NYC Ferries asks for new bids, seeks operator to make most money

New York City is once again looking for a company to run its ferry service — and hopes the winner of the next contract ends up profiting instead of millions of dollars in subsidies to keep the service afloat.

The New York City Economic Development Corporation, which oversees NYC Ferry, issued a request for proposals Wednesday looking for a potential replacement for current operator Hornblower Group, whose contract expires next September.

Applicants must include a “revenue-generating plan” focused on offsetting costs, according to requirements published in the Urban Record, and EDC is inviting “creative thinking from private sector respondents” to discuss how to make it profitable.

The EDC will support the proposals through revenue programs that remit the most money back to the city, the agency wrote.

A Hornblower spokesman noted that expiring contracts included revenue sharing for ship concessions and in-house media advertising, as well as fares based on total passenger and revenue figures, and the company planned to put forward new bids.

In a statement to New York City on Wednesday, Hornblower Group chief executive Kevin Rabbit said: “Today, no other operator is better positioned to build on the early success of the system and implement a more innovative approach. A vision for a fair and more accessible New York ferry.”

“We look forward to continuing our partnership with the City of New York and the opportunity to once again demonstrate why Hornblower is the best operator capable of delivering results for millions of everyday New Yorkers.”

Since its launch in 2017 under former Mayor Bill de Blasio, the NYC Ferry has kept millions in taxpayer revenue. Auditor General Bradland revealed earlier this year that the city had invested nearly twice as much as officials initially expected.

THE CITY previously found that the de Blasio administration had donated $23 million to the ferry before stepping down last year, and that the EDC had also misappropriated proceeds from its holdings of Times Square real estate to help pay for the costs.

As THE CITY reported in 2019, de Blasio’s pledge to buy the ships cost the city an additional $369 million. EDC officials confirmed Wednesday that the city does now have all the ships.

Source of income

As part of the request for proposals, the EDC states that new operators must come up with plans to integrate “contactless boarding” by 2025, and will also set service reliability targets related to incentives.

Another big change in the new contract: EDC plans to keep all fare revenue.

In its request, the EDC wrote that any new agreement would provide future operators with bonuses based on certain performance metrics, “incentivizing operators to improve service in a way that promotes passenger growth.”

Sean Campion, a senior fellow at budget watchdog group Citizens Budget Committee, said the day-to-day operation of the ferry should not change much for passengers if the new operator was chosen.

“The original contract expected Hornblower to have everything and run a turnkey system; now City owns everything,” Campion wrote in an email to City.

However, he doubts the new operator will be able to significantly increase revenue.

“It’s certainly possible for operators to come up with new revenue streams or ideas to operate more efficiently or increase marginal ridership, but I’m not sure how much juice can be squeezed,” Campion said.

Set sail for higher fares

Officials said the new search for the operator had been part of the city’s original contract with Hornblower in 2016, which expired on 30 September 2023.

Because EDC is not technically a city agency, but a nonprofit corporation whose mission is to support cities, its contracts are not considered public records.

Discounts are available for seniors and low-income New Yorkers, just two months after Mayor Eric Adams announced that basic ferry fares would be raised from $2.75 to $4 starting Monday.

De Blasio initially wanted prices to be in line with subway and bus fares, but that led the city to subsidize nearly $13 per ride.

The New York City ferry system has 39 vessels covering 6 routes and 25 landings. According to EDC, these ferries carry about 6 million passengers a year. By comparison, subway ridership is about 3 million per day.

Passengers on the ferry system tend to be whiter and wealthier than those who use other modes of public transportation, according to EDC’s own data.

Brooklyn City Councilman Justin Brannan, who represents Bay Ridge and describes himself as a “ferry apologist,” told THE CITY that he hopes those who run the ferry service next year will make it more economically viable.

“How do we make it sustainable, how do we make sure we don’t waste money, how do we make sure it’s not subsidized to unacceptable levels?” he asked.

“Whatever gets us to a place where New Yorkers can rely on buses and subways and the ever-present ferry — that’s where I think we should really focus.”

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