N.Y.C. Ferry System Lost Track of $224 Million, Audit Finds

The agency in charge of running New York City’s ferry system failed to report nearly a quarter-billion dollars in costs during the administration of Mayor Bill de Blasio, the city comptroller announced on Wednesday in a 50-page audit.

“We rely on the city to be honest in how much things cost so that we can make clear, shared decisions about where the money is going,” the comptroller, Brad Lander, told reporters. “When hide-the-ball is played with any amount — certainly with a quarter of a billion dollars — you can’t have confidence that your city is providing 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, the E.D.C. made excessive payments to Hornblower and failed to hold the operator accountable to the contract it signed.

Fred D’Ascoli, the chief financial officer for the development corporation, rejected some of Mr. Lander’s findings, in a letter.

“We believe that relevant data was misrepresented, key facts were misconstrued, or N.Y.C.E.D.C.’s contractual agreement with the operator of the N.Y.C. Ferry was misunderstood,” Mr. D’Ascoli wrote.

Asked to comment, Mr. de Blasio said he had not reviewed the full report and its 11 recommendations. The development corporation agreed to follow some of the suggestions, including to solicit bids for a new system operator to possibly replace Hornblower when its contract ends next year. But it has denied overpaying Hornblower by $12 million, which the comptroller had calculated based on its audit.

“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,” Mr. de Blasio said in a prepared statement. “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. ”

Mayor Eric Adams, meanwhile, said through a spokesman that his administration was “keenly aware there is room for improvement,” adding that his staff was working on a plan to ensure that the ferry system was financially sustainable, and more accessible to those who needed it.

The ferry system, highly subsidized by the city but often serving more affluent riders, was a focus of Mr. de Blasio during his two-term tenure as mayor. In 2015, he unveiled a plan to spend more than $325 million on a fleet of custom-built ferry boats and docks — but by 2019, those costs had nearly doubled.

According to the Citizens Budget Commission, a nonpartisan, nonprofit civic organization, New York’s ferry system is estimated to have one of the nation’s highest transit subsidies per ride at $9.34, compared to $1.05 for the subway.

And the commission also found that the average subsidy for each passenger in the system’s first year of operation in 2017 was $10.73, far more than the de Blasio administration’s original estimate of $6.60.

The comptroller’s new report estimates that the subsidy was $12.88 in fiscal year 2021.

According to the audit, the development corporation accumulated $758 million in ferry-related expenses between July 1, 2015, and Dec. 31, 2021, but only reported $534 million in expenses.

The comptroller’s office said several of the development corporation’s decisions cost millions in unnecessary expenses, including the purchase of vessels at higher-than-market costs.

In one case, the audit said, the development corporation ordered and paid Hornblower $8.4 million for a Rockaway Class vessel model but received a River Class model instead that the agency later valued at $5.6 million. The E.D.C. never requested that Hornblower refund the $2.8 million difference.

In a prepared statement, a representative for Hornblower said that the company has “continually worked to deliver quality transit options at affordable fares while expanding the ferry system” and noted that it returned $1 million in scheduled payments from the city while ridership numbers dropped during the pandemic.

Hayley Richardson, a spokeswoman for Transit Center — an advocacy foundation for urban mass transit — said the city should reduce subsidies to the ferry system, urging officials to use those savings to improve bus service, used primarily by low-income people who do not have cars and live far from the subway.

“In light of the Comptroller’s damning report, it’s essential for Mayor Adams to direct the E.D.C. to seek an open-bidding process when the Hornblower contract expires in 2023, and to instill far more disclosure and transparency in the contract,” she said, noting that a stronger bus network “would have a much bigger impact on improving transportation access and outcomes for everyday New Yorkers.”

Kirsten Noyes contributed research.

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