Burlington City Council members cast six votes in favor of the co-op and five votes for Ting in a four-hour meeting on Monday night. Republican Kurt Wright (R-Ward 4) offered the sole vote for the third company, Schurz Communications.
About 150 residents crowded into Burlington City Hall Auditorium to voice their support for the co-op’s bid. They stood along the walls and sat on the floor, bearing signs with slogans in favor of Keep BT Local.
“How about we keep our internet & just sell Miro instead?” read one, taking a shot at Mayor Miro Weinberger. Read another, “Hands off our internet.”
“This is probably the biggest issue you’ve ever voted on,” former Progressive state legislator Dean Corren told the council. “Decades from now, it will seem silly that we considered having something other than local control over the telecom.”
Others urged the council to consider the extensive public support for the co-op.
Among the lawn signs placed in yards around the city, “You’ve never seen a sign saying, ‘Give it to Tucows,'” said Charles Simpson, referring to Ting’s parent company. People applauded and laughed.
The vote brings closer to conclusion a years-long process to rebuild Burlington Telecom, which fell into legal and financial trouble after then-mayor Bob Kiss diverted $17 million from city coffers to prop it up.
The question has been whether local ownership or strong financial footing for the Telecom holds more appeal.
On Monday, councilors across the board expressed concerns about the financial viability of Keep BT Local’s bid. The co-op’s $12 million offer would be financed by a loan with a 14 percent interest rate.
“It’s not about fear [of litigation against the city], it’s whether there’s legitimate concerns about whether Keep BT Local can pull it off,” said Kurt Wright as he explained his unwillingness to support the co-op. “I don’t take those considerations lightly.”
Citibank has previously sued the city over Burlington Telecom debt, and will receive sales funds. The bank has indicated that it may sue the city again if it believes it hasn’t received its share of profits, added Chip Mason (D-Ward 5).
Still, half the council decided to give the co-op a chance. In spite of the “major hurdles” the co-op faces, “You’ve worked hard to earn my respect,” said Dave Hartnett (D- North District), who voted for the co-op. “I’m a hometown guy and I’m from Burlington.”
Councilors said that their votes Monday night weren’t necessarily an indication of their final choice. The two finalists will continue to refine their offers before the council selects the winning bid on October 30.
Ting and Keep BT Local’s bids are the last of eight that were submitted last June. Four advanced to be considered by the council, but one bidder dropped out.
Last week, Weinberger announced that he supported Ting, and asked the council to reject the co-op’s bid.
Ultimately, “It’s not about fear of litigation,” Weinberger said Monday. It was about the city making good on commitments to pay back debts, he said.
Some members of the public also expressed their doubts. Burlington resident Michael Caulo urged officials to consider the “tremendous professional experience” of the “competitive proposals” of the highest bidders. “I’m not sure we can translate the success of a grocery store to the success of an internet system,” said Caulo, referring to City Market/Onion River Co-op.
At times, council President Jane Knodell (P-Central District) struggled to keep the crowd from clapping or interrupting.
But the public input was what ended up tipping the scales in favor of Keep BT Local, said Max Tracy (P-Ward 2). He read emails submitted by the public. According to Tracy, 186 support the co-op, compared to 20 for Ting and 16 for Schurz.
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I don’t care about local ownership nearly as much as I care that as a Burlington taxpayer I cannot use Burlington Tekecom because they don’t provide service to my neighborhood.
I support Ting because I believe they will be able to extend service to all of Burlington. I’ll be really upset if the council chooses to continue excluding taxpayers like me from this wonderfully valuable resource. Keeping it local is meaningless if I’m forced to choose between Comcast or Fairpoint.
Congratulations. Six craven councilors caved to the mob of Burlington comministas in favor of a bid that is a joke. The Internet is not a grocery store, and even City Market would never take out a $10 million loan at 14% interest from an out of state lender.
And isnt one of the Social Justice Warriors pictured in one of the photos in this article someone who should be in jail right now for defacing public property a week or so ago?
So when the local co-op fails the system will be worthless. The local co-op will borrow money at a crazy interest rate and then will not be able to afford the necessary upgrades and expansion. Just because it gets sold to Ting doesn’t mean it is going anywhere.
I cant understand why the Co-op would choose to borrow money at a 14% interest rate, this would amount to over $19 million of interest on a twenty year note to borrow $10 million. And the lender is a cable infrastructure company. What is going on there?
“I cant understand why the Co-op would choose to borrow money at a 14% interest rate”
Because they had no choice. They can’t get that $10 million anywhere else at a better rate than 14%.
Which tells you either that the lender has no faith in KBTL, or that the lender is actually HOPING that BT defaults on the loan so that it can foreclose on BT, just like Citibank did 7 years ago.
Which is why no one in god’s name should support this bid.
As a taxpayer and current BT customer I was very disheartened that six councilors voted for the Keep BT Local bid last night, thereby eliminating Shurz–a stable, family owned telecom and media conglomerate around since the 1800’s–from the selection process. As a telecom consumer I value the great service and choice created by competition between healthy firms. What makes firms healthy is strong cash flow and robust working capital.
KBTL is by far the weakest bid and should never have been included as a finalist by BTAB’s selection process. The junk credit at 14% interest fueling this highly leveraged proposal is indicative of considerable risk lenders have placed on a KBTL operation. With insufficient working capital available KBTL will start hemorrhaging cash under the crushing weight of their liabilities. Ensuring BT can provide sustainable service for their customers is as important to me as protecting taxpayers from the near-term risks of litigation (brought out by either Blue Water and/or Citi) and fiscal pressures that are likely with a lower bid. In the wake of financial mismanagement of BT under the Kiss admin these risks should not be taken lightly.
I have heard the arguments by KBTL; that is BT’s current EBITDA is sufficient to service $12m in debt at 14% interest. However, the assumptions used in such an optimistic foward-looking analysis make even Elon Musk look bearish!!!
Paco DeFrancis
BTV GOP
These comments are full of inaccurate assumptions. This might help clarify: https://vtdigger.org/2017/10/13/brian-pine…. Borrowing $12M at 14% with a 1.5 debt-coverage ratio results in the same payment as the multinational and national corporations cost of funds to carry double the KBTL debt load, and their debt-coverage ratios could be lower – the Council and public have asked but this question has not been adequately answered.
With a multinational corporation like Ting, when you do get connected to our state of the art fiber optic network your rates will soon look more like this, which is where the industry is going, to tier your telecom rates the way your phone rates work (the more data you use, the more you pay):
https://www.heraldmailmedia.com/news/local…
Liz, why hasnt KBTL looked for lower interest capital and offered a higher offer to the city of Burlington? The offer price is low due to the high interest rate. This has a double negative effect on Burlington tax payers. Less money in our coffers up front and more of our telecom money leaving Burlington to cover the holding costs of high interest rates. I fully support a Co-op model but do not like the figures at all. Something doesnt seem proper here. Is there someone from KBTL that can answer the question of why they havent searched for better financing options?
Its interesting to see how much this thread favored Ting and Schurz. Yet sad to see Councilors – in particular the one that teaches economics, to be bullied by an increasingly aggressive vocal minority. The intimidation and bully tactics used are not OK. Adam Roof shared this in his email about the vote :
“I have been disappointed in the style of civil discourse surrounding this issue. Over the last week or so Ive taken calls where Ive received outright political threats and harassment. Last week I answered a call from a blocked number informing me that if I did not vote for KBTL I would have a target on my back and that capitalist pigs will be slaughtered.”
Although Adam also shared how much support he gets from good and decent constituents, I think that if we want to have strong and effective leaders, we need to treat them with due respect. Or we’ll end up with more “leaders” that cower to the mob instead of leaders like Adam that vote for what’s really best for the city and its residents.
– Dave Gibson
The Eight Hundred Pound Gorilla in the parlor is the City’s $17,000,000 liability which resulted from the improper (and illegal) transfer of General Fund money to BT. That liability is evidenced by outstanding “stabilization bonds” which the City issued to convert the General Fund deficit to debt. Those bonds are secured by a pledge of the City’s full faith and credit. They are payable by the taxpayers. It seems to me that the City Council has a duty to maximize the cash it receives from the sale of BT so that all or significant portion of those proceeds can be applied to paying down the “stabilization bonds”, thereby reducing the taxpayers’ exposure. Acquiring an equity stake in “Son of BT” should be a secondary concern.
Can we talk about KBTL people shushing public commenters who spoke out in favor of other bids? At one point, President Knodell had to say “he gets to finish!” after a bunch of KBTL-ers tried to give a commenter the hook the second his red light went off (something no one did for pro-KBTL comments). Not only is KBTL a vocal minority peddling a really bad idea, many of them are jerks about it. See also the “capitalist pigs will be slaughtered” comment made to Councilor Roof.
The mayor is the aggressive vocal minority to be contained. The missing 17 million that taxpayers contributed involuntarily — about $1500 per taxable property — could have best been recouped by maintaining city ownership. Properly managed in recent years, Burlington Telecom is turning a 3 million profit yearly. Residents never asked for a Citi Bank deal that required unloading an increasingly valuable asset dearly acquired. And if the 30 million owed Citi was invested in infrastructure, not siphoned or squandered, the value remains and the Citi debt could have been restructured. The suggestion that CIti might have pulled their fiber optic cable out of the ground is absurd. That would be vandalizing the collateral they foreclosed on. The mayor inappropriately tried to deep six the KBTL bid at the 11th hour as unviable, and even sent his lawyers to Citi to solicit a threat of litigation. He was properly rebuked by the six councilors who voted to move the KBTL bid forward. The arithmetic may suggest that Ting is the obvious choice, but a deeper analysis points elsewhere, beyond Comcast lite. Given that the city has agreed to be forced to sell this asset, the KBTL bid is in fact the most viable and fiscally prudent option.
2 cents… Continuing with conspiracy language like he “sent his lawyers to Citi to solicit a threat of litigation”, only further hurts those trying to make believable points in support of your own cause.
RE: Big Sadie – “The Eight Hundred Pound Gorilla in the parlor is the City’s $17,000,000 liability which resulted from the improper (and illegal) transfer of General Fund money to BT.”
The City’s transfer of funds to support BT was not only legal, it was explicitly allowed by the Public Service Board in BT’s CPG. Don’t take my word for it, look it up. Also in the history files is two criminal investigations that found no wrongdoing and a defeated civil suit from disgruntled citizens.
Tiki,
“The City’s transfer of funds to support BT was not only legal, it was explicitly allowed by the Public Service Board in BT’s CPG. Don’t take my word for it, look it up. Also in the history files is two criminal investigations that found no wrongdoing and a defeated civil suit from disgruntled citizens.”
The transfer of funds may have been legal but not being able to repay was illegal.
All of the bidders have to build out the system to all of Burlington – that is the business plan for all three. The comments about KBTL are ignorant. The people putting the deal together include industry officials who have managed and operated electric cooperatives, argued hundreds of utility cases, and worked for Wall Street investment houses. None of the comments made above are based on knowledge and fact – merely assumptions, fear and individual political bent. With respect to Batman’s question, yes there is someone who can answer your question if you post it here: https://www.keepbtlocal.com/contact/
“The City’s transfer of funds to support BT was not only legal, it was explicitly allowed by the Public Service Board in BT’s CPG.”
I believe this is not true. The CPG says that the City cannot put taxpayer funds at risk (i.e., make loans to, or invest in, BT). That’s what happened. That’s why it was done in secret. Leopold admitted that he knew he wasn’t supposed to do it.
The reason he got through the civil suit is NOT because the transfer didn’t violate the CPG. It’s because he was found not to have acted in a way that benefitted himself personally (which is true). Read Judge Toor’s decision dismissing the suit. In fact, she made clear in her decision that transferring the funds was improper.
And by the way, investing in BT — in violation of the existing CPG — is exactly what KBTL is asking the City to do now. Which is one of the several reasons I believe that the KBTL bid couldn’t possibly be approved by the PUC. For the City to accept a bid that can’t win PUC approval (or at least has a good chance of not winning that approval), is absolute folly.
Liz, I actually tried to contact KBTL on three occasions and the most recent was three days ago and have never received a response.
From Yelp Review of Ting in Charlottesville, VA 2/19/2017
“I can’t wait for my contract to be up so I can go back to Centurylink. Ting is faster, when it works but is triple the cost. My old plan with Centurylink was $29 a month for 100mbps, Ting is setting me back $89 a month for 1000 mbps. With things like Netflix we don’t see any difference in speed, both work fine.
Customer Service is very friendly but rarely has an answer except the tech will be out tomorrow. If they could keep their service running it would be tolerable. But to pay triple price to see “Cannot Resolve Host” on my devices for weeks on end is frustrating.
Plus installation and the Ting Box set me back almost $400 in addition to the $89 monthly.
Hold onto your wallet!”
Congratulations on finding one consumer criticism of Ting. What does that tell us? Absolutely nothing. Do you think we could not find one single consumer complaint against BT?
And by the way, your consumer is complaining about being charged $89 per month for 1000 mbps — ten times the capacity she was getting from her old provider. $89 per month is not high, esp. for that level of speed.
Really, this is your argument for keeping BT local? This is the best you can do? Really?