Page Sixty

14 JANUARY 2006

These people NEVER give up.

Ferry For Sale

(Rochester, NY) - 1/13/06 - Tom Roberts with Compass Maritime Services is one broker interested in putting Rochester's failed ferry into new hands.

He said, "It really depends on trade routes the ships are used on. Most ferry trade routes have vessels built for that particular route."

Because Rochester’s ferry is relatively new, it'll likely fare better in the marketplace than older ships would.  (Optimism Number 1.)

As for an auction, the city fears a fire sale. A broker may be the best option to get the best price. If used, a broker would take a cut, of course.

Industry experts said the ferry will likely go for $15- to $18-million (but not $20 million) because of the risk of a start up service.

Mayor Duffy is optimistic, given the time a ferry operator would have to wait for a newly built ship. (Number 2.)

Duffy said, "If someone has a breakdown or needs a ferry soon, we can fill the void…the one thing that is most important is for us to be organized, methodical, and professional with this."  (Number 3.)

The city is getting offers from ship brokers, however Mayor Duffy said he will also reach out to the city of Istanbul, because the Turkish government was interested in the ferry just before it went to auction last year.  (Number 4.)

Also, Bay Ferries may have some interest. Mayor Duffy said he will pursue that option as well.  (Number 5.)

WHAM13 News, ever the voice of all that's bright and chipper, just can't let a story pass without providing the masses with the requisite upbeat angle.  Remaining positive is one thing; reporting the news slathered with sugar and honey grows tiresome but for those viewers who demand as little unpleasantness as possible, WHAM13 News is just the ticket.

 

 

54º | Hi 63º / Lo 40º |
 
City needs $3.1M to buy out ferry contracts

(January 13, 2006) — City officials estimate they will need $3.1 million to continue existing high-speed ferry contracts, or buy them out if necessary, according to legislation before City Council.

The Council is scheduled to vote Tuesday on borrowing $9.4 million from the city insurance reserve. (Doesn't 'borrowing' involve 'repaying' at some point?  And where will THAT money come from?)  The total is reduced slightly from Mayor Robert Duffy's initial estimation of $9.5 million.

Other expenses include repaying manager Bay Ferries Great Lakes LLC, which is owed $2.5 million; warranties; payments on the $40 million borrowed to buy the ship and begin operations last year; and maintenance, personnel and insurance until the ship is sold(However long THAT may take...)

The main contracts outstanding involve Bay Ferries and the Toronto Port Authority.

Duffy announced Tuesday that the city was shutting down the ferry after a troubled season in which the operation lost $10 million in 10 months. The city bought the ship at federal foreclosure auction after the initial operator shut down in 2004.

Addressing City Hall employees during his weekly "roll call" ("What??") today at City Hall, Duffy said: "I do believe there's going to be somebody who is going to want to come in and bring a service to that port (the pool of eligible AND willing businesses has shrunk considerably)... we are not going to give up on that port."

Reality starts to sink in.

 

 

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WILL YURMAN staff photographer
Mayor Robert Duffy, at a meeting Friday in the City Hall atrium, notes his ferry decision was no snap judgment.
Ferry deal shows Duffy has firm hand on reins
Decision to pull plug suggests he's a strong leader, though skeptics question his motives


(January 14, 2006) —
Mayor Robert Duffy could have easily gone a different route.

In December, City Council approved borrowing $11.5 million to keep the high-speed ferry solvent for one more year. Duffy could have taken office Jan. 1, had money to run the ferry for a full season and then waited to see whether it would become financially viable.

But Duffy, in his 10th day in office Tuesday, made the first decisive action of his administration: He pulled the plug and plans to sell the ship to limit losses to taxpayers.

The decision has been big news not only for what it means to the city's economy, but also for what it says about Duffy's leadership.

Criticized by some during the mayoral campaign for lacking the skills to run a government, the retired police chief has already proven to many leaders that he can make prompt decisions and have a clear vision for Rochester.

Yet skeptics question whether the Democratic mayor sought only to make the best political move, spun it to suggest the project had run amok and relinquished a last opportunity to make the ship a success.

Either way, most leaders agree on one thing: Duffy has shown, at least so far, that he's not afraid to make hard choices.

"It clearly shows that he's a strong leader and willing to make tough decisions once he has all the facts," said Bill Nojay, a Republican critic of the ferry. "What has always been disturbing about the ferry project is how many people supported it without really understanding it."

Duffy's decision also raises other questions: If he was able to cut ties with one of the city's flagship projects, what else may be on his chopping block? How much of predecessor Mayor William A Johnson Jr.'s initiatives will remain intact?

Already, there are indications he will revamp the Neighborhood Empowerment Team program, which Johnson established and which a report this week found has not met its mission of improving city streets.

While he won't let on what other changes he will make, Duffy said that city services will be closely examined during his first 100 days in office. He denounced critics who, he said, had suggested, "I was going to be someone's puppet and not make my own decisions."

"If something does not work well, we are going to work very hard to improve it," he said. But if it can't be fixed, "I'm not afraid to say that we are going to stop doing something."

Making the choice

Duffy and his staff are quick to point out that the decision to end ferry service to Toronto wasn't a snap judgment. As he built his transition team and interviewed candidates for his administration, Duffy and his advisers also spent much of December reviewing ferry documents provided by the outgoing Johnson administration.

Duffy is known as someone who likes to "review the data," as he often says, before making a decision.

The ferry issue was no different. Aides said he was often seen carrying home stacks of information to read at night and attended every meeting of his staff when the ferry was discussed.

Deputy Mayor Patricia Malgieri said Duffy kept pushing advisers to seek out all information about the ferry and do so without bias. She and Duffy said that it became clear to them only close to his inauguration that the ferry faced too many financial hurdles to continue.

Still, staff met up until late Sunday at City Hall to debate whether there were other options. "Until the end, he would say 'Is there anything that we didn't talk about in favor of the ferry?'" Malgieri said.

Then they had to convince the public. As police chief for seven years, Duffy developed an ability to defuse controversy and build community confidence in his decisions, local leaders have said. He was rewarded by winning more than 70 percent of the vote on Election Day.

The ferry presented a similar challenge. He and his staff recognized that they had to make a strong case to sell the ship — a case, Duffy said, that had to be based on facts.

During his 12-minute televised speech at 5 p.m. Tuesday, Duffy gave examples of why the service should end:

One, it would keep losing millions even under the rosiest picture; and, two, tax dollars should be used for other purposes — such as hiring more police.

"It was brilliant," said Timothy Kneeland, a Nazareth College political science professor. "Ten days into his administration he makes a decision that was rhetorically nicely justified."

Kneeland said Duffy was also able to brush back questions about his ability to lead: Would he be an empty suit, overhandled by advisers and beholden to the legacy of Johnson, who backed his candidacy?

"We don't make decisions because they're popular or because they're easy or because they're cheap. We make them because they're right, and I think that's what he did," said Dennis Mullen, president and chief executive of the Greater Rochester Enterprise.

Moving forward

But not everyone is cheering what Duffy did. Some city officials, including Johnson, spent long hours trying to salvage the ferry after the ship's original owner ended service in 2004.

They were hoping for a full year of operation to give it a chance to work. Johnson, the project's main backer, has refused to discuss Duffy's decision. Others, including Council President Lois Giess, say they commend Johnson's efforts.

Some officials have taken issue with how Duffy noted that some ferry contracts, in particular a $250,000-a-year contract to dock the ship in Toronto, had been "discovered" by his staff, suggesting that it had not been known to the public.

City Councilman Benjamin Douglas, who heads the city-run Rochester Ferry Co., said the contracts were public for months. He said he respects Duffy's decision, but charged that facts are being twisted.

"You step off the path when, postmortem, you try to blame people and blame them unfairly," he said.

Fellow Councilman Adam McFadden contends that Duffy is seeking to borrow $9.5 million to sell the ferry, so why not borrow the $11.5 million and see whether the ship can sustain itself. (Truly clueless.  Like a chronic gambler who refuses to back away from the table, McFadden keeps wanting to roll the dice even though he's done nothing but lose since he sat down.  Adam?  That's enough.)

"It was a political decision," he said. "Killing it now makes it Bill Johnson's mess. Killing it in a year from now makes it his mess."

Duffy said it was clear that another year of operation would have just put the ferry deeper in debt. He added that the decision was not about politics or trying to criticize the Johnson administration.

"We were able to come to the table without being emotionally attached to the project from the start and look pragmatically at it," he said.

Duffy's decision has also raised new questions about whether Johnson's administration had let the project spiral out of control. Duffy said it appeared that City Hall staff spent so much time on the ferry that government resources were strained.

Brian Curran, who recently retired from City Council and had long been a ferry critic, said the analysis by Duffy and his staff indicates how the project lacked clear oversight.

"We were in a situation where people were operating on the basis of hope and imagination instead of dealing in fact and practical objectives," he said.

"And when you do that, you almost always end up with serious problems."

JSPECTOR@DemocratandChronicle.com

It's unfortunate that ex-Councilman Brian Curran left the scene; his sole adamant refusal to back a city-owned ferry from the time CATS went belly-up was right on the money.  Had more City Council members followed his reasoning, the city wouldn't be in the process of backing out now after losing a stunning amount of money.

"We were in a situation where people were operating on the basis of hope and imagination instead of dealing in fact and practical objectives," he said.   "And when you do that, you almost always end up with serious problems."

Wow.  Truer words were never spoken.  To a large extent, the unnerving current local sentiment of bringing in a hovercraft to take the place of the floating Hilton is still hanging onto the 'hope and imagination' side of the equation.  'Fact and practical objective' thinking would show nothing has changed; Torontonians and Canadians STILL have little motivation to sail on down to the Rochester area.

That was the primary reason why the ferry flopped the first two times and will be the primary challenge to another cross-lake endeavour.  Other than the travel experience itself -- the boat ride -- what's changed?  A smaller boat will be more economical to operate and buy and will presumably require fewer passenger ticket sales to support the business, but that's STILL focusing on the method while ignoring the motivation -- or in this case, the lack of.

"Either way, most leaders agree on one thing: Duffy has shown, at least so far, that he's not afraid to make hard choices.  "It clearly shows that he's a strong leader and willing to make tough decisions once he has all the facts," said Bill Nojay, a Republican critic of the ferry.... "It was brilliant," said Timothy Kneeland, a Nazareth College political science professor. "Ten days into his administration he makes a decision that was rhetorically nicely justified."

While agreeing the decision to pull the plug was necessary, let's not trip over ourselves in a rush to idolize Duffy or plaster him with stamps of 'leader-gag-ship'.  The facts were simply too overwhelming to continue to ignore... not to mention the grumbling of the Great Unwashed was growing louder the longer the business was allowed to operate.  It's not as if the mayor was pulling the rug out from under the popularity of a beloved project.  That's not 'leader-gag-ship'; that's fending off a proverbial public lynching by some really annoyed residents.  "Brilliant"?  Or simply doing his job?

I would have done the same... probably much earlier... but it's unlikely my decision would be branded as an example of 'leader-gag-ship'.  For that, I'm truly grateful.

 

 

27º | Hi 47º / Lo 16º |
 
Letters to the editor
(January 14, 2006) — Have ex-mayor bail out taxpayers

Whether you agree with Mayor Duffy's decision or not, it's about time somebody made a decision with the interest of the public in mind.

I think that I speak for the majority when I say that it is very sad to see the ferry's demise. I feel that mismanagement and outright desperation from the ferry board and former Mayor Bill Johnson are what did the project in. It seems to me that Bill Johnson just wanted to leave his legacy behind without considering the future.

Two collisions and several mechanical problems later, the boat is probably worth around $10 million less than it was a year ago.

Perhaps we should have the former mayor and his cohorts make up the millions of dollars that the taxpayers are going to have to shoulder for years to come. (Perhaps we should be more involved with how our money is being spent.)

MATT CHAMBERLAIN
WEBSTER

Look to sky for ferry's failure

I knew that when Mayor Duffy ran for office that he would make a great mayor. The ferry never should have been purchased because Rochester has only three or four months of good weather a year. The ferry was a huge mistake.  (That's odd.  At the time, many local residents were ga-ga over the idea.  Perinton residents included.)

May Mayor Duffy continue to do a great job.

WALTER H. GARROD
PERINTON

Hopes that Spitzer investigates ferry

Finally, someone has the courage to make the tough decision and eliminate this yearly drain.

I hope someday the state Attorney General's Office will investigate this shameful waste of taxpayer money. (The State Comptroller takes care of this.  But since not enough constituents bothered to speak out against the project during the CATS era, the State Comptroller can only assume the elected officials were doing the bidding of those they represent.)

DAVID H. HUDSON
CANANDAIGUA

"The ferry never should have been purchased because Rochester has only three or four months of good weather a year."

Well, yes... that was known when CATS pitched their woo to the city and should have raised all sorts of questions -- but not because of the capability of the ship.  Once again, the method was the focus and the lack of motivation was not... in this climate, few thoughts of the residents turn toward lake activities between Labour Day and Victoria Day/Memorial Day.  Doesn't matter if there was a floating high-speed sauna equipped with tanning beds and palm trees; residents turn their backs on the lakes during fall and winter.

[News]
Saturday   January 14, 2006
 
[Duffy Awaits Ferry Audit Results]
The Cat

Duffy Awaits Ferry Audit Results

 

by Kate Welshofer and Matt Biondic

file photo

Published Jan 13, 2006

As Rochester moves forward with its efforts to sell the fast ferry, the state comptrollers office continues its audit of the project.

Alan Hevesi's office agreed to launch the investigation last spring at the request of assemblymen Brian Kolb and Joe Errigo. The probe's objective is to determine whether public funds were spent appropriately on the project.

Mayor Bob Duffy pledged his full support of the audit. Duffy also said he was looking forward to the comptroller's findings and recommendations.

NYS Comptroller's Office

As much as anti-ferry/Johnson factions would love to see a State condemnation of the ferry project, I suspect there'll be an exoneration with a slap on the wrist for the rank amateur handling of the affair.  Blame will be assigned but there's not going to the wholesale witchhunt that some might find appropriate.

It's no secret I blame CATS for the debacle; Dominic Delucia and Gang may not have done anything illegal -- incredibly self-serving, maybe, but that's not against the law if the gullible bought into the idea voluntarily.  'WHY' Delucia and a privately-owned company like CATS would pitch such a concept doesn't take much imagination to figure out; any time a private company can use public money to help build their own business... well, that's 'a good thing'.

But Rochester or Toronto could just as easily said, "No" and that would have been the end of that.  And that may be the way the State Comptroller's office sees it as well.

Contrasting WHAM13 News' relentless Feel Good School of Reporting, WROC has pretty much held the line on the downside of the ferry project.  Vastly more blunt, WROC could be forgiven if they've been lumped into the Naysayer pile.  It's much appreciated.

WROC 8 Rochester HomepageWhat's a used fast ferry worth?
 

1/13/2006 11:00 PM
(Ty Chandler, WROC-TV)

After docking the fast ferry project for good, the city of Rochester is now focused on selling the vessel.  But exactly what does a used fast ferry go for on the open market?

"I think the range is 10 to 20 million with sort of 15 being, well if you get 15 you should take it," said Peter Shaerf, Managing Director of New York based American Marine Advisors.  (Pessimism Number 1.)

City Attorney Thomas Richards told News 8 Now $20 million is as low as they want to go.  The City did spend $32 million to buy the Spirit of Ontario and ran up an extra $10 million in debt trying to operate it.

"I would hate to burst their bubble but I think $20 million is the best they can get," Shaerf asserted.  (Number 2.)

Mayor Bob Duffy had a hard time believing the Spirit of Ontario could have dropped that much in value.

"It's an asset that's worth brand new $52 million," said Duffy.  "There's a demand for this size boat around the would.  To order one new it takes eighteen months to be delivered, so if someone is in need of a ship this size in a shorter period of time, we have one available," he explained.

The Cat may have been worth $52 million new, but in 2005 two appraisals valued it at 25 and 30 million.  Shaerf evaluates hundreds of boats a year and said he knows of only eight used ferries sold last year worldwide.  He said in British Columbia, their fleet were sold for scraps several years ago, so the Rochester is in for a challenge. (Number 3.)

"When you have a ship like this, it doesn't have a ready second hand market," he explained.  "You have someone saying 25 and then saying 30...I would argue a year ago 25 was probably a high value," said Shaerf.   (Number 4.)

If the City isn't looking to make a quick sale and jump at the first offer, Shaerf said 20 million could be a realistic asking price for the CAT.

"Time is money too and it could take six months to sell a ship like this." (Number 5.)

Shaerf believes the ferry should be marketed to Europe, the Mediterranean and defense markets.  He said buyers may even be able to look past the ferry's checkered past with a carefully orchestrated marketing plan.  Time may be on the city's side.  Australian lenders EFIC will allow them to pay back the $40 million dollar loan in installments, with the first principal payment due next year.

Notice the difference between the WHAM blurb and the WROC piece... same topic released the same day?

"City Attorney Thomas Richards told News 8 Now $20 million is as low as they want to go... "I would hate to burst their bubble but I think $20 million is the best they can get," Shaerf asserted."

Another cruel fact of life is coming up:  You don't always get what you want

"The prospective buyers now have a figure to start negotiating downward.  Since the world now knows what the rock bottom price is, buyers can start there and snag a great deal."

The Native Canadian  -  13 January 2006

"It's an asset that's worth brand new $52 million," said Duffy.

Who cares?  The Rochester ferry ISN'T 'brand new'.  It's been in an accident, logged tens of thousands of miles in salt and fresh water, suffered damage while tied up, carried almost a quarter-million passengers and is now sitting rust-streaked in the Port of Rochester.  It costs a fortune to buy, operate and insure.  In all but the most ideal cases, it's far more of a liability than a positive cash flow machine.

In short, not only is the city of Rochester faced with selling a very well-used piece of equipment, it's got a very select market to try and sell it to.  There's no rosey-coloured scenario here, so Duffy needs to can the sugar-coating.

It's a lemon and unloading it is going to be a challenge; unloading it at the desired price is going to be highly improbable.

Cha-CHING.  Whip out those chequebooks, folks.  This one's gonna cost ya.

Cormier.jpgBay Ferries Vice President reacts to ferry shut down

1/12/06

Rochester is out of the ferry business and that means some 100 Bay Ferries employees are out of jobs. On Thursday, Bay Ferries Vice President, Don Cormier, arrived in Rochester to begin the transition process. Since Mayor Bob Duffy announced the end of the ferry service Tuesday, Cormier has been putting in long hours to help transition the service out of city hands. He says his top priority now is the Rochester ferry employees.

In his first interview since the service was cancelled, Don Cormier tells NEWS 10NBC employees are his focus now.  “We wanted to be here in person to express our gratitude to our employees,” Cormier said.

Nearly 100 employees expected to return to work in March for the restart of service. Now the

Do you think the City of Rochester is making the right decision to get out of the ferry business?

Yes: 88%

No: 11%

company is working on severance packages for them.  “What we'll be focused on is for employees to be treated, for the Rochester Ferry Company employees, to be treated fairly,” Cormier said.  We asked Cormier if employees in Rochester could find other jobs within Bay Ferries.  "There's a possibility that some individuals could be placed in other locations if they so desire,” Cormier said.  

 

Bay Ferries will now keep a skeleton crew of about one dozen to maintain the ship and terminal operations until The Cat is sold or until March when the seaway re-opens.

NEWS 10NBC asked if Bay Ferries is considering buying the ship. Cormier told us  the Rochester to Toronto route is definitely not an option. When asked about the potential of moving the boat to warm waters, Cormier said, “there's no immediate opportunities for anything.”

In the meantime, Mayor Bob Duffy plans to pay back the $2.5 million owed to Bay Ferries by dipping into the city's reserve fund. Cormier says he's not surprised by Duffy's decision to end service, but says it's no reflection on the customer service of ferry employees. “We certainly have had wonderful staff here that we care about a lot,” Cormier said. Cormier also said that he's planning to speak with employees on the Canadian side. He says so far, no meeting has been scheduled with Rochester city officials, including Mayor Duffy, to work out the details of the city's contract with Bay Ferries.

Among a list of other things, wasn't the Rochester area told of how the ferry would generate To next page 'thousands of jobs'?