LUS Fiber seeks new loan
LAFAYETTE — LUS Fiber, the city-owned fiber-optic service, is seeking to borrow another $14.5 million to cover the cost of continued expansion while the service gains its financial footing.
The City-Parish Council is scheduled to vote Tuesday on whether to issue bonds for the money, which is within the $125 million debt cap that voters approved for the fiber project in 2005.
The Internet, telephone and television service hooked up its first customers in 2009 and has been behind initial growth projections.
The $14.5 million infusion is needed mainly to pay expenses related to adding new customers until revenues are strong enough for the service to be self-sustaining, LUS Director Terry Huval said.
“Without the funds, we would have to stop serving new customers at some point,” Huval said.
City of Lafayette voters in 2005 approved a plan allowing LUS Fiber to borrow up to $125 million to build the fiber-optic system.
LUS Fiber initially sold just over $110 million in bonds for the project but had not ruled out additional borrowing.
“We still haven’t finished spending the whole $110 million yet, but we are getting close to that,” Huval said.
The council’s vote next week is on whether to return to the bond market for the balance of the $125 million in voter-approved debt for the project.
It is not clear how the council will handle the request, but LUS Fiber has generally found support among the majority of council members, even as some question its finances.
Councilman Don Bertrand said the request for LUS Fiber to borrow more money was expected and that he plans to support it.
“We need that money for new installations, and that’s a good thing,” he said.
Councilman Jay Castille, also in support of the measure, said he is not yet worried about LUS Fiber but will be if the service is not paying its bills in two or three years.
“It’s like any start-up business. It takes five or six years to make money,” he said.
At least one councilman questions whether the city’s fiber-optic business should take on more debt.
“I guess the question and concerns that many have, along with myself, is that we sure hope that LUS Fiber is not trying to borrow their way to prosperity or profitability,” said Councilman William Theriot, nothing that the fiber system has also borrowed money from the city’s utility system.
Huval said LUS Fiber is now making enough money to cover its operating expenses but not enough to make debt payments on borrowed money.
“We think in another two years, we will be completely self-sufficient,” he said.