Hometown Utilicom Failure

October 8, 2008
Gennaro A. Marino P.E.
http://www.marinoreport.com/
Kutztown Borough Officials
It is a known fact that the Borough, doing business as Hometown Utilicom, can not provide internet services as advertised. The Hometown Utilicom website is now advertising upload and download speeds at 3 mb for $80 a month. Not long ago HU was advertising 10mb for half the price. The Service Electric website advertises 7mb for $39.95 per month and the Verizon website advertises 3mb for $29.99 per month.
Information Technology Director Frank Caruso, who heads HU, has told customers that the Borough can not provide higher speeds because Mayor Green, Councilmen Kevin Snyder and Brendan Strasser want to destroy HU for personal reasons. As usual Mr. Caruso does not state the true story. The true story is at the March ’08 Council Meeting Councilmen Snyder and Strasser voted against the loan but Mayor Green signed the Ordinance for the $1.3 million loan for HU with the stipulation that the Borough would obtain a Business Plan before the $1.3 million could be spent. The Mayor was right because she was looking to protect the residents. I assume the loan was to be used to pay for the HU system update. The rest of the story is that after almost 7 months ITD Caruso and the Borough still have not come up with a Business Plan. The Borough is deliberately delaying the completion of the Business Plan to buy time. Councilmen Snyder and Strasser voted against the Loan because the Borough, in one way or the other, has diverted more than $16 million into HU since its inception in 2002 and it continues to lose $1 million a year.
Council President Eidle has stated HU will be profitable next year. That statement is a figment of Mr. Eidle’s imagination since no financial records or budgets have ever been published by the Borough. Even if HU added all of the Apex tenants HU will not be profitable. Mr. Eidle should provide backup information for the Borough residents.
President Eidle also stated at the August ’08 Council Meeting that the Apex student housing has the potential of providing 545 new subscribers to HU. There are 183 units with 3 students in a unit. Mr. Eidle assumes every student will be a customer. Unless HU has a special deal at Apex, there is only one TV service in a unit and according to Service Electric’s website each internet service can provide service for up to 5 computers which means there is only potential for 183 customers.
I am in possession of the contract between HU and Apex of Kutztown and in it the developer has agreed, at its own expense, to provide and install all the interior and exterior fiber systems and equipment for the complete HU service operation. The contract also states that after completion and successful testing ownership of the exterior system will be transferred to HU. Apex has also agreed to provide electricity for the HU system. There are many more concessions made to the Borough by Apex in the contract. All these concessions were made before there were any plans or specifications for the project. It was impossible for the developer to calculate the cost of these concessions. Even with all the Apex free construction HU still can not provide competitive service. There is also evidence in the contract that attempts to exclude HU’s competitors from the project. All these concessions were made to the Borough in payment for the Borough providing water and sewer to the project that helped the original developer who bought the property for $440,000 to sell it for $3.2 million.
I think it is high time that the Borough fess up and tell the truth about HU. The whole operation is a lie and HU should cease operations immediately. To divert funds into HU the budget is falsified, reports are fraudulent, timesheets are falsified etc. To support these charges the 2006 and 2007 mandatory Annual Audits are at this time incomplete. And the Borough Solicitor is advising you to withhold Borough finances and not answer my letters or honor my Right to Know requests.
Sincerely,


Gennaro A. Marino P.E.