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Originally published May 18, 2008 at 12:00 AM | Page modified May 22, 2008 at 4:37 PM

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How Washington's ferry system got into a mess with no easy fix in sight

The agency's future is uncertain. It's running short of money and could face a $1 billion shortfall over the next 16 years. Lawmakers say the ferry system will have to become leaner, which ultimately could mean longer waits at the dock.

Seattle Times staff reporter

PORT TOWNSEND — Walk into almost any store along the waterfront here and you'll find owners worrying about the future. Tourism has been down, and so are profits.

They say business has suffered since the state abruptly scrapped its Steel Electric Class ferries late last year because of corroded hulls, leaving the town without a car ferry to Whidbey Island for more than two months. With summer approaching, partial service has been restored, but it could be years before things get back to normal.

Shop owners pin a lot of their troubles on one state agency: "The ferry system let us down," said Teresa Verraes, owner of an art shop, Artisans on Taylor.

The agency had spent years pursuing a plan to replace the 80-year-old Steel Electric boats, but it collapsed in the face of community opposition. When the boats were pulled, the only immediate backup was a smaller, passenger-only ferry.

State lawmakers, including the chairs of the powerful House and Senate transportation committees, say that what happened to the Steel Electrics is just a symptom of broader problems within the nation's largest ferry system:

• The agency spent millions of dollars on plans to improve and expand ferry terminals, in part to handle a predicted increase in ridership, state studies show. But instead, ridership has steadily declined in recent years and the expansion projects are now on hold.

• After the four Steel Electrics were pulled from service, the ferry system stepped up inspections of the fleet and found unexpected hull corrosion on other vessels. Last December, workers doing maintenance on the Hiyu, a ferry used in the San Juan Islands, knocked a hole through the hull when tapping on a rusted area.

The agency is now tackling the backlog of work, which ferry officials blame on tight maintenance budgets in recent years.

• The agency's future is uncertain. It's running short of money and could face a $1 billion shortfall over the next 16 years. Lawmakers say the ferry system will have to become leaner, which ultimately could mean longer waits at the dock.

The state Secretary of Transportation recently hired a new ferry-system director. And lawmakers have made changes designed to undo past damage.

"I do think we finally have leadership that will help us turn the ship around," Senate Transportation Chairwoman Mary Margaret Haugen said. "We're going to have to make major changes within the ferry system."

Former Transportation Secretary Doug MacDonald, who oversaw the ferries from 2001 to 2007, declined interview requests.

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Transportation Secretary Paula Hammond, who replaced MacDonald, acknowledges the ferry system has made mistakes, but said on the whole it's been doing a good job. Many of the decisions made over the years were reasonable at the time, she said.

"This is the beauty of hindsight. Would've, should've, could've," said Hammond, whom Gov. Christine Gregoire appointed transportation chief last October. "There are a lot of things I would like to do over in my life."

Haugen feels differently. "I cannot tell you how frustrated I've been," she said. "It's amazing it's gone on as long as it has."

"This is my livelihood"

Perhaps no place has been hit harder by the ferry system's missteps than Port Townsend.

The souring economy is contributing to slower business, but shop owners believe the disrupted ferry service has also played a major role.

Plus, they note, summer is approaching and the town will have only one small ferry, which can hold 50 cars and 300 passengers, instead of the normal two Steel Electrics during peak season. The Steel Electrics could hold up to 64 cars and more than 600 passengers each.

"We're not talking like they'll get us another ferry in four months and we'll all be OK," said Mary Stockdale, who rents out commercial space in Port Townsend. "People are going, 'Wow, this is my livelihood and we're going to go under.' "

Stockdale and others think the entire episode could have been avoided. "This whole ferry thing irritates all of us because it's been a long time in the know," she said.

State records show ferry officials began a push six years ago to replace the Steel Electrics, so named because of their steel hulls and diesel-electric propulsion systems. The new, larger boats could haul more than twice as many cars as the Steel Electrics.

The idea was to standardize the fleet and help deal with a projected ridership increase throughout the ferry system, according to the Cedar River Group, a consulting firm hired by the state Legislature two years ago to look into the ferry system's predicament.

But there was a problem. Unlike the Steel Electrics, the larger ferries — which could hold 144 cars — could not navigate Whidbey Island's shallow Keystone harbor.

The ferry terminal had to be moved.

Whidbey Island residents and interest groups complained from the start about potential damage to the environment and recreational areas. They wrote letters and ripped the proposal at public meetings. The local paper, the Whidbey News Times, editorialized against it in the summer of 2002, noting the community's skepticism.

By 2006, Port Townsend residents and the City Council joined the fight against the larger boats and the plans to expand their ferry terminal to accommodate the vessels. They worried about traffic jams downtown when the ferries unloaded their cars.

Finally, in late 2006, state officials acknowledged there was too much opposition and dumped the plan.

After spending several years and more than $8 million on designs for terminals at both ports, the project was back to square one.

Hammond defended how long it took to pull the plug, saying it didn't become clear until late 2006 "that the size of the boats they were comfortable with as communities was something less than 100 cars."

State legislators disagree. "That was one where ... someone was plain not listening," said Sen. Harriet Spanel, D-Bellingham, a member of the Senate Transportation Committee. "From the very beginning, it was known that people were not going to be happy."

Many people also blame litigation between the state and shipbuilders for delaying construction of the replacement vessels. But even if those boats had been built, they could not have been used on the Keystone-to-Port Townsend run without moving the Whidbey Island terminal.

While the agency's plan for replacing the Steel Electrics was unraveling, legislators were becoming increasingly concerned about how the ferry system was spending its money elsewhere.

The agency wanted to pour several hundred million dollars into renovating and expanding ferry terminals throughout the region, including relocating the Edmonds and Mukilteo terminals.

The Mukilteo proposal included a waiting area for cars over the water, a new building and dock, and an elevated walkway to a Sound Transit station. The work was expected to cost up to $275 million.

Kathy Scanlan, a Cedar River consultant who looked into the matter, said the push was driven in part by projections that showed significant increases in ridership — a 58 percent jump from 1999 to 2030. But instead, ridership has declined almost every year for the past eight years. It's down about 11 percent overall since 2000.

Newly revised projections, based on expected population and employment growth, now suggest ridership will increase at less than half the rate previously forecast over same time period.

People stopped riding for a number of reasons, including increased telecommuting and cuts in service. But a major factor is the sharp increase in fares. On the Seattle-to-Bainbridge Island route, for example, passenger fares have jumped 81 percent since 2000, from $3.70 to $6.70.

The agency boosted fares to help make up for millions of dollars lost when voters repealed the state car-tab tax by passing Initiative 695 in 1999. The tax had provided about 22 percent of the ferry system's operating revenue and about 77 percent of its capital budget.

In any case, the ferry system was spending a lot of money on plans that lawmakers are now questioning. Between 2003 and 2007, the agency spent more than $36 million on planning and designs to improve six terminals.

Scanlan said that when she examined the spending on terminal improvements, "it was our recommendation that these be at least reconsidered."

Secretary Hammond said ridership projections were only a small part of what drove plans for the new terminals.

People in the ferry system and the local communities believed the projects might be the last chance in 50 years to improve the terminals. They wanted to "do it right," Hammond said.

That meant designing terminals that would be welcoming for passengers, had plenty of seating space — and cost more to build.

Scaling back projects

Change is on the way for the state ferries.

The Legislature has put all the terminal improvements on hold and is looking at scaling back or canceling some of the projects.

Hammond maintains the money wasn't wasted. "We may build a more bare-bones terminal as phase 1" in some cases, she said in an e-mail, but noted there could be additional phases in the future.

"I don't think there's anybody who's happy that we spent that money on something we didn't do," said House Transportation Chairwoman Judy Clibborn, D-Mercer Island. "You can call it waste, or 'We tried to do something that didn't work.' It's a lot of money either way."

Sen. Haugen said the money that went into planning and design for the terminals would have been better spent on maintaining the boats. The Legislature, she said, has directed the ferry service to make the fleet its top priority.

"A lot of us had real concerns they weren't looking at the actual condition of the hulls. Our direction is for them to do a much more thorough maintenance program," Haugen said.

In addition to the Hiyu, unexpected hull corrosion has been found on the Evergreen State, the Kaleetan and the Tillikum. All four boats are back in service.

David Moseley, who took over as director of the ferry system in February, said the agency is catching up on a backlog of maintenance and promises to keep up in the future.

As for the Steel Electrics, state lawmakers and the ferry system recently decided to replace the Port Townsend-to-Keystone ferries with a class of boats called Island Home. They can carry about the same number of vehicles as the Steel Electrics, and can navigate Key-

stone Harbor's shallow waters.

The agency also is pushing ahead with plans to build several 144-car ferries, the ones originally intended to replace the Steel Electrics.

Those larger vessels would replace the two Steel Electrics not used on the Keystone-to-Port Townsend run, as well as other ferries approaching the end of their lives.

Finger-pointing

Fingers point in a lot of directions when it comes to how the ferry system got into this mess.

State lawmakers say the agency felt it didn't need to listen to others. "It was an agency that had the attitude of 'We can just outwait people who disagree with us,' " Clibborn said.

Haugen said she spent years battling the agency, but had little success getting other legislators to pay attention until the Port Townsend ferry crisis.

"The truth is, the majority of people in the state of Washington don't give a damn about the ferry system," Haugen said.

Mike Anderson, director of the ferry service from 2004 to 2007, said there's plenty of blame to go around.

"The ferry system didn't do this by themselves. There's incredible scrutiny. It goes through the Department of Transportation and governor's office and the Legislature," he said. "If anybody is trying to say they didn't know, I think it's convenient memory."

Andrew Garber: 360-943-9882 or agarber@seattletimes.com

A story published on May 18, 2008 was corrected on May 22, 2008. A previous version incorrectly reported that the new director of the ferry system was hired by state lawmakers. The director was hired by the state Secretary of Transportation.

Copyright © 2008 The Seattle Times Company

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