THUNDER BAY – The City of Thunder Bay’s ownership of local teleco Tbaytel – an increasingly uncommon arrangement that’s delivered more than a third of a billion dollars to city coffers over the past two decades – is set to become a little bit more lucrative.
The city will ratchet Tbaytel’s base annual dividend up to $19 million in 2024, and to $19.5 million in 2025.
That’s up from the $18 million the city received this year, a cash infusion staff say reduced the municipal tax burden by a whopping 8.6 per cent.
The city will put $250,000 of the dividend into reserve funds in 2024, bolstering its ability to cover budget shortfalls and fund future capital projects. That reserve contribution will rise to half a million in 2025.
The dividend has remained fixed at $18 million since 2020, after holding steady in the most recent 2021 review.
An updated policy approved by city council on Monday will see the city collect slightly more in 2024 and 2025 than that previous review envisioned, bumping up each year’s amount by $250,000.
Tbaytel also contributes a “performance dividend” to the city, handing over one quarter of profits above its financial projections.
That can vary widely from year to year – the performance dividend hit nearly $4 million in 2021, for example, then dipped below $240,000 last year. The company's 2023 financial results won't be reported until next year.
Tbaytel's board of directors can also issue special dividends to the city based on annual reviews of retained earnings and free cash generated.
The performance and special dividends are transferred into the Renew Thunder Bay reserve fund.
Previously known as Thunder Bay Telephone, the utility operated as a city department until 2004, when it was restructured as an arms-length city-owned corporation.
The company has transferred nearly $376 million in dividends to the city since that time, the city says.
The next review of the dividend model is scheduled for 2025.
