BURLINGTON — Burlington city councilors ironed out details of the new deal to sell Burlington Telecom during their first meeting since the sale Monday.
The document detailing the sale of Burlington Telecom to Schurz Communications was released Wednesday and documents the hastily arranged, late-night deal made at the last Burlington City Council meeting.
The document outlines the agreement to sell Burlington Telecom to Schurz Communications for $30.8 million. The letter and a document assembled in the early hours of last Tuesday comparing the three final bidders — the other two being Toronto-based Ting, and the local co-op Keep Burlington Telecom Local — have virtually the same purchase details.
Other details of the sale include no rate increases for at least five years, commitments to Burlington Telecom’s net neutrality commitments and possible expansion of Burlington Telecom services to Winooski and South Burlington.
Outstanding issues
Todd Schurz, CEO of Schurz Communications, flew into Burlington Monday and has been meeting with Burlington Telecom stakeholders since he landed, he said. He has met with representatives from Keep Burlington Telecom Local and will meet with Burlington Telecom staff Tuesday.
Armed with the details of the deal, councilors asked Schurz how he plans to run Burlington Telecom. Councilor Karen Paul, D-Ward 6, asked Schurz how his company will commit to, and advance, net neutrality principles.
In 2015, the Federal Communications Commission passed net neutrality rules on a party-line vote that the now-Republican-controlled commission will likely decide to strike down Thursday.
Net neutrality rules ensure all internet traffic is treated equally. The rules keep the internet accessible to all, supporters say, and prevent internet service providers like Burlington Telecom from charging more for specific content or websites.
“Under my proposal, the federal government will stop micromanaging the Internet,” said Republican FCC chair Ajit Pai, a Trump appointee, in a recent statement.
The company has made commitments to net neutrality and has posted statements on Schurz-owned company websites, Schurz said.
The politics of the FCC are problematic, and Congress needs to make a net neutrality law, he said.
“We believe there should be a legislative solution, because commissions change,” Schurz said. His company’s support of net neutrality reflect his personal views, he said in an interview prior to the meeting.
Schurz also said his company refrains from making political contributions, though he did say he and family members have “absolutely” donated to politicians.
“That’s inappropriate for a company,” Schurz said.
The role of ZRF Partners — the company that was originally the lead bidder during the last City Council meeting before Schurz took the lead — is still being worked out, Schurz said.
There is interest in having Faisal Nisar, founder of ZRF, lead the community investment aspects of the deal, which commits $2.5 million over 10 years to Burlington’s tech community, including tech incubator BTV Ignite and Burlington’s schools.
During the Nov. 27 meeting, Nisar did not reveal ZRF’s investors, which irked some councilors. As a way of mitigating those concerns, Schurz said Nisar would be the sole investor from ZRF.
“Any equity investments, we have agreed, Fasil would be the investor,” Schurz said.
Making amends
Councilor Dave Hartnett, D/R-North District, gave a public apology Monday to Councilor Joan Shannon, D-South District.
Hartnett lambasted Shannon during the previous council meeting for questioning a meeting at the Burlington airport between Councilors Kurt Wright, R-Ward 4, and Jane Knodell, P-Central District, and Faisal Nisar, founder of ZRF partners.
At the time, it was unclear if the meeting ran afoul of rules that barred councilors from meeting with individual bidders. Wright and Knodell have both said the meeting was on the level and approved by city attorney Eileen Blackwood and city negotiator Terry Dorman.
“I crossed the line as a councilor. I think there is a code of conduct we have here as a councilor,” Hartnett said.
“I owe an apology to Councilor Shannon,” he said.
Wright and Mayor Miro Weinberger both praised Hartnett for apologizing. Wright also repeated that he believes the airport meeting was appropriate, but said he should have extended the invitation.
“Knowing what I know now, I certainly wish that I had said to Terry, ‘Terry go ahead and share to the entire council’,” Wright said.
Next steps
The City Council is expected to act on the final agreement at their next meeting on Dec. 18. The state Public Utility Commission will then need to approve the sale, which could take place in mid 2018, according to Weinberger. However, after the City Council approves the final sale, it will have satisfied an arrangement made with Citibank to sell Burlington Telecom before the end of the year.
Burlington Telecom is owned by Bluewater Holdings, and its assets are leased back to the city in an arrangement that was reached after a settlement with Citibank. The 2014 settlement ended a $33 million lawsuit by the bank, which lent money to Burlington Telecom when it was owned by the city.
The city agreed to pay Citibank $10.5 million, sell the telecom utility, and give Citibank a share of the proceeds.
