NYC transit yachts are broke

 

 Curbed

Hornblower Group, the San Francisco–based company that operates NYC Ferry, filed for bankruptcy yesterday, claiming it could not manage its roughly $1.2 billion of debt. One of its investors, the private equity firm Strategic Value Partners, agreed to acquire the company in a debt-for-equity swap that’s part of a larger restructuring, according to The Wall Street Journal.

Hornblower operates three primary divisions: an Australian company that seems to be doing well, a ferry and sightseeing division, and a luxury cruise division, American Queen Voyages. It’s this last unit, which mostly consists of old-timey paddlewheel riverboats, that Hornblower representatives in court said was the company’s “Achilles’ heel” that never recovered from the pandemic, according to Emily Lever of Law360. The company took on hundreds of millions of dollars in debt after its revenue dropped to $175 million in 2020 from $690 million just a year earlier.

Exactly how New York City’s ferry service fits into Hornblower’s restructuring is unclear. For now, CEO Kevin Rabbitt is adamant that service will not be affected, claiming the restructuring will allow Hornblower to eliminate debt unrelated to the ferry system while continuing “record growth across the five boroughs.” Indeed, a court filing described NYC Ferry as a bright spot in the company’s portfolio. Just last year Hornblower re-upped its contract with the Economic Development Corporation, the city nonprofit that oversees NYC Ferry, at $405 million over the next five years, with two optional three-year extensions. The EDC chose Hornblower despite a 2022 audit by comptroller Brad Lander that put the total taxpayer subsidy for ferry rides in 2021 at $12.88, nearly double the city’s previous estimate. (A 2019 study by the Citizens Budget Commission estimated taxpayers contributed ten times more to each ferry ride than each subway ride and, for a voyage on the ferry’s Coney Island route, taxpayers covered $24.75.) According to the EDC, the subsidy has since been reduced to $8.55 per ride.

Hornblower originally won the NYC Ferry contract in 2016 in a somewhat controversial deal. According to The City, Hornblower beat out a team of three local ferry operators, but Hornblower’s underbid came with a hidden cost. While the local operators had proposed using their own armada of water taxis, Hornblower asked taxpayers to front $232 million to buy 38 vessels and an additional $137 million at a later date for more boats. A spokesperson for the EDC at the time justified the arrangement, in part, by saying it was smart for the city to own its vessels — logic that flies in the face of the old adage that a boat is a hole in the water you throw money into.

 

NYC Ferry has a sinking feeling

 

 

 THE CITY

New York City is again looking for a company to run its ferry service — and wants the winner of the next contract to contribute more revenue rather than receive millions of dollars in subsidies to keep the service afloat. 

The city’s Economic Development Corporation, which oversees NYC Ferry, posted a request for proposals on Wednesday looking for a potential replacement for current operator Hornblower Group, whose contract is up next September.

Applicants will have to include a “revenue generation plan” focused on offsetting costs and EDC is inviting “creative thinking from private sector respondents” on how to make it sustainable, according to the request posted in the City Record.

EDC will favor the proposals with revenue plans that funnel the most money back to the city, the agency wrote. 

The expiring contract includes revenue sharing on the boat’s concessions and interior media ads, as well as the fares based on total ridership and revenue numbers, noted a spokesperson for Hornblower, which plans to put in a new bid. 

“Today, no other operator is better prepared to build upon the system’s early success and implement the vision to create a more equitable and accessible NYC Ferry,” Kevin Rabbitt, the CEO of Hornblower Group, said in a statement to THE CITY on Wednesday.

 

NYC Ferry subsidy costs are INSANE

NY Post

 

The city’s ferry system is taking taxpayers for a ride, with each individual trip costing $10.73 more than passengers pay, according to a government watchdog.
 
In a report titled “Swimming in Subsidies,” the Citizens Budget Commission said the $2.75 fare covered just about one-fifth of the cost of the waterborne-transit system.
 
The $10.73 subsidy is 10 times the $1.05 that the government kicks in for each subway trip, which costs the same $2.75.
 
And it’s nearly twice the $5.46 paid to subsidize each trip on the free Staten Island Ferry.
It was only a few months ago that city officials pegged the ferry subsidy at $7 to $8 a ride.
 
A planned expansion of the ferry system will hit taxpayers even harder.
 
A Coney Island line due in 2021 will need an eye-popping $24.75 per passenger from the city to stay afloat, the CBC estimated.
 
“They have created a ferry network that serves a small number of New Yorkers, is expensive to operate and requires a high subsidy that will only grow higher,” said CBC researcher Sean Campion.
The ferries carried 4.1 million passengers last year, less than the subways did in on an average day.
 

 Also:

City Comptroller Scott Stringer’s recent warnings about massive waste at NYC Ferry were alarming enough. But a Citizens Budget Commission report out Thursday truly, uh, rocks the boat.
 
For every ferry ride, the CBC found, the city kicks in an average of $10.73 of its own funds to meet costs. Every ride!
 
And, to be clear, that $10-plus is on top of the $2.75 fare.
 
That’s 10 times the average subsidy for the New York City Transit system. And double the one for the Staten Island Ferry.

And get this: A new route Mayor Bill de Blasio recently announced will run from Coney Island to Wall Street — and cost the taxpayers a mind-numbing $24.75 in subsidies for every ride.
 
That’s $247.50 for five round trips a week — or $12,375 a year. Is the mayor nuts?
 
Based on Kelly Blue Book figures, de Blasio could buy each regular commuter a late-model Jaguar XE and save more than $2,000 a year on each one. Or put three riders in an Uber: The cost of that trip at 1:30 p.m. Tuesday was $35. Even with a $10 tip, the city could save $5,000 a pop each year. What in the blue seas is he thinking?

We all know damn well this mayor has no modicum of fiscal sense or is even capable of thinking. But there is something that wasn't mentioned in the CBC report and that is the free shuttle bus service that acts as a transfer to and from the ferries that traverses east and west Rockaway...

...which are also operated by Hornblower