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Many routes to ferry king's success

By: Sascha Brodsky; Downtown Express photo by Brad Horrigan July 17, 2002
The emperor of New York City's ferries was admiring the view of Lower Manhattan the other day from his office as his boats steamed across the river.
"Ferries are the subway of the 21st century" declared Arthur Imperatore Jr., watching from his New Jersey headquarters, whose walls are decorated with nautical charts and life buoys.

Imperatore, whose name means 'emperor' in Italian, runs 90 percent of the burgeoning private ferry traffic in the New York area.

New York Waterway, the company started by his father, Arthur Imperatore Sr., has expanded from a tiny operation once dismissed as "Arthur's folly" to a $30 million business.

The gap in the skyline where the Twin Towers once stood is a reminder of part of the reason Waterway has come so far so fast. Since PATH service was knocked out on Sept. 11th, the company has seen a dramatic jump in riders. It has also benefitted from federal subsidies put in place as an emergency measure that some have criticized as unfair and inefficient. In coming years, the company and its much smaller competitors will benefit from hundreds of millions of dollars in government-sponsored projects designed to increase waterborne transportation.

Waterway's president, Imperatore Jr., a Columbia Law School graduate, maintains a casual but taught atmosphere at the company's Weehawken headquarters. Wearing a polo shirt and khakis, he darted around the docked ferries, questioning workers about the state of repairs.

Few dispute that the ferries are anything but a welcome relief to the congested and polluted automobile arteries feeding New York.

"Restoring and enhancing Lower Manhattan's transportation infrastructure is central to the joint efforts of the state and city, Lower Manhattan Development Corporation chairperson John C. Whitehead said in a statement. "Expanding ferry service is a creative response and is another important step in meeting the area's pressing mass transportation needs."

Timothy Carey, president of the Battery Park City Authority, agreed, saying "Manhattan is an island and we need more ferries."

But some have criticized the subsidies propelling NY Waterway recent expansion.

After the destruction of the World Trade Center's PATH station left hundreds of thousands of commuters stranded, officials turned to ferries to fill the gap. The Federal Emergency Management Agency provided funds through the Port Authority of New York and New Jersey to give NY Waterway a contract through an unusual non-competitive bid.

The contract, which has only recently been finalized, guarantees NY Waterway a 20 percent profit. Under a complicated formula, Waterway is allowed to bill the Port Authority an hourly fee for each boat added to the fleet. Earlier this year, the firm was collecting $2.7 million a month in subsidies.

Port Authority officials said that the subsidy was not offered to other ferry companies in the area because they were too small and due to the emergency nature of the situation.

But the owners of some much smaller ferry companies said they would have liked a chance to bid.

Tom Fox, owner of New York Water Taxi and David Stafford, general manager of Seastreak, both said their ferry companies were never asked to bid on the subsidized routes.

"Normally if it's an open tender then they would have asked other companies about it," Stafford said, speaking by cell phone from one of his ferries.

The new service began by including a free water shuttle to carry commuters between the World Financial Center on the Hudson River and Pier 11 on the East River, as well as more frequent service from the Hoboken Rail Terminal to the World Financial Center, and a new route between the Hoboken Rail Terminal and Pier 11.

Scrambling to meet the demands of the new services, NY Waterway leased 10 more boats and hired 100 new employees.

But the Hoboken route, subsidized at about $2.7 million a month, only boosted ridership from the Hoboken Terminal from about 10,500 to about 11,500, according to Imperatore. That adds up to a subsidy of about $2,500 per month for each new passenger.

The free water shuttle between Pier 11 and the World Financial Center was shut down June 14 after officials decided it wasn't attracting enough riders. Waterway had little incentive to lure riders since it was guaranteed a fee for the service and some Battery Park City residents objected because the firm tried to get approval to dock in the North Cove.

But the company is expanding into other routes. Last month, NY Waterway began running weekend boats to Belmar on the Jersey Shore from Manhattan, Hoboken and Jersey City. The ferries head south on Friday evenings and return on Sunday evenings. The trip, which can take three hours by car on a summer weekend, will take an hour by boat and cost $30 for a round trip. In Brooklyn the company took over the service from Bay Ridge to Lower Manhattan that New York City began offering after Sept. 11. The FEMA-financed service will remain free for now.

Lisa Peterson, a spokesperson for the Tri-State Transportation Campaign, a transportation watchdog group, said, "ridership numbers show that the money is supporting very few passengers. So, while it is clearly necessary to provide displaced passengers with other options, FEMA may not be getting the bang for the buck that it was expecting."

Port Authority spokesperson Steve Coleman acknowledged that some routes have been a disappointment.

"We have made some modifications to the services to try to weed out those not generating riders and we are looking at the service to see what routes should be continued," he added. "We are cutting back service on some routes."

Even without the subsidies, NY Waterway has come a long way since its founding in the 1980's. When Arthur Imperatore Sr. formed his own ferry company to bring commuters across the Hudson River, observers scoffed that ferries were an outmoded form of transportation.

But Imperatore Sr. proved the doubters wrong and as the company has grown, he has been a generous political donor. Like a lot of business owners, he has given the maximum allowed amount to many state and federal political campaigns. In April, the Imperatores hosted a $1,000-a-plate dinner honoring Governor Pataki at a restaurant owned by the family, Arthur's Landing, on the waterfront in Weehawken. One of the firm's ferries is named the U.S. Sen. Frank R. Lautenberg, after the former New Jersey legislator who was active on transportation issues.

Imperatore Jr. said the company's government aid had nothing to do with its political contributions saying "there has been no quid pro quo."

Imperatore Sr. got his start after World War II, when he transformed his family's two-rig trucking operation into what was a $170 million business, APA Transportation Corp.

Observers said his success was built on innovation and a tough stance with rough unions. But the company was sold earlier this year, a victim of a shrinking trucking industry.

Some of Imperatore Sr.'s other ventures have been unsuccessful.

In 1981, he bought a 2 1/2-mile stretch of crumbling waterfront property in Weehawken and West New York for $7.75 million. He planned to build a Venetian city, a multi-billion-dollar project that would include town houses, hotels and an observation tower inspired by Leonardo da Vinci.

But the project stalled and in 1994, Imperatore Sr. lost part of the land after a bank foreclosed on a $50 million loan.

Imperatore originally conceived his ferry business as a means to attract residents to his mini-city. The ferries have blossomed where the real estate plan failed. Waterway is now a $30 million business.

And the private and public ferry trade could become even larger once a host of maritime projects around the area are completed. Among the projects is a revamped St. George Ferry Terminal on Staten Island, a reconstructed Whitehall Ferry Terminal, a new floating World Financial Center Terminal, a new West Midtown Ferry Terminal at West 39th St. on land owned by Waterway and a new Port Imperial Intermodal Ferry Terminal in Weehawken, which is also on land owned by the Imperatores.

Last year, the company bought more than a dozen new vessels for $20 million with loans backed by the federal government.

In the coming months, Waterway will face competitors, albeit small ones. Seastreak is considering adding routes. And New York Water Taxi, financed by developer Douglas Durst, is planning to start its service with two boats in September. The company projects an initial ridership of 200 people a day and hopes to increase that figure to 1,000 next year when it plans to add four more boats.

"Unfortunately we won't have had the benefit of government support," said Water Taxi's Fox. "We have applied for subsidies but there has been no answer as of yet."

©Downtown Express 2002

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