City underreported NYC Ferry costs by $224M, according to audit

Posted On Thu, July 7, 2022 By

Posted On Thu, July 7, 2022 By In Policy, Transportation

The inaugural NYC Ferry ride with Mayor Bill de Blasio in 2017; Photo © 6sqft

The city agency that operates New York City’s ferry system failed to report nearly a quarter of a billion dollars in expenditures during Mayor Bill de Blasio’s administration, according to a new audit released by City Comptroller Brad Lander on Wednesday. The 50-page audit says the Economic Development Corporation spent $758 million on ferry operations from July 1, 2015 through December 31, 2021, but only reported $534 million. The report also details tens of millions in unnecessary expenses as a result of the agency’s “poor financial management.”

“Walt Whitman waxed poetic about New York City’s ferries, but EDC’s responsibility is to provide adequate oversight and report accurately,” Lander said in a statement. “For a successful 21st-century ferry system, we need more transparent reporting, better cost controls, and a new RFP to operate the system.”

De Blasio made the ferry system–which currently includes six routes with 25 landing stops and costs the same $2.75 per trip as the subway– a priority during his administration. Since first launching in 2017, reports have surfaced about the high cost to the city and the lack of equitable access for all New Yorkers. According to a 2019 survey, more than 60 percent of NYC Ferry riders are white with an average annual income between $75,000 and $99,000.

According to the comptroller’s audit, the city’s subsidy grew to double the initial $6.60-per-trip subsidy projected by the de Blasio administration. In the fiscal year 2021, the city subsidy amounted to $12.88 per ride, 50 percent higher than the $8.59 EDC reported.

De Blasio, who is currently running for Congress, told the New York Times he could not comment on the report because he had not reviewed it. “If there are issues with underreporting at E.D.C., or by the ferry operators, that should be remedied and whatever accountability or reforms that are needed should be adopted,” de Blasio said in a statement to the newspaper.

“The ferry system’s continuation and growth is vital for New York City. We need more affordable, accessible transit options connecting the five boroughs now more than ever.”

Auditors also found EDC paid $34 million in “questionable vessel expenses” to Hornblower, the private company in charge of overseeing the construction of the vessels. In one example in the report, the city paid Hornblower $8.4 million for a “Rockaway Class” vessel but instead received a “River Class” model that was valued at $5.6 million. The agency never requested the $2.8 million difference from Hornblower.

In the report, Lander made 11 recommendations aimed at improving oversight over the ferry system and protecting the fiscal integrity of New York City. According to the comptroller’s office, EDC accepted some of the recommendations for enhanced transparency and agreed to issue a new RFP for the system operator, but disagreed with the audit’s findings.

“We believe that relevant data was misrepresented, key facts were misconstrued, or NYCEDC’s contractual agreement with the operator of the NYC Ferry was misunderstood,” Fred D’Ascoli, EDC’s executive vice president and chief financial officer, wrote in response to the audit.

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