SSA Governors Approve High Speed Ferry License; Service Begins Next
Year

By JULIA WELLS
Gazette Senior Writer

NANTUCKET - Amid a complicated tangle of legal maneuvers and
financial acrobatics, Steamship Authority governors voted yesterday to
ink a deal that will allow a private operator to begin running
high-speed passenger service between New Bedford and the Vineyard next
summer.

The deal is contingent on an elaborate plan to convert the passenger
ferry Schamonchi to a private operation, and also a final agreement with
the city of New Bedford to share the profits from parking revenues.
Converting the Schamonchi to a private operation will allow the boat
line to make an end-run around the Pacheco Act, the state privatization
law that now applies to the SSA.

"I feel confident that what we are doing here is conservative
financially, but I also know we are doing something radical," said
Vineyard boat line governor Kathryn A. Roessel.

"It's against many odds that we would ever come to this
day," said Falmouth governor Robert Marshall. "It's a
first step in mitigating traffic issues. Let this be an overwhelming
success and who knows what comes next."

The comments came during the monthly boat line meeting held on
Nantucket yesterday morning. SSA governors voted 4-0 with one abstention
to sign a license agreement with New England Fast Ferry, a private
consortium, to run year-round high-speed ferry service between the
Whaling City and the Vineyard.

The vote ends months of negotiations and six years of tug-of-war
between the Vineyard and New Bedford over opening up a new ferry
service.

"Now the real work begins," said James Barker, a partner
in New England Fast Ferry, after the meeting yesterday. Mr. Barker said
promotion and marketing for the new service will begin immediately.

Nantucket governor and board chairman Grace Grossman abstained from
the vote yesterday, noting her objections for the record based on
financial and policy reasons.

"I am against this but I will abstain because this is a
Vineyard issue," Mrs. Grossman said.

Mrs. Grossman was especially critical of the plan by the boat line
to pay a $250,000 subsidy to a private operator to take over the
Schamonchi.

"I find it difficult for a public authority to subsidize a
private carrier. I find it unacceptable," she said.

About 100 Nantucket residents crowded the large instruction room at
the Nantucket High School for the meeting. Many had local issues to take
up with the boat line board, but they were forced to wait until after
the license deal for the fast ferry for the Vineyard was completed.

The terms of the deal include the following:

* The SSA will issue a license to New England Fast Ferry to run
year-round high-speed passenger service between the State Pier in New
Bedford and the Vineyard, beginning next summer and running through
September of 2011. Management calls the contract a seven-year deal, but
in fact the agreement allows the operator to run for eight seasons. Two
150-passenger ferries will ply the route into both Oak Bluffs and
Vineyard Haven in the summer months and only into Vineyard Haven in the
winter months. The second ferry will not be built until the second year
of operation.

* The boat line will convert the Schamonchi to a private
operation by putting out a request for proposals (RFP). The SSA will pay
a maximum subsidy of $250,000 to the successful bidder, and it will also
indemnify New England Fast Ferry in the event that there is a violation
of the Pacheco Act. New England Fast Ferry is expected to be a bidder;
Mr. Barker said yesterday that the company is in fact required to be a
bidder under the terms of the license agreement.

* After seven years the boat line has the option to take over
the fast ferry operation by leasing the eight-year-old boats for $30,000
a month, or $720,000 a year, for three years.

* New England Fast Ferry will pay the boat line a $1.5 million
performance bond in the first year of operation only. This is a change
from an earlier requirement for a $3 million performance bond.

* New England Fast Ferry will pay the boat line a license fee
based on the number of passengers it carries.

* The SSA will share parking profits with the city of New
Bedford; a current draft agreement calls for the city and the boat line
to share profits 50-50 with the split changing later to 60-40 in favor
of New Bedford. The agreement is not yet final.

The vote to convert the New Bedford route to two private ferry
services comes over the vocal objections of many, including Vineyard
port council member Marc Hanover and Steamship Authority employees, who
say the boat line should run the service itself.

A meeting was held on the Vineyard Tuesday night to discuss the
details.

Yesterday SSA chief executive officer Fred C. Raskin ran through the
numbers one more time. Assuming that the new ferry carries 130,000
passengers, Mr. Raskin said the boat line would lose about $200,000 a
year if it ran the service itself, while it expects to make about
$315,000 under the license agreement with New England Fast Ferry.

But Mr. Raskin agreed that the numbers are built on the most
auspicious assumptions. "I have seen few financial analyses that
have more assumptions built into them than this one," he said.

Privatizing the Schamonchi is expected to reduce operating losses.
Bought by the boat line three years ago for $1.2 million, the Schamonchi
has been losing $800,000 a year and it is expected to lose at least that
much again this year.

SSA managers admit that they are taking a gamble, because if the
fast ferry is successful the boat line will lose revenue. But Mr. Raskin
said he is comfortable with the decision to license a private operator
because the market is so uncertain.

"I continue to have questions about the economic viability of
a fast ferry service, but I have been wrong before," he said.
"But there is not unanimity at the Steamship Authority over
this," he added.

Ms. Roessel agreed.

"The only risk to our core business is if this is successful.
But if it fails it costs us nothing," she said.

Nantucket residents had little to say about the fast ferry contract,
save one. Nat Lowell criticized the plan for winter high-speed ferry
service.

"You're selling out your year-round residents by telling
them they would rather go to New Bedford as a passenger in the winter
for $40 when it costs $50 to take a car off the Island through Woods
Hole. There isn't a human on this planet who would make the [New
Bedford] choice - but of course we aren't on this planet
anymore," Mr. Lowell declared.

George Leontire, the former New Bedford city solicitor who is known
for his bombastic style, had only words of thanks.

"This may benefit both communities if it works," Mr.
Leontire said. Among others, he thanked J.B. Riggs Parker, the former
Vineyard boat line governor who favored high-speed ferry service to New
Bedford and who masterminded the purchase of the Schamonchi three years
ago. Mr. Parker's tenure was short and he was not reappointed by
the Dukes County Commission.

"Riggs Parker broke the ice and he paid the price for
it," Mr. Leontire said.