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Residents question North Ferry hike request: County report calls increases ‘reasonable’

Just prior to the May 20 informational meeting for residents on North Ferry’s rate hike request, a report on the issue from the Suffolk County Legislature was released. The county’s Budget Review Office determined that the increase is “reasonable” in view of the company’s 2020 financial results and projects for 2021.

“The current rate structure is insufficient … to meet the costs of its capital and operating expenses,” according to the report.

“The requested fare increases have merit, and although will not eliminate the risk of an operating loss, should provide sufficient capital for maintaining current levels of service for the public,” the report concluded, saying the request for rate relief should be granted.

North Ferry General Manager Bridg Hunt told those attending the informational meeting via Zoom that the company has been operating at a loss since 2019 and had a profit margin of less than 3% since 2017. North Ferry, owned by the Heights Property Owners Corporation (HPOC), isn’t intended to be a nonprofit company, Mr. Hunt explained. Even if there’s no payment to the HPOC in 2021, the company still owes dividends for the previous two years. Those dividends have been capped for many years at the Consumer Price Index, the average change in prices paid by consumers for goods and services.

The Paycheck Protection Program (PPP) operated by the Small Business Administration provided more than $920,000. Still, that money didn’t offset North Ferry’s loss of about $250,000 in 2020, Mr. Hunt said.

In years past, the company has tried to hold rates steady for residents and commuters who work on the Island. But because of the pandemic, a lot of traffic that paid full price was absent, resulting in 58% of ferry users being those paying discounted fares. The pending request affects both full and discounted fares.

When North Ferry applied for its last rate hike, it used a different model that miscalculated the actual cost of carrying a car, Mr. Hunt said. Using the more accurate method, the ferry service has determined the cost at $9.45, well above what those with discounted fares are paying. The new calculation takes into account the length of vehicles that accounts for how many can be carried per trip.

When much of the ferry traffic came from those paying full fare, it offset the lower discounted costs. But that hasn’t been true in 2020 and wasn’t enough in 2019 to avoid a substantial loss, Mr. Hunt said.

At the request of one questioner, Mr. Hunt outlined a number of capital projects, including the recent purchase of a new boat; necessary adjustments to deal with sea level changes; maintenance and repairs to the existing boats; and improvement to boat slips.

Should regular traffic return this summer with the lifting of so many COVID-related restrictions, will the increases still be needed? Improved full fare traffic would help, but not eliminate the problem that has seen tight margins in 2017 and 2018 and the losses sustained since 2019, Mr. Hunt said.

If the requested rate hike is granted, when might the company come back for another increase?

“I wish I had a crystal ball,” Mr. Hunt said. “We’re running on empty,” he said.

Supervisor Gerry Siller said in talks with those operating North and South ferries, he discovered that both companies were struggling. South Ferry President Cliff Clark issued a statement recently saying there was no current request for a rate hike pending. But if the summer isn’t what he expects to be a return to improved use, he would have to revisit the situation in the fall.

Mr. Siller said he had suggested service cutbacks, but both companies rejected that solution.

The pandemic “almost buried the ferries,” Mr. Siller said.

COVID was hard on the ferry companies, many businesses and individuals, County Legislator Bridget Fleming (D-Noyac) said. She was on the Zoom presentation at the outset, but said she had another commitment so would be watching the session when it airs on Channel 22 in order to share her views with her colleagues. She said she worked with Mr. Hunt and HPOC General Manager Stella Lagudis to ensure products and services were getting to Shelter Island. North Ferry has been absorbing “huge revenue losses” as have many Islanders who have lost jobs or seen their paychecks reduced, Ms. Fleming said.

She characterized the fare hikes over the years as “quite conservative.”

Ms. Lagudis noted that County Legislator Al Krupski (D-Cutchogue) had a representative at the meeting who would be reporting on the discussion.

There were a number of questions about ways of raising funds from other sources.

“Everyone wants someone else to pay,” Mr. Hunt said.

But adding even more costs for trucks making deliveries on the Island would hit residents and businesses with higher fees to receive the goods they order, he said.

Another questioner asked about the possibility of waiving hikes in hardship cases, noting there are many seniors on fixed incomes living on the Island along with individuals with low income levels who would find it difficult to absorb increases.

Mr. Hunt said he would look into that possibility.

Several attendees said the plan to reduce the number of people charged for passage in vehicles being reduced from three to two wouldn’t help them. Some said timing and varied destinations off-Island wouldn’t encourage them to carpool.

The County Legislature will be holding a public hearing in early June. As soon as the time, date and means of accessing that session are available, the information will be carried on the Reporter website.

The full Budget Review Office Report appears on the town website at shelterislandtown.us.