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November 09, 2009

Council Debate on Telecom Continues

Tonight's Burlington City Council meeting will feature three resolutions addressing (what else?) Burlington Telecom.

Also, this week will mark first meetings of two ad hoc committees created by the city council to delve deeper into the problems at Burlington Telecom. One will craft an audit of BT's finances and operations, while the other will examine its governance.

Tonight's council meeting, however, will help to shed more light on the unfolding saga of Burlington Telecom. At issue is what city officials knew, and when, and if they ignored the advice of attorneys.

As I noted in last week's "Fair Game" one resolution, if approved by a majority of the council, would force the public release of various legal memos and correspondence between the city's attorneys and the administration of Mayor Bob Kiss. The memos, all dealing with Burlington Telecom, date back to August 2008.

This resolution is sponsored by Democrats Ed Adrian (Ward 1), Mary Kehoe (Ward 6) and Russ Ellis (Ward 4) along with Ward 7 Republicans Paul Decelles and Vince Dober.

At issue is when city officials learned they were in violation of their certificate of public good by not repaying borrowed city money within 60 days. As of June 30, 2008 that amount was more than $12 million and growing rapidly, as the city could not find a way to refinance BT's debt given the collapse of the global financial markets.

City attorneys said they advised the administration in November 2008 to bring the violation to the attention of the Public Service Board. The administration agreed to do so, but only when it also could offer a financing remedy. That remedy never materialized. Those same attorneys then told the mayor directly in April that they needed to correct the situation immediately, and in May they informed city councilors of the problem.

In their packet this week, too, councilors will receive all of the city's outside audit reports for FY 2008. As noted in "Fair Game" this week, the independent auditors have found problems at Burlington Telecom — most notably that BT did not have any processes in place to track compliance with its CPG.

These audit findings are usually only shared with the city's Board of Finance, which is comprised of three city councilors, the mayor and the chief administrative officer.

A second resolution, sponsored Councilors Decelles and Dober, would urge a newly-created council ad hoc committee to consider wresting control over Burlington Telecom from the City Clerk & Treasurer's Office and putting it under the control of either the director of aviation at the Burlington International Airport or the general manager of the Burlington Electric Department.

Ironically, when the city first began entertaining a public telecom utility in the Queen City back in the 1980s it was seen as a division or project of the Burlington Electric Department.

As I noted two weeks ago, that effort was thwarted by legislators after private telecom entities lobbied hard against a proposed charter change to allow BED to compete in the cable TV, Internet and telephone markets.

Finally, several city councilors — Adrian, Ellis, Kehoe, as well as Karen Paul (I-Ward 6) and Democrats David Berezniak (Ward 2) and Nancy Kaplan (Ward 4) — are sponsoring a resolution calling for the city's Community and Economic Development Office, and a related city council committee, to develop plans to: Put a "laptop in every house and develop a wifi hotzone along the Church Street Marketplace.

The resolution calls on CEDO to fund this effort with grants, rather than taxpayer dollars. The council wants a feasibility study back to it by no later than Dec. 25.

Before then, however, the city council's two special committees will meet and begin the task of unraveling the Burlington Telecom tangle.

The Ad Hoc Audit Committee will meet November 11, 17 and 23 at 5:30 p.m., according to Councilor Paul, who chairs the panel. Wednesday's meeting will be in the conference room at the Burlington Police Department, while the Nov. 17 meeting will be in Room 12 at City Hall, and the Nov. 23 meeting at the Department of Public Works.

The Ad Hoc Governance Committee will meet at 7 p.m. on the same dates, said Councilor Joan Shannon (D-Ward 5), who chairs the panel. No word yet on where the meetings will be held.

Shay are you blogging twitting or tweeting from the meeting tonight?

I will Tweet as necessary - hopefully it doesn't got until 2 AM.

17 MILLION divided by 15000 households = $1,133, enough for every btv household to get a spiffy new laptop ($400), plus a year of free broadband (@$61/month)

And in 5 years the laptops will be way outdated, 1/2 will have been taken elsewhere when the people moved and the following 4 years the residents will have to pay for the broadband. The city will also not save money on its own system.

Great long term thinking!

On the other hand, we own the infrastructure and can provide stable pricing to Burlington residents and business and can save Burlington government and taxpayers about $1,000,000 a year.

Its called an investment.

An "investment" that is currently being managed by dishonest people.

People paid $200/share for at one point - that was an "investment" too. NO ONE has thrown out a $1m figure for savings to BTV - back it up, Zuckerman. I don't think you can.

Shay. Any word yet if the Mayor has signed last nights resolution requesting release of the documents? Any dawdling here gives impression of coverup.

$500 thousand is in phone and internet savings for city departments.

$200 thousand is in franchise fees.

$250 thousand in payments in lieu of taxes.

Sorry, I was generalizing and was off by $50,000.

$450K the left hand paying the right doesn't save the taxpayer anything.

A town of 35K people should not be spending anything close to half a mil on phone and internet in this day and age. I know Leopold and/or Kiss threw that number out, but I very much doubt it has any basis in reality.

I'm really surprised you guys haven't started trying to distance yourselves from this thing by now. BT as a company is toast, and it's probably only going to get uglier in terms of revelations. At a minimum, rethink that "stable pricing" line, since I'm told they just jacked their residential rates around 20%.

I don't believe I have indicated that things were handled perfectly by any means. However, there were no secrets (as some have ascribed.) The City went to the regulatory enforcement arm of government last Nov. long before the election (for you conspiracy theorists). Those regulator enforcement folks thought that the buildout was the more important element of the CPG and understood that the financing question was necessary to figure out, but also understood the global equity market at the time as well.

The negative balance was clear in the reports, just because councilors and the media missed it does not mean that Jonathan and the Admin are criminals. Even if they were not as clear as they could have been (which Jonathan has indicated) they are still not criminals or malfeasants.

BT is a valuable service to the city. While it can be improved (I have seen some good ideas on front porch forum), there are few, if any, city's our size with this level of internet service across the board, that is good for our citizens and good for entrepreneurship.

Lets remember who is putting out the attacks. Folks with few positive ideas for the city (The church st. wifi is a good one, of already exists, the free laptop idea is way off as far as the cost to actually provide it) are attacking the Admin because they have nothing better to do. There are those councilors with serious questions (Ellis, Paul) who are trying to get to the bottom of this in a professional dignified manner, and there are those who just want to throw stones.

This is a serious issue, it is a lot of money. But lets try to figure out what BT is worth both financially and economically for the city. Lets try to figure out how it can be maintained and expanded (if the facts show it should be). Lets try to figure out the best governance structure for it. Lets try to move forward constructively.

Remember...if people just attack it and suggest no more connections etc., that diminishes its value. If we (the city and the citizens in the city) end up being forced to sell the assets under a situation of distress then it will sell for less. That means we will end up on the hook. Why are we shooting ourselves in the foot?

"The negative balance was clear in the reports, just because councilors and the media missed it does not mean that Jonathan and the Admin are criminals. Even if they were not as clear as they could have been (which Jonathan has indicated) they are still not criminals or malfeasants."

This is baloney, Mr. Apologist. Nothing was "clear." Leopold supposedly figured out in Nov. 2008 that he was inviolation of the CPG. Nothing that Leopold submitted to the council said:

1. that he lent $17 million from the cash pool to BT
2. that it hadn't been paid back w/i the required 60 days
3. that the city was in violation of the CPG.

Just yesterday the released e-mails showed that he told the city attorney to keep it quiet and to find out which councilors were snooping around at the DPS.

Leopold was dishonest and secretive.

Mr. Zuckerman, I understand your need to defend your party against charges and attacks, some of which are best characterized as baseless and inflammatory, HOWEVER, if you want respect at the end of the day you have to fairly asesss what is happening to BT and what the Mayor/CAO have done all with an eye to trying to move the ball forward.

Ask yourself: do you know how the CAO operates in practice? Many do and it ain't pretty, nor is it particularly competent. He has managed himself and the Mayor (and your party?)right into a corner. The 17 Million loan with no due diligence, the withholding of information, the obfuscation of information, the control of information - see a pattern? Should the council be on a need to know basis in your opinion, Mr. Zuckerman? Should a CAO, as a priority of his/her job be trying to forge relationships built on trust or are you satified with the public whiplash we are all experiencing. As one who will support BT (to the bitter end if need be) and as one who has also frequently seen the Progressive party as the best choice, I have some advice: if you are not already doing so, you should be advising the Mayor (who really appears desparate for a clue) on how to deconstruct this scandal (which will not go away) and plot a path that removes the CAO from his post for good. There are many many many reasons for doing this, but time is running out.

Best of luck.

"there were no secrets (as some have ascribed.)"

Apparently you haven't read last nights BFP article. Try to keep up.

"If we (the city and the citizens in the city) end up being forced to sell the assets under a situation of distress then it will sell for less."

They should have thought of that two (or more) years ago. Any company that's able to read a balance sheet can see BT has been in distress for a long time, and there's no path out. This scandal has nothing to do with that, although I'm sure you guys will try to blame Ed Adrian and David O'Brien when BT turns out the lights.

7 days!
Free Press is kickin' your butts on the BT story. This was a big opportunity blown, in part because for some time you've been perceived as apologists for the KISS admin. Shay was always looked at as a Prog, never an independent commentator.

fun thread here folks ... thanks for chiming in. Sorry it's taken me so long to join in.

Dear @Independent:

Not sure where you see the Freeps is "kickin' our butts" on the BT story. 7D, via my "Fair Game" column has been out in front of this since I broke the story weeks ago.

I first reported the $17 million loan in September, and that it perhaps violated the city charter, and definitively violated the CPG — and that the loan was made without the explicit knowledge of the council or the board of finance.

Not sure how bringing this to light, along with the revelatory audit findings of two years ago that the CAO/city ignored makes me an "apologist" but to each his or her own.

That the Freeps got the legal memos first is perhaps the only time they got their hands on info before I did. Kudos to them. Can't be the one to scoop every time.

Also @Dale Tillotson:

Mayor has not signed off on the resolution yet, and not sure how long it's going to take him. He does have up to two weeks to make a determination. If he does nothing in two weeks, it goes directly into effect. According to the city charter (Title 3 Chapter 18 Sections 45-47), he could veto it and explain why or sign it.

If he vetoes it, the council can override with a 2/3 majority. Given the original resolution passed unanimously, and that all the city lawyers say it's no big deal, I think an override is easy. I also think Kiss vetoing this would be a pretty stupid move. Then again, look how we got here in the first place.

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