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.

This article appears in Jan 12-18, 2011.

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Shay Totten wrote "Fair Game," a weekly political column, from April 2008-December 2011.

11 replies on “Burlington Telecom Continues to Drag Down City’s Bond Rating”

  2. Bet they wish they had done the financing with Piper Jaffrey over a year ago. We’re paying for consultants and lawyers because the dolts on the council want to make political points. We’ll I’m tired of paying for petty politics.

  3. OY: it wouldn’t have happened. PJ would have taken it to market and there it would have fallen apart as they tried to sell it. It wasn’t a good deal for anyone – especially the taxpayers. The Council was right in stopping that. We’d be worse off now, believe it or not.

  4. It wouldn’t have made it to market. PJ hadn’t done any due diligence when the concept was presented. BT didn’t even have a business plan at that point. I don’t mean they didn’t have a good business plan, I mean they didn’t have ANY business plan.

  5. PJ never cared about BT’s business plan. They were ready to loan the money to the city. What’s BT got to do with that from their perspective?

  6. PJ wasn’t loaning anything. They were agreeing to underwrite the offering. Up to individual investors to decide whether to invest. PJ’s deal was contingent on the “moral obligation” of the City to repay. Anyone who thinks PJ was going to solve this problem is way off base.

  7. For those with short memories, from a BFP story at the time…”In an e-mail Thursday to councilors and city officials, Paul said she had spoken with Piper Jaffray senior Vice President Jay Hromatka about the proposed BT borrowing. Hromatka said Piper Jaffray has not examined BT finances carefully but is concerned “about the city’s ability to repay the debt,” Paul wrote.Leopold told councilors the city’s overall credit rating would act as the backing for the new financing. He said the city must do its own due diligence and be comfortable with its ability to repay the loan before entering into an agreement with Piper Jaffray.”Again, keep in mind that when the “blue ribbon” committee asked for a business plan, BT did not have one to give them. First they tried to give them pro formas, then when reminded that pro formas are not a business plan, they asked for additional time to go write one.Beyond the obvious fact that PJ would have pulled out of this, the CC did the right thing in not taking on debt that BT couldn’t demonstrate a path out of. According to whom? JONATHAN LEOPOLD.

  8. isnt there supposed to be a 1,250,000 dollar surplus from the money we didn’t spend to pave the roads?Moodys only sees a general fund balance of 900k where the hell is the rest of that cash? We were not supposed to be spending the 350 on consultants and Mc Neil lawyering compliance or noncompliance issues as the case may be.What happens to the rating when Leopold moves the cash pool “liar loan” from asset to liability? Kiss is swirling the drain.And OY if you had no money to pay the Piper Jaffery last year and you borrowed more money you would just be further in debt and allow Leopold to steal even more money. You are an idiot and that’s saying as nicely as I can.

  9. Update on special BT meeting.According to the Mayor and council at Monday’s Jan 10 council meeting the new date for the special BT meeting is Thursday Jan. 27 at Contois, 6 pm.Stay tuned for the format to be used for this meeting, that is as controversial as the damn BT mess itself.Pile one controversy on top of another, what do you get?16.9 million controversies.

  11. step one: resign LIE-OPOLDstep two: resign KISSstep three: CitiFinancial sells BT assets for $10 MMstep four: City of Burlington signs lease with new owners for space at 200 Church, thius the slow repayment of the 17 million loaned

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