Rochester's ferry crisis kicked into high gear on Wednesday, when two companies that financed the boat began foreclosure proceedings.
A very possible outcome: A court will permit the lenders --- ABN AMRO Bank and EFIC (the Export Finance and Insurance Corp.) to take the boat and sell it to recoup the $31.5 million they have loaned the ferry's owner and operator, Canadian American Transit System.
There's still the possibility that the ferry will stay in Rochester, taken over by the City of Rochester --- or even kept and operated by CATS. But the foreclosure certainly moved the ship into very troubled waters.
"This makes what the city is trying to do even more urgent," said the city's corporation counsel, Linda Kingsley. CATS, said Kingsley, has three options: "They can very, very quickly come up with sufficient private investors to save their operation. They can start negotiating on what was a fair deal, for the city to buy the boat. Or they can let it go in foreclosure. It's really in their hands right now."
The city, said Kingsley, will continue to pursue its plan to create a public authority to buy the ferry. But, she said, "it will become a much more rushed process."
And although the city would attempt to buy the boat in a foreclosure sale, said Kingley, "there is no guarantee that someone else might not outbid us. And then there goes the boat and all that public money that's been put in."
"I truly believe that if we're not well on our way to solving this problem by the end of December, we will not be able to save the boat."
EFIC, said Kingsley, "has made no secret that they would prefer to solve the problem here," with either CATS or the city. "It's not a joy for them to go through foreclosure and move the boat," she said.
But, she said, "they see time passing, and they see no progress from CATS. We've told them that we've made CATS an offer and that they rejected it."
The city's plan must be approved by city council --- and the state legislature must approve establishing the public authority. And some local legislators have expressed concern about the plan.
Might EFIC officials be as worried about the city's possibilities as they are about CATS?
"They've got a right to be concerned," said Kingley. "There are obviously some dissenting opinions out there."
If the public authority is a roadblock, could the city assume control of the ferry any other way? "We're looking at what other means there are, if any," said Kingley.
Another bombshell in the story of Rochester's Fast Ferry dropped last week, when Mayor Bill Johnson announced that the city wants the state to create a public authority that would buy the ferry and resume its service.
The ferry's owners, Canadian American Transit Systems, ran out of money and abruptly shut service down in September after only two months of operation. Now the ferry sits moored beside its terminal in Charlotte, impounded ("arrested," says Johnson) because of CATS' debts to fuel companies and other providers.
Since the shutdown, CATS has tried to come up with refinancing plans that would satisfy its principal lenders. But the lenders --- including the city ---have rejected those plans. And while there has been talk of some local private investment, it hasn't materialized.
Now, Johnson says, the situation is critical. If there isn't a viable plan to resume service soon, he says, the senior lender --- Australia's Export and Finance Insurance Corp. (EFIC) --- will sell the boat to recoup its money. And with no other plan pending, the city is moving --- aggressively.
But the city's proposal doesn't sit well with CATS. The company could be out of the ferry business entirely if the city's proposal becomes a reality, even though Johnson says he'd like to maintain CATS' service infrastructure and resources."Why would we waste our time replicating that when it's already there?" Johnson says.
Tension between the city and CATS escalated late last week, when CATS CEO Cornel Martin accused the city of pirating elements of CATS' business proposals for its own plans. Johnson responded by urging CATS to disclose its business plans to the public. "I don't think they should stand behind anonymity and continue to make these false allegations," he says.
Meanwhile, in Toronto, a permanent ferry terminal will be in place by the end of January. "We're all thrilled up here," says Toronto Port Authority Chief of Operations and Engineering Ken Lundy of the city's proposal to resume ferry service.
And Congresswoman Louise Slaughter says all the red tape that led to CATS paying exorbitant pilotage and Canadian Customs fees, and prevented the ferry from transporting commercial trucks, has been removed.
In interviews with City, Johnson and CATS founder Dominick Delucia discussed the ferry's status.
Bill Johnson here!
Dominick Delucia here!