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January 25, 2011

City Hall Criticizes State 'Audit' of Burlington Telecom

41608_168107802724_1556137_n Late Tuesday, the Kiss Administration issued a 21-page rebuttal to last month's blistering review of Burlington Telecom and the city's oversight of the fledgling telecom.

The so-called "Larkin Report" was initiated in October 2009 by the Vermont Department of Public Service as the city sought relief from a few key conditions contained in its certificate of public good. This was when it was first revealed that the city had used $17 million in taxpayer funds to prop up BT over the course of several fiscal years.

The report, conducted by Larkin and Associates, was released December 10, 2010 and claimed that BT was in violation of Condition 60 of its CPG since its inception, and that BT overpaid for installation services and programming — perhaps twice as much. Condition 60 forbid the city from using any taxpayer funds unless they could be repaid within 60 days.

The report also questioned BT's long-term viability, and whether city officials had fully informed the public and city councilors about the extend of BT's financial problems.

The report was issued just days after the city told state regulators that it had backed out of its $33.5 million lease finance arrangement with CitiCapital and was seeking new financial and strategic partners. Consultants Dorman & Fawcett have been leading those talks and are one of several outside firms who have been brought in to help reorganize BT.

Mayor Bob Kiss and his administration took issue with the report as soon as it was released, but now they've provided additional details and documents they claim the consulting firm either missed, or failed to acknowledge.

Continue reading "City Hall Criticizes State 'Audit' of Burlington Telecom" »

January 10, 2011

Burlington Telecom Continues to Drag Down City's Bond Rating

In what is becoming a routine event, the credit ratings agency Moody's has once again downgraded Burlington's bond ratings due to the fact that city leaders have failed to determine how Burlington Telecom will repay $16.9 million to the city's checkbook.

The credit ratings agency twice downgraded the city last year, along with other city-run entities including the Burlington International Airport. The credit downgrades affect about $87 million in debt and will make borrowing money more expensive each time the city goes to the market to borrow anew or refinance debt.

"The downgrade reflects our view that recovery of the outstanding $16.9 million balance due to the city's pooled cash account from Burlington Telecom (BT) is unlikely to occur over the medium-term, if at all," Moody's noted in its release, which was issued Friday. Mayor Bob Kiss' office released the information today.

Burlington Telecom continues to rack up costs for city taxpayers as consultants and lawyers attempt to chart its future. A meeting scheduled for this week to publicly discuss BT's current status has been postponed until January 26.

Read the full Moody's Ratings Release below.

Continue reading "Burlington Telecom Continues to Drag Down City's Bond Rating" »

December 26, 2010

A Year in the Life of Burlington Telecom

Obrien Ed. Note: During the last week of the year, we asked our writers to reflect on the highs and lows of 2010.

Woulda, coulda, shoulda.

That could easily be Burlington Telecom's motto. Or, its epitaph.

BT remained one of the most politically charged and financially relevant stories of the year, which is saying something when you have a nuclear power plant sprouting a new leak practically each week.

Budget battles under the Golden Dome came and went, as did entire administrations, but allegations of malfeasance and the tanking of a political dynasty in Burlington are here to stay. At least for a few more months.

Expect the first few months of 2011 to be the make-or-break time for Burlington Telecom. Though, it seems as if Mayor Bob Kiss isn't going to go out without a fight. With little credibility left among voters, and even his own party, it's hard to see how Kiss can lay legitimate claim to being the "credible" player on the field.

BT entered 2010 hobbling and under intense scrutiny after it was revealed in late September 2009 that city officials has "loaned" the utility $17 million over the course of several years and failed to repay the cash — violating BT's certificate of public good and the city charter.

It heads out of 2010 in no better shape, really, though somehow still in business.

Continue reading "A Year in the Life of Burlington Telecom" »

December 22, 2010

BT's Legal and Consulting Costs Top $625,000

BurlingtonCityLogo * updated *

The outside consultants hired by the city of Burlington to help it guide Burlington Telecom through an internal restructuring and external reviews by state regulators have cost the utility more than $625,000 since July 1, 2009.

That's according to a memo sent by City Hall officials to City Councilors Paul Decelles (R-Ward 7) Karen Paul (I-Ward 6). The accounting was also made in response to a records request by Seven Days.

In September, I noted in "Fair Game" that Burlington Telecom's financial and regulatory troubles had racked up close to $500,000 in charges. As of December 21, that figure sits at $625,063, according to Scott Schroeder, the city's assistant chief administrative officer.

In all, the city has paid out more than $245,000 for legal and regulatory services, which includes $64,000 toward the recent Larkin and Associates report conducted for the Department of Public Service. DPS officials told Seven Days the full cost of the report was $85,000 and would be billed to Burlington Telecom.

Continue reading "BT's Legal and Consulting Costs Top $625,000" »

December 17, 2010

Mayor Bob Kiss: Report Critical of Burlington Telecom 'Lacks Credibility'

Local-kiss It's a tried and true trick of the trade: If you have bad news to release, ship it off to the media as near the end of business on Friday as possible.

Both today and last Friday, Queen City officials released statements about the beleaguered Burlington Telecom between 4 and 5 p.m. 

Today's release was critical of a state report that itself was highly critical of the financial and management decisions that led to Burlington Telecom's hefty debt load and poor financial condition.

Last week, Mayor Bob Kiss issued a brief statement saying he would comment more fully at a later date. Today, Kiss issued a broader critique of the report, but said the city will respond further next week as it more fully reads and evaluates the report.

Continue reading "Mayor Bob Kiss: Report Critical of Burlington Telecom 'Lacks Credibility'" »

December 15, 2010

Senate Rejects Sanders' Amendments to Tax Cut Bill

100710-10264-0022-rh U.S. Sen. Bernie Sanders (I-VT) failed in a last-minute effort to eliminate tax cuts for the wealthiest Americans contained in a compromise tax package he faux filibustered on Friday.

Sanders took to the Senate floor Friday in a daylong speech that made him into an overnight Internet folk hero among the political left — leading some fans to create a Bernie for President in 2012 website.

His faux filibuster, however, had little effect on his colleagues. In a procedural vote late Monday, the Senate approved the tax cut compromise by an 83-15 margin

Sanders' amendment would have allowed the tax breaks, ushered under Pres. George W. Bush, to expire for the top two percent of wage earners on schedule. The amendment would have also redirected the money from these tax increases to reduce the deficit and invest in the nation's infrastructure.

In the end, 43 senators voted in favor of Sanders' amendment.

Rep. Peter Welch (D-VT), who is leading the effort in the House to fight extending tax cuts to the wealthy, is talking with House leadership tonight in an attempt to get an up or down vote on a similar amendment when the House takes up the tax package tomorrow.

Continue reading "Senate Rejects Sanders' Amendments to Tax Cut Bill" »

December 14, 2010

Supreme Court Denies Immunity for Top Burlington Official

Gavel 3The Vermont Supreme Court has denied a last-ditch appeal by Burlington's Chief Administrative Officer Jonathan Leopold to be granted immunity from a citizen lawsuit seeking immediate repayment to taypayers of $17 million loaned to Burlington Telecom.

The suit was brought last year by former city councilors Fred Osier and Gene Shaver. Earlier this year, Superior Court Judge Helen Toor banned the city from dipping any further into the so-called "cash pool" to pay for Burlington Telecom's ongoing operations.

The pair wants BT to repay the entire $17 million, along with their legal fees. If BT doesn't have enough cash, they want Leopold to be held personally liable for repayment, too.

The one paragraph ruling, signed by all five members of the Supreme Court, reads:

Continue reading "Supreme Court Denies Immunity for Top Burlington Official" »

December 10, 2010

It's a Bird, It's a Plane ... It's a Filibuster

BernieHuffington* updated below *

Since the real Senate votes aren't scheduled until next week, Sen. Bernie Sanders' day-long speech doesn't officially qualify as a "filibuster," but that didn't stop Vermont's independent senator from capturing the imagination of the progressive blogosphere around 10:25 a.m.

You can watch Sanders on C-SPAN 2 live try to take apart the logic of giving tax cuts to the wealthy.

"When is enough enough? How much more do they need?" asked Sanders of the wealthiest taxpayers. "Whose bright idea was this? There are millionaires out there right now who are saying,'Thanks, but we don't need it.'"

Sanders challenged the notion that Democrats had to give up tax cuts for the wealthy in order to help working families.

"I don't accept that this is a great give," said Sanders in response to Pres. Barack Obama's claim that extending tax cuts is the only way to get unemployment benefits extended for people who are out of work. "Extending unemployment benefits has always been a bipartisan decision."

Continue reading "It's a Bird, It's a Plane ... It's a Filibuster" »

Report: BT Debt Violations Began in 2005

BT Report * Updated with comments from DPS Commissioner David O'Brien & Mayor Bob Kiss *

The outside consultant hired by the state Department of Public Service alleges that Burlington Telecom was in violation since it was first issued a certificate of public good in September 2005 — nearly three years earlier than city officials have since acknowledged.

The long-awaited report is highly critical of city and BT officials who, for years, ignored the findings and recommendations of their independent auditor — Sullivan, Powers and Company. The auditor wanted BT to track spending better, to improve oversight of external contractors hired to build out the BT network and to repay funds according to its certificate of public good (CPG) issued by the Vermont Public Service Board.

The consultant hired by the DPS — Larkin and Associates — implies that BT may have overpaid for installation services and equipment. It offered no ballpark dollar figure, but did suggest that the PSB require BT to provide the board with a more detailed list of its assets.

Continue reading "Report: BT Debt Violations Began in 2005" »

December 08, 2010

Burlington Telecom to Regulators: We've Got a Plan (We Can't Tell You About Yet)

IMG_2012 When is a telecom not a telecom? We may soon find out in the case of Burlington Telecom.

Burlington Telecom told state regulators at an hourlong hearing that its state-of-the-art fiberoptic network is now owned by CitiCapital thanks to the utility's decision to cancel its lease with the global financier.

How BT replaces CitiCapital's equipment — and when CitiCapital will demand its return — remain open questions. BT offered no answer to repeated questions on either front.

Talks with CitiCaptial to renegotiate its $33.5 million lease agreement broke down last month and the city cancelled the lease; by default, CitCapital now owns all of BT's equipment.

BT attorney Wiliam Ellis told the three-member Vermont Public Service Board that it is in talks with private equity firms and in-state telcom providers to stay in business now that it's cancelled its lease. He did not name those firms.

"There are a number of private equity firms that have expressed an interest," said Ellis. "And these firms have experience in the cable and telecom business. As well, we are talking with strategic telecom partners in the state."

Ellis projected BT will be about $600,000 in the black by the end of FY 2011 given its current customer base of more than 4500. Of course that "profit" doesn't account for lease payments or paying down any of the debt it owes taxpayers. Quarterly lease payments to CitiCapital alone were roughly $750,000, Ellis noted.

Continue reading "Burlington Telecom to Regulators: We've Got a Plan (We Can't Tell You About Yet)" »

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