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Go to WHAM TV 13
Jane Flasch (Rochester, NY) 12/14/05 - Two weeks before he leaves office, Rochester Mayor Bill Johnson has asked the City Council to back $10 million in bonds to keep the fast ferry financially afloat.
In less than a year, the operation has burned through $8.5 million in capitol reserves intended to last three years. Plus, it is now $2 million in the hole.
Without getting more money fast, the fast ferry will not be able to pay its January and February bills. The fast ferry needs to be winterized and taken to dry dock for maintenance.
Basically the city has three options.
Option #1: Fold the operation and sell the ship. Although Mayor Bill Johnson said he considered it, the move would hit taxpayers hard.
Option #2: Have taxpayers subsidize the operation, but that would take money the city does not have in its tight budget.
Instead, Johnson is going for option #3: Asking the Rochester City Council to approve $11.5 million of bonds. The mayor wants to inject the ferry operation with $10 million in capitol. The additional $1.5 million would cover the costs associated with the borrowing.
Unlike a subsidy, taxpayers would not pay as long as the operation pays its bills. The money would be paid off over time, like a second mortgage.
Mayor Johnson said, "People on Wall Street are backing these bonds. They have examined this deal…these are not people who make...poor decisions.”
Right now, the city doesn't have to make payments on the original $40 million loan until year five. But, in this case, it would start paying debt back on the bonds right away to the tune of $2.7 million starting next year.
The City Council is expected to pass the bond option on Tuesday.
Neon Red Flag
However, one investor thinks any new loan connected to the ferry is not just a red flag, it’s a "neon red flag."
Geoffrey Rosenberger said the ferry's fixed costs are too high and believes taxpayers will end up paying for the ferry eventually.
"The reality is--the cost to provide the service exceeds what you can charge," he said.
Johnson contends that the subsidy will help the ferry survive and that many public projects are subsidized.
"The library has a subsidy; the War Memorial has a subsidy. These are all places people use, why should this project be any different?" Johnson said.
Aggressive Marketing
The Ferry Board says it has a plan for a better 2006 season. With aggressive marketing, board members hope to fill the Cat with an average of 482 passengers per trip.
They say it is feasible because, in less than three months this season, the Cat carried 113,000 passengers. Next season, it would have roughly double the time to double the number of passengers.
Ferry Board President Ben Douglas said, "We had half that ridership in non optimal times…because of word or mouth. With the right drivers in place, we should reach 242,000."
Besides increasing ridership, the plan calls for generating income from private charters and events and, possibly, leasing the boat to other operations down south during the winter.
However, the plan does not call for the operation to break even. It requires a $2.7 million transfer from capitol reserve. Since the ferry has no reserve fund, that money has to come from somewhere.
Mayor Johnson said he has briefed Mayor-elect Bob Duffy on the project. He said without the new bond money, the new mayor could inherit an operation already in default.
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