Transit

Big Losses, Weak Oversight: Lander slams NYC Ferry in new report

Brooklyn residents also report huge lines

July 6, 2022 Brooklyn Eagle Staff

A NYC Ferry boat departs Sunset Park, Brooklyn, for the Rockaways. AP photo by Mark Lennihan

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Channeling poet Walt Whitman’s descriptions of New York ferries, NYC Comptroller Brad Lander gave a dramatic press conference to blast the subsidized system’s failure to report huge losses — underreported subsidies of a quarter of a billion dollars.

This announcement follows on the heels of mounting complaints by Brooklyn ferry riders. Long lines and wait times that often exceed an hour have been reported by commuters who travel daily along the Brooklyn waterfront.

One Brooklyn Heights resident told the Brooklyn Eagle, “I learned never to travel by ferry on a holiday. I waited more than two hours on Memorial Day and ended up having to take a bus home from Williamsburg. I had already paid for my ferry ticket, as did the other 400 or so people who could not get onto the crowded ferry after ferry. The ticket is only good for one day, so we all wasted our money.”

Comptroller Lander’s audit alleged that the Economic Development Corporation (EDC) underreported nearly a quarter of a billion dollars in NYC Ferry expenditures during former Mayor Bill de Blasio’s Administration.

EDC incurred a total of $758 million in total ferry-related expenditures from July 1, 2015 through December 31, 2021, yet only reported $534 million as ferry-related expenses in its audited financial statements and other records, according to Lander. The total city subsidy per ride is nearly double the original estimate of $6.60 and has been consistently underreported.

NYC Comptroller Brad Lander, whose report on the NYC Ferry system is sure to make waves. Photo courtesy of Comptroller Lander’s Office

As of now, NYC Ferry, which is administered by EDC but operated by San Francisco-based Hornblower Cruises, has several routes that include Brooklyn: the Astoria route, which stops at the Brooklyn Navy Yard; the East River route, with several Brooklyn stops between DUMBO and Greenpoint; the South Brooklyn route, with several Brooklyn stops between DUMBO and Bay Ridge; and the Rockaway route, which stops at the Brooklyn Army Terminal.

In addition, service to Coney Island is on the drawing board, but has been delayed due to controversy regarding the choice of a terminal at the Coney end of the line.

Ferries across the East River to Brooklyn have a long history. In Whitman’s day, they were pretty much the only way to get from Brooklyn to Manhattan. After the opening of the Brooklyn Bridge, ferry service declined, ending in 1924.

In modern times, New York Water Taxi began a commuter route from Brooklyn Bridge Park to Lower Manhattan in 2002. In 2011, the city began its East River Ferry route and awarded the contract to competitor New York Waterway, which had experience running ferries between New Jersey and Manhattan. The de Blasio administration announced plans for NYC Ferry, then called the “Citywide Ferry Service,” with the aim of uniting even more of the city by water, in 2015.

The Comptroller’s Office’s audit released Wednesday also found that several decisions — including the early termination of the previous East River route operator’s contract (Billybey, a company allied with NY Waterway) and lack of proper oversight over vessel acquisition — resulted in as much as $66 million in unnecessary expenses.

“Walt Whitman waxed poetic about New York City’s ferries, but EDC’s responsibility is to provide adequate oversight and report accurately,” said Lander. “For a successful 21st century ferry system, we need more transparent reporting, better cost controls, and a new RFP to operate the system.”

Previous reporting indicated that the NYC Ferry system operates at a deficit and that the city’s subsidy is higher than the $6.60 per ride initially projected. By calculating the subsidy based on a more accurate assessment of the real operating costs, auditors found that the actual city subsidy has been consistently higher than reported.

In Fiscal Year 2021, for example, the city subsidy amounted to $12.88 per ride, 50 percent higher than the $8.59 that EDC reported. The Comptroller’s Office alleges that one of the main causes of its discrepancy was the EDC’s in 2018 to stop including depreciation in calculating the total cost, a practice the city had used from 2002 until 2017.

The comptroller’s analysis of vessel costs found EDC paid $34 million in questionable vessel expenses to Hornblower, which was charged with overseeing acquisition and construction of vessels, the Comptroller’s Office said in its report.

In one case, Lander’s office alleged, EDC ordered and paid Hornblower $8.4 million for a “Rockaway Class” vessel, but received a “River Class” vessel that the agency later valued at $5.6 million. EDC never insisted that Hornblower refund the $2.8 million difference.

Finally, auditors found that what they called EDC’s weak enforcement of contract provisions resulted in at least $3 million of unsubstantiated payments to Hornblower.

The audit makes 11 recommendations. EDC agreed with two, partially agreed with three, stated that it is already in compliance with two, and disagreed with four.

EDC agreed to provide enhanced financial reporting on its website, but did not commit to disclose all ferry-related expenditures in its audited financial statements.
EDC agreed to include some additional “non-operator” costs in the subsidy-per-ride calculation (e.g. the city’s cost in maintaining the ferry landings), but refused to include capital asset depreciation, as had been the city’s practice from 2002 through 2017.
EDC agreed to issue a new RFP to operate the system.
EDC refused to seek recoupment of overpayments to Hornblower totaling approximately $12 million.