Policy

NYC Ferry is taking on water, audit finds

Comptroller audit finds $224 million in undisclosed expenditures during the previous administration.

Comptroller Brad Lander releasing a report showing that NYC EDC underreported nearly a quarter of a billion dollars in NYC Ferry expenditures.

Comptroller Brad Lander releasing a report showing that NYC EDC underreported nearly a quarter of a billion dollars in NYC Ferry expenditures. Office of New York City Comptroller

The NYC Ferry service launched by former Mayor Bill de Blasio in 2017 is notoriously expensive to operate. In order to keep fares at $2.75 per ride – equal to the cost of a subway or bus ride, and a priority of de Blasio’s – the New York City Economic Development Corporation subsidizes the service.

According to a new report by the New York City Comptroller’s office, the cost of that subsidy is even higher than previously reported though. Comptroller Brad Lander on Wednesday released an audit finding millions in underreported ferry expenses and overpayments to the ferry operator, Hornblower. “The audit that we are releasing today shows that during the de Blasio administration, EDC failed to provide the transparent, accurate oversight and financial management that is required of them,” Lander said at a press conference on Wednesday at the Wall Street/Pier 11 Ferry Landing in Lower Manhattan. 

In a letter included in the audit, Fred D’Ascoli, executive vice president of the New York City Economic Development Corporation, agreed to some of the recommendations the comptroller’s office suggested for improving the oversight and fiscal management of the NYC Ferry. That included providing more financial reporting on EDC’s website and releasing a new request for proposals for operating the ferry after the current agreement is up. But D’Ascoli also pushed back on some of the audit’s findings. “We believe that relevant data was misrepresented, key facts were misconstrued, or NYCEDC’s contractual agreement with the operator of the NYC Ferry was misunderstood…” the letter reads. (More info. on those objections below.)

Though the period under review occurred during the de Blasio administration, a spokesperson for Mayor Eric Adams also weighed in. “Concerns around the system’s finances are well known – the prior administration rushed NYCEDC to establish a large and complex ferry system, and we are keenly aware there is room for improvement,” the spokesperson wrote in an email. “We are working actively on an innovative plan to write a new chapter for the ferry system centered on true financial sustainability and access for communities that need it.”

De Blasio, who is running for Congress in New York’s new 10th Congressional District, responded to the report through his campaign but didn’t address its specific findings. “We haven’t had a chance to review the full report and recommendations, so I can't comment on any specifics yet, but if there are issues with underreporting at EDC, or by the ferry operators, that should be remedied and whatever accountability or reforms that are needed should be adopted,” a statement read.

Here are some of the key findings in the comptroller’s audit.

$224 million – The total ferry-related expenditures that the audit said was not disclosed by the EDC through 2021, roughly $181 million of which was capital expenses and $43 million of which was operating expenses. “According to EDC officials, these expenditures were recorded in its books and records or reported as a pass-through under the Department of Transportation, the Maritime Fund, or the Capital Fund without any indication that these costs were specifically for the NYC Ferry system,” the audit found. The EDC responded that it properly disclosed all ferry-related expenses but would make new financial and operational reports available online. 

47% The share of available vessels used on weekdays in winter of 2021. The audit found that of 38 available vessels, only 18 were used on weekdays in those months, and on weekends it was even less, at 11 vessels. The summer typically sees higher weekend usage, with 24 of 38 vessels used in the summer of 2021.

$2.08, $2.10, $3.98, $4.29 – The amounts by which the audit said the EDC understated the per-ride subsidy cost for Fiscal Years 2018 through 2021, respectively. In order to maintain the $2.75 price per ferry ride for customers, the EDC and the city subsidize the NYC Ferry. In Fiscal Year 2021, the EDC reported that its per-ride subsidy amounted to $8.59, but the audit found that the actual subsidy per ride was $12.88. Originally, the per-ride city subsidy was projected to be $6.60. This understatement, the audit said, was due to the EDC calculating the per-ride subsidy without including the extra ferry-related expenses noted above. The EDC agreed that going forward it would include some additional costs like personnel when calculating the subsidy, but declined to include the depreciation of assets in its calculation of total cost.

$34 million – The amount that the audit estimated was spent in “questionable vessel acquisition costs.” The comptroller’s office found that the EDC overspent when purchasing vessels from the ferry operator Hornblower – including by purchasing some at higher prices than they were valued at. In one instance, a vessel was purchased for roughly $8.4 million but received a different model of vessel valued at $5.6 million. “NYC Ferry vessels were delivered on time, on budget, and at lower cost than nearly all other publicly funded ferry vessel acquisitions over the past 15 years,” the EDC said in response to the audit. “NYCEDC strongly believes that all payments it made to the operator for both vessel acquisitions and operations were financially prudent and in accordance with its agreement.”

$12 million – The total amount that the audit recommends the EDC attempt to recoup in overpayment costs to Hornblower, including the cost differential for the vessel mentioned above, along with mark-ups on vessel repairs and other costs identified as excessive by the audit. The EDC said in response to the audit that it won’t seek these refunds, saying the payments were made to Hornblower in accordance with their overall operating agreement.

September 2023 – The end of the EDC’s current operating agreement with Hornblower. In its response to the audit, the EDC said it would “expeditiously” issue a new request for proposals to operate the NYC Ferry going forward.

1856 – The year that Walt Whitman published his poem “Crossing Brooklyn Ferry,” which Lander quoted from liberally while detailing the findings of his office’s audit. “‘It avails not,’ Whitman wrote, ‘Time nor place – distance avails not,’” Lander quoted. “Cost, however, avails,” Lander said.

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