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paddyjoe · 01-11-2006, 04:56 AM

Here's some breaking news of intrest for our Canadian buds. Looks like a car pool might be in order for those of you that are planning a trip to Rochester this summer.

link: http://www.democratandchronicle.com/...WS01/601110337

Mayor shuts down ferry, vows to 'stop the bleeding'

Brian Sharp
Staff writer

(January 11, 2006) — Rochester taxpayers likely will be saddled with debt for many years to come and the city will sap reserves, in a stunning announcement by Mayor Robert Duffy Tuesday to shut down the problem-plagued 2-year-old ferry service between Rochester and Toronto.

Duffy ended weeks of speculation in deciding not to back further borrowing to shore up ferry finances and provide for its first full season. Duffy said the financial risk was too great to go further in debt.

"We as a city are bleeding," Duffy said, estimating the city will be faced with repaying $30 million once the ship is sold. "We are now going to stop the bleeding."

Duffy said he will ask City Council to borrow $9.5 million from the city's $12.4 million insurance reserve.

While ferry officials had spoken optimistically about the opportunity of next season, Duffy painted a grim financial picture. One telling figure: In the ferry's best month last season, ship fuel expenses exceeded ridership revenue.

"This is the right decision," Duffy said.

The city backed a $40 million loan, created Rochester Ferry Co. and bought the ship last February. Rochester Ferry then hired Bay Ferries Great Lakes LLC to manage the service. A delayed, midseason startup hurt ridership and revenue during what was the second partial season for the ship. The service lost $10 million in 10 months, exhausting its reserves.

Last month, then-Mayor William A. Johnson Jr. sought to shore up ferry finances, proposing the ferry board be allowed to borrow $11.5 million more — which would have brought the total debt to $51.5 million. City Council backed the idea but delayed action until Duffy could weigh in.

Duffy said Rochester Ferry was out of money by late October, leaving Bay Ferries to cover what has grown to $2.5 million in expenses that must be repaid by the city. Duffy, who never rode the ferry, said he expected the community would be split over his verdict, but he was "at peace" with the decision.

"I'd rather take the hit right now and maybe gain some credibility," he said, noting it was only the 10th day of his administration, "as opposed to next year with an inflated debt, maybe even more uncertainty."

Projections for 2006 showed that, even if the service doubled its ridership, increased ticket prices by 20 percent and had no major, unplanned expenses, it still would come up $2.7 million short. That is the amount owed on the initial borrowing, an amount that doubles in 2007. Duffy said he thought that was a "best-case scenario" but that losses likely would be higher, leaving too little money to continue in 2007.

Support from council

"I think the ferry board did not see it as a best-case scenario, we saw it as a reasonable scenario," said City Councilman and ferry board president Benjamin Douglas. He noted the debt would be similar under either scenario and thought it was worth giving the ferry a chance to prove itself. But he added, "I respect (Duffy's decision). I'm not going to second-guess that decision." Johnson, the main backer of the project, was visibly disappointed Tuesday but declined comment, saying "I have the benefit of time" and that "I'm a private citizen." He said he may comment later.

City Council members expressed regret Tuesday but said it was Duffy's decision to make.

"No big decision is without risk," said City Councilman Bill Pritchard. "I think the community was rallying very hard a year ago for us to save the ferry the first time (after previous operator Canadian American Transportation Systems shut down). We tried it, and it didn't work out. There is going to be an expense to that."

Council President Lois Giess said the ferry was seen as an economic development tool, particularly for the Charlotte harbor area, which is Councilman Robert Stevenson's district. Stevenson said he wanted the ferry to continue but recognized it became unfeasible. He suggested that the terminal could be used for festivals, shopping and maybe even converted into a hotel.

Just what damage the ferry deal has done to the city's image remains to be seen, City Councilman Adam McFadden said.

"If we are going to be a business-friendly city, we have some growing to do," he said. "We're not totally lost, but we've got some growing to do."

County Executive Maggie Brooks said that while she had hoped the ferry would have succeeded, she supported Duffy's decision.

In a prepared statement, Toronto Mayor David Miller called Tuesday's news "a regrettable development."

Dissent

Members of Johnson's former staff were more open about their disappointment with Duffy's decision. Some of Johnson's staff spent years on the project.

"I'm very disappointed that (Duffy) was not willing to take a chance," said Linda Kingsley, who served as Johnson's corporation counsel. "Rather than taking a risk on a little more debt, he chose to let a really valuable asset go."

Lisa Raitt, the president and CEO of the Toronto Port Authority, said in a statement that the decision to end service was "disappointing" and "unfortunate." She said with two shortened seasons under CATS and city direction, the ship was "never able to realize its full potential."

Thomas Richards, the city's corporation counsel, said shutting down the current operation should not mirror the mess of liens and claims seen in 2004. There are only two significant contracts, he said. One, a three-year deal with Bay Ferries that allows for breaking the deal, and another in which Rochester Ferry must pay $250,000 annually to the Toronto Port Authority for docking the ship, plus per-passenger and vehicle fees.

"It's much cleaner than when CATS fell apart," he said.

Richards said the service being shut down is far different from the one first sold to citizens. The initial business plan relied on freight and a 12-month season, both of which were proven unrealistic. Other assumptions were for a money-making enterprise, or time-saving trip. Richards said, "As far as I'm concerned, they were never valid. But people bought them."

The city now will aggressively market the ship for sale — hoping to get nothing less than $20 million for the ship the city bought for $32 million last February. Duffy said Bay Ferries, which once expressed interest in owning the ferry, no longer appears interested. The same ship would sell new for $52 million today, officials said.

"I'm not here to second-guess what was done before," Duffy said. "I stand by what we're doing now."

In making his decision, Duffy said he asked four questions: Can the city afford to operate the ferry? Is there a sound business and marketing plan? Is the ferry likely to succeed? Is this the best way to spend so much money?

The answer to each of those questions, he said, was "No."

BDSHARP@DemocratandChronicle.com

Includes reporting by staff writers Joseph Spector and James Goodman.

01-11-2006, 04:56 AM	#100 (permalink)
paddyjoe through charlatans phone Location: Northcoast	Here's some breaking news of intrest for our Canadian buds. Looks like a car pool might be in order for those of you that are planning a trip to Rochester this summer. link: http://www.democratandchronicle.com/...WS01/601110337 Mayor shuts down ferry, vows to 'stop the bleeding' Brian Sharp Staff writer (January 11, 2006) — Rochester taxpayers likely will be saddled with debt for many years to come and the city will sap reserves, in a stunning announcement by Mayor Robert Duffy Tuesday to shut down the problem-plagued 2-year-old ferry service between Rochester and Toronto. Duffy ended weeks of speculation in deciding not to back further borrowing to shore up ferry finances and provide for its first full season. Duffy said the financial risk was too great to go further in debt. "We as a city are bleeding," Duffy said, estimating the city will be faced with repaying $30 million once the ship is sold. "We are now going to stop the bleeding." Duffy said he will ask City Council to borrow $9.5 million from the city's $12.4 million insurance reserve. While ferry officials had spoken optimistically about the opportunity of next season, Duffy painted a grim financial picture. One telling figure: In the ferry's best month last season, ship fuel expenses exceeded ridership revenue. "This is the right decision," Duffy said. The city backed a $40 million loan, created Rochester Ferry Co. and bought the ship last February. Rochester Ferry then hired Bay Ferries Great Lakes LLC to manage the service. A delayed, midseason startup hurt ridership and revenue during what was the second partial season for the ship. The service lost $10 million in 10 months, exhausting its reserves. Last month, then-Mayor William A. Johnson Jr. sought to shore up ferry finances, proposing the ferry board be allowed to borrow $11.5 million more — which would have brought the total debt to $51.5 million. City Council backed the idea but delayed action until Duffy could weigh in. Duffy said Rochester Ferry was out of money by late October, leaving Bay Ferries to cover what has grown to $2.5 million in expenses that must be repaid by the city. Duffy, who never rode the ferry, said he expected the community would be split over his verdict, but he was "at peace" with the decision. "I'd rather take the hit right now and maybe gain some credibility," he said, noting it was only the 10th day of his administration, "as opposed to next year with an inflated debt, maybe even more uncertainty." Projections for 2006 showed that, even if the service doubled its ridership, increased ticket prices by 20 percent and had no major, unplanned expenses, it still would come up $2.7 million short. That is the amount owed on the initial borrowing, an amount that doubles in 2007. Duffy said he thought that was a "best-case scenario" but that losses likely would be higher, leaving too little money to continue in 2007. Support from council "I think the ferry board did not see it as a best-case scenario, we saw it as a reasonable scenario," said City Councilman and ferry board president Benjamin Douglas. He noted the debt would be similar under either scenario and thought it was worth giving the ferry a chance to prove itself. But he added, "I respect (Duffy's decision). I'm not going to second-guess that decision." Johnson, the main backer of the project, was visibly disappointed Tuesday but declined comment, saying "I have the benefit of time" and that "I'm a private citizen." He said he may comment later. City Council members expressed regret Tuesday but said it was Duffy's decision to make. "No big decision is without risk," said City Councilman Bill Pritchard. "I think the community was rallying very hard a year ago for us to save the ferry the first time (after previous operator Canadian American Transportation Systems shut down). We tried it, and it didn't work out. There is going to be an expense to that." Council President Lois Giess said the ferry was seen as an economic development tool, particularly for the Charlotte harbor area, which is Councilman Robert Stevenson's district. Stevenson said he wanted the ferry to continue but recognized it became unfeasible. He suggested that the terminal could be used for festivals, shopping and maybe even converted into a hotel. Just what damage the ferry deal has done to the city's image remains to be seen, City Councilman Adam McFadden said. "If we are going to be a business-friendly city, we have some growing to do," he said. "We're not totally lost, but we've got some growing to do." County Executive Maggie Brooks said that while she had hoped the ferry would have succeeded, she supported Duffy's decision. In a prepared statement, Toronto Mayor David Miller called Tuesday's news "a regrettable development." Dissent Members of Johnson's former staff were more open about their disappointment with Duffy's decision. Some of Johnson's staff spent years on the project. "I'm very disappointed that (Duffy) was not willing to take a chance," said Linda Kingsley, who served as Johnson's corporation counsel. "Rather than taking a risk on a little more debt, he chose to let a really valuable asset go." Lisa Raitt, the president and CEO of the Toronto Port Authority, said in a statement that the decision to end service was "disappointing" and "unfortunate." She said with two shortened seasons under CATS and city direction, the ship was "never able to realize its full potential." Thomas Richards, the city's corporation counsel, said shutting down the current operation should not mirror the mess of liens and claims seen in 2004. There are only two significant contracts, he said. One, a three-year deal with Bay Ferries that allows for breaking the deal, and another in which Rochester Ferry must pay $250,000 annually to the Toronto Port Authority for docking the ship, plus per-passenger and vehicle fees. "It's much cleaner than when CATS fell apart," he said. Richards said the service being shut down is far different from the one first sold to citizens. The initial business plan relied on freight and a 12-month season, both of which were proven unrealistic. Other assumptions were for a money-making enterprise, or time-saving trip. Richards said, "As far as I'm concerned, they were never valid. But people bought them." The city now will aggressively market the ship for sale — hoping to get nothing less than $20 million for the ship the city bought for $32 million last February. Duffy said Bay Ferries, which once expressed interest in owning the ferry, no longer appears interested. The same ship would sell new for $52 million today, officials said. "I'm not here to second-guess what was done before," Duffy said. "I stand by what we're doing now." In making his decision, Duffy said he asked four questions: Can the city afford to operate the ferry? Is there a sound business and marketing plan? Is the ferry likely to succeed? Is this the best way to spend so much money? The answer to each of those questions, he said, was "No." BDSHARP@DemocratandChronicle.com Includes reporting by staff writers Joseph Spector and James Goodman.