LAFAYETTE — The city’s fiber-optic telecommunications division might be profitable enough by the 2014-2015 budget year to begin paying into the city’s general fund to support other city services, City-Parish Chief Financial Officer Lorrie Toups said Tuesday.
“I think the business is growing fast. It is looking successful,” Toups told City-Parish Council members during a hearing on next year’s proposed budget for LUS Fiber, the city-owned Internet, telephone and television service.
LUS Fiber served its first customers in 2009 and struggled through a rough start amid legal fights with private telecommunications companies and early equipment problems.
The system is now on track to be fully self-sustaining by fiscal year 2014-2015, LUS Fiber Director Terry Huval said Tuesday.
LUS Fiber is in a “strong financial position,” he said.
Huval gave a similar assessment during a briefing in June after Councilman William Theriot raised questions about the long-term viability of the fiber-optic project.
Huval said Tuesday that LUS Fiber is making enough money this year to cover expenses and to begin repaying start-up debts but not enough to cover depreciation — writing off the value of infrastructure and equipment as it ages.
Toups said LUS Fiber could begin paying a tax-like payment into the city’s general fund after the service is making enough money to cover all costs — operations, depreciation and annual debt repayments.
She estimated that benchmark could be reached as early as the fiscal year that begins Nov. 1, 2014.
Voters in 2005 approved letting LUS Fiber borrow $125 million to build the fiber-optic system.
LUS Fiber initially borrowed $110 million and then returned to the council last year to borrow the remaining $15 million.
LUS Fiber took a $5.5 million loan last year from the city-owned Lafayette Utilities System, a related city entity that provides water, sewer and electric service.
Huval has declined to release customer numbers for LUS Fiber, saying the information is commercially sensitive and that Louisiana law allows LUS Fiber to keep those figures secret.
He spoke only in general Tuesday about “tens of thousands” of residents using the fiber-optic system.
The proposed budget projects operating revenue to continue to increase in the coming years, rising from $28 million this fiscal year to $29.9 million next year, $33.3 million by 2013-2014 and $37.7 million by 2014-2015.
Expenses are also projected to rise over the same time period, but to a much lesser degree.
Most of the questions at Tuesday’s budget hearing were raised by Councilman Kenneth Boudreaux, who said he would like to see LUS Fiber do more to bridge the so-called “digital divide” in Lafayette.
Boudreaux said the promise of greater Internet access for all residents was part of the debate when the city was first considering the fiber-optic service.
“Let’s remember some of the other assurances and guarantees that were out there,” he said.
Huval said LUS Fiber has already made some headway in working with schools and other community groups to bring the Internet to residents who might not have access otherwise.
LUS Fiber has also begun offering more basic Internet packages for a lower price, he said.
But Huval also said his most immediate concern is to ensure that LUS Fiber is a viable operation before focusing on digital issues.
“One of the first things that is good for the community is to keep this system alive and vibrant,” he said.