Vermont Business Magazine The Vermont Public Utilities Commission on Tuesday issued an order granting certificates of public good to Champlain Broadband, and approving the sale of Burlington Telecom to Champlain Broadband, the local subsidiary of Schurz Communications from Indiana. This is the final stage of a process that the city began in 2014, with the resolution of the Citibank litigation and the transfer of assets to Blue Water Holdings, which allowed the city to stabilize its finances and improve its credit rating in order to save taxpayers millions. Bluewater will get $30.8 million and the city will get about $6.3 million.
In response, Mayor Miro Weinberger issued the following statement:
“Today’s ruling from the Vermont Public Utilities Commission regarding Burlington Telecom (BT) is excellent news that confirms the validity of the course that we have charted as a City, and helps turn what had been a great risk to the City into an enduring success. Seven years ago, this Administration and the City Council set out to find a resolution to the formidable Burlington Telecom lawsuit with Citibank that would ensure that current and future generations of Burlingtonians would continue to benefit from the powerful fiber optic resources installed by BT, protect against ever returning to the telecommunications monopoly that restricted Burlington’s service and choices prior to the creation of BT, and resolve the risk of liability while improving the City’s credit rating and recovering as much as we could of the $17 million spent by the City prior to 2010. Over the course of these seven years, we have had to make difficult decisions, but have been guided throughout by these goals. We welcome the regulatory decision announced today by the PUC, which keeps us on a path to permanently resolving this issue in a way that accomplishes all of these goals, and doing so while protecting this valuable asset and its benefits for Burlingtonians.”
The PUC ruling denies opponents who wanted BT to remain in local hands, either owned by a local company or retained by the city. The city was out $16.9 million of taxpayer money because of the financial trouble BT ran into in its early years. BT was not supposed to use taxpayer funds. It also failed to meet financing obligations to CitiBank, which wound up suing BT. The city's credit rating also suffered, which also hurt the credit rating of Burlington International Airport. The final sale puts those obligations behind it, though taxpayers will still be out most of that $16.9 million.
Opponents of the deal could still appeal the PUC decision to the Vermont Supreme Court.
Contentious Sale
The Burlington City Council approved the conceptual Letter of Intent at its chaotic, eight-hour meeting on November 27, 2017.
The final decision had been expected back in October. But a contentious bidding process, which saw one bidder who dropped out (ZRF) and another eliminated from the final round (Schurz) ultimately winning the bid as partners.
The Keep Burlington Telecom Local bid remained in contention until the bitter end, but eventually received only two votes. Mayor Miro Weinberger’s preferred candidate, Toronto-based Ting, wound up without a single vote, as two Democrats declined to vote at all at the end of the day (which lasted into the early morning of November 28).
Schurz eventually won the right to buy Burlington Telecom in an 8-2 City Council vote. The mayor could have vetoed the Council’s action, but made it clear during the final process that a decision had to be made.
The asset purchase agreement is expected to come before City Council for approval in substance on December 26 and to be signed no later than December 31, 2017. Because of the agreement with Blue Water, which now owns the BT assets, the deal had to be consummated by January 2, 2018, or the city would have lost another 15 percent of its share of the proceeds.
Even as the city will recoup $6.3 million in the final sale, the $16.9 million in the original loans to BT in 2007 and 2008 will be lost, as will any attorney fees, increased costs related to the bond rating, other costs and staff time consumed since then. The loans were made under the administration of former Mayor Bob Kiss.
The city does not know how much total has been lost by taxpayers on BT, a spokesperson told VBM at the time of the sale. Under the original BT agreement, taxpayers were to be held harmless, but have paid at least that $16.9 million and likely more when those other costs are factored in.
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Source: Mayor's office 2.19.2019