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October 06, 2009

Burlington City Council Supports Telecom Expansion

In a near-unanimous vote, the Burlington City Council early this morning approved a measure to allow Burlington Telecom to expand its services beyond the Queen City in an effort to make the fledgling telecom company viable.

As part of the resolution, the council said it supports BT's effort to seek a waiver from a condition in its certificate of public good (CPG) issued by the Vermont Public Service Board. The condition requires BT repay the city any borrowed money within 60 days.

As part of its approval, however, the council asked the city's Board of Finance to review Burlington Telecom's (BT) current financing and how much it owes the city's pooled cash program. The board must  report back to the city council no later than Nov. 16.

In last week's "Fair Game," Chief Administrative Officer Jonathan Leopold admitted the city had loaned BT upwards of $17 million to finance its buildout within the city limits. That was news to many people, including city councilors. Read this week's "Fair Game" to find out just how that move was approved and by whom.

In all, BT has spent about $50 million to date. It has about 4600 subscribers and has passed about 85 percent of the city's residences.

In approving the expansion, the council also asked Leopold to provide the council with quarterly reports on how much BT owes the city.

Leopold told councilors during the meeting that not all the money in the city's "pooled cash program" was "taxpayer" money. He said the money comes from as many as 18 different units of state government and includes a variety of revenue streams — fees, penalties, grants and loans, etc.

Leopold also said that BT has not had to borrow a significant amount of money since the end of the fiscal year, June 30. The city loans BT money at a rate of 1.58 percent, which is significantly cheaper than its current financing repayment terms to its backers, which is 4.7 percent. At this time, BT is only repaying the interest on the loan from the city.

The final vote on the resolution was 13-1 with Democratic councilor Ed Adrian voting against the measure. A proposal by Adrian to delay a vote on the expansion resolution until the council's Nov. 9 meeting was rejected 12-2.

At one point during the meeting, the council debated whether it should enter a secret session to discuss the BT resolution, but councilors decided to debate it it openly for as long as possible.

"We should debate this in public because we are dealing with the public's money and the public has a right to know how their money is being spent, and we need to justify what we do in the public domain," said Councilor Russ Ellis (D-Ward 4).

The council debated BT for almost two hours in open session and then entered a closed-door session for about an hour.

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