Steamship Authority accounting proves elusive

Malkin tells county commissioners he's not privy to 2019 audited financials.

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SSA chair Jim Malkin told county commissioners Wednesday the ferry line’s 2019 accounting hasn’t surfaced. —Rich Saltzberg

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. 

 

9 COMMENTS

    • Clear to who?
      The Board of Governors?
      The County Commissioners?
      The people who voted for the County Commissioners?
      You?
      Have you ever voted for a County Commissioner who voted for Davis?
      Are you the problem or the solution?

  1. Islanders, hating the SSA since 1960.
    What did they hate before 1960?
    The difficulty of getting on and off Island in the Winter!

    • Well let’s see – doesn’t know much about boats, not too swift on dock maintenance, getting a little fuzzy with the accounting and auditing function…what’s left? Oh yeah, are we still ok running the parking lot?

  2. What embarkation fees from trucks is Todd talking about? Trucks have a single driver usually. That generates only as much as a single passenger, that is, 50 cents/trip. All the trucks on the Cape and Islands won’t help increase VH’s embarkation fee revenue by any significant amount at all.

  3. While it’s basically useless to say it now, what I was saying for at least a year before Jim Malkin was well appointed and is doing everything he clearly can despite the lethargy of the SSA (Bob Davis, in particular) and Board of Governors (supportive, but each with their own concerns, and I have appreciated Moira Tierney’s comments of late, definitely, as quoted) — many people defended Marc Hanover, and for too long. Just look at the OB pier situation. Known about as Keith Chatinover asked since 2019. Look at the COO position Jim is discussing. Look at the report and how much is left to fulfill, now much later. Granted it was probably a mostly thankless job toward the end, over the last few years, but we didn’t have the representation we deserved and it’s too late for some things today. They are three year terms, so the last we could have decided was 2017.

  4. At this juncture we are where we are and instead of trying to get blood from a stone, time to pressure legally getting access to any and all records , who hired the auditors ? I thought there was an independent audit? As far as the work being done , WHY is this just being addressed now? Commissioners asked the right questions, but this article reads as if COVID doesn’t exist. Day trippers from New York and everywhere else in this Nation, coming here just means essentially a massive spread of COvID and a shut down greater than anyone could imagine.

    I know no one wants to hear that and I hate it too , however, that is the reality. We didn’t just go through all of this with a steady rate of increased cases , for our community to face major devastation. I do not believe it’s worth it when human life is at stake. I am reading this and kind of shocked … as if ….

    The other day I was on a private trail and ran in to someone I didn’t know she has a second home here from NJ and she says to me “we are trying to get off the island as soon as possible and we cannot get a reservation , the boats are full , we are renovating our home, we don’t want to be here it’s going to get really bad with all the people coming here from NY and NJ”

    I’m from NY I love our visitors and wish this was not happening …. I want people to enjoy the island and for our community to thrive economically BUT not at the risk of health and safety.

    She went on to say…

    “We probably won’t come back for a long time”

    She lived about 45 mins from NYC. Here with her whole family. And even she sees how precarious the situation can be and could get because of the influx of off island visitors and such.

    “Business as usual” is not going to happen. If it does , folks better prepare for real devastation financially and otherwise, as business owners and year around residents.

    Safety has to be the first priority and it would be a waste of resources not to make the repairs correctly the first time to begin with and not make these decisions based on an effort to run day tourism in these circumstances.

    I visited this island many, many times over the last 20 some years before living here , and I took the bus or rode my bike from vh to visit nearby towns and even bike up island! It’s not the worst thing for a visitor ! They will survive !
    Why not consider other solutions like
    Run more VTA busses to OB or use a free shuttle option , that may be less expensive than rushing repairs. Have shuttles from VH as a complimentary service back and forth to Oak Bluffs . Leverage bike shops to run tours up and down that stretch. It’s not that hard to get from vh to OB. Contract Out … maybe a smaller boat line or charter boat to OB at a higher price ?

    Instead of trying to force these essential repairs now at this very late date and under the current situation with COVID and the financial strain on the SSA.

    Do things the right way using wisdom and discernment , not a rush to satisfy tourism.

    It’s as if nothing has been learned here. Doesn’t anyone see ?

    Is there a way to legally obtain records ? The planning for all of this including the potential for a Global pandemic needed to happen well before this time. It’s past time to use a process to get the records. And I would ask that moving forward the committee request a hiring of a pandemic disaster preparedness specialist be a regular employee of the SSA to be hired to run scenarios , build relationships with vendors and contractors , budget plans “in the event of “ , report regularly to the board and submit updates and be reasonable for communicating with Government and be a prose and current on potential issues that impact health or security that can impact boats and providing essential goods and transportation to and from in the event of a pandemic or other emergency or event . This should have been done years ago. This persons only job is to run scenarios , stay current and ahead of possible events , plan and report regularly , prepare and communicate with regard only to preparedness and planning so we never run into this statistic again and it’s not over. This was a minor pandemic compared to reports over the years by Government of what the potential for an even more devastating event. Rather than blow it off , it’s time to prepare , hopefully it doesn’t happen but our own leadership says it will and will be worse than this. So best to prepare and nothing happen then not prepare and face worse devastation. I would be less concerned over day trippers and more concerned with reality of the world in its current state.

    At this juncture , get the records in any way they need to NOW and solve these issues. There needs to be a sense of urgency here. Ask and ask and ask and still no results , well it’s mid May! How many more times should we ask? Use a process to force the hand and get the records.

    I am really concerned that we are discussing day trippers coming here as if this has not not happened.

    Social distancing or not it’s not going to work , we are in trouble on the island:( …. this is not good.

    If I had a business that was mainly supported by tourism , I would be reconfiguring how to reinvent my business or create a more year around sustainable livelihood. Try to get by for now and plan ahead for change.

    We are going to get hit and by acting “as if” things will be “normal” and we won’t be impacted in potentially devastating way is naive.

    Having one boat running might be more of a blessing then we think, if lives and the health and safety of the community is at stake.

    If there was negligent leadership then they need to be held accountable at some juncture but right now everyone has to focus on solving the issues at hand and I am sure there are procedures to address this right ?

    Ways to override or interject accountability to get results ?
    Right now rather than go after anyone what is the actual solution? To keep the community safe , maintain essential transportation off and on island for year around residents and a steady flow of essential goods to the island for health and safety? NOT satisfy tourism …getting food and goods essential to health and safety for the community.

    Day trippers are not a priority unless your business is at stake , which I do understand , no one wants to see anyone suffer financially and lose their livelihood.

    However at the same time how far are we willing to go to save everything ? Lives versus business ?

    Safety should be the number one priority.

    Florida was a good example they tried to open things up and crowds flooded parks and beaches and they tried to police it but could not and closed up again public green spaces and beaches.

    How is this going to be managed ?

    Our schools are closed ! People had to shelter in place , Business year around shut down that serve a year around population. I would say this is pretty major. I honestly do not think day tourism should be a priority , but at the same time can understand for the many business owners facing closure or losses 🙁 it’s a tough situation for everyone 🙁

    Maybe it’s time to re think how everything is operated.

    Maybe it’s time to re-imagine a world without seasonal income , a new way of doing business, maybe reinventing a more sustainable year around model ?

    To offset the losses and save businesses?

    Anyhow , the best off luck to those trying to address many complex issues right now …
    I do not envy you.

    I hope and pray for our community, our safety and well being and that all who are taking major hits financially recover and flourish.

  5. Elaiacona, not sure what the person you ran into is talking about…there are plenty of reservations available off the island virtually every day. What’s their point anyway? That so many people are flocking to leave the island?

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