Highway 104 Western Alignment Corporation
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Letters to StakeholdersAnnual Report 2003-2004President’s Letter The Highway 104 Western Alignment Corporation continues to be committed to its current mandate to manage toll revenue collection, to maintain the schedule to repay investors, and to fund annual and long term maintenance of the facility. All of which ensures the users of the Cobequid Pass will have a quality driving experience today and in the future. The Corporation is ably assisted in its mandate by Atlantic Highways Management Corporation who operate the toll plaza, by CIT Structured Finance who represent the bondholders, by McCormick Rankin who provide independent maintenance engineering advice, and by the Department of Transportation and Public Works who supply the on-going annual upkeep of the highway and the management of the long-term major maintenance. The Corporation also relies on the legal counsel of McInnis Cooper and financial advice of Grant Thornton LLP. In this fiscal year, the Corporation welcomed two new employees to its management team. Ms. Eva Hislop, CMA became the new Controller of the Corporation in August 2003, and Mr. Don Stonehouse, P.Eng. assumed the General Manager’s duties in January 2004. In accordance with the terms and conditions of the financial agreements between the private investors in the highway and the Corporation, the tolls on the Cobequid Pass were raised on January 1, 2004. Automobiles and similar vehicles now pay a toll of $4.00, while Trucks pay $3.00 per axle, to a maximum of six axles. The use of E-Pass does provide a reduced toll for all vehicles. In 2003-04, 16 percent of automobile users and 83 percent of truck users of the Cobequid Pass took advantage of E-Pass savings. The financing structure of the Cobequid Pass provides a unique opportunity for the Corporation to ensure the roadway is maintained as a first class facility throughout its 30 year life. Toll revenues go directly to the annual operating and major maintenance of the highway. This year the Corporation was able to micro-surface 12 kilometres of the east bound lanes from the Wentworth-Collingwood Road interchange to the Toll Plaza, and to rout and seal the centre-line joint on the eastbound approach to the Toll Plaza. In closing, the finances of the Corporation continue to be in good shape and the roadway is being maintained in top condition. There are, however, challenges ahead that the Corporation will be taking on, and with the assistance of our partners, the Corporation will endeavor to ensure a continued quality driving experience that has become synonymous with the Cobequid Pass. Lee Rankin President
General Manager’s Letter In the day-to-day administration of the numerous legal and financial agreements that permitted the Cobequid Pass to be constructed with minimal government funding and to be maintained solely from revenues without government contributions, one must not lose sight of the purpose of the highway. The Cobequid Pass is a critical link in Nova Scotia’s highway system, providing a portion of the highway connection to the rest of North America. Through comments, suggestions and words of appreciation, we are reminded on a regular basis of the importance of this highway to the traveling public. The Corporation strives to ensure the operation of the Cobequid Pass is conducted in a competent and careful manner. In fiscal 2003-04 the Corporation initiated two significant reviews regarding its operation. One consultant study evaluated the tolling system. Although currently stable, the tolling system has been in operation since 1997. In terms of the software, it is dated and has inherent inefficiencies. The software also has difficulty in adapting to new, replacement hardware. With the demise of the suppliers of the original software, the on-going maintenance of the tolling system has become more difficult. The review concluded that the Corporation should take steps to support the current system and to commence an investigation of a replacement system. The first step in this process was to secure the source code of the current system from its escrow account. Further activities will be undertaken in the coming fiscal year on a priority basis. The Corporation also contracted Grant Thornton LLP to examine the financial implications of paying down a portion of the debt of the Corporation. The prepayment of the debt could lead to an earlier removal of the tolls on the highway. Grant Thornton provided a number of observations that the Corporation will be reviewing in the next fiscal year to determine the most favorable course of action. The Cobequid Pass exhibited a total growth in traffic of 1.28 % over the previous fiscal year, with automobile traffic relatively flat at a growth rate of 0.22 %, while truck traffic grew by 5.34 %. In comparison to the original forecasted volumes for 2003-04, actual automobile traffic was 72 % ahead of forecast, while truck traffic was 3 % ahead. This compares to 78 % and 0 % respectively in 2002-03. On the revenue side, toll revenues increased by 6.15 %, reflecting in part the toll increase on January 1, 2004. This report provides a broad overview of the history and administrative structure of the Corporation, and the traffic and financial operation of the Cobequid Pass for fiscal 2003-04. I would commend its reading. In regards to the financial statements, the accompanying notes are very important in explaining the financial details. If you have any questions or comments regarding the Cobequid Pass, we would be pleased to hear from. The contact information is printed on the back of this report. Don L. Stonehouse, P.Eng. General Manager |
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Copyright © 2004 Highway 104 Western Alignment Corporation
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