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New York City is again looking for a company to run its ferry service — and wants the winner of the next contract to contribute more revenue rather than receive millions of dollars in subsidies to keep the service afloat.
Katie Honan, The City
This article was originally published on Sep 8 11:38am EDT by THE CITY
The city’s Economic Development Corporation, which oversees NYC Ferry, posted a request for proposals on Wednesday looking for a potential replacement for current operator Hornblower Group, whose contract is up next September.
Applicants will have to include a “revenue generation plan” focused on offsetting costs and EDC is inviting “creative thinking from private sector respondents” on how to make it sustainable, according to the request posted in the City Record.
EDC will favor the proposals with revenue plans that funnel the most money back to the city, the agency wrote.
The expiring contract includes revenue sharing on the boat’s concessions and interior media ads, as well as the fares based on total ridership and revenue numbers, noted a spokesperson for Hornblower, which plans to put in a new bid.
“Today, no other operator is better prepared to build upon the system’s early success and implement the vision to create a more equitable and accessible NYC Ferry,” Kevin Rabbitt, the CEO of Hornblower Group, said in a statement to THE CITY on Wednesday.
“We look forward to our continued partnership with the City of New York and the opportunity to once again show why Hornblower is the best operator capable of delivering results for millions of everyday New Yorkers.”
Since its launch under former Mayor Bill de Blasio in 2017, NYC Ferry has kept its prow above water with millions of taxpayer dollars. Comptroller Brad Lander revealed earlier this year that the city had put nearly twice as much money into subsidizing the service as officials originally had projected.
The de Blasio administration gave $23 million to the ferries just before he left office last year, and EDC had also diverted proceeds from its Times Square real estate holdings to help pay for them, THE CITY previously found.
A de Blasio commitment to purchase boats put the city on the hook for up to an additional $369 million, THE CITY reported in 2019. EDC officials on Wednesday confirmed the city now does own all of the boats.
As part of its request for proposals, the EDC noted the new operator must present a plan to integrate “contactless boarding” by 2025 — and will also have service reliability goals tied to incentive payments.
Another major change in the new contract: The EDC plans to retain all fare revenue.
Any new deal will give the future operator bonuses based on certain performance indicators, “motivating the operator to improve service in a way that will promote ridership growth,” EDC wrote in its request.
Sean Campion, a senior research associate for the budget watchdog group Citizens Budget Commission, said the day-to-day operations of the ferry shouldn’t change much for passengers if a new operator is selected.
“The original contract anticipated that Hornblower would own everything and run a turnkey system; now the city owns everything instead,” Campion wrote in an email to THE CITY.
He was doubtful, though, that a new operator could significantly boost revenue.
“It’s certainly possible that the operator comes up with new revenue sources or ideas to operate more efficiently or boost marginal ridership but I’m not sure how much juice there is to squeeze,” Campion said.
Set Sail for Higher Fares
The new search for an operator was always planned as part of the city’s original contract with Hornblower in 2016, which expires Sept. 30, 2023, officials said.
Because EDC is technically not a city agency but rather a nonprofit corporation whose mandate is to support the city, its contracts are not considered public records.
The re-up happens to come just two months after Mayor Eric Adams announced an increase in the $2.75 base ferry fare to $4 a ride — beginning this Monday — with discounts for senior citizens and low-income New Yorkers.
De Blasio initially wanted the price to be consistent with subway and bus fares, but that led to the city having to subsidize nearly $13 per ride.
The NYC Ferry system has 38 vessels covering six routes and 25 landings. The ferries transport about 6 million riders per year, according to EDC. Subway ridership, by comparison, is about 3 million trips per day.
The ferry system’s riders tend to be whiter and wealthier than those using other public transit options, according to EDC’s own data.
Brooklyn City Councilmember Justin Brannan, who represents Bay Ridge and is a self-described “ferry apologist,” told THE CITY his hope is that whoever runs the ferry service next year will make it more financially viable.
“How do we make it sustainable, how do we make sure we’re not hemorrhaging money, how do we make sure it’s not being subsidized at a level that’s unacceptable?” he asked.
“Whatever gets us to a place where New Yorkers can rely on the bus and the subway and the ferry that’s always gonna be there — that’s what I think we should be really focusing on.”
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