[2001 ZTS]

Doomed from the beginning, what is it with grown men and boats? It has to be the absolute worst way to try and make money.

My company looked into the idea briefly but knew even before the preliminary analysis was done it would never be viable.

Rochester Mayor Shuts Down Ferry,
Vows to 'stop the bleeding'

1/11 - 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.

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.

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.

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."

From the Rochester Democrat & Chronicle