NYC’s ferry system underreported $224 million in costs, audit finds

A 50-page audit from the New York City comptroller published on Wednesday found that the agency in charge of running the city’s ferry system failed to report $224 million dollars in costs.

“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 detailed audit found that the NYC Economic Development Corporation (EDC), a semi-independent agency that runs the ferry network with private company Hornblower, failed to report the quarter-billion-dollar discrepancy during the administration of then-Mayor Bill de Blasio.

Auditors blame the discrepancy on under-accounting for rider subsidies, contract termination fines, and overpayment to ferry operator.

Thanks to subsidies, riders only pay $2.75 for each trip on the Ferry. According to the EDC, the real cost of each ride was $8.59. However, the comptroller found that the true cost of those rides was $12.88 per trip, costing the city more in subsidies than was originally claimed.

Additionally, the EDC gave massive payments to Hornblower but failed to keep it accountable for the contract it signed.

"They did not insist Hornblower refund the $2.8 million difference between the $8.4 million vessel they paid for and the $5.6 million vessel they received," Lander said at a Wednesday press conference.

A Hornblower spokesperson said that the comptroller’s report did not state that the company violated its contract with the city in any way.

"We have continually worked to deliver quality transit options at affordable fares while expanding the ferry system to include more neighborhoods so that taxpayers get the most out of their investment in the city’s transportation system," the spokesperson's statement read. "In fact, Hornblower worked with NYCEDC to return $1 million in scheduled payments from the City while ridership numbers dropped during the pandemic.”

Lander responded by saying that either relevant data was misrepresented, key facts were misconstrued, or the contract was misunderstood. However, Lander mostly blamed de Blasio.

"It’s reasonable to guess there was pressure on EDC to put forward info that showed a lower subsidy per ride in a way that would be more consistent with the goals that the mayor had laid forward,” he said.

The report gave 11 recommendations to bring more transparency to the city’s ferry system and better spending of taxpayer dollars. The EDC has agreed to follow some of the suggestions, including the possibility of replacing Hornblower for another operator once their contract ends next year.

New York City’s ferry system is estimated to have one of the highest transit subsidies in the nation, with each ride costing $9.34 compared to $1.05 for the subway.