CITY CLERK. Toronto-Rochester Fast Ferry - Project Update (Ward 30 Toronto-Danforth)

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1 CITY CLERK Clause embodied in Report No. 5 of the, as adopted by the Council of the City of Toronto at its meeting held on May 30, 31 and June 1, Toronto-Rochester Fast Ferry - Project Update (Ward 30 Toronto-Danforth) (City Council on May 30, 31 and June 1, 2001, adopted this Clause, without amendment.) The recommends the adoption of the following report (April 18, 2001) from the Commissioner of Economic Development, Culture and Tourism: Purpose: This report provides the results of the Request for Proposals (RFP) process used to select Canadian American Transporation Systems (CATS) as the preferred provider of ferry services and outlines the next steps required to implement the project. Financial Implications and Impact Statement: There are no financial implications resulting from the adoption of this report. Recommendations: It is recommended that: (1) Council endorse the selection of Canadian American Transportation Systems (CATS) as the preferred provider of ferry services between Toronto and Rochester; (2) Council request the Federal government and the Province of Ontario give favourable consideration to providing financial support for the establishment of fast ferry service between Toronto and Rochester; (3) that the Commissioner of Economic Development, Culture and Tourism be requested to undertake an assessment of the capital improvements that may be required to the streetscape and park immediately adjacent to the proposed ferry terminal at the southern end of Cherry Street and report on the requirements as part of the 2002 capital budget process; (4) the interim Waterfront Development Corporation be requested to meet with CATS to discuss the proposed ferry service and issues related to its integration with revitalization activities;

2 2 (5) that CATS be requested to undertake a public consultation process with the Toronto Island residents, Port Lands businesses and recreational boating community with respect to the introduction of ferry service; and (6) the appropriate City officials be authorized and directed to take the necessary action to give effect thereto. Background: At its May 1999 meeting, City Council adopted the following recommendation: That City Council actively support the establishment of fast ferry service between Toronto and Rochester in order to strengthen and develop new economic alliances between the Regions, improve the City s access to markets in New York and the eastern U.S. and increase opportunities for international tourism. In June 2000, City Council authorized the Commissioner of Economic Development, Culture and Tourism to participate with the City of Rochester, Monroe County, and the Toronto Port Authority in the preparation and issuance of a detailed Request for Proposals (RFP) for the establishment of fast ferry service between Toronto and Rochester. The Commissioner of Economic Development, Culture and Tourism was also requested to report to the Economic Development and Parks Committee with respect to the selection of a ferry operator. This report provides the results of the RFP process used to select CATS, Canadian-American Transporation Systems, as the preferred provider of ferry services and outlines the next steps required to implement the project. Comments: Establishing a regularly scheduled fast ferry service between Toronto and Rochester represents a significant economic development opportunity to further link two of the most dynamic economies in the Great Lakes Region. Ferry service would effectively establish an important boarder crossing at the base of the City and would thereby increase our access to the business and tourism markets in upper New York State and along the eastern United States. Submissions by the Olympic Bid Committee and the Fung Waterfront Report have also noted the supporting role that a ferry service linking the Regions would play. The Cities of Toronto and Rochester, the Toronto Port Authority, and Monroe County issued a Request for Expressions of Interest and Qualifications for establishing a ferry service between the two Cities at the beginning of April 2000 and received four expressions of interest. Subsequently, the City has participated with the other parties to develop a detailed Request for Proposals to guide the selection of a preferred ferry operator. RFP Process: The RFP process consisted of three phases: developing an independent market assessment and technical marine information, preparation and issuance of the RFP and the evaluation of submissions. Toronto, Rochester, Toronto Port Authority, and Monroe County retained the services of TranSystems Corporation to undertake the necessary technical studies and assist with the drafting and management of the RFP process.

3 3 The market assessment examined the potential demand for ferry service between the two Cities by studying transportation movements, the experience of other world-wide ferry services and interviews with the tourism industry. The assessment, using conservative estimates, noted that a potential market for a fast ferry does exist and could generate 827,000 passengers, 164,000 automobiles and 4,000 buses/trucks annually. The review of the ferry experiences across the world found that, even in other viable markets, there is generally some level of government participation and/or financing of the operation. The preparation of the RFP established the roles of the participating agencies, the level of service required, the technical and financial issues that must be addressed and the proposal submission process. The RFP identifies the Toronto Port Authority, the City of Rochester and Monroe County as the parties issuing the proposal call. This reflects the fact that these agencies are most likely to enter into any necessary contractual arrangements with a ferry operator. The City of Toronto s role is defined as a supporting agency that is assisting the parties to promote the establishment of the ferry service and contributing toward the RFP process. Based upon the market assessment, the RFP established the minimum level of service required of a ferry service. This is summarized in the table below. The RFP also established minimum qualifications criteria related to a proponent s company administration/organization, financial capability and technical experience. The RFP was issued in December 2000 to the four companies that had expressed interest in the project, with a deadline for submissions in February It was expected that submissions would be made by at least two of the companies that had expressed interest in the project. Prior to the deadline Canadian American Transportation Systems (CATS) acquired an interest in one of the other companies. As a result only one proposal was received. Table 1: Toronto Rochester Fast Ferry Service Minimum Level of Service Required 360 days of operation per year (subject to weather conditions) 7 days of operations per week Minimum number of round trips per day: - 3 during four summer months - 2 during five spring and fall months - 1 during three winter months Capability of making a one way trip in 2.5 hours or less Canadian-American Transportation Systems Proposal: Canadian-American Transportation Systems (CATS) is a specially formed corporation created specifically to operate high-speed ferry service throughout the Great Lakes. The corporation has established relationships with Lehman Brothers (financing), Austal Ships (ferry builder), A.R. & A. White (ferry operations), ABM Amro Bank (financing) and the EFIC (Australian Export Development Corporation) for the purpose of implementing a ferry service. CATS is based out of Rochester, New York.

4 4 The Table below summarizes the CATS proposal that would be fully implemented over a three year period: Table 2: CATS Ferry Service Proposal Number of Trips per Day Travel Time Number of Ships High Speed Ferry Capacity Trip Cost one way Start Date Proposed Terminal Location Toronto Proposed Terminal Location Rochester Total Investment Required Public Sector Loan Guarantees Requested Three Round Trips - year one Six Round Trips year three Two Hours, 15 minutes One High Speed Ferry year one One Ferry, one leased ship year two Two High Speed Ferries year three 750 Passengers 187 cars, or a mix of cars/buses/trucks $40.00 US Car $20.00 US Per driver/passenger to a max. $26.00 US Pedestrian/cyclist $ US Bus/truck June 2002, or May 2003 Toronto Port Authority Bottom of Cherry Street Mouth of the Genessee River $120 Million US $20 Million US The evaluation of the proposal focused on determining whether it met the minimum requirements established by the RFP. The parties have now determined that the proposal satisfies the RFP requirements and have agreed to recognize CATS as the exclusive selected company until June 30, CATS needed this recognition in order to finalize its financing arrangements with Lehman Brothers, EFIC and ABN Amro. The June deadline was established with the expectation that during this period CATS will continue to secure its financing, address the issue of loan guarantees and refine its business plan accordingly. If the parties are satisfied that CATS is making substantial progress, they will then enter into negotiations with respect to land leases, terminal development and port services and fees. CATS, with the assistance of the City of Rochester, has entered into discussions with the New York State and U.S. Federal governments with respect to the availability of securing loan guarantees from existing program sources. It is very likely that if the company is able to secure funding from the U.S. jurisdictions that it may be conditional upon the senior levels of government providing matching financial assistance. CATS has also now made preliminary contact with Transport Canada and the Ontario SuperBuild Corporation with respect to their involvement. Staff has made it very clear that the City is prohibited by legislation from providing a financial contribution to the company.

5 5 Next Steps: The estimated economic benefits to all levels of government from having a fast ferry service across Lake Ontario are very significant and would justify senior level of government support for the project. It is recommended that the Federal government and the Province of Ontario give favourable consideration to providing financial support for the establishment of a fast ferry service between Toronto and Rochester. The expected benefits from such an investment would include: (i) (ii) (iii) (iv) (v) (vi) increased inter-regional mobility, improved access to markets, and benefits to travellers in terms of reduced travel times and costs; very significant resource savings and, in particular, reduced demand on the congested and environmentally sensitive highways in the Niagara Peninsula; studies have shown that ships produce 33 percent less pollutants than diesel trains and 373 percent less than diesel trucks, when compared on a basis of tonne-kilometre per litre of fuel consumed; the development of an increased level of industrial, social and cultural interaction between the economies of Southern Ontario and Northwest New York State and, in particular, between Toronto and Rochester; increased tourism from the Rochester area, New York State and the Eastern Seaboard along with the creation of opportunities to develop two nation vacation packages where visitors could fly into Toronto and visit our attractions and attractions in upper New York State such as the Finger Lakes, Cooperstown and Niagara Falls; future waterfront development that could include a permanent ferry terminal perhaps combined with duty free shopping, general retail, restaurants and tourism attractions; and the direct benefits related to the creation of this new service industry would include new highly skilled full time jobs and the direct purchase of supplies and services. While CATS is finalizing its financial arrangements and securing public participation, it would be prudent to begin assessing what would have to happen locally to accommodate the possible start of a ferry service in June There are three sets of activities that should be undertaken: an assessment of the capital improvements needed adjacent to a ferry terminal, community consultation and co-ordination with the emerging Waterfront Development Corporation. There is an opportunity to improve the physical appearance and amenities at the bottom of Cherry Street and along the entrance to the park at Cherry Beach. Cherry Street would become a new gateway to the City once the ferry was operating. It will be important to create a good first impression as business travellers and tourists enter the City. It is recommended that the Commissioner of Economic Development, Culture and Tourism undertake an assessment of the capital improvements that should be done to improve the immediate vicinity. Any recommendations with respect to streetscape and park land improvements along with directional signage adjacent to a proposed ferry terminal would be reviewed through the 2002 capital budget process.

6 6 The concept of a ferry service has been noted in the submissions by the Olympic Bid Committee and the Fung Waterfront Report. Now that the waterfront development initiative is being refined and moving into a phase of implementation, there is an opportunity to explore the potential of fully integrating a ferry service into the revitalization of the waterfront. It is recommended that the interim Waterfront Development Corporation meet with CATS to discuss the proposed ferry service and issues related to its integration with revitalization activities. In May 1999, Council requested that the ferry proponent consult with Toronto Island residents and the recreational boating community to discuss and resolve any issues related to establishing and operating the ferry service. This consultation process should proceed once CATS has finalized its financing arrangements. It is recommended that CATS undertake a public consultation process with the Toronto Island residents, Port Lands businesses and recreational boating community with respect to the introduction of ferry service. Conclusions: Toronto, Rochester, Monroe County and the Toronto Port Authority have completed a Request for Proposals process for the purpose of selecting a company to establish fast ferry service between the two Cities. Canadian-American Transportation Systems (CATS) has satisfied the requirements of the RFP, provided it is able to finalize its financing arrangement within the next few months. The City is recommending that the Federal government and the Province of Ontario give favourable consideration to providing financial support for the establishment of fast ferry service in order that all levels of government capitalize on the expected benefits. Contact Name: Ms. Brenda Librecz, Managing Director, Economic Development, Telephone: , Fax: , The following persons appeared before the in connection with the foregoing matter: - Mr. Dominic De Lucias, President, Canadian American Transportation Systems (CATS); - Mr. John Morand, Toronto Port Authority; and - Councillor Irene Jones, Ward 6 Etobicoke-Lakeshore. (City Council on May 30, 31 and June 1, 2001, had before it, during consideration of the foregoing Clause, the following communications respecting the proposed Toronto-Rochester Fast Ferry Service: (i) (ii) (February 28, 2001) from Mr. John R. Simon, Executive Director, Niagara County Industrial Development Agency addressed to Mr. A. Georg F. Kostyk, The VACS Group; and (undated) from Mr. Georg F. Kostyk, Can-Am Panther Phast Ferries Group (C3PG).

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