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Scandal-Plagued BVU Wants To Sell Bristol, Va.’s Municipal Broadband Network

February 18, 2016

iStock_000005643842MediumAccording to WCYB News, Bristol, Va. has agreed to sell its municipal broadband system, OptiNet, to a private company in order to clear the debt for BVU, which operates OptiNet. WCYB reports in a “special meeting” in early February, the BVU board of directors “signed an Asset Purchase Agreement” with Sunset Digital Communications of Duffield, Va. (WCYB noted, “BVU will continue to own and operate its electric, sewer and water operations.”)

The agreement is “the first step in the process of closing the deal.” The next steps, according to WCYB, are to ask for permission from City of Bristol, Cumberland Plateau Company, Inc., the U.S. Department of Commerce Economic Development Administration, the National Telecommunications and Information Administration, Virginia Tobacco Region Revitalization Commission and “other interested parties.” According to WCYB, “Cumberland Plateau Company, Inc., has a right of first refusal for certain assets.”

For the last several months, BVU has been mired in a corruption scandal concerning members of its board of directors, its top personnel and contractors. Last October, Board Director Paul Hurley pleaded guilty to mail fraud and, last June, three of BVU’s top executives were sentenced to prison for an elaborate kickback scheme. (In April 2015, two OptiNet contractors pleaded guilty to federal charges stemming from that scheme.)

In January, state lawmakers called for BVU reform.

WCYB reported the $50 million Sunset will pay for OptiNet will enable BVU “to become debt-free,” the Herald Courier said, under a 2009 agreement, that might not be the case. Under that agreement, “In the event that the OptiNet division is sold to a third party, the net proceeds after repayment of OptiNet debt and the equity investment shall be split evenly between the city and the authority.” BVU is $48 million in debt. Bristol Mayor Archie Hubbard said because BVU “borrowed some money from the electric system” to get started, however, that debt should be paid back first before splitting the $50 million with the city.

More than $24 million of BVU’s debt stems from OptiNet. Federal taxpayers spent heavily to support OptiNet – in 2010 BVU received a $22.7 million federal grant to expand the fiber-optic network. They will not be made whole.