Burlington will not reinvest any proceeds from last year’s sale of Burlington Telecom back into the company.
City councilors early Wednesday nixed a proposal by Mayor Miro Weinberger to use $2.4 million of the proceeds to purchase a small stake in the new company, a subsidiary of Indiana-based Schurz Communications.
The fateful decision, made after midnight during a marathon meeting, ends a tumultuous two decades of municipally owned broadband.
“It’s a risky investment, and we’re not allowed to make risky investments with taxpayer funds,” Councilor Joan Shannon (D-South District) said in voting no.
Before the vote, Weinberger noted that his proposal was preliminary and meant to start a conversation among the councilors.
“Given how this debate has played out and given the very strong statements made on both sides … I want to be clear that I also respect and accept the decision if the council decides that we should not invest,” he said.
The final tally was 8 to 3 against reinvestment; Councilor Adam Roof (I-Ward 8) recused himself from the vote. Councilors Brian Pine (P-Ward 3), Sharon Bushor (I-Ward 1), and Council President Kurt Wright (R-Ward 4) voted to reinvest.
The decision whether to reinvest was “momentous,” Wright said in remarks just before the vote. “I believe we are about to make a colossal mistake.”
Burlington Telecom launched as a municipally owned and operated broadband provider in 2003. By 2009, the city had used nearly $17 million to keep the company afloat — a scandal that took down Mayor Bob Kiss.
The city, under Weinberger, completed a $30.8 million sale of the utility to Schurz in March 2019. The bulk of the proceeds went to repay bank loans and consultants, but Burlington netted about $6.5 million.
Proponents of reinvestment hoped that stake would reap annual returns that could, over time, recoup the city funds that were misspent more than a decade ago.
As the proposal’s prospects dimmed, a group of current and former councilors staged a press conference last week in an effort to drum up public support. Two of those former councilors, Dave Hartnett and Jane Knodell, also spoke during public comment on Tuesday night.
“You’re doubling down with Don Sinex,” Harnett said, referring to the maligned CityPlace developer, “and you’re worried about risk with Burlington Telecom?”
Others lamented the prospect of walking away from any municipal control over the city telephone and internet provider.
“It will be a sad, sad day in the city of Burlington if tonight you vote to cash out,” Knodell, a former Progressive councilor and University of Vermont economics professor, said before the vote.
In supporting the investment option, Pine highlighted Burlington Telecom’s financial recovery and projected that a city investment would increase its value over time.
“We deserve to reap those rewards,” he said.
But a majority of Democratic and Progressive councilors said the investment’s inherent risks were too high, and the proposed ownership stake in the company too low.
“I don’t think we should pretend that that one seat is going to allow us to steer the direction of the company,” Councilor Jack Hanson (P-East District) said. “That makes me uncomfortable to put public money into a private company whose decisions are out of our control.”
After the vote, the council also agreed to make public a confidential risk assessment prepared by city attorneys and consultants. The documents won’t be released publicly until redactions can be made, but those analyses appeared to have been a key factor for some council members.
“We need to have closure about this and move forward,” Councilor Ali Dieng (D/P-Ward 7) said.
Correction, February 19, 2020: A previous version of this story misidentified Joan Shannon’s district. Further, the story previously contained a miscalculation related to the amount of money the BT sale netted the city.
Related Stories
Got something to say?
Send a letter to the editor and we'll publish your feedback in print!
A short-sighted decision. Not only do we loose a public voice in the future of BT. We also loose the long-term financial benefits that will flow as this enterprise grows and becomes profitable.
Yeah. Maybe now the taxpayers and ratepayers can get some of the $23 million we put into this project back and avoid the tax increase that the mayor is pushing. The decision of the council not to invest is not shortsighted. The decision to sell BT is what will prove to have been very shortsighted and a gigantic ripoff of the taxpayers and ratepayers..
They said “They had the vision of a blind man”
The city council finally had enough spine to not do what Miro wanted them to do.. Maybe they learned something after the Don the Con episode!
“The city council finally had enough spine to not do what Miro wanted them to do.. Maybe they learned something after the Don the Con episode!”
As usual, you oversimplify. What you fail to point out is that two Progressive councilors and a Republican councilor also wanted to make the investment. This was not a Mayor v. Council issue or partisan issue.
I’m not a Burlington resident (but do own property in Burlington), so I’m not so much interested in the political discussions or back and forth about who knew what, who did what, etc…. That said, like many others, I’ve been following this story with interest since the Bob Kiss days. Serious question; Is Burlington’s option to purchase a 7.50% interest assignable? 480 investors pony up $5k each to form a holding company that purchases the 7.50% interest (or 4,800 investors pony up $500…same principal). The holding company works with the council to appoint a board member who would represent the interests of BTV residents. Satisfies the concerns of those who are loath to use taxpayer dollars and offers an opportunity to those who truly believe in the future of BT. Could be interesting….
Mr. Assumptions, you said “As usual, you oversimplify. “
As usual, you oversimplify. Can you present your views without ridiculing someone else’s opinion? And make it as complex as you like, of course.
I’m disappointed in the Council’s decision. Very shortsighted. What will be included in the confidential risk assessment that cannot also be applied to current city-owned infrastructure?
This decision creates confusion. Invest in a proven technology shown to hold growth potential? Nope. Invest in a developer’s lofty promises that have yet to show progress after years of talk? You betcha! Difficult to gauge how the rest of our city’s infrastructure assets are viewed in light of this vote.