Page Fifty-Three 

04 JANUARY 2006

Duffy Faces Ferry Finances   Jane Flasch (Rochester, NY) 1/04/06 - Will the ferry stay or go? Rochester’s new mayor could choose to get out of the ferry business altogether.  Bay Ferries, the company operating the service for the City of Rochester, has not been paid for its final expenses of 2005. The city owes $2.1 million. The city borrowed $40 million to buy the ship. The first payment of $2.7 million is due in March. (I thought it was February?) Ferry supporters now want the city to back an $11.5 million bond to give it a full year to get service up and running. Shutting it down today would cost taxpayers half that much. There are questions about how much money the city would get back, even if it sold the boat at auction.  (Strange way of putting it.) Representatives of the city of Istanbul, who traveled to Rochester last year seeking to bid on the ship, today said they were prepared to pay market value (they consider that about $24 million) for the boat. If Mayor Duffy elects to shut down ferry service, councilman McFadden said the city does not have $5 million in its general fund to pay ferry bills. So, its likely city taxpayers will have to back a new bond to pay off that money, plus whatever it still owes after (possible) auction. Mayor Duffy will have to make this difficult decision his very first month in office.

"Representatives of the city of Istanbul, who traveled to Rochester last year seeking to bid on the ship, today said they were prepared to pay market value (they consider that about $24 million) for the boat."

Sayin' it an' payin' it are two different things.  If Istanbul creates an optimistic buzz in Rochester, in the public's view, it's an 'out' for dumping the ferry and should be jumped on in a heartbeat.  Then, when they actually sit down and slide a low-ball figure across the table, the public pressure to accept the offer is on their side.  Take it, no matter what the offer, and cut your losses  - or - reject it and try finding a better deal elsewhere and continue to lose money.

After all, $20 million is "about" the same as $24 million.  If nobody else is eagerly waiting in the wings, it's definitely a buyer's market.

Dusting off the archives:

Monday   February 28, 2005

Ahmet Paksoy, Istanbul Fast Ferries Turks: Fast Ferry Here Not Feasible by Seth Voorhees and Judy Mendoza photo by Todd Krupa Published Feb 28, 2005 Though it wished Rochester well, a Turkish company that operates fast ferries believes the city's newly-purchased ferry business will fail. At one point, Istanbul Fast Ferries appeared poised to bid on the Spirit of Ontario. It chose not to bid on the ferry because moving the ship back to Turkey would have been cost prohibitive. Istanbul Fast Ferry representatives attended the auction Monday. The city of Rochester won the auction for the ferry in federal court for $32 milion. Istanbul Fast Ferries Company General Manager Ahmet Paksoy said that he believes the ferry's Rochester-Toronto route isn't "financially feasible". Still, Paksoy wished the city well in its endeavor. "I would like to say the operation of the vessel is more difficult and challenging than buying ships. This is very important," said Paksoy.

Well, well.  Looks like Dr. Paksoy might have known what he was talking about after almost a year has passed.

If the 'market value' of the ferry is 'about $24 million', that's a depreciation of $8 million in less than 12 months.  At more than a 25% annual depreciation rate, it looks like this fast ferry was a pretty lousy investment, wouldn't you say?  I'm not sure Dodge Neons depreciate at over 25% per year.

Dr. Paksoy knew the city of Rochester would be throwing a For Sale sign on the boat in short order... it was just a matter of time.   All he and his Istanbul colleagues had to do was sit back and wait for the Rochester business to flounder and sink, then make an offer the city of Rochester would be nuts to refuse.... even if it lost its shirt in the process. 

Lose money by selling the boat  - or -   lose money by NOT selling the boat.  Nice position the city of Rochester placed itself in.  The Turks have already rented the party hall to celebrate pulling off a shrewd deal at some naive city's expense in Upstate New York USA.

Of course, there's always the possibility of some other interested party wanting to snap up a good deal on a used ferry.  Maybe the actual selling price will be closer to the $32 million paid... although that's extremely hard to imagine as buyers would already know they had the advantage of it being a distress sale.  Word gets around, doncha know?

Speaking internationally now, I didn't hear much from any of the local delegates to the September 2005 Fast Ferry Conference held in London.

2nd Fast Ferry Information Conference September 28 – 29 2005, Hilton London Docklands Hotel, London Meet fast ferry operators from the Channel Islands, Guadeloupe, Halifax (Nova Scotia), Istanbul, London, New York, Prince Edward Island, Oslo, Rhodes . . . fast ferry builders from Australia and Norway . . . consultants from Australia and the UK. All will be speaking at the 2nd Fast Ferry Information Conference, a one and a half day event focusing on the operation of fast ferries that includes a pre-Conference evening reception, a fast ferry trip on the River Thames and a dinner at a waterside restaurant.  http://fastferryinfo.com/aboutconference.asp

I know it must have been just an oversight, but since the Toronto-Rochester fast ferry is an international operation and Rochester is keenly interested in the business, it only stands to reason local delegates from the city would attend such a conference to gain as much expertise as possible, right?

I mean, somebody DID attend this conference didn't they?  The Rochester Ferry Board DOES subscribe to fastferryinfo.com and follow the industry along with the rest of the fast ferry world, don't they?  Checking out the Istanbul Fast Ferry Co. Ltd. website shows Dr. Ahmet Paksoy is the General Manager of a company with 18 years experience in the business.  That would lead one to believe the man has a decent handle on the industry... enough to recognize a dud of a route when he sees one.  Holding a Doctorate doesn't hurt credibility either.

But I guess the credentials of local marketing 'experts' trumps those of an international professional.  "All we need is a good marketing campaign.  What could a Turk possibly have to say about an American route?"

The folks at Istanbul Fast Ferry Co. Ltd. must be amused.

05 JANUARY 2006

"Poor planning on your part does not constitute an emergency on our part."

42º | Hi 38º / Lo 26º |

This is getting ridiculous.  During the final few weeks of the 2005 cruise season -- when Bay Ferries was footing the bill for $2 million -- the Ferry Board was perfectly quiet (Read: Secretive) about the financial arrangement.  Nobody knew the reserve fund had run out until after the season was over.

Why not?  Why wasn't the imperative for selling bonds, taking out a loan or whatever being scrambled at that time?  Ben Douglas is moaning that City Hall is dragging its heels and jeopardizing the ferry's future.  I say Ben Douglas and the Ferry Board should have secured funding for the 2006 season well before the end of the 2005 season... not sit on their butts throwing around 'ideas' of where to go for possible cash after the 2005 season ended.

Now that the tourist publication deadlines are approaching, how can advertising plugs be inserted if the ferry project has no prospect of even starting up at this point?  As of this writing, the ferry is dead... there is no money in the account and there's no clear indication that there's going to be.  Ben Douglas is blaming others for the Ferry Board dropping the ball and not reacting in time.  Talk is cheap, Ben.  Either you achieve results or you don't... and in this case, the Ferry Board put off securing the funding until the last minute... then screams "Urgent".

Why didn't the Ferry Board check about the Provincial and State tourism publication deadlines last summer?  Knowing when the deadlines were, if they wanted to get in the tourism loop they would have known exactly when they needed to have the funding secured.  Example:  Ontario Tourism publication deadline for Spring 2006 is, say, February 15.  That means they'd better have the funds in place well before that.  That means they should have had definite securing of funding sources last June... not start thinking about it in October or November.

WHAM-13 News, the "More Rochesterians watch NewsSource-13 News than any other local station" local TV outlet (frightening thought there, if it's true) is losing credibility with each passing day.  In the past two days alone, their screwups have been glaringly obvious... but does that turn off the adoring fans?

No, of course not.  Form over function and style over substance are the guiding principles which keep many superficially-minded Rochesterians tuning in.  Don Alhart could read the latest news from The Onion and as long as the easy smile flashes on cue, folks would eat it up as the Solid Gold Truth.

Frankly, reading the news as reported by The Onion would be vastly MORE entertaining than listening to drivel, syrup and hackneyed 'journalism' with greater designs on influencing opinion than on providing informative reporting.  I don't know about you, but I hate being treated like some simpleton to be manipulated.

The Democrat & Chronicle has opened a discussion forum on the ferry -- click the above masthead to go there and read the musings of locals.  So far, the cheerleaders and Booster Clubs are having a field day singing arias of praise and adulation for not only the ferry, but Rochester itself.  That's good -- I guess -- as it would be a very sad state of affairs if nobody stepped up and stood up for the Rochester area.  The community's got a lot going for it, but possibly not in the quality or quantity as some people would like to believe.  That's what led to the overly optimistic estimates of the numbers of Canadians who'd sail on down here.

I can't get into pulling out and debating every minutia of the responses... I think I'd need another server of disk space to hold all my grousing.  And the Gentle Reader will no doubt realize my proclivity to grouse at length.

Just as a teaser to take a look at some the the gems of wisdom being posted on the D&C site,  here's an unedited snippet:

I just thought Torontonians would appreciate a doubled-over-stop-it-my-stomach-hurts laugh.  It's not every day that such cosmic absurdities are tossed about with such genuine sincerity.

Go ahead, Toronto.  I dare you to keep a straight face.

06 JANUARY 2006

Is it any wonder?

28º | Hi 28º / Lo 18º |

Now, I KNOW Rochester area residents are a fairly well-educated lot; that's one of the things I genuinely appreciate about living in this area.  A higher-educated population means fewer churches where rattlesnakes are used as props for demonstrations of religious conviction.  It means academic achievement is celebrated more than football prowess.  The ability to cope with the weather is more valued than running from it.  You get the drift.

That's why it's despairingly frustrating to see hopelessly simplistic solutions being proffered as tactics to solve problems which require a modicum of intellect.  Proms, weddings and tea dances are not the answer to resurrecting a multi-million dollar business which is rooted in baseless assumptions. The continuous litany of locals publicly humiliating themselves with such suggestions is depressing.

John Wilkie's banal tripe about what constitutes 'leadership' points to an employee who has a difficult time separating work life from home life... the 'leadership' mantra is a pop-culture ode to the glories of over-achievement.  For some mysterious reason, the need to have heroes to place upon pedestals means draping a label of 'leader' on someone's shoulders instead of a cape.  It's ridiculous and a craze which will look pretty silly ten years from now.

Wilkie also offers nothing about how Duffy should ACTUALLY make the ferry service succeed other than to suggest Mayor Bob demonstrate a completely vague concept called 'leadership'.  Wilkie's mindless, well-rehearsed and too-often-heard 'leadership' babble grows irritating after this second sentence and appeals more to followers of pop culture than designers of the initiatives of tomorrow.  'Leadership' without the support of the masses is a 'leader' in name only.

I expect better from Rochester area residents because they're capable of doing better.  They're reasonably intelligent and well-educated people.  But to read and listen to the vox populi of the area's residents, this may as well be Podunk County Alabama where a sixth-grade education qualifies one to seek political office.  It's unsophisticated, uninformed and illogical to a fault.

But as long as there's a Lexus parked in front of the Contemporary, it also passes as profound thought.  That's frightening in its own right and validates a culture where money takes precedence over intelligence... not particularly a grand indictment of a community to be envied --  or visited.

Keep those cards and letters coming in, Rochester.  It merely reinforces why Canadians won't bother to give this area a second glance.

"Duffy tells NEWS 10 NBC that on Friday he met with officials from the Cat's operator Bay Ferries who flew in from Nova Scotia."

When creditors come knocking on the door, chances are they're looking for more than just a danish and cup of coffee.  A few round trip tickets from Halifax to Rochester NY ain't cheap, but when $2 million is owed immediately, it's well worth the trip.

It's also a sign that Bay Ferries might be getting a bit concerned that the February loan payment is going to take precedence over the cash owed to them.  A possible nudge might have been dropping a very subtle hint that if EFIC gets paid, then so does Bay Ferries... or maybe the city of Rochester might wish to start advertising for a new ferry operator.

"Can it be sustained even with a subsidy that would be palatable for Rochester and our taxpayers? I think that is the big question.”

Actually, I think the Big Questions is:  "WHY does Rochester NEED a dedicated link to Toronto?"

Quite obviously, the desired flow of cash INTO the Rochester area never materialized, so the theory that the ferry would help the local economy was nothing but a pipedream.  The original feeble reasoning that using the ferry would be faster than driving to Toronto was proven wrong within a few weeks.  There's been no appreciable sign of more Canadian visitors at the local tourist haunts.  Even with sellout cruises, special events have done little to nothing to ensure a promising future for the ferry service.

So why the continued push to operate a business which has no basis other than as an 'exciting alternative to driving'?  That's a pretty lame excuse.  If the ferry operation cost the city a nominal amount to run -- and a million a month is far from 'nominal' -- there MIGHT be a case for a public subsidy IF there was a decent reason for a direct maritime route to Toronto.  But there isn't.

Knowing when to say "when" is the sign of a responsible drinker -- as well as a city government.

The D&C discussion forum is really showing the true colours of the community, although the lack of originality is truly disheartening.  Ever the fair and impartial observer (Insert guffaw here), I credit one verbose poster in particular as having some surprisingly refreshing suggestions along with an historical anecdote or two.  Rather long-winded -- of which I'm no stranger -- this D&C Discussion Forum writer nonetheless has about the most intriguing proposals on developing bonafide tourist attractions in the Rochester area I've seen to date.  It's definitely worth a read.

Credit given where credit's due.

Friday   January 06, 2006

Darryl Porter was sworn in on Friday Duffy: Ferry Decision By Mid-Week   by Anthony Pascale/ Matt Biondic Photo by Chris Coffey Published Jan 06, 2006 Rochester mayor by weighrf (Somebody needs a proofreader) in on the fast ferry issue while welcoming more members of his staff to city hall. Bob Duffy spoke Friday with the head of ferry operator Bay Ferries. Duffy said he's still deciding whether or not to support a proposal to bond $11.5 million needed to keep the service running in 2006. Duffy said to expect a decision next Wednesday or Thursday. Mayor Duffy also welcomed several new staff members to his team at a swearing in ceremony Friday. Seven members of Duffy's senior staff took the oath of office. The positions did not require city council approval. Deputy Mayor Patty Malgieri and Assistant to the Mayor Darryl Porter were among the seven sworn in.

We're breathless with anticipation. Nothing like starting off a new year with an failing business and an enormous debt. 

Bet THAT doesn't make Don Alhart's Bright Spot.

A few words about downsizing or swapping to a different model.

The problem isn't the boat.  The problem is the southern destination.  It lacks enough appeal to attract sufficient passenger numbers needed for the ferry business to break even.  Don't take my word for it; the poor showing in the 2005 season says it all and 'marketing' the area and the ferry won't radically change the passenger revenue.  It certainly won't change the numbers enough to make the service break even.

A smaller ferry, a hovercraft, a Spanish galleon.  It won't change the appeal -- or lack thereof -- of the southern destination and if there's not enough motivation to get on a boat, there'll never be enough passenger revenue to break even.  Regardless of the number of glossy brochures printed or slick advertising spots featured, the end result will be the same; a floating money pit which saps desperately needed cash from a community in crisis.  Hyperbole?

How much more evidence is needed?