KITCHENER -- One year after welcoming its first riders, the ION is facing financial struggles due to the COVID-19 pandemic.

Waterloo Region lost nearly $8 million in revenue from transit because of free service offered in the pandemic. Grand River Transit officials say the ION's ridership is also down.

"Since March, we have dropped off significantly on ION," Neil Malcolm, Grand River Transit Assistant Director, said. "We had about 20,000 average boardings per day and now it went down to half that or less."

Officials do say ridership is starting to trend upwards, and now the focus has shifted to a business case for funding phase two of the ION.

"[A] business case both in terms of ridership and also in terms of influencing investment decisions and increasing investments along the corridor," Region of Waterloo CAO Mike Murray said.

Last week, the provincial and federal governments announced a combined $24 million to fund transit projects in the region. However, none of that funding is earmarked for expanding the ION.

"We don't have the funding in place for the next phase," Malcolm said.

"It really needs substantial federal and provincial funding for it to be financially viable," Murray said.

There's a transit project assessment underway for expanding the ION into Cambridge. However, there's no definitive timeline for when that will happen.

Although regional officials say it will be difficult to catch up on the lost revenue, fares won't increase in July as originally planned.