Top Lawmakers Huddle on Burlington Telecom

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Burlington Telecom's financial troubles — including this week's credit downgrade by Moody's — have drawn the attention of some of Montpelier's top lawmakers and officials.

Two Burlington city councilors and one councilor-elect were called to Montpelier today to talk about what, if anything, the legislature can do to help ensure Burlington Telecom's financial difficulties do not further endanger the city's — and state's — credit rating.

Burlington Telecom's $17 million debt to the city's checking account, along with an unsure financial future, fueled the Moody's downgrade. The rating agency also put the city on a 90-day negative credit watch, essentially giving it three months to pull together a plan to rescue BT.

The downgrade, and the ongoing financial predicament, have caught the attention of Montpelier in recent weeks.

Today's half-hour special meeting, hosted in House Speaker Shap Smith's office just before midday, included Speaker Smith; President Pro Tem Peter Shumlin (D-Windham); Sen. Vince Illuzzi (R-Essex/Orleans); Sen. Tim Ashe (D/P-Chittenden), himself a former Burlington city councilor; City Council President Bill Keogh (D-Ward 5); Councilor Karen Paul (I-Ward 6); and Councilor-elect Kurt Wright (R-Ward 4), who is also a state representative. Also in the meeting was State Treasurer Jeb Spaulding.

"We are trying to get a handle on what is going on with Burlington Telecom, but at the same time we are coming up on a limited amount of time that the legislature could help in any way," Smith told Seven Days. With the legislature poised to adjourn by the end of April or early May, the window of opportunity to pass legislation that could help the city work its way out of the fiscal mess will soon close.

Smith and others said such help would not come in the form of loans or grants. In fact, everyone involved said the message is clear: City leaders will need to come to the legislature quickly and speak with one voice if they want any legislative assistance.

Keogh and Wright said the city is not ready to ask for help, but the council, the administration and the Burlington Telecom Blue Ribbon Committee and its financial consultant will be meeting in the near future to continue charting BT's future.

Last month, Illuzzi's committee — Senate Economic Development — took testimony on a proposal to allow the city to go to voters at some point in the future on the question of using general obligation bonds — bonds backed by the full faith and credit of the city — for telecom-related activities. The legislature has previously said that Burlington and other municipalities cannot use those kinds of bonds to pay for telecom ventures.

But before the legislature is willing to do anything, said Illuzzi, city officials must heed a clear message: "You need to come back to us with something the administration and the council can agree on."

The legislature has no interest in putting itself in the middle of a partisan battle between the council and the administration, said Illuzzi. In fact, he thinks it's time for the council and administration to set aside the politics.

"The damage has been done to the Kiss administration," said Illuzzi, "but I think it's time to move beyond that. We need to ensure there is not future damage to the credit rating of the city, or the state."

Shumlin, Illuzzi and Ashe met with Mayor Bob Kiss as well as Chief Administrative Officer Jonathan Leopold two weeks ago to deliver the same message.

The meetings are part of an effort by state lawmakers to better understand the financial difficulties facing Burlington Telecom and the impact those troubles have on the rest of the city and the state, said Illuzzi.

"From all available information that we can see, Mayor Kiss inherited BT when it was already losing money," said Illuzzi. "How they handled that situation has been a main concern, and that's for the council to deal with. We're concerned about the impact of the credit downgrade, and the taxpayers."

Illuzzi said the state is looking to invest money in an aviation technology center at the Burlington International Airport, but that would require some investment by the airport. A credit downgrade affects the city's ability to borrow money more cheaply.

The recent credit downgrade by Moody's will affect $87 million in outstanding debt, making it more expensive to repay existing debts as well as take out new ones.

Besides the open case before the Vermont Public Service Board related to BT's violations of its certificate of public good — namely, borrowing money from the cash pool without repaying it in 60 days, and not completing the build-out of BT's network in the city — the Orleans County State's Attorney is conducting a separate criminal review on behalf of the state attorney general.

Comments

[dale tillotson]

Sen Illuzzi speaks well. The damage has been done to the Kiss administration. To hell with the administration and it's reputation. The only thing that counts now is the taxpayer, and with kiss and Leopold still in charge we are doomed. Again I demand their resignation so we can move on with difficult costly decisions but without them maybe they can be difficult, costly, but honest decisions that are made.

[duncan]

Sounds like the issue is no longer whether Kiss and Leopold mishandled the matter. It now appears the city taxpayers will pay one way or the other.

There is one question. Do city voters want to own BT? If so, then they need to take it over, pay the cost and enjoy the benefits as they would with any other city owned department.

[sean b.]

i would like to sign up for BT once it expands beyond Burlington. Friends who subscribe love it. The quality appears superior.

[Aaron]

The city council accomplished the objective of killing off Mayor Kiss. Now, it needs to stop the attack before it kills off BT, and the taxpayers along with it.

[Jimmy]

Aaron, the whole "CC is exacerbating this problem" thing pretty much died a few weeks ago. It's clear at this point that they're doing their best with a very bad situation that was handed to him. Kiss killed himself off, when he's in court being grilled about what he did or didn't do, no one's going to be talking about the city council.

[webber]

"The city council accomplished the objective of killing off Mayor Kiss."

Oh give it a rest for Christ sake.

Oh poor, poor Kiss! He's an innocent victim! His own piss poor handling of the BT fiasco, his dismissive attitude toward the City Council and the taxpayers of Burlington, and his love of secrecy -- all that had absolutely nothing to do with his own demise! It was those dastardly City Council members!

Flashback to 1974: "Congress accomplished the objective of killing off President Nixon."

[Thomas]

Solution for the giant Kiss-hole (aka 17M unauthorized secret and illegal loan to BT):

Sell the Moran Plant and surrounding parcels to a private developer. How much would it be worth? Any ideas?

[Morgan M]

Remember long, long ago . . . say, 2007: Kiss and Leopold actually had a reputation as financial White Knights; fixing the pension mess, exposing the Brendan Kelleher deal and otherwise giving the impression of cleaning up the clutter of the Clavelle era. Kiss' apparent disconnect from the political fray was seen, from the outside anyways, as an asset.

He has poisoned the Progressive "brand" to a degree I did not think possible. It's unfortunate that there is no effort within the Progressive community to publicly (and privately) disown him, in the same way (and I know this analogy hurts . . . ) that the leading GOP Senators paid a visit to Nixon in the summer of 1974.

[Aaron]

Ding. Dong. The witch is dead. That's so yesterday. The question now: what will the city council do to ride to the rescue of the city taxpayers and the city's bond rating?

[webber]

Whatever they do, it will be better than the "plan" that Kiss/Leopold had: keep borrowing money from the cash pool and hope magic happens. Excellent plan.

It was the City Council that took the bull by the horns and formed a Blue Ribbon Committee that analyzed the BT situation and came up with a plan for seeing if BT could be saved. Maybe it can or maybe it can't. But that's more than Kiss/Leopold ever did. The CC acted quickly once they became aware of what had been hidden from them for so long by Kiss/Leopold.

And what was the Administration's response to the CC's attempt to take some action? Continue to resist any involvement by anyone except Kiss/Leopold.

[Tom S.]

Now that the burden is on the city council to fix the BT problem, I look forward to the solution that keeps BT alive and well.

[Jimmy]

It's far from a given that the thing is rescue-able, and that is far from the CC's fault. The surgeon who can't save the man with half his head blown off doesn't share the blame with the guy who pulled the trigger.

[Buster]

The problem now appears to be that Leopold will not comply with the audit that the PSB is conducting. Bill Ellis is circling the wagons claiming he will protect the city... which according to Bill Ellis the city attorney is the current administration.

I for one would like to know what the audit says. I do not think we should be protecting Bob Kiss or Jonathan Leopold, to do so seems to be putting the tax paying citizens of Burlington in harms way. There has been too much lying and covering up of this fiasco we need to learn the truth.

Ellis needs to understand that the citizens demand the truth, not another cover up. Ellis needs to understand that protecting the tax paying citizens not Jonathan Leopold is his sole priority. If he fails in that task he should be summarily fired.
How long do we have to put up with this ludicrous behavior and the damage that Kiss and Leopold are doing to the progressive party.

Where is Sanders to save his own house from these arsonists?

[webber]

@ Buster: Sanders was never officially a member of the Prog Party. After his unproductive flirtation with the Liberty Union Party in the 70s, he ditched that party and thereafter always called himself an "Independent." The Progs will tell you that he has never spent any of his own political capital on them. Sanders is not going to tarnish his image by trying to rescue Kiss.

[Buster]

@ Webber : Sanders and Jonathan Leopold have a long storied history together. Kiss put Leopold in place because of Bernie Sanders, Sanders name is all over the stench.

Sanders is the leader that these people and the progressives look up to as uncle Bernie. Jonathan Leopold like i said was CAO for Sanders if it comes out that Leopold has done more than just move city money between departments something more on the order of embezzlement.

Leopolds Taint may be squarely in Senator Sanders face after all how does a man buy 100's of acres in the Bahamas after being a civil servant for over a decade?

Im just asking? Long odds that he hit the jack pot in the markets.
Bernie should use his position as the champion of the taxpayer to weigh in...he and Leopold were joined at the hip when he was mayor. just sayin'

[webber]

Excellent points. But do not expect Bernie to ride to the rescue of Kiss. Moreover, there is really no "rescuing" of the Kiss administration to be done here. They screwed this one up all on their own, and they should be held to account for it.

[dale tillotson]

Put city government on hold. Only allow essential services to operate until the Kiss Leopold investigation is complete.
Maintain necessary operations, roads clear police protect us and fire dept. rescues us etc. No more ideals of this administration can be allowed as they cannot be trusted.
Moran plan must be put on hold.
Kiss and Leopold must resign for this city to move forward.

[DaleFan]

Wow, Dale, what a sound plan you have there: hold the city hostage until BT fails and Kiss is voted out of office in 3 years. Guess we don't need the city council for anything then. Not like they've been doing anything productive anyway, but that's another conversation.

[Lea Terhune]

Re: "Sanders is not going to tarnish his image by trying to rescue Kiss." [Weber] Bernie has already tarnished his image by making an appearance on that wanted poster ad for IRV. Bernie wouldn't have been elected mayor in 1981 with his 43% plurality if IRV had been the voting system, and he wouldn't be a US Senator today. Washington pols don't step into local ballot initiatives, especially citizen initiatives, and they don't rescue elected officials who have violated the public trust. Bernie already stepped over the line on IRV, why not find some stimulus money for BT, Moran, and the pension fund, i.e. rescue our city? If Kiss is the obstacle, Kiss should resign: (1 for the good of his party, (2) for the good of our beleaguered city, (3) to protect the state's bond rating, and (4) to save BT, the pension fund, and the Moran project.

[Emma Mulvaney-Stanak]

PROGRESSIVES WELCOME HELP FOR BURLINGTON TELECOM

Urge Mayor and City Council to Unite to Protect Taxpayers

State legislative leaders are looking for Burlington’s elected leaders to unite in resolving the challenges around Burlington Telecom (BT), as reported Friday in the Seven Days Staff Blog. Burlington Progressives call on the City Council and the Kiss administration to forge consensus behind the Blue Ribbon Committee and any solution that protects Burlington taxpayers and preserves the tremendous asset of BT. "We appreciate the tri-partisan collaboration among our legislative leaders, and we look to the Burlington City Council to follow their example," stated Chris Pearson, former State Representative.

With the legislature planning to adjourn in late April, time is short for passing legislation to help Burlington resolve BT's funding challenges. Political discord would almost surely cause the legislature to avoid the BT issue entirely. The councilors and citizen members on the Blue Ribbon Committee are working constructively with the Kiss administration on BT's financing and preserving the City's good credit rating. "It is time for us as a council to leave politics at the door, and roll up our sleeves to protect the taxpayers and the City's credit," commented Clarence Davis, Ward 3 City Councilor.

Ward 3 Councilor-elect Emma Mulvaney-Stanak stated her eagerness to work with all of her Council colleagues to find the best possible resolution to the BT issues. Mulvaney-Stanak said, "it is abundantly clear that the only way for us to garner legislative help with BT is for us as leaders to rally together and speak with one voice." She added, "I am optimistic that all Councilors will put the taxpayers first and find common ground on the BT issues."

The financial health of Burlington affects the region and the state, so failure to resolve BT’s financing could have a negative ripple affect beyond Burlington. In light of the major, long-term economic development benefits of a fiber-optic system, the issue demands a sense of shared purpose from all stakeholders.

For more information contact Burlington Progressive Party Co-Chair John Franco, 355-0858.

[webber]

Thanks a lot. Use my tax money to bail out BT? No! Why didn't Clavelle/Kiss think of this before you started a money-losing venture?

[Dale Tillotson]

Anyone notice it looks like Leopold is now blaming Moodys.
Jonathan stop it now. Keep putting the Moody men and woman in a foul mood and we will all have to evacuate the city by home made raft as the Moody's will tear down the bridges and let us drown on our way out of town.