This post was updated 11:30 a.m.
The Burlington City Council voted 8-2 early Tuesday to select Schurz Communications and ZRF Partners’ bid to buy Burlington Telecom — picking an option that was not on the table at the start of a lengthy and at times testy meeting.
The winning bidders negotiated their last-minute offer in a hallway in city hall. Around 11 p.m. Monday, they put forward a Schurz bid of $30.8 million — the company’s original offer before it was eliminated as a finalist on October 16.
Eight councilors voted in favor of the Schurz-ZRF proposal. Max Tracy (P-Ward 2) and Ali Dieng (D/P-Ward 7) voted for the co-op Keep BT Local. Councilors Richard Deane (D-East District) and Joan Shannon (D-South District) declined to support either of those bids after their choice, Toronto-based Tucows, was eliminated.
“I have never seen a less transparent offer than bringing in a completely new offer when everybody’s asleep,” Shannon said, as the session continued past midnight.
Kurt Wright (R-Ward 4) called the final outcome “the best of both worlds” from ZRF and Schurz.
The council spurned a $32.3 million offer by the Tucows and a bid from KBTL, which offered $12 million to $18 million.
The meeting dragged on more than eight hours, until 1:45 a.m. Tuesday. After an information session and public forum, the council took recesses that lasted nearly two and a half hours. Councilors and bidders gathered in groups to strategize and discuss the process.
When the councilors reconvened, they made a final decision with no public input on the winning bid. “I’m okay with giving up transparency for a better offer,” said Dave Hartnett (D-North District) with a shrug during one recess.
Under their new proposal, ZRF Partners, led by Faisal Nisar, would be a minority owner. The bid details are unclear. Nisar said it was not yet decided what percent ownership he would have in the company, though it would be a minority stake. Nisar would be responsible for delivering the community benefits offered in the bid — including funds for tech start-ups and job training.
Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. Schurz said that under the bid, his company would pay cash to the city, retain existing BT staff, and allow 20 percent — or potentially higher — city equity. Schurz will not increase broadband costs for five years.
“The last [deal] we didn’t have all sorted out because it took us four days. This one was 15 minutes.” Schurz told the council when he stumbled over questions.
Some councilors pushed back on the lack of transparency. “I feel incredibly uncomfortable with this,” said Tracy, calling it “unfair” to other bidders and the public. “I think this is a slap in the face to the public process that’s happened here,” he added, to applause from the KBTL supporters in the crowd.
Shannon questioned Schurz’s commitment to net neutrality, and ZRF’s refusal to divulge the investors funding the purchase. The meeting grew testy when she raised questions about councilors who met individually or in small groups with Nisar and Schurz.
“You’re out of control, Councilor Shannon!” Hartnett yelled, pointing her finger at her.
The vote ends a six-month process filled with controversy, reversals and delays. Eight bidders submitted offers in early June. The council narrowed the field to four before ZRF Partners dropped out, citing a conflict of interest in September; Schurz was eliminated in a council vote on October 16.
The council couldn’t decide between the original finalists — Tucows and Keep BT Local — and so, after two tie votes, the councilors invited the two eliminated bidders back into the process. ZRF and Schurz decided to team up soon afterward.
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Why is every loss in a representative democracy explained with reference to corruption, idiocy, dishonesty, etc.? Sometimes, on a matter of important public policy, people disagree as to the best choice, you don’t have the votes, and you … lose. It comes with the territory in a functioning democracy.
Big win for Kurt Wright! One R. vote for Shurz in previous round has come full circle to this. Dieng, Tracy, Deane, and Shannon showed some integrity. The rest, especially Knodell should be ashamed.
wow. what a horrible outcome for burlington, such a major loss, and absolutely unacceptable.
1) what tools are available to undo, reverse, this egregious error in judgment?
2) any public servants, from councilors to the mayor, are now fair game in re-election
this major loss is seen as a devaluation of our great city, especially to the people were are trying to attract, and/or retain. bright, young, talented families, like myself, and my colleagues, are attracted to innovation, different and unique ways of doing things for the communities we live in – we both create and seek high value productivity, what we have, here, with the sale of BT is the opposite of that. certain councilors and the mayor have inched this fine city closer toward a brain drain. shame on you.
Here we have one debacle followed some years later by a larger debacle still. The 17 million misappropriated in the previous administration at least was misappropriated to keep the enterprise afloat, in some sense serving the public interest despite perhaps betraying the public interest when viewed from another perspective.
Now this last minute back room deal brings a dark horse over the finish line, revealing the feather weight of public input and of serving the public interest or of valuing democracy.
But have our elected “representatives” taken care of Citibank, Blue Water Holdings, Dorman and Fawcett? Check.
1. It will be interesting to see what happens to BTs subscriber base following this vote. 1-800-Comcast should be very busy this month.
2. Burlington politics is severely broken. Ideologues on left and right are ruining this city, both in city council and on the school board. Centrists/pragmatists like Shannon, Paul, and Weinburger, (yes, Weinberger) need our support now more than ever.
3. Im very interested to learn what Jane Knodells reasoning is. Last week, the $30M Ting proposal was too low. This week, the $25M Shurtz proposal was priced right. Jane, please explain graphically, using supply and demand curves.
4. Recognizing our collective mistake, maybe we can vote again next Monday? 😉
The corruption on this Council is appalling. Time for Knodell, Wright and especially Hartnett to go.
It seems like this choice is a compromise which is quite refreshing! It seems that everything was carried out with maximum public input. Miro has done a great job of straightening out the city finances since the disaster of the previous Mayor. Newsflash! Burlington still owes Citibank millions of dollars! When we read that everything was settled with Citibank, it didn’t mean that they are giving Burlington a pass on paying the money back, it just gave more time to pay it back once there was a sale. Great job by the city council vetting out all of the proposals! Lets move forward and let the council move on to other business!
@Penelope
“This shady deal likely ends with this investor selling to Comcast in a few years and I hope the councilors that sold us all out go straight to hell.”
Lighten up Penelope! It is not the end of the world. KBTL would have lost BTC in a few years to Maine Fiber. They can make promises all day long but without the perfect scenario they end up following in Bob Kiss’s footsteps.
At least with this deal we the residents of Burlington get something in return and retain some say in what happens to BTC.
Congratulations to KBTL for electing Donald Trump.
Everybody needs to vote these completely inept and corrupt people out of office, and ideally run them out of town. What kind of deals were made behind closed doors? We will never know and sadly Burlington taxpayers once again pay the price. This shady deal likely ends with this investor selling to Comcast in a few years and I hope the councilors that sold us all out go straight to hell.