the request of Councilman William Theriot, who has been vocal in scrutinizing the fiber service.
The city’s fiber-optic Internet, telephone and television service served its first customers in 2009.
The service faced some early equipment problems and legal challenges from competitors, but Huval said he has few concerns about the future of LUS Fiber if growth trends continue.
“We’re still not done. It’s still a 5-year-old kid,” Huval said.
Lafayette voters approved a plan in 2005 to allow LUS to borrow up to $125 million to build the fiber-optic system.
LUS Fiber initially borrowed $110 million, then returned to the City-Parish Council last year for approval to borrow the remaining $15 million in voter-approved debt.
LUS Fiber also owes $30 million to the city-owned Lafayette Utilities System, which provides water, sewer and electric service.
The utility service and fiber service both fall under Huval, but are required by Louisiana law to remain distinct financial entities.
The $30 million includes early start-up expenses the utility system paid for LUS Fiber, the purchase of a small fiber-optic network the utility system had set up before the launch of LUS Fiber and taxlike fees LUS Fiber is required to pay to the utility system but has been keeping as a loan.
LUS Fiber also took a $5.5 million cash loan last year from the city’s utility system.
Councilman Kenneth Boudreaux said his only issue with the service is the money it owes to the utility system.
He said he still has “heartburn” that the $5.5 million loan from the utility system closely followed a utility rate increase.
Councilman Brandon Shelvin raised similar concerns.
“I’m going to fight every LUS rate increase until we get our money back,” Boudreaux said.
Theriot pointed out if LUS Fiber cannot keep up with its payment on the $125 million in bond debt, the city’s utility service would be on the hook to cover that cost, which could push up utility rates.
Huval said that issue was part of the public debate before voters approved borrowing the money in 2005 to build the fiber-optic system.
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