All aboard!

Predictably, the proposal presented to Council Tuesday night for the City to “collaborate” with the Water Emergency Transportation Authority to get new ferry service up and running at the Seaplane Lagoon by 2020 elicited hosannas and huzzahs from the usual suspects in the audience and on the dais.

Both Chamber of Commerce president Michael McDonough and League of Women Voters doyenne Kate Quick extolled the virtues of a new ferry terminal.  Later on, Councilwoman Marilyn Ezzy Ashcraft pronounced herself “thrilled,” and Councilman Jim Oddie “excited,” by the prospect.  Even Councilman Tony Daysog ended up joining the chorus.

The Merry-Go-Round wasn’t in the room.  (We attend Council meetings only when the former chair of the Golf Commission is speaking).  But had we been there, we would have followed the old Marie Gilmore rule and held our applause.

It’s not that we don’t like ferries.  Indeed, we used to be a regular rider.  And we surely see the marketing value of ferry service located within walking distance of Site A and the “Enterprise” district to Joe Ernst and Alameda Point Partners, and to the City (in trying to entice businesses to move to the Point) .

Still, when we turned off the video, the nagging thought remained:  What if a new Seaplane Lagoon ferry terminal got built by 2020 and nobody came – because all they’d see when they got there was an empty dock?

This wasn’t just our innate skepticism talking.  Democratic presidential candidate Hillary Clinton has taught us to ask the kind of question she routinely poses to Bernie Sanders:  Your proposal – whether it’s free college, free health care, or new ferry service – sounds great.  But how are you going to pay for it?

Alameda Point Chief Operating Officer Jennifer Ott ventured an answer in her staff report and presentation.  And the source of funds she identified wasn’t the Wall Street banks or the “billionaire class.”  Instead, she said the City will be relying primarily on other governmental bodies – federal, state, regional, and county – to foot the bill for getting new ferry service ready to go by 2020.

Before Council, Ms. Ott expressed optimism that the financing plan would work.  “I think there is a realistic path for each , and we’re going to get there,” she said. “But it’s certainly not guaranteed, and there’s some uncertainty, and we need some flexibility to respond to that.”

With all due respect to Ms. Ott, we’re not quite as sanguine as she is that all of the stars will line up the right way.  And if they don’t, the City may find it necessary to tap its own till if it wants to realize the “vision” proclaimed by the planners.

According to the staff report, the new ferry terminal itself will cost $18.2 million to build.  Under the Disposition and Development Agreement between A.P.P. and the City, the developer is obligated to pick up $10 million of this tab, and we know Joe Ernst is good for the money.  But where’s the other $8.2 million coming from?

Ms. Ott told Council that the City will be applying at the end of this month for a “TIGER” grant from the federal government that, among other things, would provide funds for construction of the new Seaplane Lagoon ferry terminal.  The problem, as Ms. Ott herself acknowledged, is that TIGER grants are discretionary – and much in demand.  Indeed, she told us later in an email, “TIGER is extremely competitive so [we’re] not really confident [about getting the grant] . . . .  That is why we are looking for other regional (Measure BB) and state funding sources as well.  [It’s a] multi-prong approach.”

It has to be, since Measure BB alone isn’t likely to do the trick.  Passed in November 2014, the measure generates sales tax revenue to implement the 2014 Alameda County Transportation Expenditure Plan, under which funds are distributed annually to cities throughout the County for transportation projects.  (The City of Alameda got $389,000 in Measure BB funds last fiscal year and is expected to get $2 million this fiscal year).  But the Plan didn’t include construction of a new Seaplane Lagoon ferry terminal in its list of approved projects, and City staff would have to convince the Alameda County Transportation Commission to free up funds for that purpose.

As for state funding sources, Ms. Ott mentioned the state’s cap-and-trade program, but, according to news reports, the Governor and the Legislature haven’t managed to agree on how to spend the funds already collected by the program.  Of course, the City has Rob Bonta in the Legislature and Don Perata as its lobbyist, so maybe funds earmarked for a Seaplane Lagoon ferry terminal can be made to flow from Sacramento after all.

And if none of these sources comes through?  Well, there’s always the City itself.  Although Ms. Ott didn’t recommend applying money from the General Fund toward the cost of building the ferry terminal, she suggested that future proceeds from sales of City-owned land at the Point (as well as developer fees) could be used for terminal construction.  (The Master Infrastructure Plan, she said, already includes $15 million for a new Seaplane Lagoon ferry terminal).  But a dollar diverted to the ferry terminal is a dollar less available to put in sewers and water mains.

Building a new Seaplane Lagoon terminal is the only first step in being able to expand ferry service.  Once the new terminal is built, a boat will be needed to carry passengers.  (The intent is to run three morning peak-hour departures from the new terminal with three afternoon peak-hour return trips from San Francisco).

Unfortunately, WETA doesn’t have any spare vessels sitting in dry dock that could perform this function.  Instead, it will have to buy a new boat whose cost the staff report pegs at $16 million.  Where’s that money coming from?

According to Ms. Ott, WETA intends to pay for the new boat with “Proposition 1B funds.” Passed in 2006, Proposition 1B raised $19.925 billion in bond proceeds for state and local transportation projects.  WETA is one of the agencies eligible to receive Prop 1B distributions from the state.

This time, the problem is that WETA already plans to use Prop 1B money for other projects, such as the new downtown San Francisco terminal expansion (total cost = $115.6 million) and the Central Bay maintenance facility (total cost = $65 million).  As WETA’s manager of planning and development, Kevin Connolly, told Council Tuesday, the amount of Prop 1B money WETA gets each year is “variable and volatile.”  As a result, he warned, “there is a possibility that there will be a gap” between the cost of the new boat and the available Prop 1B funds.

At which point the alarm bells went off on the dais.  Did this mean that the City would be required to kick in its own money to fill the gap?

Ms. Ott did her best to put out the fire. “The way I’m thinking about this, it’s WETA’s responsibility,” she told Council. “I think that their [Prop 1B] funds are going to be sufficient, and that WETA’s going to find capital dollars to do that.”  And if not?  “We may need to be creative with them and look to evaluating other options.”  She added:  “We’re not committing to providing our own funds but we’re leaving the door open to exploring that with them.”

At first, this wasn’t good enough for Vice Mayor Frank Matarrese, who insisted that the agreement between the City and WETA “record and identify” that WETA bore sole responsibility for paying for the new boat.  But then, a few seconds later, Mr. Matarrese – characteristically – changed course mid-stream and announced that this was a “risk I’m willing to take.”

Okay, let’s suppose that the terminal gets built and the money is found to buy the new boat.  Now WETA is going to have to provide the actual ferry service.  Projected operating expenses total $3.5 million in 2020 and increase to $4.9 million by 2030.  But fare revenue is expected to cover only a portion of the operating costs.  As a result, the new service is predicted to run an annual operating deficit of around $2.8 million in each of the first 10 years.

Where’s the money coming from to make up that shortfall?

The short answer is:  From the people who drive across Bay Area bridges.

At present, “Regional Measure 2,” which raised tolls on all seven state-owned Bay Area bridges by $1 in 2004, provides funds to WETA – $18.3 million in fiscal year 2014-15 – that cover the bulk of the expenses of operating its current service.  According to the plan presented to Council, a third regional measure “is expected to be added to the ballot in upcoming elections to further increase funds raised by Bay Area tolls for transportation improvements.”  Assuming the voters approve such a measure, the funds “would be expected to be available prior to 2020 and could be used by WETA to fund Seaplane Lagoon ferry operating expenses.”

At the Council meeting, Ms. Ott again was cautiously optimistic about this potential source of funds.  “We do think the region, because of all these Transbay issues, is really looking at ways to enhance both bus and ferry service,” she said. “We do think those regional measures will occur, and we do think we will be able to get sufficient operating dollars from that.”

And if she’s wrong?  Under the MOU between the City and WETA, “Seaplane Lagoon ferry service shall be initiated when sufficient operational funding has been secured for a minimum service period of ten years.”  If no regional measure is passed providing a subsidy, the service won’t happen unless somebody commits to paying the bills for 10 years.   There are really only two possibilities – and one of them is the City.

Now for some rudimentary probability analysis.  For new ferry service to be ready to go by 2020, three things have to happen:  (1) the terminal has to get built; (2) a new boat has to be bought, and (3) a new source for an “operating subsidy” has to be found.  Let’s be bullish and suppose that the odds of each of these events occurring is four out of five. Even under that scenario, the probability of all three events occurring (assuming each is independent of the other) is 51.2 percent.  So the chance that new ferry service actually will be up and running by 2020 is slightly better than even.

This is not meant to criticize Council for approving – unanimously – the Seaplane Lagoon ferry terminal plan and the MOU with WETA.  As Ms. Ott pointed out, those documents do not obligate the City to spend any money on the project.  If the other sources of funds don’t materialize, the City can pull out if it chooses.  Laying the groundwork for increased ferry service may have been the right move – but the politicians shouldn’t be exchanging high-fives quite yet.  (Wanna bet what Ms. Ashcraft’s and Mr. Daysog’s campaign literature for the upcoming election will say on this subject?  We note that the firefighters’ union’s candidate, Teamster lawyer Malia Vella, wasted no time tweeting her enthusiastic support for the project).

Ordinarily, we’d end there.  But there is a coda to the story that’s worth telling.

The proposal presented to Council Tuesday did not contain any specific plan for bus service to the new (or, for that matter, existing) ferry terminal at the Point.  Instead, the MOU stated that, “The City and WETA agree to work collaboratively to advocate for and coordinate with AC Transit and other potential local transit operators to provide frequent, reliable, and convenient bus service to the Main Street Terminal and future Seaplane Lagoon ferry terminal.”

Two days later, we attended an LWV forum on upgrading transit service.  BART director Robert Raburn and AC Transit director Christopher Peeples spoke; no one from WETA had been invited.  (As it happened, WETA was holding a board meeting across the street at City Hall at the same time).  But Mr. Peeples informed the audience that WETA had applied for an “One Bay Area” grant to lease a boat from another operator and “get the money to do” a bus route along Encinal Avenue to the Main Street ferry terminal.

If this were true, it was a significant development.  An additional leased boat would add capacity now, years before service out of the Seaplane Lagoon is expected to begin.  And a new bus route would enable Alameda residents who live outside the Point to get to and from the ferry without having to drive there.  (The proposal presented Tuesday called for 400 parking spaces, which Ms. Ashcraft, consistent with the anti-automobile dogma laid down by Inner Ringleader and Planning Board chair John Knox White, objected to).

But was it true?  If anyone would know, it was Mr. Connolly of WETA, so we asked him.  He replied:

I was under the impression that the Transbay initiative Mr. Peeples referred to was still in the early concept stages and still a secret.  It was my loose idea that I pitched to AC staff only 2 weeks ago and we were going to develop it next week.  Oh well, I guess it has legs now.

Here is the whole story, which will be fleshed out next week when I have the chance to put it together.  MTC has asked the Transbay operators to come up with anything – anything! – to address the jammed Transbay commute.  We are all pretty much tapped out but I had a wacky notion about using some of the dinner cruise boats from our contract operator Blue & Gold fleet that are not normally used for ferry services and pairing that up with local bus service to Main Street and Jack London. The earliest we could start this would be the fall, due to AC Transit’s constraints with driver sign-ups.  If Mr. Peeples said WETA would pay for bus service, that’s not correct.  The whole package would be paid for by MTC.  I’m not sure where they would get the money or even whether they would accept the idea.

The whole proposal still has to be developed, then the management at AC and WETA would still have to consider it, since it’s unconventional and outside the norm.  Sounds like a Board Director is already interested, though.

And that, dear readers, is your lesson for today on how the transit planning process works in the Bay Area.

Sources:

April 5, 2016 staff report: 2016-04-05 staff report re ferry terminal

Seaplane Lagoon Ferry Terminal Plan: 2016-04-05 Ex. 1 to staff report – Seaplane Lagoon Ferry Terminal Plan

City-WETA MOU: 2016-04-05 Ex. 3 to staff report – WETA MOU

Measure BB local distributions: ACTC FY14-15 Measure BB sales tax distributionsACTC FY15-16 Measure BB sales tax projections (9.28.15)

WETA FY 2014-15 financial statement: FY 2014-15 basic financial statements

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
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8 Responses to All aboard!

  1. Eric Strimling says:

    Good article. Thanks.

    Do you think Bonta et al could get us a bridge to the 880?

    • David says:

      You may still be able to see the erstwhile planned 66th street extension from Harbor Bay Parkway to I-880 if you check out the plat maps in the planning department. If they haven’t been updated. It was on there several years back when I was looking at them.

      Bay Farm Island residents were promised that extension some 30 to 40 years ago.

  2. Steve Gerstle says:

    Does the data support the demand for two West End ferry terminals or will the currently existing one be phased out?
    How will we be able to support public transit to two ferry terminals when we can’t even provide it to one?
    Where will these ferries dock in San Francisco? Is there enough space at the SF Ferry Building or will the ferries be going somewhere else?
    Is the assumption that many of those living in Alameda Point will be working in San Francisco?
    I can understand that having the ferry terminal at Seaplane Lagoon will give the development cachet similar to Sausalito and Tiburon, but those locations have a single ferry terminal, not two.

    • Steve,

      In answer to your first question, the MOU between the City and WETA states, “The City and WETA agree that, at a minimum, the existing levels of service and current amenities, including both the quantity of on-street and off-street parking facilities, will be maintained at the Main St. ferry terminal irrespective of future Seaplane Lagoon ferry service being implemented.”
      (BTW, WETA publishes monthly ridership data, which are included with the Board of Directors agenda package. Check out p. 14 in the package found at http://sanfranciscobayferry.com/sites/default/files/weta/meetings/Agendas/2016/040716.pdf for the February 2016 stats).

  3. Thank you for the informative article. In addition to your roughly even odds of launching ferry service from the Seaplane Lagoon with a guaranteed ten-year funding package, I think the odds of the service lasting beyond ten years (if that) are probably in the same ballpark – around 50-50. Up until the last couple years, the Seaplane Lagoon ferry terminal was envisioned as a replacement for the Main Street Terminal. Now, ferry service from the West End has morphed into two terminals. Where is the study that shows that a second terminal is going to be fiscally viable with robust ridership that does not simply draw riders (and fare box revenue) from Main Street?

    One assumption that is often mentioned is that future businesses will find the service desirable. In other words, the ferries will deliver commuters to jobs at Alameda Point. It’s very expensive to live in San Francisco. How much will the new businesses have to pay in order to attract employees living in San Francisco?

    The Main Street Ferry Terminal is not going away. WETA has made that very clear. Yet, now that they’ve made that decision, no one is proposing to study whether Main Street should be the only West End terminal. There is more than ample waterfront land on which to expand parking, even with a parking structure, and a generous bus turn-around. Instead, parking spaces are going to be set aside on much more valuable real estate at Alameda Point for ferry commuters.

    At this point, all that can be said is, “Good luck.” If the Seaplane Lagoon ferry service idea dies, it will be an expensive observation platform.

  4. MP says:

    Interesting story re an Alameda based ferry service business with plans to offer rides the general public.
    http://www.ktvu.com/news/99095394-story

  5. Eric Strimling says:

    I agree. Seaplane is a much better location than Main St for an Alameda only ferry. But the business model may require the JLS stop. In that case only the Main St dock makes sense. There will be a ton of new housing at the base and North Shore, but enough for an entire new ferry line?

  6. David says:

    This has been covered before… within the past 6 to 7 years… the Oakland-Alameda ferry is only viable with both stops.

    It’s unproven that SF to Seaplane Lagoon alone is a viable service. And nonsense to suggest that riders would tolerate JLW->Main St.->Seaplane Lagoon->S.F.

    Pipe dreams.

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