The Burlington City Council signed off on a 61-page agreement turning the telecom company over to Indiana-based Schurz Communications during a special meeting Wednesday night.
The 10-2 vote marked the last major decision the city council has to make in the Burlington Telecom sale process.
The process is not complete yet. In two months, the deal will go before the Public Utilities Commission, which needs to certify the deal through granting a Certificate of Public Good. Once that is attained, the council will finalize the deal once more — that process could stretch well into next year.
The agreement sets in stone several provisions worked out over the course of weeks between the city and Schurz, but also represents a major milestone of the nearly six-year Burlington Telecom saga.
Many councilors reflected on years of wrangling over the future of Burlington Telecom before the vote. Several sat on the council in 2011, when it was revealed that then-mayor Bob Kiss had been propping up the ailing Burlington Telecom with $17 million in city funds.
“We were, literally months away from trial in federal district court, facing a $30 million claim for breach of contract, fraud, and a legitimate, very legitimate claim for taking the assets back from Citibank,” said Councilor Chip Mason, D-Ward 5, who was on the council at the time.
The lawsuit against the city by Citibank ended with a settlement that uses financing from the holding company Blue Water Holdings, which partially owns Burlington Telecom and leases its assets back to the city.
The agreement with Blue Water forces the city to sell Burlington Telecom by the end of the year, or risk losing a portion of the sale proceeds — hence the special city council meeting scheduled in the final days of 2017.
This year, the sale process dragged on and the council faced criticism from many sides — a councilor recused herself for reasons still publicly unclear, there were two failed joint-bids between potential buyers and a combative late-night meeting that produced Schurz Communications as a buyer.
The legally-binding agreement approved by the council is the culmination of years of work to find the telecom a permanent owner.
Among them:
• The new company will retain the name Burlington Telecom;
• The city can buy up to a third, in equity, of the new Burlington Telecom;
• Current rates will be held level for five years;
• The new Burlington Telecom will adhere to net neutrality principles;
• The company will give $250,000 annually for 10 years to local technology incubator BTV Ignite, and $50,000 annually for technology programs in Burlington schools;
• A clause that gives the city first dibs to buy back Burlington Telecom in the “unlikely event” Schurz wants to sell.
Mayor Miro Weinberger and Councilors Karen Paul and Max Tracy joined the meeting via conference call.
The agreement approved Wednesday has legal teeth. Under the agreement, the city can ask a court to order Schurz to comply with the contract under a specific performance order, a special type of legal remedy commonly used in contracts for unique properties like Burlington Telecom.
“We have the ability to bring them into court, and have a judge order that they do what they say they are going to do,” said Ralphine O’Rourke, an attorney retained by the city to help with the Burlington Telecom sale.
Though the council’s main task is finished, the 12-member panel now needs to decide if it will invest in the company.
“The deal that we are about to undertake represents a loss of local control, and I am heartbroken for the tortured process that led us to this deal tonight,” said councilor Max Tracy, P-Ward 2.
Tracy and Councilor Ali Dieng, P/D-Ward 7 were the two no votes.
Dieng said he could not vote for a deal that he did not believe represented what his constituents wanted.
“I want to find the best interests, and fight for it. And I think that’s exactly what I did,” Dieng said. Tracy and Dieng also voted for the local co-op bid, Keep Burlington Telecom Local, over the successful Schurz bid during a late November meeting.
How much stake the city should have in the new Burlington Telecom will be the next major decision the council undertakes. If the council finds a way to purchase up to a third of the company, the city could have up to two members on a seven-member Burlington Telecom advisory board.