CAPITAL ASSETS (CONTINUED) NOTE 5
The pollution remediation obligation is an estimate and subject to change resulting from price increases or reductions, technology advances, or from changes in applicable laws or regulations. The liability is recognized as it becomes estimable. In some cases, this may be at inception. In other cases, components of a liability are recognized as they become reasonably estimable. The measurement of the liability is based on the current value of outlays to be incurred using the expected cash flow technique. This technique measures the sum of probability-weighted amounts in a range of possible potential outcomes. For the year ended June 30, 2024, the MDTA accrued $3.5 million for pollution remediation obligations. These obligations were recorded within accounts payable and accrued liabilities on the accompanying financial statements. Service Concession Arrangements The MDTA and Areas USA entered into a Service Concession Arrangement in 2012 to redevelop and operate the two Travel Plazas that the MDTA owns along the John F. Kennedy Memorial Highway (I-95). The structure of the agreement between the MDTA and Areas USA is a long-term lease and concession. The MDTA retains ownership of the property and assets. All property and improvements, with the exception of the fueling systems, are to be returned to the MDTA at the end of the 35-year capital lease. The MDTA will derive several financial benefits from this agreement including reduced future operating and capital expenses, debt capacity will be reserved for core business activities, and revenue is guaranteed over the life of the agreement. Areas USA will operate and maintain the travel plazas through the year 2047.
Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2024 | 59
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