Five hours into the Burlington City Council’s November 27 meeting, Councilor Dave Hartnett (D-North District) decided to take matters into his own hands. His colleagues were trying for the third time to select a buyer for Burlington Telecom, and, in Hartnett’s view, they were once again headed for a deadlock.
So, just before 11 p.m., he climbed the stairs to the City Hall Auditorium balcony to hash out a deal with one of the bidders.
“You guys aren’t winning,” Hartnett recalled telling ZRF Partners founder Faisal Nisar and Schurz Communications president and CEO Todd Schurz, who had put together a joint-venture bid. “I don’t support your proposal.” He suggested that Nisar and Schurz restructure the bid — that Schurz take the lead role and Nisar step back and fund the venture.
The result? A new, 11th-hour $30.8 million offer. Some councilors, such as Max Tracy (P-Ward 2), strongly objected to the backroom deal. He called the last-minute development a “slap in the face to the public process.”
Nonetheless, it won approval from a majority of Burlington city councilors. At 1:45 a.m., they voted 8-2 for Schurz and ZRF. By then, the group had rejected the highest bidder — Toronto-based Tucows offered $32.3 million — and the lowest, which had the most vocal supporters: the cooperative Keep BT Local.
To maximize profit, the city had to sell Burlington Telecom by the end of December as part of its 2014 legal settlement with creditor Citibank. The six-month process of vetting potential buyers was supposed to be orderly and transparent, but conflicts of interest and changing timelines, bidders and offers made it anything but. The deadline vote came after an eight-hour meeting marked by sharp disagreements, profane outbursts and Twitter battles. Because of the outcome, Councilor Ali Dieng (D/P-Ward 7) later vowed he’d work to unseat some of his colleagues on Town Meeting Day.
“I’ve never seen anything like it. I’ve never imagined anything like it,” said Councilor Richard Deane (D-East District). “I’m a little disillusioned.”
Council President Jane Knodell (P-Central District) summed up the drama as messy but necessary.
It was a “process of compromise,” she said. “That is what legislative bodies do when they’re working well. At the end of the day, I honestly think we got a great bid.”
How did the search for a new owner of Burlington Telecom turn the rule-bound city council into a reality show?
Eight bids for BT came in by the June 5 deadline. An advisory board selected the final four — ZRF, Schurz, Tucows and KBTL — to advance to the full council in July.
Knodell decided to make the once-confidential offers public in September and called it a “big win for transparency.”
But then three, not four, bids were released. Nisar’s ZRF had withdrawn its offer after Mayor Miro Weinberger expressed his concerns about a potential conflict of interest in the relationship between Nisar and BT adviser Terry Dorman, the latter of whom was considering staying involved with BT after the sale. The two have known each other, and served on some of the same boards, for more than a decade.
Then, in October, the council delayed what was supposed to be its final vote because Councilor Karen Paul (D-Ward 6) announced that she had a professional conflict of interest. Paul subsequently quit her job and did vote, though the nature of the conflict has still not been revealed. (The city turned down Seven Days‘ request for related public documents, and the newspaper is suing to obtain them.)
The second time the council tried to finish the job, members were split 6-6 between Tucows and KBTL. Because the 12-member council has no tie-breaking measure, it asked the two competing bidders to team up and present a joint proposal. If they couldn’t agree on one, the council decided, Schurz and ZRF could reenter the process. Dorman resolved any potential conflict by announcing that he would have no future involvement in the telecom, according to Hartnett and Weinberger.
A week later, the council passed a resolution stating that “no individual city councilor shall be in contact with any bidder individually for the remainder of this process.”
If that measure was intended to rein in councilors, it failed. Last week’s meeting was even more contentious than the preceding ones.
The council had already taken two hourlong recesses by 11 p.m., when public deliberations on BT finally started. The long delay gave the audience plenty of time to tweet about the growing chaos. They called it a “travesty,” a “farce” and a “show de merde” — a shit show.
It got worse. As the new Schurz-ZRF bid came forward, Councilor Joan Shannon (D-South District) questioned Nisar about two meetings he’d had with Councilors Kurt Wright (R-Ward 4) and Knodell.
“Bullshit!” Hartnett yelled over her. “You’re out of control, Councilor Shannon, and you’re going down the wrong path!” When she persisted, he jabbed a finger at her and declared her interrogation “boring.”
Wright and Knodell jumped in to defend themselves. Speaking for the two of them, Wright denied that he had acted improperly and later asserted that Dorman had approved the November 26 sit-down at the Hilton Garden Inn.
Dorman did approve a November 22 meeting of Nisar, Knodell and Wright in the airport, the BT adviser said later. Dorman told Seven Days he further attempted to facilitate the meeting that occurred on the 26th, but learned Todd Schurz was unavailable. He gave Nisar’s cell phone number to Wright “mistakenly thinking that the meeting (which I had okayed but could not schedule) was being substituted by a call,” he said in an email.
Councilors traded barbs as interim Chief Administrative Officer Beth Anderson struggled to keep the meeting under control. Those who favored Tucows accused three pro-KBTL councilors of being disingenuous; Knodell, Sharon Bushor (I-Ward 1) and Sara Moore (P-Ward 3) ultimately switched their votes from the co-op to Schurz-ZRF.
Co-op supporters alleged that Tucows backers were “Miro-bots” who will do whatever Weinberger wants.
With time running out and options seemingly exhausted, many councilors were willing to resign themselves to the ad hoc Schurz-ZRF proposal. Schurz is a private family-owned company from Indiana that operates fiber, cable and media companies across the country. ZRF will fund job training and provide startup capital for local tech companies.
“We couldn’t postpone any more,” said Adam Roof (I-Ward 8), a Tucows supporter who nonetheless voted in favor of the final Schurz-ZRF proposal. “It was an improper ending,” Roof said. “But it was a fitting ending to an improper process.”
Hartnett acknowledged that he ignored the council resolution from two weeks prior by approaching Nisar and Schurz at the meeting but said he had no regrets. “I’m OK with giving up transparency for a better offer,” he said during a recess at the meeting.
Besides, he told Seven Days later, “Everyone had their hand in the cookie jar going to bidders independently.”
Those councilors who violated the resolution by meeting in secret won’t face any consequences, Blackwood told Seven Days. “The people’s remedy is to unelect them,” she said.
But Hartnett’s comments toward Shannon sparked outrage on social media. At a neighborhood planning assembly meeting in the New North End two days later, several residents asked for Hartnett’s apology.
“No apology from me for Councilor Shannon — at all,” he said.
In fact, Hartnett asked for Shannon’s apology. He was enraged, he said, “to sit there and have another city councilor attack the integrity of other councilors and virtually just flat-out lie on the floor. She should consider maybe even stepping down from the council.”
Shannon said it “pained” her to hear of Hartnett’s continued criticism. “We had a good relationship prior to Monday,” she said. “I do believe time heals all wounds, but how much time, I don’t know.”
In a phone interview last week, Dieng, who voted against Schurz, said the meeting was “like kindergarten.” He took the next day off work. “I was totally sick from the inside,” he said.
He said he’d be helping to unseat those current councilors who are motivated by “their own agenda. It’s really time; other people should run for office.” Dieng said he is especially peeved with Knodell, Wright and Hartnett, but only Wright is up for reelection in March. Dieng also suggested that Paul should step down from the council for her alleged conflict of interest.
Groups are mobilizing, too, as a result of the BT decision. KBTL board chair Alan Matson said last week he was taking “a day to mourn” but would be meeting with members soon to decide next steps. They would consider using their groundswell of support — including 500 contributing members — to stay involved with BT or to back council candidates in March, he said.
Rights & Democracy is gearing up to campaign for and endorse progressive candidates and will be discussing BT and devising a strategy, according to spokesman Shay Totten, a former Seven Days columnist who supported KBTL.
“There’s a backlash that’s going to come out of that that’s a little more vicious,” Totten predicted. “People have been very energized,” he said, and are “seeing this as part of a broader picture that the city is sliding backward.”
Tom Torti, president of the Lake Champlain Regional Chamber of Commerce, worried that the “debacle” would make Burlington look bad in the eyes of tech companies searching for a place to land. Such companies seek transparency, consistency and predictability, he said: “They’re going to look at that and say, ‘Huh?'”
Plenty of questions remain about the winning bid. Schurz charges its consumers more than BT, according to Shannon, but it promised not to raise prices in Burlington for at least five years.
The company also submitted a letter to the Federal Communications Commission to advocate against net neutrality — the current practice that prevents internet service providers from favoring some online content. But CEO Schurz promised that BT would stay net neutral. “The commitment we gave to the city we will absolutely keep,” he said.
Weinberger, who backed Tucows, said he was relieved the council finally acted. Of Schurz, he said, “We’ll work to hold them to a higher standard than sometimes they’ve achieved in other markets.”
He said he would help Schurz and ZRF establish a formal agreement, which is scheduled for council approval on December 18. By Tuesday, the contract was not yet formalized.
Meanwhile, CEO Schurz said he would spend the next several months reaching out to the community, trying to win the hearts of Burlingtonians. A few days after the marathon meeting, he confessed, “We, too, were surprised by what happened on Monday.”
Correction, 9:20 p.m., December 5, 2017: An earlier version of this story mischaracterized the resolution restricting councilors’ contact with bidders.
Clarification: This story was updated at 4 p.m. on December 6, 2017, to include Dorman’s statement about trying to set up a meeting for Wright on November 26.
The original print version of this article was headlined “How the Burlington Telecom ‘Debacle’ Divided a City Council”
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This article appears in Dec 6-12, 2017.
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Why Doesn’t KBTL Partner with Ting and Present a New Proposal?
After all Schutrz/ZRF put together a proposal at the last city council meeting in 15 minutes in the backrooms and hallways. The contract with Schurz/ZRF is not final until the City Council approves it on December 18.
Let KBTL and Ting try one more time to come up with a proposal before the city council meets on December 18. The last negotiating positions I read about gave KBTL 20% of shares for $6 million and the city could roll their $6 million settlement into another 20% ownership. The new company would be KBTL: Powered by Ting – and KBTL-Ting would have 40% local ownership and seats on the board.
KBTL-Ting would put in the same $30.8 million bid that Schurz/ZRF already has already bid and then the city council can do an apples to apples comparison of each company’s plans, promises, and compliance.
The city is already vetting the Schurz/ZRF proposal. Let KBTL-Ting write their new proposal this week, let it be vetted by the the mayor next week and presented at city council meeting on December 18. This will also give Mayor Weinberger some leverage in negotiations with Schurz/ZRF knowing there is an alternative in the background.
Ask KBTL and Ting if they would be open to the idea of revisiting their partnership which I understand failed to materialize by one single vote in KBTL’s board. Nothing is stopping KBTL from writing a new proposal, partnering with Ting, and bringing their proposal the City Council meeting on December 18 for the council to consider.
Can someone please ask President Knodell how a bid from a company that opposes net neutrality that has promised to “optimize” BT or some nonsense code for cutting jobs and sell it in 5 years AND THAT OFFERED LESS MONEY THAN TING is a “great bid”? I’m serious. What in the hell is the appeal of Schurz other than it’s not the one the Democrats liked? Dave Hartnett, same question. I’ll try not to shout “Bullshit!” during your answer but no promises.
Ting was clearly the best alternative to full local ownership. Aside from being the high bidder and granting the city a large minority stake, they’re highly regarded in every community they service and were enthusiastic about supporting Burlington’s technology community.
Any business manager would be fired for malfeasance for manipulating and then choosing a lower offer from a less qualified bidder. That Knodell and Hartnett refused to vote for Ting because it was the choice of democrats, to spite the mayor and our council representatives, is a crime against every Burlington taxpayer. Please don’t forget and don’t vote for these miscreants. Anyone who puts petty grievances or political payback above the good of the city doesn’t deserve to serve.
Piggybacking off of Susan Joy’s comment: Unfortunately, the “good of the city” is in the eye of the beholder.
Most KBTL supporters (and I started out as one) would probably say that the city is best served by completely local ownership of BT.
Most Ting supporters (and I ended up as one) would probably say the the city is best served by competent, financially stable ownership of BT.
And most Schurz supporters would probably say–WAIT, THERE WEREN’T ANY UNTIL THAT COUNCIL MEETING!
😉
I agree that some of the council members should be replaced as they will do anything to make Miro happy and he has to go as well!
I never supported KBTL. After the first go-round of malfeasance under the Kiss administration, taking BT out of local control is the best possible outcome in my opinion. KBTL had zero working capital. Its own employees did not support it being locally owned. And I have no doubt Citibank would have sued the city had KBTL prevailed. Taxpayers cannot afford it. Could the process have been different if not better? Of course. But at the end of the day, I am looking for solvency. Seven Days, I hope the city is forced to turn over the documents supporting Paul’s conflict.