Trump Trade Wars: A Look At Winners And Losers Since 2016
by Tom Orlik (Bloomberg) Who Loses in Trump’s Endless Trade War? In 2016, Donald Trump campaigned for the US presidency on a promise to beat China. Once in office, he unleashed a...
New York, NY – New York City Comptroller Brad Lander released an audit showing NYC Economic Development Corporation (EDC) underreported nearly a quarter of a billion dollars in NYC Ferry expenditures during former Mayor Bill de Blasio’s Administration. EDC incurred a total of $758 million dollars in total ferry-related expenditures from July 1, 2015 through December 31, 2021, yet only reported $534 million as ferry-related expenses in its audited financial statements and other records. The total City subsidy-per-ride is nearly double the original estimate of $6.60 and has been consistently underreported.
The audit also found that several decisions — including the early termination of the previous East River route operator’s contract and lack of proper oversight over vessel acquisition — resulted in as much as $66 million in unnecessary expenses. The audit’s many findings collectively indicate poor oversight and a failure to hold the operator, Hornblower, accountable to the fiscal terms and conditions of their contract.
The Comptroller made 11 recommendations aimed at improving oversight over the ferry system and protecting the fiscal integrity of New York City. EDC accepted some of the recommendations for providing enhanced transparency and agreed to issue a new RFP for the system operator. However, they refused to include a full accounting of the Ferry system in its audited financial statements, or to seek recoupment of approximately $12 million in overpayments to Hornblower.
Key highlights from the audit’s findings include:
Undisclosed Expenses
While the de Blasio Administration’s EDC reported spending $534 million on ferry operations from July 1, 2015 through December 31, 2021 in its financial statements and other records, auditors found they actually incurred at least $758,517,560 in ferry-related expenses. A review of other financial records, including payment lists provided for this audit, found an additional $180,960,344 in capital expenses and $43,470,732 in operating expenses.
Subsidy Higher than Projected or Reported
Previous reporting indicated that the NYC Ferry system operates at a deficit and that the City’s subsidy is higher than the $6.60 per ride initially projected. By calculating the subsidy based on a more accurate assessment of the real operating costs, auditors found that the actual City subsidy has been consistently higher than reported. In Fiscal Year 2021, the City subsidy amounted to $12.88 per ride, 50% higher than the $8.59 that EDC reported.
The largest element of this understatement is EDC’s decision in 2018 to stop including depreciation in calculating the total cost, a practice the City had used from 2002 until 2017. The City removed capital expenses from its calculation in 2018, shortly after then-Mayor de Blasio announced a $300 million capital investment in the ferry system.
Period | Reported | Actual |
---|---|---|
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 Financial Management
Several of EDC’s decisions resulted in tens of millions in unnecessary expenses, including purchasing vessels at higher-than-market costs as well as early termination and transfer of the East River contract.
Contract Enforcement and Overpayments to Hornblower
Auditors found that EDC’s weak enforcement of contract provisions resulted in at least $3 million of unsubstantiated payments to Hornblower. Those included failure to submit documentation of the East River early activation costs, questionable calculation of management incentive fees, unjustified ticketing infrastructure and marketing costs, and other miscellaneous overpayments to Hornblower. EDC also failed to ensure compliance with certain insurance requirements.
The audit makes 11 recommendations. EDC agreed with two, partially agreed with three, stated that it is already in compliance with two, and disagreed with four.
Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.
Join the 109,769 members that receive our newsletter.
Have a news tip? Let us know.
Maritime and offshore news trusted by our 109,769 members delivered daily straight to your inbox.
Essential news coupled with the finest maritime content sourced from across the globe.
Sign Up