Burlington Considers Bid Process for BT

The clock is ticking as the city of Burlington examines bids from entities to buy or partner to operate Burlington Telecom. The community has narrowed down what sort of characteristics they want in a buyer, but there is also some debate about the process as city officials move toward the final process.

On To The Next Step

The community received eight bids, none coming from large national telecommunications companies. Early in July, the Burlington Telecom Advisory Board (BTAB) reported that the highest bid was two and a half times the lowest, but they did not make dollar amounts public. They’ve eliminated some of the bids and on July 31st, the finalists are scheduled to make presentations to the City Council in an executive session. 

While price is a factor that the city and the BTAB are considering, it isn’t the only criterion that matters. Last year, the BTAB released a report based on community input, recommending the city first look for a locally based entity. Many people in Burlington like BT as a locally controlled asset and fear it may eventually be swallowed up by one of the large, distant carriers. 

Keep BT Local formed when city residents banded together to create a cooperative. They started in 2012 and have recruited members committed to keeping BT in the hands of local residents. Keep BT Local was one of the entities that submitted a bid.

How Much Public Input?

Keep BT Local is the only bidder that has publicly acknowledged its decision to bid on the network and city officials are still undecided about how much information to release to the public about bidders. Mayor Miro Weinberger has indicated he would prefer the bidders and their bibs remain confidential until after city officials make a final decision.

“Each bidder is working hard to convince the city they can meet those criteria, and they don’t fully know how they stack up against and what the others are offering,” Weinberger said. “That dynamic creates a strong negotiating position for the city.”

Keep BT Local’s chairman Alan Mattson, understands the reasoning, but also believes releasing the information would allow the public to be more engaged in the process.

The upside to engaging the public is that it would create greater support for whomever is eventually selected, Mattson said, while helping city officials make a selection that’s truly in the public interest.

Mattson pointed to the process by which City Market was selected to build a grocery store at its downtown location as an example. Public input swayed that process by showing that residents preferred the co-op to a Shaw’s.

“We should all put our cards on the table, and let those cards play,” Mattson said.

A recent VT Digger article pointed out a potential conflict of interest based on the city’s relationship with Dorman & Fawcett, the firm which has helped manage BT and will received a share of the final sale price. Mayor Weinberger says, “We are very aware of that potential conflict and working to make sure it doesn’t become an actual conflict.”

Concern has developed because the firm could be in a position to sway public officials’ decision regarding the process. 

“Mr. Dorman of course is used to a completely private kind of sale, and here we have a public that feels strongly vested in this decision and rightly so,” [City Council President Jane] Knodell said. “We need to take that into consideration while also acknowledging that disclosure in some cases could be adverse to the public’s interest.”

It's Been A Long Road

gavel.png In 2014, Burlington came to a settlement with Citibank, which required the city to sell the municipal network either in whole or in part. A previous Mayoral administration hid major cost overruns from the public for years and the city eventually owed Citibank approximately $33 million. After a drawn out lawsuit, the parties settled. They city would pay $10.5 million to the company and a share of BT’s future value.

Burlington had to turn to a local business owner for the bridge funding, who agreed to provide much of the funding in exchange for transfer of ownership of the network to Blue Water LLC, a company created specifically for this purpose. The city then leased the network from Blue Water.

If Burlington sells BT by January, the city will keep more funds from the sale, under the terms of the settlement agreement with Citibank. Burlington officials say they’re on track to meet that date; any final deal must be approved by Vermont’s Public Utility Commission.