As an interim approach to expense mitigation, WDBL has taken steps to manage its expenses, including the layoff of employees, discontinuation of all discretionary spending, limiting expenditures to its core business needs and the deferral of capital projects until 2021 or later. It should be noted however that construction on the self-funded Tunnel Ceiling Project has continued with significant progress due to low traffic volumes.

In addition, cash fund held by the Windsor Detroit Tunnel Corporation (WDTC) have been transferred to assist WDBL with its current cash levels. WDBL is also reconsidering the annual dividend payment to the City.

WDBL’s business practice is to maintain a minimum cash balance of $500,000 in its operating account. While the above-noted measures will allow WDBL to meet its near term financial obligations, if toll revenues remain depressed through the end of 2020, WDBL’s projected cash balance will fall below that minimum threshold by January 1, 2021.

There are several unknowns at this time, i.e. when and by how much Tunnel traffic and revenues will rebound which warrant a conservative fiscal approach. In the event that WDBL’s cash flow projections are accurate, and given the uncertainty regarding cross border traffic over the coming months, WDBL has approached City Administration with a request to add an extra layer of cash flow protection whereby, WDBL would secure an open line of credit, to a maximum amount of five million ($5,000,000) from the City as its sole shareholder.

As indicated above, this request was presented and approved by the WDBL Board of Directors at its June 17, 2020 meeting and is now being presented to City Council. As previously advised, the City is currently in a very strong cash flow position with a strong liquidity outlook. To that end, the City is in a position to be able to provide this credit facility on an ongoing basis. The ability to access funds from the City will give WDBL access to working capital should it become necessary. The terms and conditions of this credit facility would be negotiated by Administration and be subject to the satisfaction of the City Solicitor and Deputy Treasurer, Taxation & Financial Projects in lieu of the City Treasurer. The City Treasurer is also noted as the Secretary Treasurer for WDBL and as such, the Deputy Treasurer, Taxation & Financial Projects is the designated financial representative for the City relative to this matter.

Risk Analysis:

As is the case with operators of other cross border facilities, WDBL is challenged to determine the consequences of the pandemic on the long-term travel traffic volumes. As of May 20, 2020 northbound traffic volumes have declined by 84% compared to the same period (January to May) in 2019. In addition, as of July 14, 2020, Canada and the United States agreed to extend the restrictions on non-essential travel across the border until August 21, 2020. As a result, traffic volumes through the Tunnel are expected to remain severely depressed for the foreseeable future.