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TonyO
September 8th, 2004, 11:07 AM
Rochester fast ferry halts service due to debt

September 8, 2004 — Less than three months after its launch, the high-speed ferry between Rochester and Toronto was docked indefinitely Tuesday night as mounting debt and bureaucratic battles forced its owner to shut down service.

The highly promoted ferry has been a source of pride for the community and was expected to boost the struggling local economy and tourism industry. Roughly 140,000 people have already ridden it across Lake Ontario, and millions in public dollars have been invested.

But now the $42.5 million ferry will sit unused, a devastating blow that could leave a black eye on Rochester for decades.

The company, Canadian American Transportation Systems, accumulated $1.7 million in debt since service started June 18 and says it can't continue those losses. The private owners hope to restart service if they can overcome many governmental obstacles.

But it's unclear if and when service would resume. The owners threw out April 15 as the latest service would restart, yet gave no reason for that date.

"We can't keep bleeding," said CATS President Cornel Martin. "We've got to stop it. Every day we go on, it digs us deeper."

There have always been serious questions about the ship's viability, but officials were shocked it has sunk so quickly. Even with its rocky points, the ferry, named the Spirit of Ontario, seemed to be gaining steam and riders.

"This is a tragedy," said John "Dutch" Summers, a head of the Rump Group, a consortium of Rochester business executives. "We were looking for rallying points and things we could be proud of and things that would differentiate us. The fast ferry fell into our lap, and we let it slip away."

CATS stopped taking reservations Tuesday afternoon. Tickets already purchased will be refunded, the company said.

Laid-off workers on Tuesday night walked out of the new $16 million ferry terminal in Charlotte carrying boxes and desk plants. They declined to comment. The ferry company employed about 200 people. Security shuttered the terminal's doors.

Residents and former ferry passengers were dejected by the ferry's demise.

"This is surprising," said Bob Mattick, 52, of Pittsford, who recently took the ferry. "It was really nice. I'd do it again."

Others say they saw this day coming.

"I knew it would happen, but I didn't expect it to happen so soon," said Rabin Salloum, 41, of Rochester.

Even more stunning is that the project hasn't come close to reaching its full potential.

Toronto just recently started building a permanent terminal on the city's banks. Rochester-area tourism groups were just developing an advertising campaign to draw people from the ferry to Rochester-area attractions.

Businesses were counting on the ferry for new customers, and some ventures are still being built inside Rochester's terminal.

"I'm ... disappointed in (CATS)," said Louis Bellanca, co-owner of Bellanca's Portside Restaurant on Lake Avenue, near the terminal. He blamed the company "for not communicating with politicians and with their customers. Businesses were really banking on them for future customers."

From the onset, CATS has faced scrutiny. The Rochester-Genesee Transportation Authority questioned the company's business plan two years ago, but was eventually cut out of the deal.

"The worst part about this is that some people will say, 'I told you so,' and that's the biggest shame of it all," said state Sen. James Alesi, R-Perinton. "Everybody should have been behind this."

On Tuesday, the company put the blame on issues outside its control. A last ditch effort Friday to get access to $1.5 million in escrow from financial backer Australian Export Finance and Insurance Corp. and additional money from other private sources failed, Martin said.

Contacted Tuesday night in Australia, EFIC spokeswoman Gabrielle Smith said the government agency had just learned that CATS stopped service. She said EFIC officials plan to be in Rochester next week to talk with CATS.

Austal Ships, the Australian company that built the ferry and is an investor in CATS, declined comment.

The ferry has experienced a string of bad luck. First, it was damaged in a docking accident in New York City as it was being delivered to Rochester. Then, the ship's engines broke down and required $1 million in modifications.

Those incidents happened before CATS took ownership of the vessel and delayed the maiden passenger voyage by seven weeks. It was originally scheduled to set sail May 1.

Since then, the company says it has incurred unexpected bills: $6,000 per day in pilotage fees, $2,500 in Canada Border Services Agency fees and higher-than-expected fuel costs. It is also losing out on a possible $18,000 in daily revenue because U.S. Customs and Border Protection haven't allowed commercial trucks on the ferry.

Otherwise, the ferry, nicknamed The Breeze, would have been successful, Martin said. And if the issues can get resolved, service could be restarted any day, he said.

"We had 140,000 passengers over 80 days," he said. "That's more than we need to cover operating expenses."

The woes were seemingly compounded last month when the state Assembly rejected a proposal to allow video lottery terminals on the ship. Gambling was expected to aid ridership, especially during slower months.

Mayor William A. Johnson Jr., the ferry's top booster, spent Tuesday urging CATS to reconsider and asking federal officials for help. He fought hard in 2002 to get the state to provide a $7.4 million grant and a $6.6 million loan for the project. The city has kicked in at least $5 million of its own money.

He called the announcement disappointing and premature, saying CATS should have cut back its schedule — as many ferry services do after Labor Day — to once a day or just on weekends. The company suggested recently it was considering stopping service during the winter.

"They run the risk of sending the wrong message to the public," said Johnson, who said the ferry cannot sit idle all winter and expect to be successful in the spring. "They have to send out the message they will be available."

Despite the problems, passengers have boasted about the ferry's luxuries and smooth ride. The Spirit of Ontario, which can carry up to 774 passengers and 238 cars, features a restaurant, bars, wireless Internet service, two small movie theaters, a business class, a duty-free shop and an arcade. The ship was making two round trips each day. A one-way trip takes about 2 hours and 15 minutes.

If the ship doesn't run again, local officials could have a reclamation project on their hands, including determining what to do with the ship and how to make the best of the millions of dollars spent to rehab the Port of Rochester in Charlotte.

And even if service does restart, some officials fear the project's image could be damaged to the point of no return.

Bob Dodge of Rochester showed up at the terminal Tuesday night after hearing the news. He had tickets to ride on the ship today and had planned to see a show in Toronto.

"I think they should have given a few days notice," he said angrily after unsuccessfully trying to get his questions answered at the terminal.

So much development and hope has been built around the ferry that its quick demise seemed unbelievable to many. With many sold-out trips recently, optimism was growing about its long-term success.

"Demonstrating demand was a huge issue for the ferry," said Kent Gardner, director of economic analysis for the Center for Governmental Research in Rochester. "They have really proven the viability of the idea."

About 9:30 p.m. Tuesday, the ferry returned from Toronto to the Port of Rochester, dropping off several hundred passengers. Few knew that they would be the last to take the trip in the short term — or longer.

David and Marilyn Palm went to Toronto on Tuesday morning. No one mentioned anything on the trip over, said David Palm.

"About 10 minutes before our departure from Toronto, they told us, 'Anyone who's not coming back tonight has to get a refund, because there won't be another trip.'" said Palm, of Queensbury, Warren County. "It's a great boat. This was first-rate, first-class. It's too bad."

Sheronda Wilson of Rochester went on the ferry with a friend. "It was like a mini-cruise ... , I am really, really upset that they are discontinuing this. I planned to take it again in a month."

Margaret Maracle of Rochester went to Toronto over Labor Day to visit friends, her first trip on the ferry. She heard the news from reporters in Toronto.

"I couldn't believe it," said Maracle, who said she drives to Toronto at least 10 times yearly. "When I got on the boat, there was a sign that said it was the last voyage. ... It's a good thing I came back tonight. I have to work tomorrow."

TonyO
September 8th, 2004, 11:08 AM
http://www.democratandchronicle.com/news/extra/fast_ferry/images/ferry1.jpg

CATS: Ferry service stops Wednesday

Joseph Spector
Staff Writer

(September 7, 2004) — Canadian American Transportation Systems announced today that it will stop operations Wednesday of the high-speed ferry between Rochester and Toronto, claiming accumulating debt has made it unable to continue service.

The ferry’s halt is a major blow to economic development efforts in Rochester and could be a major black eye for the community for decades.

“This is a very difficult decision, but until the other parties involved fulfill their promises and obligations, we have no choice,” said Cornel Martin, president of CATS, in a news release sent out to members of Rochester’s state delegation.

It’s unclear if and when service will resume. CATS officials could not be reached for comment.

The ferry, which started service in June, has been stung by a series of problems, even before it officially launched.

The private ferry company has been weighed down by some unexpected costs early on, including customs fees and high fuel prices. Also, the U.S. Bureau of Customs and Border Protection hasn’t allowed commercial trucks on the ship yet, depriving CATS of a much-needed source of revenue.

"This is a tragedy. Psychologically, it is very bad," said John "Dutch" Summers, head of the Rump Group, a consortium of Rochester area executives and chief executive of Jasco Tools Inc.

"We were looking for rallying points and things we could be proud of and things that would differentiate us. The fast ferry fell into our lap and we let it slip away."

CATS states in the news release that it has accumulated more than $2.1 million in debt with no offsetting revenues during a seven-week delay of the vessel, after it hit a pier in New York City. Operations were scheduled to begin May 1.

Mayor William A. Johnson Jr. said he’s been pleading with CATS this afternoon to delay the ferry’s closure, saying he and other political leaders were working feverishly to rectify outstanding issues.

He said stopping service would hurt the immediacy of getting the federal government and others to remedy CATS problems.

Johnson said CATS should have cut back its schedule - as many ferry services do after Labor Day - to once a day or on weekends.

“They run the risk of sending the wrong message to the public,” said Johnson, who said the ferry cannot sit idly all winter and expect to be successful in the spring. “They have to send out the message they will be available.”

TonyO
September 20th, 2004, 12:45 AM
Fact-finding pushes on in effort to restart ferry

Background
Canadian American Transportation Systems, the Rochester-based high-speed ferry company, suspended its service between Rochester and Toronto last week after less than three months of operating. Company officials, who hope the $42 million ferry will resume service soon, cited financial problems and government regulations for the shutdown.


Rick Armon
Staff writer

(September 17, 2004) — Financial backers of Rochester's high-speed ferry continued their fact-finding mission Thursday in Toronto, meeting privately with the Toronto Port Authority and Canada Border Services Agency.

Australian Export Finance and Insurance Corp. officials are visiting Toronto and Rochester to assess the Lake Ontario ferry service, which suspended operations last week. The $42 million ship had been shuttling between the two cities for less than three months.

Canadian American Transportation Systems, the private Rochester-based ferry company, blamed the shutdown on financial problems and what it called onerous government regulations.

It wants to resume service and has said that EFIC, an arm of the Australian government, can make that happen by releasing $1.5 million held in escrow. EFIC provided a $33.7 million (Australian) finance guarantee to build the ship and start the business.

Officials involved in Thursday's meetings either didn't return calls for comment or said there was no news to report.

Patrizia Giolti, a spokeswoman with the Canada Border Services Agency, described her agency's meeting as "positive interaction between the groups and discussion of procedural issues."

Sen. Charles Schumer, D-N.Y., said earlier this week that he was assured that EFIC is trying to work out problems and help bring the ship back in operation. Those problems, according to CATS, include higher-than-expected pilot fees, Canadian customs fees, not being allowed to carry commercial trucks and no permanent terminal in Toronto.

Rochester Mayor William A. Johnson Jr. is scheduled to meet with the backers next week.

RARMON@DemocratandChronicle.com

TonyO
October 26th, 2004, 11:49 AM
NYTimes
October 26, 2004

From the First, Rochester Ferry Was Burdened by Failings in Fine Print

http://graphics7.nytimes.com/images/2004/10/26/nyregion/26rochester.ferryxl.jpg
The Spirit of Ontario, which can carry 774 passengers and 238 cars, set off for Toronto for the first time on June 17, but was shut down on Sept. 7.


By MICHELLE YORK

ROCHESTER, Oct. 25 - When a gleaming new ferry arrived in port this summer, it was supposed to lift the spirits of this economically depressed city.

Officials had worked for years on the project, with the city and state investing a total of more than $30 million to make it a reality. The result was a high-speed luxury ferry, the Spirit of Ontario, capable of carrying 774 passengers and 238 cars across Lake Ontario to Toronto in two and a half hours - 30 to 60 minutes faster than the trip by car.

"We look forward to many years of smooth sailing," William A. Johnson Jr., this city's mayor, said in June at the inauguration of the privately run service, which he said would attract tourists and make the city an international gateway.

But after 80 days of service, the $42 million ship was docked and then ordered impounded by a federal judge, its operator deep in debt and creditors knocking at the door. A combination of bad luck and bad planning appears to be largely to blame, and local legislators are calling on the state comptroller and attorney general to find out what went wrong.

"It was a colossal disaster," the mayor acknowledged recently.

It was more bad news for a city that has had more than its share.

Rochester, a city of 220,000, has tried to redefine itself after struggling with years of layoffs by its main employer, Eastman Kodak, and its chronically high homicide rate. When a Toronto newspaper columnist traveled here last year to see why anyone from Toronto would visit, she concluded that they would not, calling Rochester "beleaguered" and "depressing."

Now, with the ferry halted, its owner and operator, Canadian American Transportation Systems, and city officials are accused of ignoring warning signs in their eagerness to move the project forward.

"Taxpayers had very little overview and access to the records, and that was a major flaw in the deal," said George Conboy, president of Brighton Securities, a locally owned investment firm. Mr. Conboy, who examined some of the plans, said that the developers were better dealmakers than business executives, and that they found a receptive ear in the city's mayor.

"The mayor is a very softhearted, well-intentioned man who desperately wanted development for the city," he said.

People here have been dreaming of a Lake Ontario ferry for five decades, ever since two ferry services to Cobourg, Ontario, stopped running. In the late 1990's, two Rochester natives, Dominick DeLucia and Brian F. Prince, took up the idea of developing a high-speed ferry that could whisk people 171 miles across the lake to Toronto.

The two men, friends since graduate school, had made their fortunes at Lehman Brothers in New York City. They formed Canadian American Transportation Systems and spent several years putting together their plan, arranged for financing from Dutch and Australian lenders. Early on, they won the support of the mayor, who said the project was among his top priorities.

"In the upstate area, we don't have many wins," Mayor Johnson said. "We're perceived as gloomy and desperate. This ship was changing all that."

One skeptic was William Nojay, the chairman of the Rochester-Genesee Regional Transportation Authority, which was originally asked to coordinate and administer the public funding for the project.

Pressure to approve the ferry plan was immense, Mr. Nojay said. "We were struggling," he said of the city. "There was a feeling - and there still is - that we need to put Rochester on the map."

During lengthy negotiations, Mr. Nojay said, he became increasingly concerned. He said that the ferry's backers did not have enough capital and that they fought the most basic conditions, including that their financial assets be verified. They also refused to guarantee that Rochester would remain the ship's home port, Mr. Nojay said, and would not agree to disclose future ownership changes.

"Basically, we said, 'This is a half-baked plan; let's develop it further,' " Mr. Nojay said.

He wasn't the only person who was troubled. So were some local business leaders. "Very early on, it was too iffy," said John R. Riedman, a wealthy insurance executive who looked at the proposal and declined to invest. "Nobody wanted to disclose anything to anybody. There were a lot of unanswered questions."

The developers eventually found help from a city agency, the Rochester Urban Renewal Agency, which took over the role as the conduit for the tax money going to the project.

The city agreed to invest $16 million in a new port terminal, made other improvements to the port and loaned the ferry company $1.3 million. State officials agreed to $14 million in financing, made up of a $6.6 million loan and the rest in grants. Mr. DeLucia said he and his partner each invested $2 million. Others invested, too, he said.

The state contribution was less than was hoped for, Mr. DeLucia said, but was enough to get the project going. "We always wanted $20 million, and we got $14 million," he said. "All the parties - the city of Toronto, the port of Toronto, the county of Monroe, the city of Rochester and the Australians - looked at it, and everybody said O.K."

By the spring, the ferry had been built in Australia, and the ship set out for its new home at the port of Rochester. En route to Lake Ontario, the ferry hit a pier in New York City in a docking accident and needed repairs. Almost immediately after that, the engine began malfunctioning.

For seven weeks, the ferry sat idle. The company took in no fare revenue but kept incurring expenses, one of the largest being payroll.

When the ferry began service on June 17, it was well received but already in trouble. The company, distracted by the accident and engine problems, was also unable to resolve other significant issues.

The company tried but failed to have customs fees waived and had to pay Canada $2,500 a day. With stricter regulations emerging to prevent terrorist attacks, trucks, which could have brought up to an additional $18,000 a day in revenue, were not allowed on the ship. The ship was initially registered with the Bahamas Maritime Authority and not the United States or Canadian government, meaning the company had to carry registered pilots on its voyages. That cost $6,000 a day, much more than anticipated, the company said.

The president of Canadian American Transportation Systems, Cornel Martin, said the company had written assurances from various government officials that these problems would be resolved, but they were not.

By mid-July, the company stepped up efforts to gain state approval for video lottery terminals on the ferry, hiring lobbyists in Albany and Toronto and maritime lawyers in Washington. The efforts failed. Meanwhile, gas prices soared, and the company was unable to pay its fuel bill.

Ridership increased in the first months, and many trips in August were sold out. Still, the ferry was drowning in bills. "It was clear by the end of August that financial pressures were building," Mr. Martin said.

When the developers were unable to raise additional cash, they announced on Sept. 7 that service would stop immediately. Ticketholders were not reimbursed.

But while the ship has sat idle since then, its operators have not.

Ferry officials say they are working to renegotiate debt, raise up to $10 million from new investors, put a new management structure in place and resolve the bureaucratic issues. In recent weeks, they have won limited approval for lucrative commercial truck traffic, even in the antiterrorism climate. They've also taken steps to reflag the ship in the event that service resumes.

The Australian financiers, who would not comment, opened the books to Mayor Johnson for the first time after the ferry stopped running. He said he saw no indication of malfeasance. Nor did the developers mismanage money, he said; they simply ran out of it.

United States Senator Charles E. Schumer, who said he had been talking regularly with the Australian financiers since service was halted, said that the ferry had a 50-50 chance of resuming service and that he remained hopeful. On a campaign stop here on Monday, Mr. Schumer called the ferry "an important economic engine for the region" and said, "We hope to get it back and running as quickly as possible."

The company "made its share of mistakes," admitted Mr. DeLucia, who said he was negotiating daily to revive the ferry. Earlier this month, the operator presented a plan to the lenders, he said, and hoped to strike a deal within a couple of weeks.

That was welcome news to Mayor Johnson, who said: "Every day, every where I go, people say, 'You've got to get that ferry up and running again.' "

TonyO
December 20th, 2004, 12:31 AM
Democrat&Chronicle (Rochester)

Australia offers city $40 million to buy ferry

Council likely to vote on proposal Tuesday.

Rick Armon and Gary Craig
Staff writers

(December 18, 2004) — The Australian government is ready to loan up to $40 million to Rochester to save the high-speed ferry for the community.

The Export Finance and Insurance Corp., an arm of the Australian government, would provide "a $40 million line of credit" for the city to buy the ship at an upcoming foreclosure auction and to finance startup costs, according to a plan unveiled Friday by Mayor William A. Johnson Jr.

The proposal calls for no upfront public money to rescue the ferry project, city officials say.

"What we want to do is to be in a position to save this asset, save these services," Johnson said.

The news about EFIC's willingness to loan money was a surprise twist in the ongoing ferry saga. The highly anticipated service to Toronto began in June and carried about 133,000 passengers before the private ferry company, Canadian American Transportation Systems, pulled the plug in early September because of financial problems.

Since then, the $42.5 million Australian-built ferry has sat idle at the Port of Rochester while company officials and others scrambled to try to restore the service. All those efforts have failed — including trying to find private investors to prop up the business and creating a state authority to buy the vessel by issuing bonds.

Under the new plan — which requires the approval of City Council — the city would create a nonprofit corporation to own and operate the ferry service. An 11-member board of directors appointed by the mayor and confirmed by council would govern the corporation.

Nine of the 11 members would be city officials, with the remaining two being citizens.

The EFIC loan, which could be less than $40 million, would go directly to the newly created corporation. The money would be paid back from operating revenues over 15 years at a rate that is expected to typically stay below 5 percent, city officials said.

The city would guarantee the line of credit. EFIC also would allow the city to forgo principal payments for the first two years.

The agreement signals an end to any chance that the city and CATS will work out a private deal to salvage the service, city officials say. CATS general counsel Adam Michael refused comment Friday evening about the city's proposed deal with EFIC.

Johnson said the city is using a conservative business plan, and will have enough ridership to cover the operating costs. He hopes the service will resume in the spring.

The ferry could be a money-maker, city officials say. The city business plan predicts a positive cash flow in the first 10 years of operation. In the first year, the city projects revenues of $19.5 million and expenses of $18.2 million.

The deal's risks

But the plan is not without risks. City officials reluctantly admit taxpayers could be hit up for a subsidy if revenues didn't meet or exceed expenses in any given year — although they say the corporation would be responsible for any shortfall. If the venture failed, the corporation would ultimately have to sell the ship, and the city would be responsible for any portion of the loan that is unpaid.

The plan is structured, though, not to include any public money, said Edward Doherty, city commissioner of environmental services who developed the business plan to operate the ferry.

EFIC, which already has invested more than $22.5 million in the ferry project, has set Wednesday as the latest date for a commitment by the city to pursue the plan. Otherwise, the Australian agency would seek other buyers.

City Council members met in a special work session Friday afternoon to pose questions to the administration about the plan. Their main concern was the risk to taxpayers.

Councilman Brian Curran disputed assurances by the administration that no public funds will be needed. He said there was likelihood that the operation would lose money and require taxpayer subsidies.

Council has hired TransSystems Corp. to study the feasibility of the city taking over the operation.

That report, which will sway their opinion, is expected to be available Monday.

"That's the key piece in my mind," said Councilman Wade Norwood.

Council scheduled a special meeting at 5 p.m. Tuesday to talk further about the ferry and will likely vote on the plan at its regular meeting at 8 p.m. Tuesday.

It is in EFIC's interest to keep the ship in Rochester. The government agency helps finance construction projects for the Australian ferry industry. If the Spirit of Ontario were sold at auction to an operator elsewhere, that would eliminate a potential job for one of the Australian manufacturers supported by EFIC.

EFIC believes "the North American market is a lucrative market" and wants to see the project succeed, Johnson said.

Foreclosure begins

Earlier in the day, a federal magistrate judge decided that the ship would be auctioned off Feb. 28 to repay creditors.

Doherty said he expects the ship to sell for $25 million to $32 million, plus outstanding maritime liens of about $2 million to $3 million.

A deal between EFIC and the city wouldn't necessarily guarantee that Rochester would be the high bidder at the auction, which would be conducted at federal court in Rochester. Bidders must be prequalified.

It was unclear immediately whether an EFIC-city agreement would scare off other potential bidders.

By continuing with the auction process, the ferry's buyer would be assured of a title free of the debts, said city Corporation Counsel Linda Kingsley.

"The way you get a boat with clean title is buying it at a foreclosure sale," she said.

CATS general counsel Michael said after Friday's court hearing that the city thwarted its attempts to revive the ferry. He claimed that in October CATS had a $5 million commitment from some investors and interest from others, though he did not reveal any more details.

"The city of Rochester has unfairly interfered with CATS' efforts to restart service," he said. "But for the city's improper conduct, we likely would have resumed service by now."

The U.S. St. Lawrence Seaway Pilots' Association also announced in court Friday that it plans to join the lawsuit against CATS.

The association is owed about $26,000 for more than a week's worth of pilot services.

RARMON@DemocratandChronicle.com

GCRAIG@DemocratandChronicle.com

Public comment
There is limited opportunity for public comment on the city's plan. People can sign up to speak to City Council at 7 p.m. Tuesday by calling (585) 428-7421. Council is expected to vote at its regular meeting at 8 p.m.

Key dates
Monday: City Council to receive consultant's feasibility report on a city takeover of the ferry. City to begin eviction proceedings against CATS at the Port of Rochester terminal.

Tuesday: City Council scheduled to vote on mayor's ferry proposal.

Wednesday: Deadline for city to agree to borrow up to $40 million from the Australian Export Finance and Insurance Corp. to buy and operate the ferry.

Feb. 28: Auction date for ferry at federal court in Rochester.

The ferry terminal
Rochester wants to toss Canadian American Transportation Systems out of the ferry terminal at the Port of Rochester. The city plans to start eviction proceedings against CATS on Monday, according to City Corporation Counsel Linda Kingsley.
The city claims CATS is in violation of its lease agreement because it no longer is operating a ferry service. CATS attorney Adam Michael said Friday that CATS has not breached any agreement. Maplestar, a CATS subsidiary, might be able to continue as the agent leasing space at the terminal, Kingsley said.

TonyO
February 28th, 2005, 01:48 PM
Democratandchronicle.com

February 28, 2005


Mayor: 'We got the boat at a real good price'



Jeff Blackwell and Rick Armon
Staff writers
In less than one minute of bidding, Rochester's high-speed ferry had a new owner — but not a new home.

The winning bid from the ferry company created by the city to buy it was $32 million. For that, the Rochester Ferry Co. got the ship and a new start on an idea that five months ago looked like a dead end.

There were just two bids on the vessel, which cost $42.5 million new. The auction in a courtroom at the Kenneth B. Keating Federal Building in downtown Rochester lasted less than 60 seconds.

The minimum bid had been set at $22.5 million. MTU Friedrichshafen GmbH, the German company that built the ship's engines, did not bid. Top mortgage holders ABN AMRO bank and the Export Finance and Insurance Corp. of Australia was the first bidder, and bid $29,635,400. There was a slight pause, then the city bid $32 million.

That was it, and the courtroom erupted in applause.

"I think it's a tremendous relief now to be beyond this point," Mayor William A. Johnson Jr. said. "We got the boat at a real good price."

After the auction, city officials and invited guests headed off to the Port of Rochester, where the city had planned a luncheon celebration.

The city's opening bid raised some eyebrows after the auction, with people wondering why the bid was so high considering bidding increments were only $10,000.

"Our feeling is we wanted to send a signal," city Corporation Counsel Linda Kingsley said. "We had made it clear to MTU if they pushed us too far they might end up owning a boat. We threw down the gauntlet and drew a line in the sand."

Anchored at the Port of Rochester, the Spirit of Ontario has been conspicuously idle since Canadian American Transportations Systems discontinued daily service to Toronto in September. The city is hoping to restart daily service by Memorial Day.

But it has a great deal of work ahead of it. The Rochester Ferry Company must decide if it will hire a private company to operate the vessel, or do the job itself.

It also will have to set rates, create a schedule and move forward with marketing the service here and in Canada.

Representatives from Istanbul Fast Ferries, a ferry company from Turkey, attended the auction. They had inspected the vessel in advance of the auction and had considered bidding on the ship, but did not put down the requisite $2.25 million deposit.

General Manager Ahmet Paksoy would not comment after the sale, but released a five-paragraph statement that congratulated and questioned Rochester at the same time.

"The purchase of a ferry boat is a relatively simple affair — however, the operation of such a vessel is a high maintenance activity and requires a high degree of professional management," he wrote. "I trust the city of Rochester has properly prepared itself for the appropriate operator since CATS was unsuccessful after only 80 days.

"On the other hand, it is my personal view that the Toronto-Rochester route is not financially feasible."

He also wrote that the Turkish company wanted to buy the Spirit of Ontario, but realized that "the bid would exceed a reasonable price."

CATS co-founder Dominick Delucia described the auction as bittersweet.

"The sweet part is CATS founders and employees that pioneered this effort with their hearts and souls got what we want — to have this project continue on here," he said. "I'm not going to talk about the bitter part."

Delucia declined to comment on what will happen to CATS.

TLOZ Link5
January 3rd, 2006, 06:06 PM
New York Times

January 1, 2006
Mayor's Popularity Endures Despite His City's Problems
By MICHELLE YORK

ROCHESTER, Dec. 29 - A few days after William A. Johnson Jr. became mayor of this city in 1994, he took a phone call from a constituent concerning a local issue.

The caller was 11. The issue was his neighborhood playground, which was scheduled to close.

Mayor Johnson arranged a breakfast meeting. The boy's mother served pancakes.

Rather than closing, the playground got new equipment.

In Mr. Johnson's 12 years in office, perhaps no other municipal problem has been solved so easily. Like many other cities in the state, Rochester (population 219,000) has struggled with a loss of manufacturing jobs, a flight to the suburbs, and crime.

Mayor Johnson's last year in office has been grim. He has attended the funerals of young murder victims in the latest bout of urban violence and has tried to rescue a bankrupt ferry service to Toronto.

Yet perhaps because of projects like the playground renovation and his accessibility to residents, he leaves office a popular figure. "If you work with him, he'll work with you," said Roxie Sinkler, whose son, Jamaal, now 23, was the 11-year-old activist.

Mayor Johnson, 63, decided not to seek re-election this term, citing a desire for less stress and an easier workload. He leaves office on Sunday.

Sometime in 2006, he plans to start a teaching job at Rochester Institute of Technology. His friends joke that it will be a perfect environment, for he is known for his ability to lecture. "I don't have any regrets," Mayor Johnson said in an interview in his office, which was filled with packing boxes.

His critics say he should have at least one regret: having championed a high-speed, high-profile ferry service, which was supposed to rejuvenate the local economy and turn Rochester into a tourist destination.

Displaying a famous stubborn streak, Mayor Johnson ignored the warnings of business advisers, who said the operation would not be profitable, said William Nojay, a former adviser on the ferry project, and he worked with two entrepreneurs to bring a luxury ferry here in 2004.

The ferry, which crossed Lake Ontario to Toronto in two and a half hours and carried as many as 774 people and 238 cars, was often fully booked. But the business failed after 80 days because of financial and bureaucratic problems.

This year, Rochester took over the project. City and state officials have invested more than $63 million in the ferry, including the costs of building a terminal and buying the fast ferry at a bankruptcy auction.

"He is an honest, good-hearted man," George Conboy, president of an investment firm, said of the mayor, "but I don't believe to this day that he has much business sense."

This summer, under its first year of city control, the service performed dismally, with a $4.2 million operating deficit, layoffs and dwindling ridership in fall and winter. Initially scheduled to run year round, the ferry closed on Dec. 12. Its troubles have made headlines, but the mayor has not wavered.

One of Mayor Johnson's last tasks was to ask the City Council to approve an additional $11.5 million in financing to keep the ferry operating through 2006. But the Council deferred to the incoming mayor, the former police chief, Robert Duffy, who had asked to be involved in the decision.

"If the ferry continues in 2006, it will be out of deference to Bill Johnson," Mr. Nojay, the former adviser, said. "But after that, it will be gone, because the city cannot continue subsidizing $8 million to $10 million losses."

Mayor Johnson insists that the ferry will prove itself. But he has toned down his optimistic language. "If in 2004, it had shut down, it would have definitely become my legacy," he said. "I prefer to be criticized for trying to save it instead of sitting on my hands and doing nothing."

It is that willingness to take on a tough issue that many find appealing. "He really wanted a major success," said a friend and colleague, Pearl W. Rubin. "He tried very hard. But some problems are so complicated, no city administration could deal with it."

One of those was crime. For years, Rochester has had a high homicide rate. The number of killings had declined after the city moved aggressively to dismantle gangs. In 2005, however, a new wave of violence left several children dead and tempered the feeling of progress. "Every year I've been mayor, a young person has died," Mayor Johnson said. "My heart cries out."

Perhaps because of his inability to bring major changes on issues like that one, Mayor Johnson has focused on the more understated, and undisputed, successes of his term.

He helped establish entertainment districts in stagnant areas of the city, kept spending under control and strengthened relationships with the Police Department. As the city's first black mayor, he hired more members of minority groups and made the office more accessible to residents.

"He broke new ground in that way," said Clayton H. Osborne, vice president for human resources at Bausch & Lomb. "Accomplishments like that are not always visible."

©New York Times Company, 2005

speXedy
June 10th, 2006, 02:26 AM
ugh

I always new this was such a bad idea, and our tax dollars had to pay for it. Thank Goodness we got a new mayor and he got ride of that thing. It was a good idea, but why the heck would someone from Toronto come to Rochester? We have NOTHING here other then Xerox and Kodak, and Kodak is going down the tubes. So meh ... if we had a Casino then MAYBE but even then Toronto is a World Class City. Kind of old news, but I live in Rochester, so yea.