Burlington Telecom awaits PSB decision on interest payment - WCAX.COM Local Vermont News, Weather and Sports-

Burlington Telecom awaits PSB decision on interest payment

Burlington, Vermont - February 15, 2010

A blue-ribbon committee says Burlington Telecom is a world-class telecommunications system, but one the city simply can't afford. It is $51 million in debt and has already violated its operating certificate by borrowing $17 million in public money.  And last week a judge said Burlington can't use any more taxpayer dollars to pay  $386,000 dollars in interest it owes on its debt.

"This was never intended to be an issue for the taxpayers and we need to make sure that it isn't an issue for the taxpayers," City Councilor Karen Paul said. 

Paul, an Independent, was on that committee and says Burlington Telecom was supposed to be a self-sustaining enterprise. But it can't afford an interest payment due Wednesday. That has left the city without good options, and time is running out.

"If we default, that isn't good," Paul said. "If it we use pooled cash, that isn't good either."

Paul says the Public Service Board could let the city dip into its cash reserves. Public Service Commissioner David O'Brien says that's not something the PSB wants to do, and borrowing more money wouldn't make sense because there's no evidence the city could repay that debt either. O'Brien says the city would not technically be held liable under terms of financing, but he and Paul agreed it would be difficult for future lenders to ignore it.

"While it may not be a directly linked to our credit rating, it certainly is not helpful," Paul said. The city of Burlington has a very high credit rating, and that allows us to finance other projects at lower interests. So we need that higher credit rating."

O'Brien says Burlington Telecom should go to the bank before going to the taxpayers, and Paul says she thinks lender Citi Leasing would negotiate.

"I don't think Citi Leasing wants to own Burlington Telecom," she said, "and perhaps there is a way we can work this out with them."

Both the city council and the Public Service Commissioner are expecting the PSB to issue a decision Tuesday on whether the city can tap into its pooled cash.

Kate Duffy -- WCAX News

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WCAX. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.