McAllister’s Navy Fires Back

Captain Brian McAllister, president of the Bridgeport and Port Jefferson Steamboat Company, wants to correct the record about what he says are inaccuracies contained in an OIB guest column by Denis O’Malley, chairman of the Bridgeport Port Authority. McAllister and the city have been going at it for quite some time over a variety of issues, including the ferry company’s proposal to relocate from downtown to a new terminal across the harbor in the East End.  Read his response to O’Malley:

On July 16th, OIB printed a guest column by Denis O’Malley, Chairman of the Bridgeport Port Authority, concerning the still-unresolved issues between the Port Authority (a City agency) and the Bridgeport-Port Jefferson Ferry. Mr. O’Malley’s column was polished, made some good points, sounded reasonable, and even said some nice things about the way we operate our ferry company. I will repay the compliment and say that Mr. O’Malley strikes me as a rational and community-minded person. But his column does contain several inaccuracies and omissions, which I believe OIB’s readers should be aware of. I point out these inaccuracies and omissions by underlining his words and inserting my corrections and comments (using bold type) immediately following, right in Mr. O’Malley’s column.

Sincerely,

Captain Brian A. McAllister

President, Bridgeport and Port Jefferson Steamboat Company

Prior to being appointed a Bridgeport Port Authority commissioner, I loved the Port Jefferson Ferry. Even after my BPA appointment in the middle of this lawsuit and the resulting tension, I love the Port Jefferson Ferry. It’s a great operation, well-run, accommodating staff and altogether a pleasurable experience. Brian McAllister has done a great job taking a seasonal ferry service with a very limited schedule and rather than get out of the business as his father suggested, building it up to three boats running 365 days a year. Better service for the passenger, more revenue and profit for the company … And that’s the way it’s supposed to be!

By the way, a significant factor in that growth has been the Water Street Terminal built by the Bridgeport Port Authority. The real factor in the growth of the business has been more than $40 million dollars of private money invested by the PJFC in improvements to the terminals and new, top-of-the-line ferry boats. To summarize the statistics that can be accessed at www.portofbridgeport.com, with BPA’s much more passenger-friendly terminal and 24-hour security, the entire experience made a magnum leap for the better. Ferry traffic has gone from 585,000 people and 281,000 cars in 1994 to what will be over almost 1,000,000 passengers and approximately 500,000 cars and trucks in 2010 2005. In 2009 ferry ridership decreased to about 380,000 cars and trucks and is continuing at about the same level in 2010. This loss of ridership and revenue is attributed to two factors–the recession and the high cost of our fares, due in part to the tariffs imposed by the Port Authority on each trip by each car, truck and passenger.

Unfortunately as has been well publicized, the BPA and Port Jefferson Ferry Company are embroiled in a landlord/tenant dispute a dispute over the Port Authority’s tariffs that has resulted in very expensive litigation. (Because of that litigation, the BPA had to table building a parking garage adjacent to the terminal after spending over $1 million and since then, lost the grant dollars.  The Port Authority went forward with its garage plans without considering the objections of the ferry manager.) Some of the decisions have favored the BPA and some have favored the PJFC. While the tariff was ruled constitutional which is a win for the BPA, the Court ruled that the tariff was excessive and therefore unconstitutional – at the time of trial the Court stated that 57% of the tariff was excessive and unconstitutional, the Court decided that the tariff could only fund benefits to the PJFC and its passenger and that places severe financial restraints on the BPA. Prior to the Court decision, the BPA collected approximately $1.4 million a year (This excludes a tariff surcharge enacted to pay legal fees) which helped fund a number of initiatives, most of which related to other projects and did not benefit the ferry at all.  PJFC collected the tariff from passengers, for which they received roughly $30,000 a year as a service charge, and remitted to the BPA.

This Court decision actually compounded the situation as the BPA is now fighting a class action lawsuit that in all likelihood will also name the PJFC a defendant as well because they were paid to collect the tariff. There is no basis for such a claim against the PJFC. In the long run, the class will receive nothing but the law firms will earn significant legal fees. Not happy about this but that’s our legal system. The BPA and its lawyers also wrongly predicted that our suit challenging its tariff as excessive would fail. The BPA lost that argument in the federal trial court, lost its appeal to Court of Appeals, and the Supreme Court rejected its petition to hear the case. The Port Authority has collected millions of dollars from ferry passengers in excessive and unconstitutional fees.

The other main revenue streams of the BPA would be the monthly rent paid by the PJFC. They are going in to the final year of the 10-year lease and are now paying of $12,700 a month, $152,400 a year for a 1.5-acre (plus or minus) terminal. Given the improvements to the property, many have suggested that the rent is too low but prior to my appointment, the BPA felt this fair due to the tariff revenue collected from passengers. To put that rent in perspective, Derecktor Shipyards currently pays the BPA $250,000 a year in rent that increases to $275,000 in 2013 for an approximately 23-acre shipyard with far less traffic and stress on City services. The court held that our lease payments at the dock are at or above the market rental value.

Because of the severe financial hardship resulting from the Court’s decision, one of the BPA’s efforts has been trying to settle this case by either selling or entering into a long-term lease with the PJFC. Unfortunately that has gone nowhere even after six months of negotiation and two days of settlement mediation by Federal Judge Garfinkel. The PJFC’s appraisal of the terminal’s value is extremely low   and we just can’t seem to get to a number that works.

The BPA opposed the PJFC moving across the harbor to the Coastline terminal property. We believe that the ferry is a benefit to downtown Bridgeport right now with the Intermodal Center concept. More importantly, as urban development changes and downtown becomes more of a residential/entertainment/commercial environment, the ferry plays a key role contributing to the Downtown Bridgeport experience. This trend is being seen in cities all over the country and it’s starting in Bridgeport as well. While there are many frustrated with Bridgeport development and understandably cynical, this trend is happening. The ferry is already a strong component in that growth and can only better Bridgeport even more down the road.

The BPA, supported by the downtown business and political interests, wants to hold the ferry operation captive in its present location at the Water Street Dock, even though the approximately 1.5-acre property is totally inadequate, prevents growth in ferry ridership and causes agonizing traffic delays that discourage passengers from returning.  Unfortunately, neither the BPA nor the downtown interests acknowledge this proven fact.  They believe that the ferry will make downtown Bridgeport thrive. But less than 1% of our passengers go into Downtown Bridgeport. The vast majority get on Route 95 and other roads bound for other destinations. The real benefit of the ferry is to take cars off the highways between Long Island and Connecticut. If the ferry could move to an adequate space on the East End, with faster loading and unloading of cars and easy access to Route 95, we should be able to take about 600,000 vehicles off the highways (as opposed to the significantly lesser number of cars we are currently taking as a result of the inadequacy of the Water Street Terminal). The federal and state governments have supported ferry companies with grants of hundreds of millions of dollars for this purpose, to ease traffic congestion on America’s highways. By trying to keep us at the inadequate terminal, and illegally taxing our passengers with a fee that has proved to be excessive, the BPA has frustrated the state and the federal support of our ferry and has violated the Commerce and Tonnage Clauses of the U.S. Constitution.

Contrary to earlier news coverage and comments, the BPA, very much wants to get out of this litigation nightmare and so does the ferry. However, the BPA (with the support of the downtown business interests) is forcing us to look to alternatives, such as moving the ferry terminal to New Haven, or any other port where we would be welcomed.

As with most commercial disputes, it comes down to dollars & cents. Now there is a much higher value to the Water Street dock because of BPA improvements.  We have not come to agreement with the PJFC over that value. To some degree, I think this may well be because of the finances of the City of Bridgeport , the BPA and Coastline Terminals. The PJFC has been in discussion with all and seems to be playing a war of attrition, working to get a price that is not equitable. (Last week’s P&Z decision, essentially knocks Coastline out of the picture.) The vote at the P&Z was 3-3, with some commissioners not present, and the ferry company has the right to appeal.

Both the BPA and the PJFC have made mistakes in all of this. So too has the City of Bridgeport and the State of Connecticut . Rather than agonizing over real or imagined past wrongs, the BPA and the PJFC have to work this out. But the numbers have to work for both parties.

I sincerely wish that we could work this out with PJFC because right now, only the lawyers are making money

Denis O’Malley

Bridgeport Port Authority Chairman

Corrections and comments in bold

by Captain Brian A. McAllister