(January 18, 2006) — The facts support former Mayor Bill Johnson's contention that a 14-year lease agreement between owners of the high-speed ferry and the Toronto Port Authority was not hidden. But they also show he and the Rochester Ferry Co. weren't nearly as open about the pact and its terms as they should have been.

Obviously, had that been so, mouths wouldn't have dropped as they did last week when Mayor Robert Duffy disclosed the 14-year, $250,000-a-year lease in announcing his decision to shut down the ferry. And even Karen Noble Hanson, the Rochester Ferry Co. secretary, no doubt would have been able to readily recollect the existence of the lease agreement if it had been given more public discussion. She insists that there was never time to properly consider a deluge of paperwork related to ferry operations provided by Rochester Ferry Co. staff.

Johnson, breaking a weeklong silence about the ferry's demise, pointed out Tuesday that the lease was mentioned in documents provided this newspaper last summer. But it must not be forgotten that this newspaper had to request those documents through the Freedom of Information law to secure ferry ridership numbers which the Rochester Ferry Co. refused to make available. The documents revealed minutes of a closed-door, conference call meeting of the ferry board's executive committee at which the lease was discussed.

And just as reporters overlooked the significance of a reference to the lease in the FOI document, citizens who reviewed information about the agreement on the city's Web site no doubt did the same.

This kind of openness is all too reminiscent of the Johnson administration's insistence last year that there was sufficient public disclosure of the $1-a-year lease of the Rochester ferry terminal. Never mind that no effort was made to provide details of the possible impact on taxpayers.

Surely, Johnson and the ferry board don't believe their brand of openness truly represented good government practices.

(January 18, 2006) — Who knew what when?

That question has been fodder for media, politicos and talk show hosts ever since officials with the new City Hall administration announced last week that they had "discovered" a 14-year lease between the Toronto Port Authority and the Rochester Ferry Co. LLC.

At his news conference Tuesday, former Mayor William A. Johnson Jr. reiterated what officials with his administration and members of the ferry board said last week: The pact was no secret and was amply documented in public actions by the ferry board.

"One matter that has been widely, and erroneously, reported is a 'secret' lease with the Toronto Port Authority," Johnson said.

But, when it comes to the lease for Toronto terminal space, the most pressing question for the new City Hall administration is not who knew what when. Instead, the question is: Can the city get out from under this 14-year commitment?

And that question might not be answered for months to come. The contract remains in effect as long as the Rochester Ferry Co. exists. And the ferry company, which owns the Spirit of Ontario ferry, needs to stay in existence at least until the vessel is sold.

"They own the boat," Corporation Counsel Thomas Richards said of the Rochester Ferry Co. "They have the contracts. ... The city does not."

Under the 67-page lease contract, the city does not guarantee any outstanding debts with the Toronto Port Authority.

That leaves open the question of liability for any unpaid bills. Former City Corporation Counsel Linda Kingsley said last week that, under the contract, the city should not be responsible for any future years of payments once the ferry company is dissolved.

But current city officials aren't so sure, and say they plan to meet with Toronto Port Authority officials to determine the future of the lease agreement.

Ken Lundy, the engineering and operations chief for the Toronto Port Authority, said the ferry company is current on its payments. Under the contract, the company pays $62,500 (Canadian) each quarter — adding up to a $250,000 annual commitment.

"Nobody's in default in this deal," Lundy said. "They made their first quarterly payment. There's nothing in arrears."

'Nothing nefarious'

On June 13, the Rochester Ferry Co., or RFC, met, and one of the key issues under discussion was the lease agreement, minutes show. The lease was set to start June 28 and last 14 years, according to the minutes. The contract includes provisions for extensions after the 14 years, and even for the possibility of a second ferry operating between Rochester and Toronto.

"The City of Rochester, notwithstanding the expressed desires of the (Port Authority), is not guaranteeing the RFC's obligations, and bears no obligations in the event of a default by RFC," the minutes state.

City Councilman Benjamin Douglas, the president of the ferry board, said Tuesday the lease agreement was the best deal available at the time, and the previous ferry operator — CATS — operated under a similar lease.

"There is nothing nefarious about (the lease)," he said. "We don't gain anything by paying more than we have to. It's the lowest price we could negotiate, and we were continually trying to negotiate a price lower than that."

The lease also requires the ferry company to pay some utility and janitorial costs for operation of the Toronto terminal. The company paid a little more than 7 percent of the utility costs and paid janitorial costs based on the percentage of the terminal used by ferry management, Lundy said.

The contract also established a mediation and arbitration process to settle disputes, with Canadian courts serving as the ultimate arbiter. (Hmmm.) Neither city officials nor Port Authority officials will say whether they expect to use the formal process to negotiate a settlement.

City Council voted Tuesday night to spend $9.4 million to resolve outstanding ferry-associated costs, other than the debt to purchase the vessel. Under the legislation, $3.1 million is estimated to cover the cost of continuing or terminating ferry contracts, including those with Bay Ferries, the management company, and the Port Authority.

Discussions 'really limited'

On Tuesday, Johnson chafed at what he said was the perception created by the media, the Duffy administration and ferry company board member Karen Noble Hanson that the lease agreement was a secret.

Information about the lease agreement was available in the June 13 ferry board minutes and even on the city Web site, Johnson said. He noted that the Democrat and Chronicle had copies of those minutes, obtained through a Freedom of Information Law request, but had not reported on the lease until Duffy cited it last week when announcing that he planned to stop subsidizing the ferry. (The Democrat and Chronicle filed the FOIL request in August in an attempt to obtain ferry ridership numbers that the ferry company had refused to release.)

Democrat and Chronicle coverage on Jan. 11 noted that ferry board members and City Council members said the lease was no secret to them, and was an expected expense to ensure the availability of the Toronto terminal.

Hanson, ferry executive committee member and secretary, said in a Jan. 12 Democrat and Chronicle story that, while she knew about the annual fees paid to the Port Authority, she never actually saw the 14-year contract and first learned of it from the Duffy administration weeks ago.

A review of the minutes of the June 13 meeting shows that Hanson, in fact, made the motion to approve the lease — and later signed the minutes of that meeting. Hanson said Tuesday that she participated in that meeting via conference call.

Hanson, who was criticized by Johnson Tuesday morning for her comments in the Democrat and Chronicle last week, said Tuesday afternoon that she doesn't recall whether she saw the actual lease contract, and regretted if her recollection was faulty about some of the specifics that were discussed. (Ahhh.. the 'I Forgot' Defense.)

Hanson, chief financial officer for the Episcopal Diocese of Rochester, (How'd she get hired for THIS position with such a 'faulty' recollection?) told the Democrat and Chronicle last week — and reiterated Tuesday — that she had wanted staff to try to renegotiate the costs of the lease at a later time.

Regardless of "who knew what when," the major issue was the lack of time to address concerns about contracts because of the constant pressure to ensure the ferry operated, Hanson said.

"The opportunity to have real discussions about contracts was really limited," she said.

In the end, the contract — though portrayed by the Duffy administration officials as a surprise to them — had little to do with the decision to end ferry operations, Richards said.

"I wasn't that surprised" that there was such a lease, he said. "We bought the boat. We had to take it to Toronto to dock it.

"Let's suppose Toronto gives it to us for free," he said of the terminal. "It's not enough (to keep the ferry afloat financially)."

But Toronto's insistence on the lease costs proved something else, Richards said.

"It shows that nobody else was willing to put any money into this venture, that nobody else was willing to take the risk," he said.  (Cut the crap.  Toronto saw a dud and didn't want to buy into it.  That's not avoiding a 'risk'; it's avoiding a 'failure'.  Simply because Rochester couldn't -- or wouldn't -- see the ferry as a business destined to fail, in no way obligates Toronto to follow suit and dive headfirst into a major flop as well.)

GCRAIG@DemocratandChronicle.com

(January 18, 2006) — Interested buyers for the high-speed ferry so far are from New York City and Turkey, Mayor Robert Duffy said Tuesday, adding that the ship most likely won't be sold until summer.

"There obviously is some interest," Duffy said, explaining that the Turkish inquiry was made by an intermediary that operated in the same role for Istanbul Fast Ferries last year. "We have not set up a conference call yet. I hope to do that this week."

Officials warn that what lies ahead is a methodical dismantling likely to frustrate residents who want things to happen more quickly. As Duffy said, there is no urgency to unload the ship, but "if it sits there for an inordinate amount of time, I think it's just a reminder."

One week after Duffy announced the city was getting out of the ferry business, City Council approved borrowing up to $9.4 million from city insurance reserves Tuesday night to pay shutdown expenses. One year ago, the city was in the throes of a rescue mission to save the Rochester-to-Toronto service. The lingering question is the fallout for taxpayers. But the debt to be assumed by the city won't be known until all Rochester Ferry Co. dealings are resolved and the ship is sold.

"We did everything in our power to prevent this day from coming," former Mayor William A. Johnson Jr. said earlier Tuesday, breaking his silence on the ferry shutdown to defend his administration's handling of the project.

Johnson, speaking during a news conference at Mount Olivet Baptist Church, 141 Adams St., refrained from second-guessing Duffy's decision. He made it clear, however, that the service would have continued under his leadership.

Johnson focused his comments on insinuations that his staff wasn't open about its 14-year contract guaranteeing the Toronto Port Authority $250,000 annually. He also clarified that a state and federal investigation into past ferry finances came at the city's request.

"I am disappointed that some people are willing to so easily dismiss this venture as 'ill-conceived, ill-fated and poorly executed,'" Johnson said. "I am angry that anyone would remotely insinuate that there is some malfeasance or cover-up."

Duffy later met with the media at City Hall and stood by his comment that the Toronto Port Authority contract was "discovered," noting, "Nobody ever alleged a scandal." Duffy did not give Johnson a heads-up about his decision, and the two since have spoken only once in passing.

Looking ahead, the reserve funds first will be used to repay at least $2.5 million owed manager Bay Ferries Great Lakes LLC. Duffy said that could happen as soon as next week. A separate matter involves breaking a contract with Bay Ferries, but the Canadian company must remain in place as it employs the skeleton crew that will maintain the ship until it is sold, said Thomas Richards, the city's corporation counsel.

Richards is part of a three-member ferry team that Duffy appointed to guide the process. Additionally, a senior staffer in the Department of Environmental Services is being assigned to work the project full time. Richards said he wants to get advice from people in the business and possibly hire a broker before going much further.

"We're going to have to be patient," Richards said. "I know that's going to be frustrating for people because they want this thing to be done."

The $9.4 million should cover all envisioned expenses through July or mid-August, Duffy said. If the ship is not sold by the end of March, the insurance must be renewed. In June, the warranties come due. Those two expenses alone total $800,000 and are included in the request.

"It's a lot of money," Duffy said of the $9.4 million. "It's an awful lot of money. It's a big chunk of the reserve funds."

The money will be drawn from the city's $12.4 million insurance reserve, maintained because the city is self-insured against lawsuits and outside claims.

Whatever is borrowed will be repaid once the ship is sold. Duffy has said the city should expect no less than $20 million for the ship it bought for $32 million last February. So far, he said, no offer has been made.

In terminating ferry service, Duffy rejected a plan for $11.5 million in external borrowing to keep the operation going.

"The one advantage I had was I came into this without having a strong personal attachment to the project," Duffy said.

Johnson has denied he was enchanted by the ferry project, instead painting it as a means to an end — restoring the Port of Rochester to its once-prominent place as a destination.

"That was the vision we pursued, and the ferry was one of the tools to achieve it," Johnson said.

"Was it possible to achieve? We will never know."

BDSHARP@DemocratandChronicle.com