A contingent of current and former Burlington city councilors are urging their colleagues to reinvest the proceeds from the Burlington Telecom sale back into the now-privately owned utility.
In a tripartisan press conference at city hall on Wednesday, the five councilors and former councilors took turns at the mic to explain why the city should invest in the once-sinking telecom that wounded the city's reputation and its balance sheet. It's now thriving, they said.
"This is not the same Burlington Telecom of 10 years ago," said Jane Knodell, the former Progressive city council president and a University of Vermont economics professor. She was flanked at the podium by current council president Kurt Wright (R-Ward 4), councilors Brian Pine (P-Ward 3) and Sharon Bushor (I-Ward 1) and former councilor Dave Hartnett, a Democrat.
Knodell estimates that Burlington could earn up to $660,000 a year by reinvesting the $5.3 million in proceeds from the sale last spring to Indiana-based Schurz Communications, assuming a 12.5 percent rate of return.
Mayor Miro Weinberger has recommended reinvesting $2.4 million, which would buy Burlington a 7.5 percent stake in the company and a seat on its board.Knodell said would take eight years to recoup $2.4 million.
Wright said the group is concerned that a council majority will shoot down the proposal. The topic is scheduled for debate at the council's meeting on Tuesday, February 18.
"We need to highlight this issue as a critically, critically important issue," Wright said. "I think we will rue the day that the city council makes this decision — if that's what happens — down the road, as we watch Schurz reap all the benefits."
Pine said the council has an opportunity to increase revenue without raising taxes and to try and recoup some of the $16.9 million that the city spent to keep the failing utility afloat.
"We're getting some of that back from the sale proceeds — in my opinion, not enough," Pine said. "The only way for that to grow is to reinvest the capital in a revenue-producing source."
Pine has heard his fellow councilors suggest that the city could opt out of BT and use the money for other, one-time expenses, he said.
"That is completely backwards. This is not windfall money," Pine said.
Bushor said her constituents want lower taxes. If the city spends the $5.3 million on other projects, there would be no direct return on those investments, she said.
Hartnett said this is the city's last chance to get some of its lost money back: "If we vote no on this, that's it; we're done. No ownership, no nothing," he said, adding, "We can't afford not to do it."
Knodell acknowledged that there is risk in the deal but said if the earnings don't pan out or if the city needs a large sum to pay for other capital needs, Burlington can always cash out. If that time comes, Schurz has agreed to buy the city's shares, she said.
"The real risk is not doing anything," Wright added. "The real risk is cashing out and saying, 'Sayonara.'"