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Council Approves New TBayTel Dividend Policy

January 25, 2010 – City Council tonight approved a new TBayTel dividend policy that continues the annual ‘fixed dividend’ of $17 million, increases the ‘performance’ dividend that is received when TBayTel achieves operating results better than forecasted, and establishes a new ‘special’ dividend component.

“TBayTel is an absolutely invaluable asset for the residents of Thunder Bay,” said Mayor Lynn Peterson. “TBayTel provides its customers with competitive rates and telecom technology, lowers municipal taxes, grows and maintains quality jobs, supports regional economic growth and contributes to the community’s vital infrastructure.”

TBayTel is structured as an independent telecommunications company and focuses on delivering value to its customers, its owner, and the residents of Northern Ontario. TBayTel offers Northern Ontario customers access to state-of-the-art competitively priced telecom solutions, provides the City of Thunder Bay with a consistent dividend and contributes telecom infrastructure, employment (400 jobs) and economic growth support in Thunder Bay and throughout the Northern Ontario region.

City Council established the TBayTel Municipal Services Board on June 29, 2004, through a By-law under the authority of the Ontario Municipal Act 2001. The Board, consisting of eight independent members, provides governance support to the company and liaison to City Council.

The ‘fixed dividend’, currently $17 million annually, is expected to continue to assist in funding the tax-supported Budget. The dividend provides approximately 12.5 per cent savings to taxpayers on the municipal portion of the tax bill.

The ‘performance dividend’ will increase to 25 per cent from 10 per cent of net income in excess of the annual plan and will continue to flow into a City reserve fund to provide the City with financial flexibility and/or operating budget stability in future years. “Net income in excess of the annual plan” means the ‘performance’ dividend is calculated only on net income above what was expected when the annual budget was approved by the TBayTel Board.

TBayTel has provided consistent dividends to its owner, the City of Thunder Bay, and through the City to the taxpayers. These dividends total over $105 million since 2004. The new policy was developed in conjunction with the TBayTel Board as part of a regular review.

A new element is the ‘special dividend’ component. Annually, the TBayTel Board will review the status of the retained earnings and the Board will approve if/when a special dividend may flow to the City. Under the new policy, any such ‘special’ dividends will be directed to the Renew Thunder Bay Reserve Fund to leverage additional investments in major Thunder Bay infrastructure.

Renew Thunder Bay is a Council-approved five-year incremental capital plan to enhance our quality of life and grow our economy through targeted and highly leveraged strategic infrastructure investments. Thunder Bay will contribute approximately $40 million of the funds required for this $130 million strategic infrastructure plan. The plan will create 1,500 jobs from construction alone. Recommended projects include Waterfront Development (Phase 2 including Marina), Multi-Purpose Event Centre, Thunder Bay Public Library Facility Renewal (new County Park branch), Smart City projects, City-wide Multi-use Trail System, Golf Links Road/Junot Ave. Mixed Use Corridor and a variety of capital programs including recreation and parks renewal, downtown upgrades, Green City projects and community partnership projects.

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Contact:  Tim Commisso, City Manager, 625-2224