BURLINGTON, Vt. (WCAX) Should Burlington try to get back into the cable and broadband business? After being forced to unload Burlington Telecom to get out from under debt, the city now has a chance to invest $5 million from the sale proceeds in the now privately owned utility.
Current and former members of the Burlington City Council of different political parties got together on Wednesday to advocate investing in Burlington Telecom.
"The trajectory of this company is on the upside," said City Councilor Kurt Wright, R-Ward 4.
When BT started 14 years ago, it was entirely owned by the city, with a goal of competing with big corporations like Comcast. But it went into debt, unable to pay its major creditor and had to be propped up with $17 million from taxpayers.
Last year the city sold BT to Schurz Communications and paid off its remaining debts, with an option to buy back a small stake in the operation.
"The investment and potential return from the company that is doing great and poised to do great into the future," Wright said.
The city has about $5 million left from the sale of Burlington Telecom to Schurz. At their next meeting, city councilors will vote on how much to invest -- if any -- into Burlington Telecom, which is now operating under the name Champlain Broadband.
"We believe that the short and long term return is very promising and that the risk is modest," said former council member Jane Knodell.
Right now there is a proposal to invest $2.4 million for a 7.5 percent share of the company and a seat on the board. Advocates say that as the company continues to grow, so will the city's investment.
"By year five, the projected distribution to the city is over $300,000 a year," Knodell said.
"What we need is to get this steady stream of revenue coming in from this company," Wright said.
The current proposal gives the city outs if they run into trouble in the future, saying that Shurz guarantees they will pay back earnings.
"That means that gives us downside protection against the worst-case scenario," Knodell said.
But Councilor Max Tracy is among those who are wary of getting involved again.
"I think we need to be careful about engaging in speculative investments given what's gone on here," he said.
Tracy says he is worried about the changing tech industry, believes citizens should have input on how to spend the money and wonders if there are better investments.
"If we spend it on this, that's money we can't spend on other needs," he said.
The vote is scheduled for next Tuesday's City Council meeting and so far members we've talked to appear to be split on the decision.