Background:
On December 21, 2004, the City of Lafayette and the Utilities Authority adopted a resolution that authorizes the city to issue up to $125 million in bonds to fund the construction and improvement of the city’s fiber-optic network for the purpose of offering various communications services including local phone service, high-speed Internet service and television service. Under the terms of the resolution, the bonds to be issued will be secured by two forms of collateral: the revenues, income and receipts from the operation of the communications network to be constructed with the bond proceeds; and, possibly, the physical assets/revenues of both the communications network and the publicly-owned water, electric and sewerage systems.
The following statement may be attributed to William A. Oliver, President-Louisiana Operations, BellSouth:
BellSouth responds to concerned citizens’ request to protect
the people’s right to vote on fiber optic proposal
Today, BellSouth has responded to a public appeal from concerned citizens and has filed a lawsuit to ensure that the Lafayette Utilities System (LUS) and the City of Lafayette follow the correct procedures for issuing bonds for the fiber-optic proposal. State bonding laws provide procedural safeguards which are designed to ensure that citizens have a strong voice as to whether or not their government should use publicly owned assets, such as a utility company, as collateral for borrowing money to fund other projects. We believe the procedures LUS and the City of Lafayette are following bypass state bonding procedures designed to give citizens that voice.
This legal action focuses on a narrow, but important, legal issue. It is not about the merits of the LUS proposal or even the City of Lafayette; it is about determining the appropriate procedure for issuing bonds of this nature in Louisiana. A top city official has suggested to concerned citizens that a lawsuit may be necessary to resolve this issue. We agree. As government moves forward to compete with private industry, it is important that voters, as well as taxpayers and investors, have the assurance that the right state laws will be followed.
Finally, since this lawsuit will proceed under an expedited process, no one can claim that this lawsuit will unduly delay the bond proposal. In fact, LUS has already indicated that it will await the establishment of competitive safeguards by the Louisiana Public Service Commission before taking further action on this proposal. That proceeding is pending. Under the expedited procedures for lawsuits of this nature, we expect this action to be resolved within approximately 90 days.
NOTE: A copy of the lawsuit will be made available upon request by contacting Karen Beck at karen.beck@bellsouth.com