I hope your holiday season has been full of good food and good times with family and friends, and that the weeks ahead promise more of the same.
Ending the Burlington Telecom lawsuit + starting a new chapter
It has been five years since Burlingtonians first became aware of serious financial troubles with Burlington Telecom and three years since Citibank commenced a $33+ million lawsuit against the City.
At the beginning of this year, following a two-day mediation session that I personally attended and led on behalf of the City, the City reached a Settlement Agreement with Citibank regarding the lawsuit. In the months since, we have been working hard to implement that agreement.
That work has included: ensuring full public transparency into the agreement, securing multiple City Council approvals, obtaining commitments for the bridge financing necessary to carry out the agreement, and seeking regulatory approvals from the Public Service Board (PSB). In November, after months of testimony and careful review, the PSB unanimously approved the Settlement Agreement and related financing, and the City Council gave its final approval of the financing agreements by unanimous vote.
Barring some unforeseen and surprising setback, in the weeks ahead we will close on the bridge financing and complete the Settlement Agreement, definitively ending a long and unfortunate chapter in the City of Burlington’s history. As we approach this significant threshold, I would like to take this opportunity to review why we intend to move forward with the Settlement Agreement.
In short, we are moving forward because the Settlement Agreement accomplishes all the BT goals the City has been seeking to achieve since the beginning of my Administration. Here is a list of those long-standing goals and a summary of how they will be met under the settlement:
- Protect taxpayers from further BT-related losses. The bank’s $33+ million lawsuit will be dismissed fully in exchange for $10.5 million, almost all of which will be paid from BT revenues and non-City sources.
- Maintain BT service for its more than 4,000 customers. When the Settlement Agreement is completed, the bank’s demands that the City remove and return to the bank all BT fiberoptic cable and other equipment or that BT be put in receivership outside of the City’s control will be dismissed. The Settlement Agreement and related financing will allow BT to continue providing its service to BT customers as it does today for up to four years as the City seeks financial partners or buyers.
- Preserve BT as a telecommunications competitor to maintain affordable Internet, cable, and telephone services for Burlington residents and businesses. The competition created by BT – particularly in the previously non-competitive cable sector – has generated benefits in terms of service and pricing for Burlingtonians. The Settlement Agreement and related financing will allow this competition to continue as the City seeks financial partners or buyers that can operate BT in a favorable manner for the long-term.
- Restore Burlington’s credit rating. Earlier this year, in the wake of the announcement of the Settlement Agreement, Moody’s Investors Service upgraded the City’s credit outlook from negative to stable. Our expectation, based on public analyses Moody’s has issued, is that completion of the Settlement Agreement will quickly lead to further credit rating improvements, and each improvement in that credit rating can save Burlington property tax payers many millions of dollars by reducing future bond interest rates over time.
- Secure, if possible, the opportunity for recovery of a portion of the $16.9 million spent by the City prior to 2010. While it is unlikely that the City will ever be able to recover all $16.9 million that was spent improperly prior to 2010, the Settlement Agreement creates the opportunity for some repayment over time either in the form of cash with the sale of BT or through a carried interest in the long-term BT ownership entity.
- Secure the right partner for BT committed to working with the City on its BTV Ignite economic and community development initiative. This final goal was added approximately a year ago as the City launched BTV Ignite, a collaborative community effort to accelerate Burlington’s tech economy. Again, by giving the City years to find a long-term resolution for BT, the Settlement Agreement creates the opportunity for accomplishing this goal.
You can learn more about the Settlement Agreement by visiting the Press Releases section of the Mayor’s Office web page and by reviewing documentation accompanying past City Council agendas when BT was discussed. I also gave presentations about BT at all of the NPAs in November and you can find video of those discussions in Channel 17’s archives.
The next four years will be a critical period for BT’s long-term success, uncertainty about what that success looks like remains, and there is much more work to do. However, this new chapter will be very different than the one we are ending. While BT’s problematic history cannot be forgotten and will have practical impacts on BT’s future, in the years ahead, we will have an opportunity to explore together how a new vision for BT can support our long-term community and economic development goals.