Burlington Telecom: Some in Montpelier like what they see

by Angela Chagnon  

January 27, the Mayor’s Office and the City Council in Burlington held a public hearing about the future of Burlington Telecom, the debt-laden municipal telecommunications system instituted in Burlington under the administration of Mayor Bob Kiss ( P). About 118 city residents attended the meeting, many of them wearing stickers emblazoned with “Give Back Our $17 Million!” in reference to the $16.9 million taken from the city’s cash pool to fund the telecom.

Burlington City attorney Joseph McNeil, in an opinion attached to the CitiFinancial lease application, had claimed, “We are advised that approximately 40% of general fund revenues are derived from other sources than through taxation of the City’s taxpayers.”

Earlier in the same paragraph, he had reiterated Condition 60 of the Public Service Board’s Certificate of Public Good that had specified that Burlington taxpayers were not to bear the losses from Burlington Telecom.  What was the City’s reasoning to allow the withdrawal of General Fund cash?  McNeil had concluded that because 40% of the General Fund revenues were not taxpayer generated, it was okay to spend up to 40% of GF monies on Burlington Telecom.

Bill Ellis, an attorney with McNeil, Leddy and Sheehan, outlined the conditions BT had violated – four altogether, but the two most grievous were Condition 56, holding that taxpayers were not to be liable for BT’s debt and Condition 60, which mandated that any money taken from the cash pool be repaid within 60 days.  He said that BT must have a “cure proposal” by February 28, outlining what relief the city is seeking from the condition violations.

City councilors spoke out near the end of the three and a half hour meeting, pointing fingers and attempting to distance themselves from the mayor’s administration.

Chief Administrative Officer (CAO) Jonathan Leopold was not present, citing “doctor’s orders”.  Councilor Ed Adrian (D) remarked that Leopold had seemed well enough to address the Council the previous day to convince the Council to place a measure on the City ballot to raise property taxes.

Fred Osier and Eugene Shaver of Burlington are currently suing the City to recover the $16.9 million taken by Burlington Telecom. According to a January 27 article in the Burlington Free Press, “Norman Williams and Robert Hemley of the firm Gravel and Shea, representing Osier and Shaver, argued in their motion dated Tuesday that the city has violated [Judge Helen] Toor’s order by spending about “$236,000 in city funds for BT between July 1, 2009 and December 21, 2010.” Williams and Hemley wrote in their motion that following a Free Press story Jan. 7 detailing the spending, they contacted the city’s attorneys and asked the city to repay the money “to avoid the need for a motion for contempt.”

Judge Toor had issued an Order on February 12, 2010 forbidding the City to use the pooled cash for anything other than “such payments in the ordinary course of business”, provided that the withdrawals are paid back within sixty days.

In light of this financial disaster in Burlington, House bill H.105, introduced by Reps. Jim Masland (D-Thetford), Alison Clarkson (D-Woodstock), and Mary Hooper (D-Montpelier) may be of interest to Vermonters.  The statement of purpose reads: “This bill proposes to authorize two or more municipalities to form a district for the delivery of telecommunications services”.

Section 4965, subsection ( c) of the bill reads, “No action shall be brought directly or indirectly attacking, questioning, or in any manner contesting the legality of the formation, or the existence as a body corporate and politic of any telecommunications district created under this chapter after six months from the date of the recording in the office of the secretary of state…”

It seems like Burlington Telecom, with its gross mismanagement, unsustainable debt, secrecy, outright illegal actions and complete disregard of taxpayers has been such a success that some think that it’s worth spreading throughout the state.