Burlington Telecom failed to make a nearly $500,000 lease payment to CitiCapital by the end of October, yet city officials say talks with the financier remain ongoing with another meeting potentally scheduled this week.

That's according to a letter filed today with the Vermont Public Service Board by BT's attorney William Ellis. In the two-page letter, Ellis noted that the utlity remains in discusssion with its financier about how to restructure its $33.5 million lease. BT depleted a reserve fund of $1 million earlier this year to cover payments to CitiCapital it couldn't make from its own cash flow.

If CitiCapital were to claim BT in default of the lease, it could seize the utility's assets and either sell them to the highest bidder or hire a firm to manage the company and recoup any profits.

BT filed the letter with the PSB as a condition of an order handed down last month which found the municipal telecom engaged in a "wanton disregard" of various conditions of its certificate of public good.

In its ruling, the PSB required BT to provide ongoing updates to the PSB about its talks with CitiCapital — the first to be filed on Oct. 31, Sunday. BT filed their letter today.

In its letter, BT explained that talks between CitiCapital and BT's outside consultants — and day-to-day managers — at Dorman & Fawcett were ongoing.

"Beginning in June and continuing through the present, D&F has had direct discussions with CitiCapital officials and their attorneys," wrote Ellis. "Those discussions concerned restructuring the lease agreement. There has been recent communication between D&F adn CitiCapital and both sides are trying to work through this difficult situation. The city is hopeful a meeting will occur this week."

Dorman & Fawcett took on a greater role in managing BT after BT's former general manager, Chris Burns, left Burlington to join a telecom firm in Alaska. Dorman & Fawcett's involvement comes at a substantial cost to taxpayers, along with the cost of other consultants hired by the city to sort out BT's fiscal mess.

In its letter, the city and BT also asked the PSB to "implore" Department of Public Service Commissioner David O'Brien not to insert himself in the neogiations without first consulting with Dorman & Fawcett and the city. Recently, O'Brien wrote a letter direct to CitiCapital officials.

"The city was taken aback when it learned [O'Brien] had injected himself into the middle of these negotiations without any advance warning or discussion with the city," wrote Ellis. "Not only did the commissioner’s letter contain erroneous information (the city is not in default of the lease agreement as he states), it was not helpful and could hamper negotiations."

On top of the $33.5 million lease payment, BT also owes taxpayers $17 million. A lawsuit that aims to force repayment of that money continues to proceed in Vermont Superior Court in Burlington. In that case, Chief Administrative Officer Jonathan Leopold failed to have himself removed from the lawsuit or have the suit dismissed. Judge Helen Toor rejected Leopold's claim of "qualified" immunity — which means he claimed he was just doing his job when he allowed BT to borrow, and not repay, $17 million over the course of three fiscal years from the city's checkbook.

The end result is that Leopold could be on the hook personally to repay portions of the $17 million if the city can't cough up the cash.

Finally, a criminal review of BT won't be complete until year's end. That's the report from Orleans County State's Attorney Keith Flynn, who Attorney General Sorrell asked to conduct the review because he and his office had a conflict of interest. Sorrell, and other attorneys in his office, had worked for the same firm that represents the city and BT.

Flynn recenty requested to meet with Sorrell to provide the AG with a status review.

"He indicated that he hopes to have completed his efforts and be in a position to meet with me by roughly the end of the calendar year," said Sorrell.