[B]urlington Telecom will be sold to Schurz Communications — a last-minute arrangement decided through backdoor political maneuvering at a Burlington City Council meeting. The meeting, which ended in the wee hours of Tuesday morning, was rife with confusion and marked by outbursts.
The decision brings to an end months of back and forth between three bidders and the city. Many residents backed local co-op ownership, while Mayor Miro Weinberger openly objected to the bid from Keep Burlington Telecom Local.
There were two commercial bidders for Burlington Telecom in the final round: ZRF Partners with financial backing from the formerly independent bidder, Indiana-based Schurz Communications, and Toronto-based Ting.
Ting offered $32 million, ZRF $25 million, and KBTL offered $12 million to $16.5 million.
All three bidders made public offers. But during the first of several breaks at the seven-hour meeting held in Contois Auditorium in City Hall, talk of a major change to the ZRF Partners and Schurz proposal began to emerge.
The new proposal, which was not disclosed until shortly before the vote, gave Schurz control of Burlington Telecom instead of ZRF. The offer was bumped up to $30.8 million, which was identical to Schurz’s previous, solo offer.
During a recess, city attorneys worked with Faisal Nisar, founder of ZRF, and Todd Schurz, of Schurz Communications, to mark up a previously released proposal. It was posted online at 1:40 a.m. Tuesday.
Shortly thereafter, the City Council voted 8-2 in favor of the revised Schurz plan.
Major questions remain. Councilor Joan Shannon, D-South District, for example, asked Schurz who would operate and manage Burlington Telecom.
Schurz replied: “I wasn’t expecting to answer that question.”
Schurz said he will submit a new, updated proposal in writing to the city Tuesday. Schurz, like the other bidders, said current Burlington Telecom staff would be retained.
Schurz would own between 60 percent and 100 percent of Burlington Telecom, depending on how much of a stake Nisar wants in the company, and how much equity Burlington wants to retain.
Burlington Telecom is owned by Bluewater Holdings, and its assets are leased back to the city in an arrangement reached after a settlement with Citibank. The 2014 settlement ended a $33 million lawsuit by the bank, which had loaned money to Burlington Telecom when it was owned by the city.
Burlington’s agreement with the holding company allows the city to select a buyer and retain a large portion of the proceeds if the sale is completed by the end of the year.
More legal threats
Citibank had threatened to sue the city if councilors chose Keep Burlington Telecom Local over other bidders for Burlington Telecom.
The bank also threatened to sue if the city accepted the ZRF/Schurz offer of $25 million, according to City Attorney Eileen Blackwood.
Blackwood said the motive was mainly financial — Citibank sees a Ting as the best bidder because the company offered the highest bid.
“Is that something they have generally communicated to us? Yeah,” Blackwood said. “They believe the city needs to take the bid that is at market value.”
Councilor Sara Moore, P-Ward 3, echoed Blackwood.
“We’ve had threats of legal action if we go for anyone but Ting,” Moore said.
Outbursts and hallway meetings
Several breaks gave councilors time to huddle, strategize and level accusations against fellow councilors.
Councilor Dave Hartnett, I-North District, shouted an expletive and stormed out of Contois Auditorium during the first long break from public deliberation, with Councilor Chip Mason, D-Ward 5, following close behind. Reporters could overhear the two talking in the hallway.
Hartnett told Mason he did not want to vote for any of the three bidders.
“This is crazy,” Hartnett said to Mason.
While her colleagues were talking behind her, Shannon told reporters about a meeting between Nisar, City Council President Jane Knodell and Councilor Kurt Wright, R-Ward 4, at the Burlington Airport last Wednesday.
The rendezvous appeared to break a resolution that barred councilors from reaching out directly to the bidders. The gag order was designed to keep individual councilors from influencing bidders, creating the impression that they were speaking for the whole council, and undermining the work of the city’s negotiator, Terry Dorman.
When asked about the meeting, Wright said everything was on the level.
“All we were ever told is we couldn’t meet individually,” Wright said.
Wright explained that Dorman set up the meeting, and he checked with city attorney Blackwood. They met at the airport out of convenience, because Nisar was leaving town. They talked about potential problems with Nisar’s bid, Wright said.
Later, when Nisar was in front of the council, Shannon asked him about the meeting. After initially dodging the question, he tepidly said he did not meet with councilors.
Several councilors tried to interject, sensing Nisar was in hot water.
“You’re out of control, Councilor Shannon. You’re going down the wrong path,” Hartnett said.
Vote
Councilors started to vote around 1:40 a.m. Tuesday. In the end, Schurz won 8-2, with Shannon and Councilor Richard Deane, D-East District, declining to vote for either finalist.
Councilors Max Tracy, P-Ward 2, and Ali Dieng, P-Ward 7, voted in favor of KBTL. “Burlington residents are going to wake up tomorrow morning and be furious that they did not get to weigh in,” Tracy said.
Councilor Sharon Bushor, I-Ward 1, was considered a possible swing vote. When she voted for Schurz, there were audible gasps among the mostly pro-KBTL crowd.
“It was a process for me, trying to figure out how to get a majority of votes,” Bushor said afterward.
Many councilors said they were trying to avoid a repeat of the council’s tie vote earlier this month between KBTL and Ting. Bushor voted for KBTL during that vote. This time, she said the Schurz proposal was similar to what the company had previously unveiled as an independent bidder.
“If was totally plucked from the sky tonight, I wouldn’t have been able to support it,” Bushor said.
She added: “I wasn’t looking forward to this night.”
