The agency responsible for running New York’s ferry system failed to account for nearly a quarter of a billion dollars in expenses during Mayor Bill de Blasio’s administration, the city comptroller said Wednesday in a 50-page audit.
“We rely on the city to be honest about what things cost so we can make clear, shared decisions about where the money goes,” Comptroller Brad Lander told reporters. “When Hide and Seek is playing with any amount — certainly a quarter of a billion dollars — you can’t be confident that the city is giving you the truth.”
The report details record-keeping problems at the city’s Economic Development Corporation, a semi-independent agency that runs the ferry network with the private company Hornblower. According to the audit, EDC overpaid Hornblower and failed to hold the operator accountable for the contract it signed.
Fred D’Ascoli, the development corporation’s chief financial officer, rejected some of Mr. Lander’s findings in a letter.
“We believe that relevant data has been misrepresented, key facts have been misrepresented, or NYCEDC’s contractual agreement with the New York ferry operator has been misunderstood,” Mr. D’Ascoli wrote.
Asked for comment, Mr. de Blasio said he had not reviewed the full report and its 11 recommendations. The development corporation has agreed to pursue some of the proposals, including soliciting bids for a new system operator to potentially replace Hornblower when his contract expires next year. But she denied overpaying Hornblower by the $12 million the comptroller estimated based on its audit.
“If there are problems with underreporting at the EDC or by the ferry operators, that needs to be addressed and whatever accountability or reforms are needed should be adopted,” Mr. de Blasio said in a prepared statement. “The continuation and growth of the ferry system is vital to New York City. We need more affordable and accessible transit options connecting the five boroughs more than ever. “
Meanwhile, Mayor Eric Adams said through a spokesman that his administration is “clearly aware that there is room for improvement,” adding that his staff is working on a plan to ensure the ferry system is financially sustainable and more accessible to those who need it.
The ferry system, heavily subsidized by the city but often serving wealthier riders, has been the focus of Mr. de Blasio’s attention during his two terms as mayor. In 2015, he revealed a plan to spend more than $325 million on a fleet of purpose-built ferry boats and docks — but by 2019, that spending had almost doubled.
According to the Citizens Budget Commission, a nonpartisan civic nonprofit, New York City’s ferry system is estimated to have one of the highest transit subsidies in the nation at $9.34 per trip, compared to $1.05 for the subway.
The commission also found that the average subsidy per passenger in the system’s first year of operation in 2017 was $10.73, far higher than the de Blasio administration’s original estimate of $6.60.
The new comptroller’s report estimates the subsidy was $12.88 in fiscal year 2021.
According to the audit, the development corporation accrued $758 million in ferry-related costs between July 1, 2015, and Dec. 31, 2021, but reported only $534 million in expenses.
The comptroller’s office said several of the development corporation’s decisions cost millions in unnecessary costs, including buying vessels at above-market rates.
In one case, according to the audit, the development corporation ordered and paid Hornblower $8.4 million for a model Rockaway Class ship, but instead received a River Class model that the agency later valued at $5.6 million. EDC never asked Hornblower to refund the $2.8 million difference.
In a prepared statement, a Hornblower representative said the company is “continually working to provide quality, affordable transit options while expanding the ferry system” and noted that it has returned $1 million in scheduled payments from the city while ridership has dropped by time of pandemic.
Haley Richardson, a spokeswoman for the Transit Center, an advocacy foundation for urban mass transit, said the city should cut subsidies for the ferry system, urging officials to use those savings to improve bus service, used mostly by low-income people who don’t have cars and live far from the subway.
“In light of the comptroller’s damning report, it is essential for Mayor Adams to direct the EDC to seek an open bidding process when the Hornblower contract expires in 2023, and to bring much more disclosure and transparency to the contract,” she said , noting that a stronger bus network “will have a far greater impact on improving transportation access and outcomes for ordinary New Yorkers.”
Kirsten Noyes contributed research.
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