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$10.5 Mil settlement in Burlington Telecom case - WCAX.COM Local Vermont News, Weather and Sports-

$10.5 Mil settlement in Burlington Telecom case

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BURLINGTON, Vt. -

"Today the big, dark cloud that has hung over the City of Burlington for four years is breaking up," said Burlington City Council President Joan Shannon.

Financial mismanagement of Burlington's publicly-owned telecom created that big dark cloud. The city floated the utility by illegally moving $17 million into its coffers. In 2011, Citibank filed suit for $33 million and threatened to rip out the system's guts after the city failed to make loan payments. Monday, Mayor Miro Weinberger announced plans to partially repay creditors and the public. "We still have a lot of work to do to complete the settlement agreement and put the lawsuit behind us. However, with this agreement, for the first time there is now a clear path to resolution of the BT challenges," Weinberger said.

Pending approval from the full city council and the state's Public Service Board, Citibank will receive $10.5 million. Much of that cash will come from another loan, and the rest largely from insurance policies. The city's taxpayers and bank will split any profits from BT's sale, which is expected to happen within the next four years, though neither should be expected to recoup all they put in.

"Moody's, please take notice," said Burlington City Council member Karen Paul. The pending lawsuit left the city's bond rating teetering above junk-bond status and forces the city to pay more for new borrowing. Once the settlement is finalized, the rating is expected to rebound, though how quickly and fully is unclear.

Mayor Miro Weinberger ran on fixing the BT mess and called the issue his top priority. Residents Channel 3 spoke with say the agreement he crafted deserves top marks. "I think getting something back is always a win. it's better than nothing back," said local resident Lane Dunn.

The agreement comes out of a federal mediation hearing -- which have failed in the past. A trial date for the lawsuit had been scheduled for this month and likely provided both sides with added incentive for making a deal.

Related Stories:

Trial date set for Citibank, Burlington Telecom lawsuit

City's new push to lure business with Burlington Telecom

Burlington Telecom dispute likely headed to federal court

Legal battle over Burlington Telecom lands in court

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