Let's Make a Deal
The Little Telecom That Couldn’t: Will that turn out to be Burlington Telecom’s epitaph?
After a year of secret talks and scandalous revelations, the city of Burlington terminated its $33.5 million lease with CitiCapital and must return the BT equipment it bought with the borrowed money.
What’s next is anyone’s guess. More lawsuits? Tax hikes? A fire sale of BT? All of the above?
It’s not clear which equipment BT is required to hand over to Citi, but technically it could include 180 miles of fiber- optic cable (the technological brains of the network), cable boxes and more.
“CitiCapital has assured us they won’t do anything precipitously because they know that BT serves both the police and fire departments,” said Mayor Bob Kiss. The rest of city government, including schools, rely on BT, too. Ditto large nonprofits such as the HowardCenter, a human-services agency.
Pulling the plug on this “socialist experiment” would do more than just political damage. Contrary to what Kiss has suggested, the city is not off the hook financially once it turns over the leased equipment.
Lease provisions allow Citi to sue Burlington in order to recoup the entire $33.5 million. CitiCapital spokesman Mike Rogers isn’t saying whether the financier will go that route.
Remember, too, that $33.5 million is just a portion of BT’s debt. It also owes $17 million to the city’s taxpayers.
Plus, it would take at least another $8 million to finish wiring the city — an unlikely scenario, at best, if it’s going to happen on BT’s dime.
Since BT is a project of the city and not a private company, it can’t declare bankruptcy. The entire city of Burlington would have to file for bankruptcy. Such an event would be unprecedented; only the Vermont legislature can allow a municipality to file for bankruptcy.
Undaunted by the legal snares, mounting debt and his own dimming political future, Kiss remains optimistic. Or aloof — it’s hard to tell the difference with this guy.
“I still believe Burlington Telecom has a lot of potential and could play a role in providing key telecommunication services in Vermont if we can work through the finances,” said Kiss. “Burlington is a very resilient city. We’ve tackled tough problems before.”
BT has been hampered from the get-go. Barred from using taxpayer dollars by lawmakers eager to “protect” the likes of billion-dollar operations such as Adelphia and Comcast, BT turned to the private market for start-up money. There, it got all the money it needed — and more. When it ran out of private cash, and the global finance markets collapsed, it secretly dipped into the public till — illegally, as it turned out.
Michel Guite, who owns Vermont Telephone Company, has offered BT the money — $300,000 — and equipment it needs to stay in business. He and VTel have plenty of cash on hand thanks to an infusion of $116 million in federal stimulus funds to wire broadband across Vermont.
“The problem is simply that BT spent like drunken sailors in the early years,” said Guite. “Burlington can and will be proud of it if they stick with it.”
Another longtime BT observer agrees it still could rightsize and stay alive.
“Burlington Telecom’s technology infrastructure is excessive compared to what it needs to support its current customer base, and coupling that with the cost curve of technology, BT could possibly lease replacement equipment at a fraction of the original cost and remain operational,” said Tim George, former chairman of the city’s Telecommunications Advisory Committee.
So far, neither Comcast nor FairPoint has talked to the city, or Citi, about taking over BT’s operations, company reps tell “Fair Game.” Give ’em time.
One group showing interest — for the second time — is Reboot Burlington Telecom, led by businesspeople Don Mayer of Small Dog Electronics and Paul Millman of Chroma Technology, former city council president Andy Montroll and Tim Nulty, BT’s first general manager. The group’s purchase offer was rebuffed earlier this year, in part because of a long-standing feud between Nulty and the city’s chief administrative officer, Jonathan Leopold.
Guite says his goal isn’t to get BT for a song.
“The fundamental way is to behave like an ally, rather than an adversary,” said Guite. “We already serve BT as an Internet provider, and we want to keep doing so, and we believe in loyally supporting our customers. Comcast, and anyone who hopes to buy this cheaply, to my thinking are BT adversaries.”
Just prior to Thanksgiving, Entergy announced the “good” news. It had — ta-da! — finished removing tritium-laced groundwater from the VT Yankee site. Well, sorta.
Simply put, Entergy met a preset, arbitrary goal of sucking up 300,000 gallons of tritiated water. VY spokesman Larry Smith told “Fair Game” plant officials are now evaluating whether it should continue extracting water. The 300,000-gallon mark was established earlier this year before the extent of the contamination was known.
Gov.-elect Peter Shumlin has called on VY to add more extraction wells. Pressing the “pause” button on the extraction is “illogical,” he said, if more tritium exists. VY should be doing all it can to clean up the tritium in the groundwater.
So, why stop now? Because winter means ice.
“My conclusion is that they didn’t want to make it freeze-proof,” said Fairewinds Associates’ Arnie Gundersen, who has been hired by the legislature to monitor VY activities.
Freeze-proofing the lines costs money — which VY doesn’t want to spend without knowing whether it will be operating beyond 2012.
One thing is clear: Contaminated groundwater is still making its way to the Connecticut River, and potentially into the bedrock.
According to test results provided to the Vermont Department of Health, tritium levels near the banks of the Connecticut River are more than 400,000 picocuries per liter — 20 times the limit set by the U.S. Environmental Protection Agency; the highest readings on the site have topped 750,000 picocuries per liter.
Gundersen believes Entergy should continue to suck up the water for one simple reason: “What goes up won’t go down, and if they pull it up, it won’t go down into the bedrock.”
What will go down if Entergy keeps pumping out tritium? The price it can fetch for VY.
Filling Up the Cabinet
Gov.-elect Peter Shumlin announced his “transportation team” on Monday, proclaiming his picks for the number-one and number-two slots at the Agency of Transportation.
Brian Searles will be AOT secretary. His deputy-to-be: Rep. Sue Minter (D-Waterbury).
Searles is no stranger to the post. He had the job for the final four years of Gov. Howard Dean’s administration.
For the past five years, Searles has been the director of aviation at Burlington International Airport. The bond rating for BTV dropped recently as a result of Burlington Telecom’s financial woes and a reduction in air travel in and out of Vermont.
Minter has overseen the AOT budget from her seat on the powerful House Appropriations Committee. She previously served on the House Transportation Committee.
Late Tuesday, Shumlin made three more picks: Former Democratic gubernatorial rival Doug Racine will serve as secretary of the Agency of Human Services — a choice sure to warm the party’s bleeding-heart liberals. Patrick Flood will remain the agency’s deputy secretary. Shumlin named David Yacavone, a longtime AHS exec under Dean, as commissioner of the Department for Children and Families — a department under siege due to rising caseloads and dwindling staff.
Recounts R Us
In four recounts held Monday, Democrats held onto three seats — two in Rutland City and one in Essex Junction — while a Republican kept a fourth seat in Rutland.
Three more recounts remain: Two were held Tuesday as “Fair Game” went to press — one in the Northeast Kingdom and one in Franklin County. The final, in St. Johnsbury, will be held next week.
When all is said and done, the GOP and Democrats will go into this next session with exactly the same size caucuses as in the previous biennium: Democrats with 94 members; the GOP with 48. There are also five Progressives and three independents.
Some things never change — such as that pesky $100 million-plus budget gap.
After four years living in Washington, D.C., Andrew Savage, a longtime aide to Democratic U.S. Rep. Peter Welch, is returning to the Green Mountain State to become director of communications and public affairs for AllEarth Renewables in Williston.
Savage, a Calais native, will now be working for David Blittersdorf, AllEarth’s founder and an ally of Gov.-elect Peter Shumlin.
Roaming the Statehouse in his public-affairs capacity will be a different kind of homecoming for Savage, who first worked under the Golden Dome in 2002 when then-Sen. Peter Welch was president pro tem.
Savage begins the new gig after the first of the year, just as the new legislative session begins.
Vtdigger.org has merged with the Vermont Journalism Trust, another nonprofit news organization, to help it raise money.
The little-known Trust, chaired by businessman Bill Schubart, was established in September 2009 to fund investigative news gathering and create a consortium of receptive media outlets in hopes of influencing public policy. But the Trust decided instead to partner with Digger.
“The economic model that since the mid-19th century has supported print journalism is in steep decline,” Digger-in-chief Anne Galloway notes in a statement on the website. “Investigative journalism and beat reporting have been especially hard hit. We wanted to produce in-depth journalism vital to Vermonters within a sustainable economic model.”
To do that, Galloway has partnered with several Vermont newspapers and has also landed major national grants from J-Lab and the Knight Foundation.