Burlington will not invest proceeds from the sale of Burlington Telecom into Champlain Broadband, the local affiliate new BT owner Schurz Communications created to operate the telecom, the city council decided early Wednesday.
The council voted 8-3 to not use a portion of the $6.5 million it is receiving in the sale to invest in Champlain Broadband. The city sold BT to Schurz Communications for $30.8 million, a sale that was approved by state regulators in February 2019, and had until March 12 to decide to invest in BT.
Mayor Miro Weinberger proposed investing $2.4 million into Champlain Broadband, which would purchase a 7.5 percent stake in the company and include a seat on the company’s board.
Councilors in favor of investing viewed it as a safe investment that would offer a revenue stream outside of the property tax, while those opposed said they believed it was risky and the money would be better spent elsewhere.
Councilors Brian Pine, P-Ward 3, Sharon Bushor, I-Ward 1, and city council President Kurt Wright, R-Ward 4, voted in favor of investing. Councilor Adam Roof, I-Ward 8, recused himself for a professional conflict.
Pine said BT had grown in value over the years, and all indications showed it would continue that growth. The income from the investment could limit future increases to the property tax, he said.
“This is a chance for us to keep a piece of local control, ensure the upside of the company be returned back to the taxpayer, to hopefully put downward pressure on property taxes,” he said.
Bushor said all but one of the Ward 1 residents she had spoken with were in favor of investment, and during her long tenure on the council, the city had consistently been looking for alternatives to the property tax.
“I want the residents of Burlington to have a chance to recoup some of their money, to have a seat at the table and to find, finally, an alternative to help them live in Burlington,” she said.
Councilor Joan Shannon, D-South District, said the 7.5% ownership stake would not give the city a meaningful voice in the company’s operations. She said she did not believe the city should be investing taxpayer money that way.
“This is not an alternative to the property tax, it’s a risky investment,” she said. “And we’re not allowed to make risky investments with taxpayer funds.”
Councilor Max Tracy, P-Ward 2, said he is against investment as he does not think the city should be using its public money on a private investment.
“This notion that this is somehow progressive, to me, does not feel correct,” he said. “I feel like it’s in some ways an extension of neoliberal policy to sort of extend the public sector into the private sector in the form of this investment.”
Councilor Ali Dieng, D/P Ward 7, said he thought it was time for closure on BT.
“I think it is important as a community that we move forward, strengthen our priorities, and strive for stability,” he said.
Weinberger said he has tried to allow the council space to make its decision on investment and that his proposal was preliminary and meant to start the discussion. He said he respected the council’s decision and that the administration would work to ensure Schurz lives up to its commitments in the sale agreement.
The decision not to invest wraps up a decade-long saga around the city’s management of BT. In 2009, the administration of Mayor Bob Kiss used $16.9 million in taxpayer funds to prop-up the telecom.
The city agreed to sell BT as part of a 2014 lawsuit settlement with Citibank, which sued the city for $33 million after the city defaulted on a loan. The city decided to sell to Schurz instead of a local co-op and Toronto-based Ting in November 2017, and the Vermont Supreme Court upheld the sale in a decision in January.
During the meeting’s public forum, a handful of speakers spoke in favor of investment, including former city councilor Jane Knodell. She said that the city would not have received two bids of over $30 million if BT was a risky investment, and said BT has a strong track record.
“In my judgment, the risk is in not investing,” Knodell said. “I think it would be a sad, sad day for the city of Burlington if tonight, you vote to cash out.”
Solveig Overby, one of the residents who intervened in the state Public Utility Commission’s consideration of the sale, spoke against investment. She said the seat on the board would be “powerless.”
“Burlington residents should decide how the balance of the BT sale’s proceeds are applied to best meet the economic, social and democratic needs of the community,” she said.
