THUNDER BAY — If Thunder Bay city council approves a report from administration, Tbaytel will contribute a larger annual dividend to city coffers starting in 2020.
Under the current Tbaytel Dividend Policy, the city-owned phone company pays a fixed annual dividend of $17.5 million.
Most of the money is included in general corporate operating revenue in the city's budget, and effectively reduces the property tax burden. Last year the reduction amounted to about nine per cent.
The current policy requires that the amount in excess of $17 million be transferred to the Stabilization Reserve Fund. Its purpose is to provide a source of money in the event of an uncontrollable or unanticipated cost or decreased revenues impacting the operating budget.
This fund currently has a balance of $9.2 million, an amount which administration describes as "providing a good degree of protection against these risks."
Administration is proposing two significant changes to the dividend policy.
First, it wants to increase the fixed annual dividend to $18 million for the period 2020 to 2023.
Second, it recommends that the amount in excess of $17.75 million be transferred not to the stabilization reserve but to the General Capital Reserve Fund, where it would be put toward repairing and upgrading the aging components of the municipal infrastructure.
This fund currently has a balance of $770,000.
There's also provision in existing policy for Tbaytel to pay the city an annual Performance Dividend and a Special Dividend.
Administration recommends these dividends continue to be deposited in the Renew Thunder Bay Reserve Fund. A staff report prepared for council states that this fund "provides Council with the ability to address existing and emerging capital infrastructure investment and leveraging opportunities."
Between 2004 and 2019, Tbaytel's dividend payments to the city totalled about $297 million.
The fixed dividend accounted for $271 million, the performance dividend over $7 million, and the special dividend over $18 million.
