The request by ferry co-owner Peter Wells to increase Chappy Ferry rates by 15 percent was approved in a unanimous vote Monday by the Edgartown select board.
With nearly 90 participants at Monday’s public hearing, held via Zoom, the select board heard from proponents of those opposed to the requested hike, after a brief presentation by Wells regarding the reasoning behind the proposed fare hike, which was included in the public hearing notice issued by the Edgartown select board. A vehicle trip, for example, will go from $13 to $15 roundtrip.
The new rates are set to go into effect Jan 1.
Wells said a 15 percent hike is necessary to keep up with operational costs, as the company’s expenditures have exceeded its revenue.
Wells pointed to an increase in every one of the ferry operation expenses, including fuel costs, insurance, payroll, utilities, maintenance, and supplies.
This, along with increases in the cost of living and the consumer price index, Wells said, calls for an equitable increase in all fare categories, with the exception of a 20-ticket book for bicycles, which will remain the same. All fares will be rounded to the nearest dollar in order to move away from coin change, in an attempt to speed up transactions.
Wells said he and co-owner Sally Snipes attempted to hold off requesting a rate increase, as “a sale to new owners seemed imminent.”
Since that change of ownership did not occur, he said, the increases are necessary in order to keep up with expenses.
Wells and Snipes plan to maintain ownership of the ferry operation for “at least another year.”
Additionally, Wells said that the “across-the-board rate increase will enable the ferry company to afford to add people to the current Chappy year-rounder program.”
The program, instituted nearly half a century ago, was created to “ease the burden on fewer than a dozen households that lived on Chappy then, and depended on the ferry to get to work five days a week,” he said, noting now “there are currently more than 150 benefiting from this subsidy program.”
At last week’s Chappy Ferry Steering Committee meeting, Wells received pushback from committee members who questioned the justification of increasing ticket prices, and noted they would be interested in seeing Wells’ financial reports.
On Monday, the majority of the testimony heard by the select board argued neither for or against the proposed increases, but rather a more detailed review of the operation’s financial statements.
Inquiry by Chappy Ferry committee member Rick Biros regarding how the Chappy Ferry revenue hasn’t been keeping pace with its costs, when Island traffic, and other revenues seemed to be up, was echoed by a number of speakers.
Biros noted the Trustees of Reservations (TTOR) experienced “record sales” for over-sand vehicle (OSV) passes.
Not for or against Wells’ proposal, Biros called for “just more due diligence in justifying the raise.”
Rob Strayton agreed. “There’s no question that some of the expenses are up,” he said, but “I don’t necessarily see the expenses being through the roof.” He also pointed to the increase in Chappy traffic and the uptick in the amount of construction in the past few years.
“Everyone’s doing work on their homes,” Strayton said, “There’s tons of [construction and contractor] vehicles in [the ferry] line all the time … those are the vehicles that are creating those lines.”
“I have a really hard time believing that revenue is down,” he said. “And I have a hard time believing that revenue was down throughout COVID — that was not our experience.”
Wells recalled a committee meeting earlier this year, where it was agreed that a third party accounting firm, Nardella & Taylor, would review the ferry’s finances “to ensure that revenues reported in the company’s financial statements are reasonably accurate.”
Wells said he has been consistent in submitting those statements.
“I think it’s important that you understand where this review came from,” Wells said. He stated that the accounting firm charged with the assessment was recommended by Chappy Ferry committee members, and per approved minutes of the committee’s Jan 12 meeting: “[Rick] Schifter confirmed that N&T was willing to take on the work free of charge in anticipation of being involved in a possible subsequent transaction involving the ferry.”
Although Chappy Ferry Inc. was “technically the client, and signed the engagement with N&T,” Wells said, “Chappy Ferry Inc. did not pay for any of the work … the work was done at the specific direction of the steering committee.”
Wells said the conclusions of the review are in the public record, and show in 2018 and 2019, the ferry “almost broke even.”
In 2020, revenue was 16 percent less than expenses, Wells said, followed by 7 percent in 2021.
Wells said a summary by a CPA, “acting at the direction of the [Chappy Ferry] advisory committee, answered the questions formulated by that committee after reviewing all the ferry’s financial records for those years.”
Wells noted the company’s operational license calls for a “confidential review” of the ferry’s finances by the town’s select board. “This has been done for this fare increase.”
“Somebody has looked at the books,” he said.
A summarized conclusion submitted by N&T, and obtained from the town, states that revenues from years 2018–2020 were “consistent,” with an increase in 2021. The report “validated the percentage of revenues based in cash for 2018 based on available bank statement details,” and “validated the decrease in cash-based revenues from 2018–2020 due to the introduction of credit card kiosks in 2018.”
N&T was “unable to determine that all cash received was deposited into company bank accounts,” per its report, although the accounting firm “did not see anything unusual that would raise our skepticism that significant amounts of cash were diverted from the company for other uses.”
Additionally, per its report, N&T “reviewed the depreciation expense calculations per the 2018, 2019, 2020, and 2021 tax returns, noting the assets and equipment being depreciated appear to be reasonable for the operation of a ferry business.”
Upon the review, N&T “did not see any unusual expense categories that would appear to be non-ferry-related.”