The financial scandals embroiling Montpelier and Burlington have some striking similarities. No, it’s not just that the administrations of both cities are liberal — if not downright progressive.
Rather, key administrators opted to keep their money troubles — and the strategy to get out of those fiscal pickles — a secret from citizens.
In Montpelier, Mayor Mary Hooper and City Manager William Fraser, in collusion with city councilors, kept hidden from the public an overpayment to a contractor that will cost taxpayers $400,000 to remedy. It may have already caused water rates to rise. They kept the information to themselves for three years.
During that time frame, Hooper ran for reelection unopposed. She’s up again in March. Want to bet she’ll see a challenger this time?
In Burlington, a top aide to Mayor Bob Kiss is on the hot seat after it was revealed that he authorized a $17 million loan from the city’s checkbook to keep fledgling Burlington Telecom afloat.
Chief Administrative Officer Jonathan Leopold told “Fair Game” that it was he, and he alone, who decided to extend the money to BT in early 2008. He loaned it in anticipation of receiving a new round of financing from outside investors. The deal never materialized because of the global financial meltdown, and the city’s checkbook became the bank.
“It was me, and I’m not ashamed of it,” said Leopold. “I still believe it was the right thing to do. In hindsight, you can always find things you could have done differently, but this was prudent and the taxpayers are not at risk.”
Leopold said refinancing BT’s current debt could cost about $1.1 million in fees, and he hoped to refinance the old debt and the cost of the remaining build out all at once. That process has taken longer than anticipated.
Leopold said he did brief city and state officials about BT’s finances, and the use of the loan, as far back as December 2007 and again last fall. Still, there is no explicit OK on record from the board of finance or the city council to loan the money, which is what irks many councilors and the public.
I never knew the phrase “checks and balances” means the guy in charge can request the loan and write the check.
Leopold’s actions also protected Mayor Kiss during a spirited four-way race for mayor this March. Wonder if voters would have been as likely to back Kiss for a second, three-year term if they had known the full details of the $17 million loan?
It also helps fuel ongoing speculation that Kiss is clueless and Leopold is really running the city.
Burlington and Montpelier aren’t alone in their secret shenanigans. As I noted recently in “Fair Game,” the Winooski School Board ran afoul of the state’s open-meeting law when it decided in an email exchange to “protect” the children from Pres. Barack Obama’s speech to schoolkids.
Recently, too, the weekly Waterbury Record took its town select board to task for holding subcommittee meetings without telling the public, or even keeping minutes of the meetings. Sheesh.
In the Winooski and Waterbury cases, Secretary of State Deb Markowitz said that, while there was a violation of law, they were honest mistakes. An intentional violation of Vermont’s open-meeting law is punishable with a $500 fine.
It isn’t the first time the Record has caught the Waterbury select board running afoul of the law, notes editor and publisher Maria Archangelo.
As with all these cases, perhaps there’s more intent than meets the eye?
Burlington Mayor Bob Kiss said he supports a full, independent audit of Burlington Telecom’s finances, among other steps, to reinstate confidence in the venture.
Kiss outlined these fixes to the city council before a special meeting Tuesday night. [Click here for Shay Totten's report from that session on Blurt: The Seven Days staff blog].
The audit request comes on the heels of an extensive war of words between the Kiss administration and David O’Brien, the state’s public service commissioner.
The public flap erupted after “Fair Game” first reported that BT borrowed $17 million from the city after years of promises that it wouldn’t rely on taxpayer money to be viable. O’Brien said it was “the most irresponsible utility behavior” he’s seen in his seven years as commissioner.
CAO Leopold, who OK’d the city loans to BT without explicit approval from the board of finance or the city council, will recommend several refinancing options to councilors by their November 16 meeting, Kiss said. The financing plan could include an immediate repayment of the $17 million.
In a letter to city officials on Friday, O’Brien’s department urged BT to repay the city loan immediately and stop taking more cash from taxpayers.
City officials say O’Brien either doesn’t talk to his own staff or, worse, he wants to deliberately sabotage BT.
“The tone of urgency of the letter is ironic since the DPS has known about the city’s use of pooled cash since November 2008,” the usually quiet Kiss fired back in a prepared statement. “This is a public relations ploy consistent with Mr. O’Brien’s inaccurate and unwarranted statements about BT’s finances. His remarks undermine public confidence in BT and increasingly appear to be a strategy to close BT down.”
Oh, come on. The only folks who might like to see BT shut down would be Comcast. And I don’t recall seeing the giant telecom company on O’Brien’s holiday party guest list last year — you know, the one “Fair Game” wrote about? In his Stowe condo, O’Brien rubbed elbows with Jay Thayer, the head honcho from Entergy Vermont Yankee.
Queen City taxpayers are being invited to a special council-sponsored city hall forum about BT on Thursday night. There, voters will finally have a chance to give city councilors a piece of their minds.
Imagine that, letting the public weigh in.
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