Updated May 8
Jim Malkin told Dukes County commissioners Wednesday night at a virtual meeting that Steamship Authority 2019 audited ledgers are nowhere to be found. As chair of the ferry line’s board and the Vineyard’s representative to it, Malkin said those financials are essential to plotting a course forward, especially if the grave fiscal forecast made by general manager Bob Davis bears out. Steamship Authority revenue has plummeted in the wake of the novel coronavirus pandemic. Davis told the five-member Steamship Authority board on Tuesday that barring an upwell in ridership or an infusion of outside capital, the ferry line is projected to lose $60 million, about half its annual revenue. He also predicted the Steamship Authority stands to run out of cash by Labor Day.
Malkin told the commissioners the absence of audited financials “makes it very difficult to look at a business model going forward. I’ve asked for them, will continue to ask for them. I’ve asked for an update for where they are with the auditor, but I have not yet seen those things.”
Asked for greater detail by The Times, Malkin said, “If the authority is losing money, $1 million, $1.5 million, and I’ve heard both, $5 million in the month of April, you’re going to run out of pockets … If despite all our efforts to encourage people to come here, all our efforts to socially distance, all our efforts to stay safe, all our efforts to serve my friends in Oak Bluffs who own restaurants and hotels, et cetera, despite all that, if we don’t get traffic, and if Mr. Davis’s prediction of being short $50 million, $60 million, comes true, the question is, What’s the business model that runs in that kind of a revenue stream?”
Without the financials, Malkin argued, only blind planning can occur. “In order for me to make an educated guess, and the other [board members] and management to make an educated guess, we need to be educated by audited financials,” he said. “If you look on the Steamship Authority website, the financials for the years 2017 and 2018 were put up there Feb. 4, 2020. I’m looking for the financials for 2019. We don’t have them yet. I haven’t seen them yet. I’d like to see those financials, and if they’re not audited, I’d like to see what we’ve given to the auditors. Because without the numbers, you’re operating in the dark when you come to look at what you are going to do with this business.”
SSA spokesman Sean Driscoll later told The Times 2019 financials are being audited by the firm RSM, LLP. The process began in January, he wrote. He was unable to answer why the work isn’t finished. Asked when it’s expected to be done, he emailed, “The 2019 report is in process; at Wednesday’s Port Council meeting, Mr. Davis said he hoped the audited financials would be done by the end of the month, but that is largely out of our control.”
Driscoll added that the long overdue 2018 annual report is expected to be done “within days.”
Malkin clarified Friday that while the audited financials are still unavailable, he said he was told the financial materials provided to the auditors would be shared with him.
Oak Bluffs concerns
Malkin told the commissioners he wanted repair work at the Oak Bluffs terminal done by June 15, and that no longer seems to be in the cards.
“To me that speaks of process,” he said. “This thing should have gotten underway at the end of last year. In terms of scoping, it should have gone out to bid in February.”
Safety concerns at the Oak Bluffs terminal came to light in April. The drive-on pier vehicles pass over to reach the transfer bridge and the ferry beyond was found to have a number of pilings and piling caps in need of replacement, 35 pilings and 315 feet of piling caps, specifically.
In some places the pier was deemed unsafe for the weight of a car, let alone freight trucks. The SSA originally budgeted $750,000 for the work, but later estimated the job at $500,000. After the bids went out, no one wanted the job.
Malkin told the commissioners that contractors found the surety bonds the SSA wanted, “and the timing that we requested, and the penalties that we put in the contract to see that it would get done by the 15th,” prohibitive.
In response to the lack of bids, Davis told the board on Tuesday, an alternate project would go out to bid, one that was more modest, and would only affect repairs sufficient to allow passage of people, cars, and pickup trucks through the terminal. Freight trucks would have to go through Vineyard Haven. He said the work could be done by June 22. This diminished repair would see only 13 pilings replaced, and only 24 feet of piling caps. Bids are expected to be opened Monday, and voted on Tuesday.
Malkin said after he dug into records and spoke with people, he found the pier’s issues shouldn’t have come as a surprise. “It was known it was going to be a problem,” he said. “Money was put in the budget to do something about it. Nothing got done, frankly …”
Commissioner Keith Chatinover asked Malkin to specify just how long the pier was known by the SSA to be deficient. “At least prior to the budget process for this year,” Malkin said. “That would have been October.”
“For seven months we’ve known this is a problem — blows my mind,” Chatinover said.
Commissioner Christine Todd, who is executive director of the Oak Bluffs Business Association, pressed Malkin on a number of Oak Bluffs service issues.
She asked if a fast ferry could pinch-hit for the SSA until the terminal reopens, and Malkin said he would look into it. He pointed out he looked into having SSA ferries deliver just passengers to Oak Bluffs, but found “it doesn’t make economic sense to do that at all.”
He had previously stated he understood how vital day-tripper passengers are to the town’s tourist economy.
He pointed out other passenger ferry services are poised to begin their seasons in Oak Bluffs.
The Island Queen starts on May 22, with reduced capacity for social distancing, he said. They normally take “about 400 passengers,” and don’t take reservations. HyLine also starts May 22. He noted their bookings for Memorial Day “represent about 10 percent of what their capacity is.”
SeaStreak will begin May 20. He said, in their words, they had “a handful or reservations,” and are still planning to offer New York City service, though only a “few dozen reservations” have been made for that run so far.
Malkin seized on the opportunity to question the economics of the SSA authorizing competitors, especially amid the pandemic. “I’m sure one of the things that is on your mind, it’s certainly on my mind,” he said, “is that as I learn from the Steamship Authority that the money that they make that carries the lean winter — money that they make in the summer, primarily comes from passengers. It seems to me to be quizzical, at best, that the Steamship Authority licenses other businesses to compete with them for those passengers, and then has to advertise for passengers against the competition it has licenced.”
He noted there is historical precedence for some of the competitors, but nonetheless, he said, their role must be looked at in any sort of revised business plan, especially “if ridership doesn’t increase.”
He added two board members are “very against doing anything, and voted against doing anything, to the Oak Bluffs pier at all. So I will do everything I can to see that the Island gets the service it needs for all the towns.”
In a follow up interview Friday, Malkin made what he described as a “factual correction” to certain statements he made to the commissioners. He told the commissioners those two board members voted against Oak Bluffs repair work. The two board members, he said, Moira Tierney of New Bedford and Kathryn Wilson of Falmouth, “questioned the need for two ports on Martha’s Vineyard, but voted to authorize the Steamship Authority to purchase the materials necessary for the Oak Bluffs Pier.” He apologized for any confusion he may have caused.
At the meeting Todd said she gathered New Bedford and Falmouth’s positions, especially about the closeness of the two Vineyard terminals: “You know, it may not make economic sense to the Steamship [Authority] to run passenger-only boats into Oak Bluffs, but it certainly has a tremendous economic impact on Oak Bluffs, and providing a bus service from Vineyard Haven to Oak Bluffs doesn’t anywhere come near to what bringing people directly into that town does.”
Malkin said he lamented all the truck traffic being channeled through Vineyard Haven. “I’m sure they’re not delighted to have all the heavy trucks going through Vineyard Haven,” he said. “But from the point of view of all the Island towns, and all the Island residents, on balance I think it’s really the only alternative that exists.”
Todd noted Tisbury would get the embarkation fees from the truck traffic, and asked if Oak Bluffs could be compensated for the fees it will lose out on while the terminal is out of operation.
Malkin referred the question to Davis and the town of Tisbury.
Todd pressed him on the completion date for the interim fix, which he’d described as “the fastest way we can get the project up and get the pier operational for Oak Bluffs.”
He said June 22 “is what I’ve been told.”
Todd said that leaves a month gap from when the pier opened last year, and asked what the SSA is willing to do to make it right.
Malkin noted Davis has worked out a deal with the Vineyard Transit Authority for a shuttle bus between the Vineyard Haven and Oak Bluffs terminals.
Todd was unenthused.
Chief operating officer discussed
While many recommendations of the December 2018 HMS report have been implemented or are in the process of implementation, the position of chief operating officer, a role deemed necessary by the report’s authors as a part of “realignment of the chain of command and roles and responsibilities among operations and engineering personnel,” has yet to be authorized by the board. Among other benefits, the HMS report stated, reorganizing management structure to include a COO “would support and aid the change to process-based management while alleviating some of the burden on the general manager by the current flat structure.”
Malkin told the board the absence of a COO is an ongoing concern of his. He described Davis as so engrossed in so many aspects of management “it slows the process down.” He went on to say, “I think it’s detrimental to the effective operation, and I think the business could be run better with a COO to take over some of the things Davis is involved in. I’ve spoken to Davis about this.”
Malkin said the other four board members are not in favor of hiring a COO: “I intend to continue to bring that up.”
Overall, Malkin said, while exasperated he can’t effect change in the ferry line in a swifter manner, he’s fighting on for the Vineyard’s needs. “I am doing everything I can to represent all the towns and all the residents and all the businesses on the Island, but when I was appointed,” he said, “I was not appointed general manager of the Steamship Authority, and what I have found is there are five [board members]. Each of [them] has a constituency and a point of view, and they aren’t necessarily the point of view of Martha’s Vineyard. So I will continue to advocate for Martha’s Vineyard as forcefully and articulately as I can, but you do need to know that we cannot unilaterally change things at the Steamship Authority.” He added, “Much to my frustration.”
Updated to include new information about Steamship Authority audit status and to include a correction Jim Malkin made about some of his previous statements.