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Provo • The city needs to realize that it will have to subsidize iProvo, and come up with a way to do it without raiding budget reserves, Mayor John R. Curtis declared Thursday.

Curtis, speaking at a sparsely attended meeting at the Covey Center for the Arts on economic development, iProvo and the proposed recreation center, said the direct approach to iProvo's financial situation — possibly putting a surcharge on each utility bill — would relieve anxiety with residents.

"It might be a pebble in our shoe, a thorn in our side, but it is not a millstone around our necks," Curtis said of iProvo's woes.

The city sold the troubled fiber-optic network in 2008 to Broadweave Networks, which was later bought by Veracity Communications and became Veracity Networks. Under terms of the sales agreement, if Veracity fails, the city would have to take back the network — and the remainder of the $39 million bond the city took out to build the network.

Last year, Veracity asked the city to "loan" it $1.48 million through reduced payments on the bond to improve its cash flow for network improvements. The city is tapping its energy fund reserves to make up the difference until next spring, when Veracity is supposed to start paying back the city.

Drew Peterson, Veracity's chief executive, said the company has upgraded its network equipment and improved service. It's a move he said the company hopes will attract more customers and make it more profitable.

As for the current situation, Curtis said the first thing the city needs to do is measure the funding gap. Right now, he said it is between $840,000 and $1.68 million a year — or $2-$4 a month per city household, which he said people do not see as threatening as the whole $39 million bond.

When the city was running the network, it was paying $2 million a year to make up a shortfall of revenue.

One option, Curtis said, is to add an iProvo charge on utility bills to cover the gap.

Residents at the meeting said they would be willing to pay a fee to keep the network from failing.

"You have to deal with it," said John McLaughlin, an iProvo customer, of the gap.

Judy Kelsch, Dixon Neighborhood chairwoman, said such a fee should be looked at as a way to save the city from having to take over the network.