SSA Governors Approve High Speed Ferry License; Service Begins Next Year
By JULIA WELLS
Gazette Senior Writer
NANTUCKET - Amid a complicated tangle of legal maneuvers and financial acrobatics, Steamship Authority governors voted yesterday to ink a deal that will allow a private operator to begin running high-speed passenger service between New Bedford and the Vineyard next summer.
The deal is contingent on an elaborate plan to convert the passenger ferry Schamonchi to a private operation, and also a final agreement with the city of New Bedford to share the profits from parking revenues. Converting the Schamonchi to a private operation will allow the boat line to make an end-run around the Pacheco Act, the state privatization law that now applies to the SSA.
"I feel confident that what we are doing here is conservative financially, but I also know we are doing something radical," said Vineyard boat line governor Kathryn A. Roessel.
"It's against many odds that we would ever come to this day," said Falmouth governor Robert Marshall. "It's a first step in mitigating traffic issues. Let this be an overwhelming success and who knows what comes next."
The comments came during the monthly boat line meeting held on Nantucket yesterday morning. SSA governors voted 4-0 with one abstention to sign a license agreement with New England Fast Ferry, a private consortium, to run year-round high-speed ferry service between the Whaling City and the Vineyard.
The vote ends months of negotiations and six years of tug-of-war between the Vineyard and New Bedford over opening up a new ferry service.
"Now the real work begins," said James Barker, a partner in New England Fast Ferry, after the meeting yesterday. Mr. Barker said promotion and marketing for the new service will begin immediately.
Nantucket governor and board chairman Grace Grossman abstained from the vote yesterday, noting her objections for the record based on financial and policy reasons.
"I am against this but I will abstain because this is a Vineyard issue," Mrs. Grossman said.
Mrs. Grossman was especially critical of the plan by the boat line to pay a $250,000 subsidy to a private operator to take over the Schamonchi.
"I find it difficult for a public authority to subsidize a private carrier. I find it unacceptable," she said.
About 100 Nantucket residents crowded the large instruction room at the Nantucket High School for the meeting. Many had local issues to take up with the boat line board, but they were forced to wait until after the license deal for the fast ferry for the Vineyard was completed.
The terms of the deal include the following:
* The SSA will issue a license to New England Fast Ferry to run year-round high-speed passenger service between the State Pier in New Bedford and the Vineyard, beginning next summer and running through September of 2011. Management calls the contract a seven-year deal, but in fact the agreement allows the operator to run for eight seasons. Two 150-passenger ferries will ply the route into both Oak Bluffs and Vineyard Haven in the summer months and only into Vineyard Haven in the winter months. The second ferry will not be built until the second year of operation.
* The boat line will convert the Schamonchi to a private operation by putting out a request for proposals (RFP). The SSA will pay a maximum subsidy of $250,000 to the successful bidder, and it will also indemnify New England Fast Ferry in the event that there is a violation of the Pacheco Act. New England Fast Ferry is expected to be a bidder; Mr. Barker said yesterday that the company is in fact required to be a bidder under the terms of the license agreement.
* After seven years the boat line has the option to take over the fast ferry operation by leasing the eight-year-old boats for $30,000 a month, or $720,000 a year, for three years.
* New England Fast Ferry will pay the boat line a $1.5 million performance bond in the first year of operation only. This is a change from an earlier requirement for a $3 million performance bond.
* New England Fast Ferry will pay the boat line a license fee based on the number of passengers it carries.
* The SSA will share parking profits with the city of New Bedford; a current draft agreement calls for the city and the boat line to share profits 50-50 with the split changing later to 60-40 in favor of New Bedford. The agreement is not yet final.
The vote to convert the New Bedford route to two private ferry services comes over the vocal objections of many, including Vineyard port council member Marc Hanover and Steamship Authority employees, who say the boat line should run the service itself.
A meeting was held on the Vineyard Tuesday night to discuss the details.
Yesterday SSA chief executive officer Fred C. Raskin ran through the numbers one more time. Assuming that the new ferry carries 130,000 passengers, Mr. Raskin said the boat line would lose about $200,000 a year if it ran the service itself, while it expects to make about $315,000 under the license agreement with New England Fast Ferry.
But Mr. Raskin agreed that the numbers are built on the most auspicious assumptions. "I have seen few financial analyses that have more assumptions built into them than this one," he said.
Privatizing the Schamonchi is expected to reduce operating losses. Bought by the boat line three years ago for $1.2 million, the Schamonchi has been losing $800,000 a year and it is expected to lose at least that much again this year.
SSA managers admit that they are taking a gamble, because if the fast ferry is successful the boat line will lose revenue. But Mr. Raskin said he is comfortable with the decision to license a private operator because the market is so uncertain.
"I continue to have questions about the economic viability of a fast ferry service, but I have been wrong before," he said. "But there is not unanimity at the Steamship Authority over this," he added.
Ms. Roessel agreed.
"The only risk to our core business is if this is successful. But if it fails it costs us nothing," she said.
Nantucket residents had little to say about the fast ferry contract, save one. Nat Lowell criticized the plan for winter high-speed ferry service.
"You're selling out your year-round residents by telling them they would rather go to New Bedford as a passenger in the winter for $40 when it costs $50 to take a car off the Island through Woods Hole. There isn't a human on this planet who would make the [New Bedford] choice - but of course we aren't on this planet anymore," Mr. Lowell declared.
George Leontire, the former New Bedford city solicitor who is known for his bombastic style, had only words of thanks.
"This may benefit both communities if it works," Mr. Leontire said. Among others, he thanked J.B. Riggs Parker, the former Vineyard boat line governor who favored high-speed ferry service to New Bedford and who masterminded the purchase of the Schamonchi three years ago. Mr. Parker's tenure was short and he was not reappointed by the Dukes County Commission.
"Riggs Parker broke the ice and he paid the price for it," Mr. Leontire said.