In all reality once the cross border travel restrictions are lifted, WDBL does expect that its traffic volumes and revenues will begin to rebound. The volume of discretionary traffic will be determined by the reopening of destination attractions and influenced by individual choices to attend events and attractions.
The availability of financial relief from the federal government to offset revenue losses is also unknown at this time including how quickly any such funds would become available and could perhaps begin to flow.
Even though WDBL is a wholly owned subsidiary of the City, there is still some risk involved with lending funds by way of providing an open line of credit. This risk is mitigated by ensuring that the agreement and related documents entered into provide for proper security as well as registering the correct statements under the Personal Property Security Act , RSO 1990, c. P.10.
Financial Matters:
The financial implications to the Tunnel as a result of the border restrictions are significant. Given the various uncertainty and risks, a very conservative approach has been taken in calculating WDBL’s future cash flows. Some of the key assumptions and considerations are as follow:
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Traffic volumes and Revenues
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Current traffic volumes and toll revenues will remain flat for the remainder of 2020.
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Traffic volumes for 2021 are based on 2018 traffic actuals
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All non-critical capital projects will be deferred until 2021.
While the current situation has magnified the financial risk to the Tunnel as a result of decreased traffic, it is not the first time that such a situation has occurred in the past 10 to 15 years. Administration, in consultation with the CEO of WDBL has determined that it would be prudent to establish an open line of credit with the City, as its sole shareholder, to be used as an alternative to reserves. The general terms and conditions of the credit facility are as follows:
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Open line of credit to a maximum amount of five million ($5,000,000) be made available
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Draws in any amount may be made at the request of the CEO of WDBL in an appropriate manner as provided by City Finance.
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Funds requested are to be used for operating and/or capital purposes as determined by the CEO of WDBL
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Interest to be charged at a rate of prime plus 0.25%.
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Interest to be calculated monthly based upon the average principal balance which remains outstanding.