Pinellas County will explore lower taxpayer subsidy for Cross Bay Ferry

The Pinellas County Commission on Tuesday voted unanimously to terminate its agreement supporting the Cross Bay Ferry in order to negotiate better terms and potentially lower the amount taxpayers contribute to the service.

Local governments have been subsidizing the ferry since its pilot season in 2017, which Pinellas County Administrator Barry Burton said was intended just “to get them up and running.”

In June 2021, Hillsborough County and HMS Ferries Inc. entered into a four-year operating agreement that would gradually expand the service from an October-May season to a 12-month operation by 2024.

Burton said he was given no opportunity to weigh in on the operating agreement ahead of time and found out it had been reached by reading about it in the Tampa Bay Times.

He said it was too late to negotiate changes when the interlocal agreement came before the four local government partners in September. Pinellas signed on to the interlocal agreement with Hillsborough County, Tampa and St. Petersburg. Under the agreement, the municipalities agreed to each provide a subsidy of $175,000 in the first year, increasing incrementally to $255,000 in the fourth.

With the first season of the four-year agreement completed, Burton said the county had to state its intent to terminate by June 1 and enter into new terms by Aug. 1, per the contract.

“We want to see the Cross Bay Ferry continue but we want to make sure it’s done right by our taxpayers,” Burton said in an interview. “Are there other ways of funding this, advertising and other things like that, to make the subsidy on the taxpayers less or zero?”

Burton said he will be arranging for elected officials from the four local governments to meet and talk about new terms.

The ferry hosted 62,130 riders this season, which is 10,000 more than its previous record, according to a May 4 news release.

During a discussion on the topic at a work session last week, Deputy County Administrator Jill Silverboard presented data showing that HMS Ferry earned a $334,425 profit in 2021-22 while receiving $700,000 in subsidies from the four governments and charging $9.16 for an average ticket.

The data showed the ferry is projected to earn a $495,495 profit in the 2024-25 season while charging $15.16 a ticket and receiving $1.02 million in government subsidies.

According to the county’s presentation, 85 percent of riders use the service on the weekends.

Burton said the county received the data directly from HMS Ferry.

Before the vote Thursday, HMS Ferry President Matthew Miller disputed the data and said the company will absorb “a significant operating loss” this year due to higher fuel, labor and insurance costs. He took issue with the county attempting profit projections without consulting with the company.

He underscored the benefits the service has provided to small businesses and the local economy.

“If the county wants to open up the agreement, so be it, that will help us recoup our losses,” Miller told the commission by phone.

“Hm, so now they’re going to threaten us,” Burton could be heard whispering on the dais in response.

When Commissioner Pat Gerard asked him to clarify what was said, Burton responded to her with his interpretation: “If you open it up, I’m going to increase the costs.”

In a statement to the Times, the Cross Bay Ferry stated the financial data HMS Ferries previously gave the county was a “dated pro forma summer 2021 projection” and not an actual profit and loss statement for the past six months. The company will be providing updated financial information to Hillsborough County, its operating partner.

While commissioners highlighted the importance of the ferry to the region, they questioned the lack of opportunity they had last year to provide input to the original four-year agreement. Commissioner Kathleen Peters said the ferry “is not transportation, this is entertainment.”

“This is not transit, this is not taking people to work or back, this is not taking people or cars off the road during the heaviest time of traffic because this is weekends and evenings,” Peters said. “This is a whole different conversation and animal than it is transit.”

Burton stressed the need for the company to explore advertising and sponsorship opportunities that could offset government subsidies, which is one of the terms he wants to discuss during the negotiations.

Commissioner Rene Flowers highlighted the need for elected officials from Tampa, St. Petersburg and Pinellas and Hillsborough counties to come together so that they can negotiate together for the first time.

“This does not say that we don’t want it, this says that we want to be fiscally responsible for our role as it relates to the ferry,” Flowers said.

Ed Turanchik, an attorney for HMS Ferries, told commissioners that when Pinellas withdraws from the interlocal agreement among the four governments, the terms of the operating agreement between Hillsborough County and HMS Ferries will “automatically expire.”

He said “absent the governments figuring out how to do this,” the ferry service will not be able to begin in October. County attorney Jewel White disagreed with that interpretation of the contract.

Turanchik noted another problem.

Earlier this year, Cross Bay Ferry received $4.9 million from the federal government for a new boat that will link southern Hillsborough County to MacDill Air Force Base. Turanchik said that grant depends on having “an existing operating system.”

“So there’s a lot of risk here,” Turanchik said.