Audit Finds $224 Million In Underreported Prices In NYC Ferry System 

New York, NY – New York Metropolis Comptroller Brad Lander launched an audit displaying NYC Financial Improvement Company (EDC) underreported practically 1 / 4 of a billion {dollars} in NYC Ferry expenditures throughout former Mayor Invoice de Blasio’s Administration. EDC incurred a complete of $758 million {dollars} in complete ferry-related expenditures from July 1, 2015 by means of December 31, 2021, but solely reported $534 million as ferry-related bills in its audited monetary statements and different data. The entire Metropolis subsidy-per-ride is almost double the unique estimate of $6.60 and has been persistently underreported.

The audit additionally discovered that a number of choices — together with the early termination of the earlier East River route operator’s contract and lack of correct oversight over vessel acquisition — resulted in as a lot as $66 million in pointless bills. The audit’s many findings collectively point out poor oversight and a failure to carry the operator, Hornblower, accountable to the fiscal phrases and situations of their contract. 

The Comptroller made 11 suggestions geared toward bettering oversight over the ferry system and defending the fiscal integrity of New York Metropolis. EDC accepted a few of the suggestions for offering enhanced transparency and agreed to problem a brand new RFP for the system operator. Nevertheless, they refused to incorporate a full accounting of the Ferry system in its audited monetary statements, or to hunt recoupment of roughly $12 million in overpayments to Hornblower. 

Key highlights from the audit’s findings embody:  

Undisclosed Bills 

Whereas the de Blasio Administration’s EDC reported spending $534 million on ferry operations from July 1, 2015 by means of December 31, 2021 in its monetary statements and different data, auditors discovered they really incurred at the least $758,517,560 in ferry-related bills. A evaluation of different monetary data, together with fee lists offered for this audit, discovered a further $180,960,344 in capital bills and $43,470,732 in working bills.  

Subsidy Larger than Projected or Reported 

Earlier reporting indicated that the NYC Ferry system operates at a deficit and that the Metropolis’s subsidy is larger than the $6.60 per experience initially projected. By calculating the subsidy based mostly on a extra correct evaluation of the actual working prices, auditors discovered that the precise Metropolis subsidy has been persistently larger than reported. In Fiscal Yr 2021, the Metropolis subsidy amounted to $12.88 per experience, 50% larger than the $8.59 that EDC reported.  

The most important component of this understatement is EDC’s determination in 2018 to cease together with depreciation in calculating the whole value, a observe the Metropolis had used from 2002 till 2017. The Metropolis eliminated capital bills from its calculation in 2018, shortly after then-Mayor de Blasio introduced a $300 million capital funding within the ferry system.

Interval  Reported  Precise 
FY 2018  $10.72   $12.80  
FY 2019  $9.34   $11.44  
FY 2020  $10.59   $14.57  
FY 2021  $8.59   $12.88 

Poor Monetary Administration 

A number of of EDC’s choices resulted in tens of hundreds of thousands in pointless bills, together with buying vessels at higher-than-market prices in addition to early termination and switch of the East River contract. 

  1. The Comptroller’s evaluation of vessel prices discovered EDC paid $34 million in questionable vessel bills to Hornblower, which was charged with overseeing acquisition and development of vessels. In 2016, EDC ordered at a mean of $4 million per 150 River Class vessel and $7.1 million per 350 passenger vessel. In 2018 and 2019, they ordered at a mean of $5.8 million per 150 River Class vessel and $9.1 million per 350 passenger vessel, a worth improve that far outstripped the speed of inflation. In a single case, EDC ordered and paid Hornblower $8.4 million for a “Rockaway Class” vessel, however acquired a “River Class” vessel that the company later valued at $5.6 million. EDC by no means insisted that Hornblower refund the $2.8 million distinction.
  • Billybey initially operated the East River route beneath a five-year settlement with EDC, however EDC terminated the contract practically three years early, incurring further prices of $21 million to Billybey for early termination and $3 million to Hornblower for the transition. 

Contract Enforcement and Overpayments to Hornblower 

Auditors discovered that EDC’s weak enforcement of contract provisions resulted in at the least $3 million of unsubstantiated funds to Hornblower. These included failure to submit documentation of the East River early activation prices, questionable calculation of administration incentive charges, unjustified ticketing infrastructure and advertising prices, and different miscellaneous overpayments to Hornblower. EDC additionally failed to make sure compliance with sure insurance coverage necessities.  

The audit makes 11 suggestions. EDC agreed with two, partially agreed with three, acknowledged that it’s already in compliance with two, and disagreed with 4. 

  • EDC agreed to supply enhanced monetary reporting on its web site, however didn’t decide to disclose all ferry-related expenditures in its audited monetary statements.
  • EDC agreed to incorporate some further “non-Operator” prices within the subsidy-per-ride calculation (e.g. the Metropolis’s value in sustaining the ferry landings), however refused to incorporate capital asset depreciation, as had been the Metropolis’s observe from 2002 by means of 2017. 
  • EDC agreed to problem a brand new RFP to function the system.
  • EDC refused to hunt recoupment of overpayments to Hornblower totaling roughly $12 million.   

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