Pin It

Board yet? Ferry gets its company 

The city's decision to get into the ferry business has ratcheted up public scrutiny on the project way beyond 11. And you can bet that each ferry decision the city makes --- up to the bid for The Breeze on February 28 and well beyond --- will be accompanied by loud second guessing.

The latest dialogue on the ferry doesn't concern the boat or the service. It's about oversight.

On January 20, City Council approved the formation of a limited liability company, called the Rochester Ferry Company, that will serve as a board of directors, hiring the operator and overseeing the operation. Nine of the 11 members of the board are either elected city officials or are City Hall administrators. Only two are from the private sector: Charles Barrentine, director of corporate Kodak operating systems, and former Wilmorite executive Karen Nobel Hanson, now director of finance at the Episcopal Diocese.

Since the names were announced, critics have said the board doesn't contain enough real business expertise, let along any experience in the ferry racket. Can a board dominated by ferry supporters in City Hall provide crucial skepticism and outside perspective?

The heavy City Hall representation has its roots in state requirements --- and in the city's pressure to get moving, quickly, on the ferry. The plan had been to have the board be a non-profit organization, and for that kind of unique operation, state law required that 80 percent of board members be officers or employees of the city.

At virtually the last minute, however, city officials learned that the non-profit structure might not pass state scrutiny. The LLC proposal was substituted, and City Council approved it. And Council left the board membership intact.

Explains Mayor Bill Johnson: "[City Council President] Lois [Giess] and I talked about this, and what we agreed to was getting this through council so our lawyers can go to court and file these incorporation papers. Let's get a group of people who are there to oversee it, and then, as we move forward, we can come back and revisit the composition of the board."

"Most of the people on there are people I employ anyway, so they're not gonna object or be in a position to object if we want to broaden the board," says Johnson. "Right now, I want to focus on winning the auction and doing everything we have to do to be in a position to do that."

Members of City Council have expressed confidence in the nine public and two private-sector members of the board. Johnson's comment about City Hall employees toeing the line, however, may generate more concern from critics who want independence and scrutiny on the ferry board.

In an interview early this week, Johnson talked about the structure of the ferry board, including the flurry of public discussion about citizens donating money to help the ferry. An edited version of that interview follows.

City: As a non-profit, the Rochester Ferry Company would have been able to accept grants and private donations. Wasn't that something you were hoping to do?

Johnson: $40 million in private donations is a huge mountain to climb. I've had a number of people who've emailed or written here directly to say they'd like to make a small donation or buy stock. But that's a huge effort. Anybody in the private sector can tell you that raising start-up capital is one of the hardest jobs on earth. And people are looking for a return on their investment.

It's a romantic notion. I think it's great. I mean, I'd love to test the market to find out if people would be willing to put their money up for this enterprise, but we don't have the time for that. When this boat goes to auction, we can't buy it on credit. You've got to pay cash for it.

City: So your plan is to keep the board as an LLC for the foreseeable future.

Johnson: "For the foreseeable future" I think is a good way of putting it.

City: One of the issues that's come up since the board's been appointed is that there's not enough business representation.

Johnson: One of the things that kind of amazes me is, where have these people been? When we put this plan together and when it was approved by City Council in December, the form of this corporation was always known. We stated right then that it would be overwhelmingly public officials and city employees. All of a sudden, on the day of the vote, people come out like they've been asleep for 20 years: "Wait a minute! Why are you doing it this way?" It was never a secret.

People should not underestimate the magnitude of tasks we have to complete to buy this boat. When we buy this boat, if we buy it, we'll be stuck with it. We've got to get it up and operating. We don't want it sitting around in the port for long. We want to launch the service as soon as we can in good weather. I've got people working around the clock on this.

I can understand the level of scrutiny people want to attach to this. But isn't it amazing they don't give the same level of scrutiny to Renaissance Square? People have accepted on face value that there's $250 million out there. They don't know how the money's gonna be spent, what it's gonna buy, and they don't know how it's gonna be operated.

These are questions people might ask as we get closer to fruition on Renaissance Square. But we made an effort to be open and above board on the ferry. You can't tell me about another public project where the business plan was put online for the world to see. And we still get criticized.

City: How extensive have your interactions or discussions with the broader business community been as this ferry plan has evolved?

Johnson: It's very amazing. An article in the Messenger-Post newspapers said how silent this community has been on this project. To be perfectly honest, I hadn't had a lot of time to think about that. But when I read that article, it dawned on me: My phone hasn't been ringing off the hook.

When the word was out that the lenders were pulling the plug, we spoke with two parties who made some indication they were interested in the deal: John Summers of the RUMP Group and [Wilmorite Chairman] Tom Wilmot on behalf of the Seneca-Cayuga tribe. They came and met with our team. Since then, it's like everybody has gone on vacation on this project.

The other day I was at a meeting where a businessman pulled me aside to say: "I'm amazed you don't want to involve more of the business community on this." I said: "Look, we've been operating out in the open. None of these people have called to talk to me."

I'm very interested in knowing what people's concerns and insights are. We're toying with the idea of creating an advisory board that we can meet with as we go along. But there's not a lot of time to meet with people who just want to share an opinion.

We're trying to create some kind of orderly forum where we can convene some people who have the skill sets so we can tap into that expertise. Other than that, we're getting it from people in the industry. We talk back and forth to people in Australia all the time. We're bringing in other folks who know this business. Those are the folks we really want to spend our time talking to, not just having general conversations.

City: A couple things might feed into the public's reluctance to support this venture: the fact that the business community has been quiet, but also the fact that no one's been able to run a ferry without a public subsidy.

Johnson: It was the private sector that had this deal first, and they blew it. I'm not one who worships at the altar of the private sector. I've been in the not-for-profit sector all my life, and I resent strongly those who believe all wisdom is posited in the private sector.

Each time, as we talked to the few people who were interested in this deal, they had specific things they were trying to get out of it. And that ran the cost of the deal up.

We strip all of that. We don't have any shareholders to pay off. And we don't have any profit margins we're trying to hit. What we're trying to do is run an efficient service and make just a little bit of money. Because my view is if you ever run something to break even, you lose money on it. The profitability angle on this is very slim. Any money we make that exceeds our projections gets reinvested in the business.

We know things the general public doesn't know. We know things the business community doesn't know, because they haven't seen CATS' books. We know where we think they went wrong--- not because they were engaged in misconduct; some of their assumptions were wrong. We are committed to not repeating those same miscalculations.

Why do we think we can do this if CATS couldn't, or if the private sector's not interested? The private sector doesn't have all the facts.

City: It's not just what CATS has not been able to do, it's what nobody in the history of the known world has been able to do: run a ferry operation like this without a public subsidy.

Johnson: There's a first time for everything. I'm not arrogant. I'm not stupid. I'm not crazy to run this operation. I was the last person in this administration who came to believe we should do this. I was the one throwing up the most resistance. I didn't think there was any will in this community to throw more public money at this project.

When CATS couldn't come up with a way to keep this going, the only thing we were faced with was that EFIC going to seize the vessel, head to court to slug it out with CATS, and then, if they won, take the boat out of here and sell it to whoever they could. The whole community would have lost.

But we meet with EFIC and they say they've checked the city's financials and we could do this deal. I'm saying absolutely not. Other people --- the Carlsons, the Kingsleys [Deputy Mayor Jeff Carlson, Corporation Counsel Linda Kingsley] --- they're saying we should think about it. But I didn't want to walk down the public-funding path. It's too difficult.

I called a couple of government- and private-sector folks that night, and they said I should explore this, not rule it out. I heard that three or four times. The next morning I went back and shocked everybody by saying I was willing to set aside my objections to see what's possible. It is from that basis we began to develop this plan. It was not brash action on my part.

City: One of the perceptions you hear in the community is that Mayor Johnson's doing this because the ferry's a big part of his legacy.

Johnson: People who think they know me would be shocked to know how conservative I am and how that stuff doesn't matter to me like it matters to others. I've done my job, and I'll walk away without looking back. It won't follow me.

I don't control my legacy. We don't get a lot of credit for the things we're doing, but I got over that a long time ago. It does matter to me that we did what we thought were authoritative studies. And they said this was a venture that was viable and legitimate and that it'll be supported by a significant number of people.

Based on those studies, we raised millions in government money to improve the port, to improve that terminal. It can't be used for anything else. And I don't take lightly kissing off $25 or $30 million public dollars.

Comments

Subscribe to this thread:

Add a comment

Latest in News

Latest in News

Browse Listings

Submit an event

Tweets @RocCityNews

© 2014 City Newspaper

Website powered by Foundation