Burlington Telecom, the failed/failing/flailing government-sponsored enterprise, an enterprise that Burlington taxpayers unwittingly subsidized when then-Mayor Bob Kiss decided it was OK to dip into the city’s cash pool to keep the cable flowing, has had its settlement talks with its creditor collapse on Monday. From the Freeps:
Settlement talks in Citibank’s $33.5 million lawsuit against Burlington and Burlington Telecom have ended unsuccessfully, federal mediator Richard Cassidy said in a report to U.S. District Court in Burlington.
Cassidy said in a “final report” to the court that he had participated in “many telephone conversations” with both sides since the last face-to-face negotiations in late January.
“We have apparently exhausted the possibility of settlement,” Cassidy concluded, “given the present posture of the case and the views of the parties.”
Let’s not all be shocked at once. This issue has been dragging on since 2010, when Burlington terminated the lease agreement when, as if by magic, it discovered that Burlington Telecom could not make promised payments on the leased equipment. Since then, Citibank has been trying to recoup its losses, but it now sounds like that even aided by a federal mediator, the parties can’t come to an agreement. This sounds a lot like:
a. Whatever Burlington is offering to pay is nowhere near the value of the equipment, or the terms are so long that Citi would continue to lose money. I’m assuming that Burlington Telecom is still considered to be a viable enterprise by the City of Burlington, regardless of the math surrounding the debt structure and operating expenses. Hope has sprung eternal here.
b. Burlington is operating under the impression that BT will continue indefinitely, regardless of the outcome, so they’re not offering terms in good faith. As unrealistic as this sounds, this could very well be the case, considering its past statements about the value of BT.
c. Citibank is unwilling to accept anything but full value of the lease agreement, and/or repayment terms that equate to the full value of the lease agreement. Considering the City essentially broke a contract, and the City violated its Certificate of Public Good under which BT is allowed to operate, I’m not quite sure how Burlington is off the hook for the value of the contract, regardless of how painful that payment structure might be to the citizens of Burlington.
Miro Weinberger, who inherited this rolling disaster when he became Mayor, states something approaching the obvious here:
“We would all like to put (this) behind us,” Weinberger said. “It’s an unfortunate chapter for the city and for Citibank.”
No kidding. But Bob Kiss left you something to clean up that is simply not going to come up easy.
He said the city wants to be sure that any settlement of the case, whether by negotiation or in trial, “is fair to the citizens of Burlington, who have spent far more on BT than they expected.”
There won’t be anything fair in a settlement. The citizens of Burlington were not supposed to spend anything on Burlington Telecom – period. End of story. It was not to be a taxpayer-supported enterprise, until Kiss and Jonathon Leopold decided to spend $17 million of money that wasn’t their own to keep BT’s doors open, and tried to hide the spend from taxpayers.
There should be zero expectation that Burlingtonians spend anything on this boondoggle, but they’re going to end up with the bill
that someone else left for them anyway. But for what? An enterprise that provides a service was already provided, by multiple suppliers, to all Burlingtonians, and had been for years? BT’s pricing, even before the wheels came off, was not much better or worse than other service providers. It’s about the same.
So why re-create the wheel, on the backs of taxpayers, when you don’t have to? Why not City of Burlington Gas Stations? City of Burlington Shoe Stores? Inevitably, when politicians do things for political reasons, the bottom falls out of the project, onto the heads of taxpayers. A “Progressive” business is always a success, when there’s a deep and wide pool of tax dollars available for siphoning when economic reality slaps the Progressive mind square in the melon.