Six people were effectively laid off today at Burlington Telecom, less than two weeks after city officials proclaimed that the muncipal utility was paying all of its bills and netting a positive cash flow — absent paying off the debt it owes to taxpayers.
The six positions are slated for elimination as part of a staff restructuring being overseen by outside consultants. The positions include two technicians, two customer service representatives, an outside plant manager and BT’s marketing coordinator. The six people who hold those posts were placed on administrative leave today; the City Council will have to approve the changes. Once approved, the six people will be officially laid off, said consultant Gary Evans of Hiawatha Broadband.
At a special City Council meeting two week ago, Evans said the main problem facing BT was too few subscribers. So, why axe the marketing position?
“This doesn’t mean that BT’s marketing efforts will stop,” Evans said.
After the layoffs, BT will have a workforce of 20 employees. “We don’t think there’ll be a need for additional layoffs,” said Evans. “This action does, in no way, suggest the beginning of the end or that this is the end of BT. On the contrary, we feel as if this will put BT at the right staffing level for its customer base.”
Two weeks ago, outside consultant Steven Barraclough, who is helping to run BT’s day-to-day operations, told attendees at a special City Council meeting that BT has a “surplus” of roughly $40,000-$50,000 per month and is not taking any money from the cash pool. In addition, BT is paying the interest on the $16.9 million owed to the cash pool.
Burlington Telecom is in the midst of discussions with several financial and strategic partners in an attempt to stay in business. The city is awaiting word from CitiCapital about what equipment it wants returned, and how. The city backed out of its $33 million lease purchase agreement with CitiCapital last year after it could not reach an agreement to restructure its debt.
When asked, however, to produce a standalone termination letter, the city said no such document exists.
“There isn’t a stand-alone termination letter,” wrote City Attorney Ken Schatz in an email to Seven Days. “Letters between the City and CitiCapital involve ongoing contract negotiations and settlement discussions. Therefore, in order to protect the City’s interests, we need to keep them confidential.”
Barraclaugh said at the January meeting that BT has priced replacement equipment it suspects it will need when CitiCapital seeks return of the equipment it now owns as a result of the lease termination. Barraclough said the replacement equipment will cost about $6 to $8 million.
BT is developing a plan to take out existing equipment and install new equipment that is designed to provide “minimal disruption in service,” Barraclough said in January.
This article appears in Feb 9-15, 2011.
Got something to say?
Send a letter to the editor and we'll publish your feedback in print!
David this is getting tiresome. Nice job not answering the many replies and questions about the near delusional post you made about BT. The value that CitiFinancial owns is the network (i.e. the equipment, fiber, etc) IN PLACE. You don’t just go out and buy replacement equipment and give the other stuff to Citi. Citi has the right to sell the network in place. Kiss is playing a dangerous game with this fantasy of his. Imagine if you defaulted on your home and you decided that you could make the bank whole by going to Home depot and buying all the parts (the lumber, the insulation, the wire, the wallbaord, etc). Voila! “Here Bank – here are the parts you loaned me money for. Now we are settled, thank you.” I don’t want to see BT go away at all and I agree that the network adds value to our community, economy, etc. But it is bankrupt and Mayor Kiss has squandered both time and resources in his effort to resolve it, further harming the taxpayers and reputation of the city. The damage he has done alone on the issue of trust between citizens and city hall will take years to recover from. The financial damage we will pay for years as well and frankly we don’t know the full extent of how much. BT is toast and it will be sold at a fire sale, hopefully to folks who are interested in restoring and regenerating the value it once represented. BTW I don’t care about your past abuse of meals, incidentals, etc. But the term is “Per Diem” (latin: per day).
But David, To clarify, the fiber cable and equipment is valued at 6-8 Million, would cost 6-8 Million to buy or cost 6-8 Million to buy and install. That’s the real question, how much to repurchase and install? We know it cost about 50 Million to do it the first time….
To clarify a couple small items…1) I quoted a Comcast ad from the Free Press. It said $500 installation fee.2) I did not say that BT only owes $6-8 million. I understand that we owe Citi $33 million +/-. I was trying (apparently poorly) to point out that the actual cable and infrastructure was worth about $6-8 million.3) As for the perdiums. I was more than willing to speak to the 7 days reporter because the pay system (which includes the strange perdium allowance system) needs to be changed. It was in the context of a pay cut (but not a perdium rate cut) that the conversation even started. In fact I was the 4th lowest compensated legislator from Chittenden county and the 27th lowest in the State (out of 180). Legislative salaries are totally messed up (only about $10,000 per session, with $4000 to as much as $17,000 for some legislators in the form of perdiums).The legislators from Burlington and other relatively close places who rent apartments in Montpelier are the ones that really take the cake.And ultimately, I guess in some peoples eyes, all people who try to serve as publically elected officials are crooks. But really, folks I know, across the political spectrum, are trying to make government work better. It is wonderful to have all the different perspectives and ideas present in the discussions about how to do that. I am not sure that anyone has the perfect answers.
Zuckerman logic: “BT does not offer one thing then have you hooked and increase your rates. BT does not charge the hook up fee. So actually, they can have the same cash flow with fewer people because for the first few months of each person hooked up the costs outweigh the income. But after the box is paid for, the income/cost stream for each customer improves.” what is different for Comcast David? They have a cable drop and no dead equipment left behind I have about three hundred dollars worth of BT/Citi capitals junk in my garage collecting dust because they left it there. I think I will let the kids harvest it for electronic parts.I would have to pay BT for at least a dozen years for them to recoup one dollar of their install cost. You think that’s smart business you have been out in the sun too long Dave your brain is turning to mush. It Takes BT 12 years before you break even and that doesn’t count operating expenses or debt service profit for future expansion etc etc….David we do not live in the same reality. If as you posit that fiber and internet speed is so important and life changing and an economic boost why hasn’t Vermont enjoyed a larger economic benefit we enjoy the fifth fastest connection speeds in the country, and 80% of internet users are using broad band. http://wwwns.akamai.com/soti/webinar01262011.pdf surely the high tech world should be overflowing Burlington’s tax coffers and we would see a tax decrease instead of the tax increase foisted upon us by the incompetent Progressive Mayor and CAO.
David: I won’t attack.1. Name 1 asset that the City of Burlington owns related to BT?2. Are you a BT subscriber? Yes? Did you know that when you send your monthly payment in, that it belongs to CitiFinancial? Is the City of Burlington putting all excess into an escrow account. We are on the hook for that too?3. What color is the sky in your world?Citi Financial is giving the City Hall some breathing room to come up with a work out. That time will end soon.
David you should call and tell Kiss to resign. Gotta give you credit, after admitting to defrauding the state over mileage and expenses you at least had the decency to remove yourself from the taxpayers payroll. Kiss needs to follow precedence and resign for the fraud he and Johnny have committed.
David,There is not a five hundred dollar install fee its fifty.in six months you can find a better deal. The progressives have pissed in the soup. Your boys Kiss and Leopold have put us in a deep deep hole.David you are naive to think that Citi will settle a 33 million dollar bill for 6 million.Especially when your Prog Boyos have claimed that they were negligent in their operation of BT. That is a losing defense in a Tort case which we will face if your plan moves forward. To listen to your moronic statements it is insulting David.The lease is under Force Majuer. The work out by D&F is in lieu of Citi sending their own chumps to run this thing. They need a value we need a value and the value will not equal 50 million.Looking ahead it needs to grow to survive, your guys have proven to be negligent , incompetnet and thieves progressives are proven incompetnets.Just like you think its okay to charge per diems for goods you dont use to plump your own wallet while you laid off the people who do the real work. Go comrade, your socialist logic stops at your own front door. It is only a prog that thinks they will get this thing for free. The Mayor and Leopold will be doing jail time under your scenario. Travelers will be tapped and Citi will attach the 17 million because that is in the lease asset. Leopold should go to prison for bankrupting the city and stuffing BT with his thefts.Restructuring the debt is fine but you cannot scalp CITI they will take a haircut but they are in the drivers seat. Kiss an Leopold have lost the asset it no longer belongs to us we have little to no say.
Zuckerman, why in the world would Citi accept a million or two for fiber that they spent 20+ to install? That type of pie in the sky thinking is half the problem. Citi could sell it to Comcast, Fairpoint or an completely different entity for more. Thinking they are going to accept some paltry sum from BTV is just absurd. As for BED, it has become a cash cow for sure…in part due to 14.5% increases and mainly because there isn’t any competition. They don’t really compete with CVPS or GMP. BTC has to compete with Comcast, Fairpoint, Dish Network, DirectTV
“There is no business or financier who wants to spend the money to pull down the cables and remove the equipment”Who would have to pull down cables? Citi owns the cables right where they are. If/when they sell them, they’d be selling them already buried/strung/installed.You clearly haven’t read the agreement between the BT and Citi. BT is in default, they don’t get to just walk away.If you think BT as it stands could ever pay back $17m – over 10 years, or 100 years – you haven’t been paying attention. They just lost 1000 customers and laid of 6 employees. They’ll be lucky to survive until Citi comes in and tells everyone to go home, or stick around for a month to train their replacements.
Why don’t you just ask your friend Bob what the truth is? Ask him whether the city only owes Citi $6-8 million, or owes it the full $33 million.Ask him if Citi is preparing its lawsuit papers right now to collect $33 million from the city.And then finally let us all know, ok?