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November 17, 2009

Council Balks at Burlington Telecom Refinancing

After two hours of feisty, and at times acrimonious and partisan debate, the Burlington City Council early Tuesday morning scuttled a $61.65 million refinancing proposal for Burlington Telecom.

Mayor Bob Kiss came to the council with a resolution offering to repay any money BT borrowed from the cash pool since October 1 within 60 days, while at the same time seeking council approval to work with financier Piper Jaffray to fully develop a refinancing deal to keep BT afloat and help it complete its buildout.

A complete deal, he said, would come back to the council sometime in mid- to late January for final approval.

In October, the council asked the administration to come back to it with refinancing options, and financing strategies, no later than November 16. Kiss, and Chief Administrative Officer Jonathan Leopold, said the proposal with Piper Jaffray was in response to that request.

Of course, no one said the council would approve what the administration proposed. The council also felt as if the administration was unfairly pushing the council to make a rush decision without giving it enough information.

The refi deal, announced Friday by Kiss and Leopold, would repay BT’s outstanding $33.5 million lease deal with CitiCapital as well as the roughly $17 million owed to the city’s so-called "cash pool" or unified checkbook. The deal would require the city to set aside another $8 million in reserve funds, and it left open the option to finance another $10 million down the road.

While BT proponents cheered the deal on Friday, that good feeling didn't last long. A number of BT boosters believe that the council majority is either willingly, or unwittingly, undermining BT's ability to operate in order to score political points against the administration.

Council Democrats, using parliamentary procedures, split the resolution into two parts and then, blocking debate, approved the repayment clause while rejecting the refinancing proposal. The council voted 12-2 on the repayment provision, and 10-4 on the refi rejection.They'll reconsider the refinancing proposal at their December 7 meeting.

On the final vote, all seven Democrats, two Republicans and one Independent, Karen Paul, voted in favor. All three Progressives and Independent Sharon Bushor voted against.

Councilor Sharon Bushor (I-Ward 1) said the delaying a vote on the refinancing option could force BT into insolvency if it can’t borrow money from the cash pool until a new financing deal is approved.

“I hear people saying they are here to protect taxpayers, but you could easily end up leaving people with a huge debt and no Burlington Telecom,” said Bushor. "By doing this, we're leaving the city and BT hanging."

She also complained bitterly about how Democrats blocked debate during the meeting. “I don’t like being boxed in by this council,” said Bushor.

Leopold, too, said he was “appalled” by the action, calling it a partisan ploy designed to embarrass the administration. Even in the council brawls between Democrats and Mayor Bernie Sanders in the 1980s, in the end all sides came together to work on what was best for the city, he added.

Leopold said he sees little of that spirit at work now.

“Do you really want to destroy a $50 million investment and the credit rating of the city?” asked Leopold. “Because that’s what this could do.”

In response, Councilor Nancy Kaplan (D-Ward 4) said she was tired of being “scolded time and time again. I don’t think we deserve it. We’re racking our brains for a problem that we did not create. Treat us with a modicum of respect.”

Councilors Joan Shannon (D-Ward 5) and Ed Adrian (D-Ward 1) argued that council needed more information, such as BT’s projected financials, its business plan, any documents provided to the financier, and any report given to the city by the financier, before deciding whether to move forward.

Councilors questioned the impact of the new deal on the city's taxpayers. Bond counsel Thomas Melloni told councilors the proposed financing structure would not place taxpayers at direct risk.

Mayor Kiss offered to host a series of meetings to answer councilor’s concerns, but asked the council to allow talks with Piper Jaffray to continue. His offer was rejected.

Kiss told the council earlier that he vetoed their October 26 resolution requesting the mayor put Leopold on leave while the BT mess was sorted out. At the time, Kiss said he wouldn't comply with the resolution — which was purely advisory.

It was Kiss' first veto since first being elected in 2006. And, given the way the debate went last night — it may not be his last.

I had my customary front-row seat in Contois Auditorium and provided a Tweet-cast for all those at home who couldn't watch the live Channel 17 feed of the meeting on Burlington Telecom channel 317.

Below are select Tweets from the tail end of the meeting. Click here to scroll and read the full recap.

  • #BTV Council Prez Bill Keogh calls 5 min recess .... tempers rising!
  • #BTV Councilor Kaplan - "We are trying to help you get out of this problem. Give us a modicum of respect."
  • #BTV Councilor Joan Shannon - needs more info from Kiss Admin before voting on #BTV Telecom refi. Wld be OK with 2 wk delay
  • #BTV Councilor Kaplan "tired of being scolded again & again. I don't think we deserve it. We are trying to fix a problem we did not create."
  • #BTV Councilor Nancy Kaplan (D-W4) says councilors need to conduct due diligence on $60M finance. Need more info 
  • #BTV Councilor Sharon Bushor (I-W1) said motion will leave Burlingtonians with "huge debt and no BT."
  • #BTV bond counsel tells council the proposed refi deal would not put taxpayers at direct risk  
  • #BTV CAO Jonathan Leopold sez Adrian amendment, if approved, would destroy Telecom & city's credit rating
  • #BTV councilor Adrian seeks Telecom biz plan, pro forma budgets, consultant's report, docs sent to Piper Jaffray, and PJ's review of BTV Telecom
  • #BTV Councilor Ed Adrian (D-W1) introduces amendment seeking more info from Kiss Admin before approving refi deal

Odum takes issue with your use of the word "skuttled" here at GMD. I have to agree that the word doesn't quite fit. To skuttle something is to sink it like a ship. Melloni said the likely result of any postponement would be its corresponding delay of the financing.

Also this-

Even in the council brawls between Democrats and Mayor Bernie Sanders in the 1980s, in the end all sides came together to work on what was best for the city.

I think your intent was to attribute that opinion to Leopold, but the sentence does not include any attribution, so it reads as opinion presented as fact.

It was a very entertaining meeting, and since the action on BT didn't happen until after midnight, Briggs couldn't make his deadline with it, and I got the scoop, having watched it at home from my cutomary front-row seat in front of Burliington Telecom channel 317.

Haik: As always, thanks for chiming in. Missed your post (sorry!), and glad you got it out there early.

Glad to know you're watching from home - makes me feel not so alone while I Twitter away the meeting. And, glad you're blogging more, too. You're a favorite blog of mine.

I did mean the word scuttle, and that's fine if someone disagrees with it (someone always does).

I didn't get the sense this was truly about delaying, but rather tanking this proposal (perhaps any proposal) until the administration comes forward with more information.

Not that it's a bad thing ... but, it could very well mean this proposal is dead in the water. Is that the end of BT as we know it? Probably not, if BT can ignore their CPG they can probably ignore a city council resolution - or the mayor could veto it.

Personally, I think BT should be placed under the control of Burlington Electric Department and out of the CAO's office entirely. Too bad they couldn't do that from the start, but the Legislature wouldn't allow it as part of the charter change.

As to the Leopold graf: I thought it was clearly Leopold's thought as he is introduced as the speaker in both that graf, and the graf to folo. But, in case it isn't clear, I'll add another "he said" to the graf.

Thanks again, Haik.

Given the council dynamics — such as they are — ever give thought to running for a council seat again?

"or the mayor could veto it."

And the CC could override that veto, as they should.

Blindly moving forward, absent a business plan making the case that moving forward is the right thing to do, is the type of move that got us here in the first place. BT should have everything the CC asked for, and should have been able to provide it today. Leopold said he's been working on this for a month (Kiss said months). If they don't have it, and delaying progress in the PJ "deal" by the amount of time needed to generate it means that BT will die, then they just would have been pissing away the $20 million anyway, because they simply don't know what they're doing.

Shay is becomming a pawn to the progs.

It's strange and disturbing to watch.

Seven Days beat reporters have a good reputation of being even-handed and knowledgeable, and it shows here as well. Seven Days would have an interest towards injecting sensationalism into this ongoing story on City Hall. Doing so would help sell papers. To their credit, they only let the events of the circus speak for itself.

Given the council dynamics — such as they are — ever give thought to running for a council seat again?


Shay=haik's friend forever

It's too bad you didn't have time to look up the word "scuttle" between this blog post and the writing of your Fair Game column, because you're still using it incorrectly. The CC did not put an end to the PJ deal. The word has an actual meaning, you don't get to arbitrarily assign it a new one.

Also interesting were your attempts to persuade CC members to vote to continue the PJ deal via Twitter during the meeting. Is that typically part of the journalist role?

Hi regards to the person in the back of the room that bellowed out, I am surprised to see the Mayor here tonight, thought he would be conveniently out of town.
This person is stealing my lines.
Back to BT.
Bond council Melloni said taxpayers would not be at a direct risk.
This is political double talk as taxpayers voted to not be put at any risk in 2000, so this issue with any direct risk involved is quite possibly illegal on the part of the administration. Risk, direct risk is all political jargon. voters voted for no risk and that is the only acceptable solution. As the administration as violated this it, is now time for the removal of the Kiss administration from City Hall. Pending the results of the audit kiss can resign with some grace, for just not having the ability to fullfill his elected position, but can resign in handcuffs at the result of the audit.

Melloni can say the taxpayers would not be at risk but the PJ COP engagement letter clearly is using ability of the city of Burlington to raise taxes as their surety for the bonds. this is in direct violation of the DPS CPG.

All of the blather by the admitted incompetent Leopold( What CEO cannot get the rules straight for over a year?) and Chauncey Gardner is he still conveniently out to lunch?

How can we sign off on the deal with out knowing

A) what was the 17 million spent on?

B) how much is the Business worth?

C) How long will it take Chris Burns to lose an additional 10 million dollars?

D) How do they plan to pay back the money or after 18 months are we still in the fudge?

Burlington Telecom does not have competent professional management. It is run by a flunky and an admitted incompetent. Now the incompetent declares he can cover up his incompetence once more with a loan for more money but he does not have a plan to pay it back. His plan is to be out of a job in 18 months and stick the taxpayers with the bill. Will he skulk off to his condo in the Bahamas with bags of Telecoms money?

We need to value BT, we need a plan and we need to audit the joint to fire the current management and replace them with real telecom talent. Sending it to Burlington Electric who haven't a clue about innovation, marketing or technology would be a major fail.

Totten you are such a party tool it is laughable you call your self a journalist. your byline should read "hack" your tounge is way up the Kiss hole

Think Burlington Telecom is the only City Hall scandal?

Here's another one for you:

(The nub: Planning Commissioner Bruce Baker's claim of legal "home occupation" fails the laugh test.)

First, thank you Shay for tweeting the council meetings. It helped some who could attend or watch follow along. I longed for a radio broadcast, by the twitter thing was pretty good.

HOWEVER, it was dismaying to follow the city council meeting an see that Shay was trying to "explain" the meaning of what the councilors were voting on to the councilors through the Twitter feed. He was communicating during council business to two Dem councilors trying to influence their vote. WTF? I thought you were there to report on the happenings and maybe ask a few questions after the action - not try to "correct" the understanding of councilors perspective.

And councilors, stop tweeting and pay attention! Let the reporters and citizen journalists tweet.

And while I'm on a role, how dare 7 days (Ken Picard?) write a headline as irresponsible as "City Secures Refinancing for Burlington Telecom"? Even after he was corrected that this is simply and purely misleading, nothing changed. When you get egg on your face, wipe it off!

@Dismayed & @Jimmy

In regards to my trying to "influence" councilors during the debate via Twitter.

To think I, a Progressive Party hack as some like to claim, have sway over Democratic Councilors Ed Adrian or Nancy Kaplan — is laughable.

They asked me questions as I was Twittering away reporting what various councilors were saying, etc., and I responded in kind. I offered my opinion/observation, which is what I do all the time on Twitter and in my column.

In fact, you could say their rhetorical questions, DMs (which don't show up in my public Twitter feed), etc. are an attempt to sway my reporting, but that would be cynical - right? Personally, I could think of more productive things they could do with their time at a council meeting than engage me in a conversation via Twitter.

The exchanges are public; anyone can see what you were responding to and they were not questions. You were advocating Kiss/Leopold's position directly to city councilors who were about to vote on an issue. It was inappropriate. Surely they taught you that in journalism school.

Well, if it came across as advocating, it certainly wasn't my intent. I agree it would be inappropriate to do so.

As for journalism school — didn't attend one. Learned on the job starting at the Barton Chronicle in the 80s. Still learning.

And, don't call me Shirley.

I tend NOT to trust Seven Days when it comes to local reporting on Burlington politics (Many people in the community do not). Shay is an exemption...let's hope it stays that way. Thank God for Burlington Pol, GMD and the Burlington Free Press.

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