Council Delays Financing II

"Had I been there I would have voted against splitting the question, and against the postponment of the letter of intent." -Me from the last post

A prominent local attorney wrote to me yesterday to express his belief that Monday's resolution was more binding than I thought. Why a resolution authorizing the pursuit of funding from a lender, with whom a tentative agreement had clearly already been pursued?

Good point.

The bottom line though- can BT possibly repay one-hundred million dollars in twenty years on its own merits? Based on its current track record, a reasonable person could conclude- no. They could not become cash flow positive after spending fifty million dollars and there is no proof they ever can.

Let's look at the facts, OK? BT has 4,500 subscribers (maybe). Comcast has twenty-five million. That's five thousand times as many. What makes the city interested in competing with that? It feels like we're trying to cross the ocean in a row boat with this thing. For what? We might just want to turn back while we can still see the shore. In another year or two Burlington Taxpayers might only be able to dream of owing just seventeen million dollars.

This re-fi makes the city liable to repay 6o million in principle and 40 more million in interest. Sure the city may repay the money with BT proceeds if it wishes, and if they're sufficient to do so, but as far as Piper Jaffrey is concerned repayment is "fungible." That means they don't give a shit where the money comes from as long as we pay them.

No creditor ever gives a shit where the money that pays them back comes from.

And when BT revenues aren't enough- the money will come from the taxpayers.

At this point it's hard to imagine Chris Burns and Jonathon Leopold can slap together a convincing business plan to show how BT becomes profitable. I mean for heaven's sake- they start their customer service reps out at seventeen dollars per hour. Seventeen dollars per hour! That is so much money! They aren't worth it. Richard Donnelly alone took home nearly 70K in FY08. Somebody could have done whatever the hell he did for BT for half of that I'm sure.

Most of the network is already built in Burlington. Wiring the city with fiber was forward thinking, but who really cares who runs the network? And the value of fiber could easily drop with more and more wi-fi available.

The thing is BT is a totally non-essential city service. It could disappear tomorrow and Bob Kiss could still be remembered as a good mayor for creating a rainy-day fund and paving the roads. Who care about BT? Judge Judy is Judge Judy regardless of the cable carrier. So who cares?

"Um is not an answer, sir!"

Is it worth the risk of owning a 100 million dollar dinosaur that eats? I urge my city councilors Paul and Vince in particular to consider that question carefully, since they are the swing votes.