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25 NOVEMBER 2004
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| Home > News > Local News |
Rochester Time:
10:44 am
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Lenders push for foreclosure on ferry
Court action could force talks on ship's future into high gear.
Rick Armon
Staff writer (November 25, 2004) — The
Spirit of Ontario may end up on the auction block — but not before a
stopover in federal court. The two lenders are seeking $31.5 million and other damages from Canadian American Transportation Systems, the private Rochester-based ferry company. They have asked the court to sell the vessel so they can be repaid. "EFIC and ABN AMRO are protecting their rights," said
Paul Nunes of Rochester, one of their attorneys. EFIC's statement did little to answer that question. The $42.5 million ferry — one of the most anticipated projects in recent Rochester history — started operation in June but ran for less than three months before shutting down. CATS said it was drowning in a sea of red ink. The vessel, which now sits idle in the Genesee River, made its last voyage between Rochester and Toronto on Sept. 7. Since then, CATS, political leaders and financial lenders have been trying to figure out how to resume the service, which had carried about 133,000 passengers, according to the city. Mayor William A. Johnson Jr. has floated a plan to turn the ferry into a publicly run operation, and the city has made an offer to CATS to buy the ship. But the two sides have bickered intensely through the media over the last week. Both city officials and CATS said they hope the move by the lenders forces the other side to be more realistic in negotiations. "The smartest solution to this problem is taking a mature, cooperative approach that works within the context of a public-private partnership," said CATS co-owner Dominick Delucia. Linda Kingsley, the city's corporation counsel, said: "We don't need to be fighting this for the next couple of months. The only people who are going to get rich are the maritime lawyers." The legal papers filed Wednesday are part of a maritime lien filed in September by Amerada Hess Corp., the ferry fuel supplier, which is owed more than $372,000. A federal judge ordered the ferry not to leave Rochester. ABN AMRO and EFIC are now asking the court to recognize their claim on the vessel. The court must rule on the lenders' request to intervene in the case and — if a voluntary settlement can't be reached — figure out how to move forward with a foreclosure on the ship. The legal papers filed Wednesday also detail the
financial arrangement between CATS and many of its lenders. The other secured lenders in the deal are the Rochester Urban Renewal Agency, which steered a $6.6 million state loan to CATS; and the city ($1.3 million). And that money doesn't include any of the cash spent by U.S. taxpayers to construct a ferry terminal and rebuild the port area for the ship. (ed. Why is it the $6.6 million and $1.3 million aren't considered taxpayer's money? Just where does that money come from anyway? The Long Greenback Tree?) Since Sept. 28, CATS has missed about $1 million in
payments to ABN AMRO, EFIC and MTU, according to the filing. In turn, EFIC notified CATS on Oct. 26 that it wanted to
be reimbursed. "There could be someone else who wants to outbid us and then we're sitting there with a beautiful terminal and no boat to put there," Kingsley said. But Adam Michael, general counsel for CATS, said the
lenders don't want the ship to leave. |
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Officials Criticize City Ferry Plan by Anthony Pascale Two Rochester City Council members are voicing their concerns about the city's plan to operate the ferry. Councilman Brian Curran said parts of Mayor Johnson's proposed business plan are based on assumptions. (ed. Hey, there's a real shocker....) If revenue projections for items like advertising and carrying trucks and buses aren't met, Curran says it could potentially cost taxpayers four million dollars a year. “If we can find a way to reconstitute the business so it benefits the community we should do so,” Curran said. “On the other hand, if it's going to require continuous public subsidy, we should walk away and cut our losses." (ed. A voice of reason on City Council. Will anybody care to listen?) Council member Ben Douglas wants to have someone in the ferry industry take a closer look at the city’s ridership projections. (ed. Why? What would someone from across the continent know about the social trends and priorities of Southern Ontario and Upstate New York?) |
Not that any of this makes any difference at this point; the lenders have had enough of delays for Grand Plans and 'studies'. $31.5 million or the ferry's history. And they want it NOW... not weeks from now.
CATS has had more than enough time to secure funding if it were possible considering operations were suspended almost three months ago. If is hasn't happened by now, it's not going to happen.
The City of Rochester has a plan which will need weeks... even months... to grind through the legal and legislative processes in order to float some bonds. If the city could come up with the cash within the next week, maybe there might be small chance the ferry could be kept in the Port of Rochester. That's just not going to happen either.
So the lenders are left with no reasonable alternative other than to foreclose on the boat and cut THEIR losses and the sooner that happens, the less money they'll lose. As heartless as it may seem to the local interests, the lenders really don't give a flying fig whether civic pride is on the line or not. Unlike certain Rochester-based companies, they're in business to MAKE money... not lose it.... and they should take every measure to ensure losses are kept at a minimum.
Dominick Delucia is under some strange impression that the lenders 'want to keep the ferry in Rochester' when the only thing they 'want' is to deal with a client who's ready, willing and able to abide by the terms of the loan. Frankly, ABN AMRO Bank N.V. and EFIC would most likely rather not see Delucia or CATS ever again, so all the gushing platitudes are falling on deaf ears in Australia. Butt-kissing isn't going to see the foreclosure request withdrawn and only serves to reaffirm how clueless CATS officials really are.
And what about the forty-year lease agreement CATS signed with the City of Rochester to occupy the terminal? Any legal repercussions about trashing THAT contract? From food concessionaires to fuel delivery contracts to leaving customers either stranded or holding worthless tickets, CATS has proved without a shadow of a doubt their credibility is zip and their word isn't worth the paper they signed. Claiming to be the target of 'bad luck' is almost laughable when clearly the fault was 'bad planning'. If that's the best CATS can do, then obviously their best isn't good enough.
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| Home > Opinion > Letters |
Rochester Time:
10:53 am
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Letters to the Editor
(November 26, 2004) —
Ferry ticket holder still awaiting refund
Probably the only way I'll ever recover my money is
to have it start up again. NILES GARNHAM All aboard ferry for a night out
The ferry won't be going anywhere for the next several months. But if it is like most ships (and I've been on a number of them), it will still be powered up and more or less functional while tied to the dock. Why not try to make it an entertainment destination? It includes a bar, a restaurant and a theater. People go out to dinner, to have a few drinks and to movies all the time. Why not go to the ferry for those diversions? And while we're on the subject, why can't tours of the ship be run? We were planning on taking the ferry this fall, but by the time we began planning, the ship was not operating. So we've never been on it. But we'd love to tour it. And we'd be willing to pay for the privilege. I'd guess that we would not be alone. About 140,000 people rode it before it was tied up. Many, many more have never been aboard it. Let's try to generate a few bucks for the taxpayers. MIKE DOOLIN |
Ahh, yes. Let's take another stab at an 'entertainment destination'. This time, let's buy some $42 million highly specialized water craft which couldn't turn a profit sitting still (let alone moving), open it up for more wear and tear from hundreds of people and turn a 'few bucks for the taxpayers'. THAT ought to cover the repayment of $40 million in bond repayments, shouldn't it?
And there's that 140,000 figure again. 'The Proof'. Can't let it go, can we?
"Now that it looks like the city might be running the ferry.." Might want to take a closer look at the details, Mike. Just glancing at the headlines doesn't tell the whole story.
Any question NOW on how this project was able to limp along? It's like the local version of the Spanky & Our Gang backyard barn productions.... pretending to be Broadway while barely resembling the Bijou.
And now for a view from the rationale (but often considered flaming Liberal) local independent media outlet:
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Home » Cover Story » Cover story NOVEMBER 24, 2004
Ferry update, November 24:Rochester's ferry crisis kicked into high gear on Wednesday, when two companies that financed the boat began foreclosure proceedings. A very possible outcome: A court will permit the lenders --- ABN AMRO Bank and EFIC (the Export Finance and Insurance Corp.) to take the boat and sell it to recoup the $31.5 million they have loaned the ferry's owner and operator, Canadian American Transit System. There's still the possibility that the ferry will stay in Rochester, taken over by the City of Rochester --- or even kept and operated by CATS. But the foreclosure certainly moved the ship into very troubled waters. "This makes what the city is trying to do even more urgent," said the city's corporation counsel, Linda Kingsley. CATS, said Kingsley, has three options: "They can very, very quickly come up with sufficient private investors to save their operation. They can start negotiating on what was a fair deal, for the city to buy the boat. Or they can let it go in foreclosure. It's really in their hands right now." The city, said Kingsley, will continue to pursue its plan to create a public authority to buy the ferry. But, she said, "it will become a much more rushed process." And although the city would attempt to buy the boat in a foreclosure sale, said Kingley, "there is no guarantee that someone else might not outbid us. And then there goes the boat and all that public money that's been put in." "I truly believe that if we're not well on our way to solving this problem by the end of December, we will not be able to save the boat." EFIC, said Kingsley, "has made no secret that they would prefer to solve the problem here," with either CATS or the city. "It's not a joy for them to go through foreclosure and move the boat," she said. But, she said, "they see time passing, and they see no progress from CATS. We've told them that we've made CATS an offer and that they rejected it." The city's plan must be approved by city council --- and the state legislature must approve establishing the public authority. And some local legislators have expressed concern about the plan. Might EFIC officials be as worried about the city's possibilities as they are about CATS? "They've got a right to be concerned," said Kingley. "There are obviously some dissenting opinions out there." If the public authority is a roadblock, could the city assume control of the ferry any other way? "We're looking at what other means there are, if any," said Kingley. The backgroundAnother bombshell in the story of Rochester's Fast Ferry dropped last week, when Mayor Bill Johnson announced that the city wants the state to create a public authority that would buy the ferry and resume its service. The ferry's owners, Canadian American Transit Systems, ran out of money and abruptly shut service down in September after only two months of operation. Now the ferry sits moored beside its terminal in Charlotte, impounded ("arrested," says Johnson) because of CATS' debts to fuel companies and other providers. Since the shutdown, CATS has tried to come up with refinancing plans that would satisfy its principal lenders. But the lenders --- including the city ---have rejected those plans. And while there has been talk of some local private investment, it hasn't materialized. Now, Johnson says, the situation is critical. If there isn't a viable plan to resume service soon, he says, the senior lender --- Australia's Export and Finance Insurance Corp. (EFIC) --- will sell the boat to recoup its money. And with no other plan pending, the city is moving --- aggressively. But the city's proposal doesn't sit well with CATS. The company could be out of the ferry business entirely if the city's proposal becomes a reality, even though Johnson says he'd like to maintain CATS' service infrastructure and resources."Why would we waste our time replicating that when it's already there?" Johnson says. Tension between the city and CATS escalated late last week, when CATS CEO Cornel Martin accused the city of pirating elements of CATS' business proposals for its own plans. Johnson responded by urging CATS to disclose its business plans to the public. "I don't think they should stand behind anonymity and continue to make these false allegations," he says. Meanwhile, in Toronto, a permanent ferry terminal will be in place by the end of January. "We're all thrilled up here," says Toronto Port Authority Chief of Operations and Engineering Ken Lundy of the city's proposal to resume ferry service. And Congresswoman Louise Slaughter says all the red tape that led to CATS paying exorbitant pilotage and Canadian Customs fees, and prevented the ferry from transporting commercial trucks, has been removed. In interviews with City, Johnson and CATS founder Dominick Delucia discussed the ferry's status. More about the ferry from Bill Johnson and Dominick Delucia.(Interviews with Rochester Mayor Bill Johnson and CATS CEO Dominick Delucia - opens in this frame) Bill Johnson here! Dominick Delucia here! |
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City Newspaper is the local liberal-leaning independent freebie found at the grocery stores and like Toronto's Now, Hamilton's View, St.Catharines' Pulse, Buffalo's ArtVoice and Syracuse's New Republic, it presents news from a pragmatic, if not always popular position.
Therefore, despite the attractive newsstand price ($0.00) it comes as no surprise City Newspaper isn't given the same credibility as the mainstream media MixMaster called the Rochester Democrat & Chronicle. The D&C needs to give what its readership wants to see... or risk a cash flow to other daily publications or worse yet, the internet. That sort of pressure is lacking with City Newspaper which only needs to woo advertising dollars.
Plus, they're not called 'alternative' papers because of their bland similarity to the Big Guys. We like that.
Naturally, the readership of these publications tend to be a touch more open-minded and willing to entertain the remote possibility that mainstream for-profit media just MIGHT have ulterior motives which cloud the message being broadcast. Should the D&C come out with "Ferry Project Sets New Goal For Stupidity", well... the locals just might be put off a tad and cancel subscriptions, but City Newspaper might run the same headline and actually increase its circulation for that week.
"Tell me what I want to hear and you're a genius. Tell me what I don't want to hear and you're a blathering idiot." You know... "Don't P.O. the customer". And since media giant Gannett runs the only daily in the community, all it needs to do is avoid offending the customer and the subscription revenue will keep flowing in.
A great marketing tactic for selling donuts, but severely lacking in the truthful and thorough dissemination of news.
Recognizing that City Newspaper was actually grabbing a good-sized chunk of the local readers, the D&C comes out with its own freebie Insider, aimed at being as 'hip and groovy' as City. It's aimed at a younger market but comes across as probing as My Weekly Reader and is just about as relevant.
But back to City's interview with CATS CEO Dominick Delucia:
"...Factors outside of CATS' control --- 9/11, the SARS outbreak, the train crash in Charlotte, the ferry crash in New York, wildly escalating fuel costs, and problems getting approval for transporting commercial trucks --- led to the shutdown of service, he said. "Remember: This was a startup company," he said. "This had never been done here before."
A master of victimization, Delucia points out the same world and local events which other companies, both in transportation and otherwise, had to contend with in the same time frame. While starting-up in untested waters. Which were still in operation for more than 80 days after throwing open the doors.
Admitting culpability... conceding serious errors in judgment had been made... "We screwed up"... none of these seem to be in media releases and press conferences from CATS. So blaming other factors has suddenly become the raison d'être for CATS management even though the transparency of this move borders on the insulting.
Mayor Bill Johnson has less of a motive to obfuscate the truth but a far greater interest in salvaging a career which is headed towards a major train wreck. A main proponent of bringing a slick - but redundant - method of travel to Toronto, Mayor Johnson is watching his pet project sink before his eyes. Convinced that, like 'all' problems, simply throwing more money at a wallowing issue will make it hale n' hearty while ignoring 'news we don't want to hear'... like "Why would Torontonians need a dedicated ferry to get to Rochester?"
"Johnson: Oh, yeah. What you will see in the business plan is all our income projections, all the assumptions we base those projections on. CATS was basing their projections on about 700,000 to 800,000 passengers. That was, of course, for a full year at full operation. They were encouraged by the lenders to think about, since they were going to relaunch in the fall, running it on a more limited schedule in the winter.
Our assumption builds that in. We're talking about full operation from April to October, two round trips a day, seven days a week. From October to April, we would reduce that operation to one round trip a day, four days a week, on the assumption that we've got to adjust for wintertime travel. So our numbers are based on us having to carry fewer than 400,000 people. And we view that as extremely cautious and conservative."
Phewww. Whole lotta 'assuming' and 'projecting' going on around here. And what's more irritating is: the fate of not only the ferry service, but tens of millions of dollars rests SOLELY on these 'assumptions' and 'projections'. This is truly the Achilles Heel of the whole concept.
"There aren't enough passengers to keep the Ferry profitable over the long term".
380,000 versus ??? That's the only real issue which should be debated yet it's glossed over with barely a mention. But again, all this is conjecture as ABN AMRO Bank N.V. and EFIC are about to prove in court by yanking back the title.
As I'm standing in the middle of the Toronto SkyDome tomorrow, I'll be wondering how many Rochester area residents will be among the thousands in attendance. I'll also muse about specifically how many more would be there had the ferry still been in operation and can't help but feel the difference wouldn't amount to more than C$100 worth of tickets at $10 a pop.
Think Toronto's going to go into an economic slide from ten fewer Rochesterians visiting? One hundred fewer? Toronto doesn't have much trouble filling hotel rooms with tourists... something Rochester cannot similarly claim. The loss of a few hundred folks across the Lake isn't going to amount to diddly compared to the weekend's tourist revenues city-wide.
I have no reason to believe the 'difficult drive' to Toronto will stop me from attending a major event such as the Toronto Aboriginal Festival and Powwow being held at SkyDome. If not having ferry service to Toronto is the reason fewer Rochesterians will also be in attendance, I'd have to say these people were more interested in a boat ride than attending an event of this magnitude. Their loss. The fun will still go on without them.
She:kon? my brothers and sisters. Gardiner and Spadina, here I come.
Always a pleasure to be back.
Speaking of Toronto:
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Tongue-in-cheek I'd say, Mr. Mayor.
Pretty much knowing the ferry's actually a 'done' deal, Mayor Miller has nothing to lose by appearing both wistful and helpful. 'Begin partnerships with tourism agencies in Toronto to better promote (the service)'? What's that mean? Print up a few pallets of brochures and posters to stock tourist literature shelves? "Yah... throw a cupla thousand in for graphic design and printing... maybe another cupla thousand for silk-screening t-shirts... and we're golden". For a metropolitan area with a population approaching four million, $10,000 is like slipping $5 in the grandkid's birthday card. The kid's thrilled and Gramps looks like a hero.
Whatever. It's a fairly riskless promise as there's not much to be gained if the ferry resumes service and not much to lose if it doesn't. And now it can't be said Toronto hasn't been helpful and supportive of the City of Rochester's plan. CATS is all but defunct and every indicator shows it's about to become a has-been, so hitching the wagon to a lame horse makes more sense than tying up with a dead one.
It would be intriguing to listen in on the off-the-record comments and rumours at Toronto City Hall concerning the ferry debacle. Public statements are more often finely crafted and couched reports with more of a design in public relations than public knowledge... and I suspect this proffering of Mayor Miller is no different. Toronto winds up looking sympathetic (while probably ambivalent) and neighbourly (while probably somewhat annoyed with the whole affair). Canadian diplomacy is some of the world's finest with good reason.
But it's nice not to be forgotten. Particularly after a most undignified pratfall. It's nice to be nice.
Toronto The Good.
Rochester The Incompetent. Not exactly a glowing
indictment, but there you have it.
![[News]](titler_News.gif){kind=small}
Toronto's
Mayor David Miller said he favors Rochester Mayor Bill Johnson's plan to
buy the ferry through bonds and run the service in the public sector.
Miller believes the ferry was seriously undercapitalized from the
get-go.