whatcom county citizens’ task force for the lummi island...

Whatcom County Citizens’ Task Force for the Lummi Island Ferry

Report to the Whatcom County Council

August 1, 2011 Introduction On November 23, 2010, the Whatcom County Council voted to implement a $3.00 surcharge per trip on all ferry fares, effective January 23, 2011 in order to increase the ratio of fares paid to 55% of total operating cost. On that same date, the County Council established a Citizens’ Task Force for the Lummi Island Ferry. Although the initial impetus to form the Task Force came from questions about equitable fares, it quickly became obvious to Task Force members that the most important issue was how to reduce rising costs for the County. We focused our research and the materials in this report on ways to reduce costs of ferry operations and enhance revenues to support the ferry system while maintaining transportation services. Governments everywhere in Washington are caught with expenses rising at a faster rate than the rate at which revenues rise; among the reasons for this are archaic methods of tracking and analyzing information, aging infrastructure and capital decisions made without life-cycle costing, and workforce costs. Many of the recommendations in this report address these issues. It is important to note that while not all Task Force members agree with every recommendation in this report, the Task Force voted, unanimously, to approve this final set of recommendations in its entirety. Contents We met most Mondays from January 18 through August 1, a total of 24 formal meetings. Task Force members researched the topics assigned by the County Council in Resolution 2010-046 and presented findings to the group and to the community. We studied many historic documents, including the County’s Comprehensive Plans, the plans and reports from other ferry systems, accounting authorities, traffic studies, budget documents, and funding studies. Our recommendations are based on that research, refined by considerable interactions with the Lummi Island community. The Task Force examined these issues as requested in Resolution No. 2010-046:

1. Potential and current revenue sources for the Lummi Island ferry system; 2. Historical data and projections of the ferry’s operation, costs, ridership, fare levels, and

revenue; 3. Similar ferry operations in Washington; 4. Distinctions between operating costs and capital expenditures for the ferry; 5. Accounting for ferry costs and applicable state revenues for the ferry system; 6. Capital needs of the Lummi Island ferry system; 7. Transportation needs of ferry users and nature of trips taken on the ferry; 8. Impact of the ferry service on the economy and tax bases of Lummi Island and the

greater Whatcom County community; 9. Input from Whatcom County citizens and other communications; 10. Recommended fares and fare structure options; 11. Classifications of ferry expenditures as operating costs; options.


12. Potential new revenue sources or changes in expenditures, or both; options 13. Recommendations on other policies to improve long-term fiscal balance in the ferry

fund, the efficiency of ferry operations and/or the quality thereof; 14. Summaries and records of data used to come to its conclusions.

The result is a heroic effort to provide the County Council with useful information about ways to improve ferry operations, accounting procedures, and revenues while reducing operating costs wherever possible, and with ways to determine ferry fares that are fair and equitable. Some ideas on how to reduce costs we did not have the time or the expertise to fully evaluate, and we have listed them in our report and encourage further research into them. Other ideas that we investigated we recommend against, and those are also listed in the report. Acknowledgements The Task Force was charged to present its recommendations and to dissolve no later than August 1, 2011. No funds were available to the Task Force to complete its work, and several Lummi Island community groups sponsored the costs of meeting space and reproduction of materials. We would like the Council particularly to thank the Lummi Island Grange and the Lummi Island Community Association for donating over a thousand dollars of room and equipment rental plus several hundred dollars for copying and printing this report. From my perspective, the most important recommendation from this Task Force is that the County Council create a Ferry Advisory Committee. It is clear from our work with the community that the intricacies of County budgets, government accounting, ferry operations, and communication with the County’s Public Works Department require continued focus by those most affected – the residents of Lummi Island. The best way to achieve that focus and communication is through citizens’ who examine fares and operations, investigate potential sources of revenue, and are involved more intimately in the planning and decisions regarding the future of the ferry. I would also like to thank Council member Kathy Kershner for getting the Task Force off to a good start and keeping an eye on ongoing Task Force operations. Frank Abart, Accounting Supervisor Peggy Hoviton and Ferry Coordinator Chantelle Hilsinger were very helpful when the Task Force needed information and perspective. Thanks to the entire Council for the time you spent in June listening to our status report, and for your ongoing attention to this complex and critically important issue to the 1000 people for whom the Lummi Island Ferry is a lifeline to schools, work, doctors, food, and civic and cultural life in Whatcom County. Barbara Ryan, Chair


Members of the Citizens’ Task Force for the Lummi Island Ferry Kathy Berg is a retired park manager. She serves on the Community Transportation Advisory Group at the Council of Governments, and is involved with local land use, planning and environmental protection organizations. She is active in the Birch Bay community. Jim Dickinson is a lifelong resident of Lummi Island, has been a commercial fisherman for many years, and is President of Iconic Manufacturing, LLC Pioneer Sound, and Jim Dickinson Marine. His family has been active members of the island community for generations. Patricia Dunn, CPA, is Director of Finance for Whatcom Transportation Authority and former financial executive with several transportation, technology, and construction entities including the Alaska Railroad, Enron, Corsair Engineering, and Black Ram Engineering. Her grandparents settled on Lummi Island in the 1920’s, and she spent childhood summers here. Diane Harper fell in love with Lummi Island on her first visit in 1983, and has been an island homeowner since 1985. She was a planner with the Whatcom County Planning Department from 1984 to 1993, and a Transit Planner with King County Metro until retirement in 2007. Chandler Johnson is a third generation islander. He consults with large manufacturing, distribution and service supply chains developing optimization algorithms. He taught statistics at Stanford University while pursuing a PhD. His thesis concerns network=conditioned learning and commodity price behavior. Barbara Ryan chaired the Task Force. She retired after twelve years on the Bellingham City Council with a particular interest in regional transportation planning. Before politics, she was a public relations practitioner and business owner (Waycross Investment Management Company). Riley Starks owns The Willows Inn, a world-renowned restaurant and bed-and-breakfast inn on Lummi Island. He has owned and operated Nettles Farm on the island since 1992, and is a reefnet fisherman who delights in introducing chefs to fresh caught seafood.

Recommendation CommentsEstimated Expense Decrease

Estimated Revenue Increase

One Time costs

Type of Estimate

App

endi

x

Further explanation and data can be found by going to the appendix listed in the far right column.

1Substitute current parking security service with surveillance camera system and emergency call button(s) tied to Lummi Police.

Based on budgeted amount. May include drydock period when security should be retained.

$77,000 $(13,000) Very rough on one time cost A3

2 Reduce sevice by making last trip to island at 10:30 pm Sunday through Thursday.

Reduces operation by 417 hours annually (250 trips). $47,000 Mid-Range

Crew Costs A4

3Utilize single engine operation when schedule and weather permit. Two/thirds of the annual hours of operation could be run on one-engine without modifying the current schedule.

The crew reports that a trial several years ago reduced fuel use by about 1/3rd. If consumption is 52,000 gallons/year, the estimated reduction is 11,000 gallons (assume $3.50/gallon).

$40,000 Reasonable A4

4Do not renew lease for parking on Gooseberry Point. Note that this expense reduction cuts maintenance costs and also increases vehicle traffic on the ferry.

27 parking spaces will remain; more parking could be established within county ROW. $36,000 $15,000 2011 budget A1

5 Reduce Safety Specialist FTE (now .25) to common standards.

Includes non-payroll costs allocated according to FTE assigned. $27,000 Reasonable C2

6 Reduce clerical FTE by implementing web ticket sales, outsourcing ticket sales, and/or limiting service hours.

Reduces clerk and accounting time and costs of printing. $5,000 Reasonable C2

7Reduce crew to Master and purser for the 30 minute boat preparation/engine start-up at beginning of day. Severe weather might require three.

Two crew are needed for safety; purser sets up for ticket sales. Assumes lowest paid crew time is cut.

$3,600 Assumes lowest paid crew member

A4

8 Reduce hours of operation by eliminating the extra trip after midnight on Saturdays.

Reduces operation by 17 hours annually (52 trips). $2,500 Mid-Range

Crew Costs A4

9Implement an electronic ferry ticketing system that accepts debit/credit card payment on-deck as well as collects and reports data through a robust database.

No-pay and under-pay fares are increasing, much of these are solved with plastic. Explore electronic alternative to punchcards in Request for Information. Consider crew time and environment constraints.

$2,000 $15,000 $(25,000) Rough until RFI - RFP A1

10Transfer cash often and fast to Ferry Fund from the inter-fund receivable to generate additional interest in the Ferry Fund (amount dependent on rates and balance).

Road fund does not earn interest, so revenue is not taken from road fund. $2,000 Reasonable B2

Recommendations of the Whatcom County Citizens' Task Force for the Lummi Island Ferry

Section A: Recommendations on changes in expenditures and potential new revenue sources

August 1, 2011 page 1 of 3 Recommendations

Recommendation CommentsEstimated Expense Decrease

Estimated Revenue Increase

One Time costs

Type of Estimate

App

endi

x


11

Move start of drydock to 3rd week of April or last week of September to capture larger tourist market in September, but only if shipyard and substitute boat costs are equal or less than current 2nd week of September start.

If costs were equal to current schedule, ferry revenue and island businesses would benefit. If there were more weather related delays, the costs would increase more than gains in revenue.

Warning: could cost more than revenue

gain

$7,000

Financial risks discussed in appendix; revenue from Sept 2010

A2

12Establish a ferry district. Administration costs to county estimated at about 4% and have been deducted from revenue shown.

Council may impose up to $.75/$1000 ($75/year per $100,000 of value). Note that a county-wide district would obtain the same revenue at 1/100 of the rate (75 cents/year per $100,000 in value).

$184,000

FD 11 Assessor value used, it may be lower.

B4

13 Install on-vessel DVR for accident investigation. Maintenance costs shown here more than covered by decreased Safety Officer time. $(3,000) C2

14All current and retired crew members and their families are issued punchcards as part of their compensation. Amounts depend on fare levels.

Allows ferry users to see crew ask everyone for fare; estimated amount, but subject to union/county negotiations

$(27,400) $27,400 D1

Total Potential Reductions in Expenditures and Enhanced Revenue $209,700 $250,400 $(38,000)

15 A3

16 A4

17 A4

18 A1

19

20

NOT Recommended: The Ferry Task Force investigated the following items and decided to recommend against them. Do not establish parking charges for Gooseberry Point as it would increase expense more than revenue.

Do not establish expiration dates on punchcards. Staff time to monitor and resolve would outweigh very marginal revenue increases.

Do not eliminate the first trip on weekdays. The marginal expense reduction was more than offset by the loss of fares from families who would have to move off the island.

Do not institute a collections procedure for tracking and collecting from no-pays and under-pays. Implementing electronic payment on deck will resolve most of the no pays and reduce administrative staff time, as well.

Do not eliminate the first trip on Sundays. It is needed by shift workers whose alternate schedule required the midnight trip. Expenses are reduced more by eliminating weekday midnight trips.

Do not sell naming rights or other advertising on the ferry or ferry system unless revenue potential becomes significant.


Recommendation Comments Financial Impact Appendix


21Add Extended Run Fare (1 run at end of day); can be arranged by calling ferry coordinator in county office the day before.

Model on Skagit County practice. Union contract renegotiation provision needed for crew to work overtime on a one-day notice.

A4

• Ease schedule confusion

22 • Revise schedule for slower one-engine when necessary.

23

Contract with Opportunity Council to perform screening for needs-based ferry fare discount; change three methods in current ordinance to one income-based guideline - HUD Very Low Income is recommended.

• Cost per year was estimated by the Treasurer to be $3,750; the Opportunity Council would be slightly less.

D1

• Residents are familiar with ferry operation and needs of residents

24 • Experts can provide outside perspective• Promotes ongoing communication with a cross-section of ferry users• Current formula pits fares paying for operations against capital needs (ie, short term advantage of expensing vs capital)• Current formula does not specify other possible revenue sources (taxing districts, naming rights, donations, etc.)

27 Create and implement a Cash Reserve Policy. Accumulate cash reserves for rate stabilization and emergencies. B3

B2

B3

No change

Impacts would depend on formula adopted.

Fiscal impact, if any, unknown

Dependent on specific arrangements and income level selected.

Variable, but low-lying fruit may be gone

Higher cash balances will increase interest income.

Modify schedule so trips leave the same time every hour, whenever possible. A4

B5


or the efficiency and quality of ferry operationsSection B: Recommendations on policies to improve long term fiscal balance in the ferry fund,

Unknown how many times used. Base charge covers all costs, overtime and fuel - estimated at $100 here; plus those on ferry pay usual fare.

Explore revision of farebox/county 55/45 shared operational expenses formula. At a minimum, revise sources of "farebox" revenue.

• Complete Balance Sheets & Income Statements showing ferry financial condition are not available, hindering knowledgeable decision making.

25

Establish Citizen Ferry Advisory Group. The Ferry Task Force has illustrated that cost savings can be identified and supported by the community. Direct interaction between PW staff and community members is much more time-consuming (ie, not cost-effective).

26

Examine fund structure in conjunction with Ordinance 2005-094. Although the ferry fund is called an enterprise fund, it lacks certain common enterprise fund features, including assets such as a ferry, required in the operation of the fund.


Recommendation Comments Financial Impact Appendix


B6

• Allows alternate ferry in the event of emergency failure of boat. B6

• On-the-shelf boat design is wider than current boat, as are all other WA ferries • Used boat would have lower capital cost• Older boats have lower fuel use than new• Allows interoperability with other ferries

31

32 A4

33

34 B4

35 B4

36

37

38

39

40

No recommendations at this time: The items on the following list needed further investigation before a recommendation could be made. We suggest that the Council request an appropriate person or group to research. Only those that are shown to reduce costs should be implemented.

B7

An in-depth analysis of fuel efficiency, maintenance, dry dock, and other factors is needed to determine if a used boat is preferable to new.

Form a 3 or 4 county ferry working group to monitor and lobby for changes at state level such as removing fuel tax for ferries, and to investigate potential for expense reduction by acting together on purchasing, emergency or dry dock boat service, etc.A two hour midday service cut was considered. Midsummer counts indicate this is not advisable, but analysis of a year's data of island-mainland traffic is required to compare to mainland-island counts to assess an alternate winter schedule.

Consider expanding dock width when major maintenance is required. Utilize life-cycle costs as a predominant factor in the decision.

Life cycle cost analysis is required to determine whether an interim major maintenance project is preferable to proceeding with dock expansion.

Some cost in staff or consultants; would better position the County to obtain grants.

Determine how and when the Whatcom Chief should be replaced. Consider the possibility of purchasing the ferry Christine Anderson (Pierce County) if/when available.

• Funding needs in the 14-yr plan are considerably lower than expected compared to practices of other county ferry systems

Reduce crew to two by establishing directional signs and signals on the ferry operable from the wheelhouse, if this meets Coast Guard requirements. One-engine operation with only two trips per hour also would allow slower loading with only one crew member on deck.

Investigate utilizing the LEAN efficiency method for administrative processes. This has had success in some industries, but is new to government.

Explore outsourcing administrative and ferry operations, similar to Pierce County.

Use Senior ferry crew (Master) to assist with certain off-boat responsibilities such as repair and maintenance decisions. Consider changing Master duties in next union contract.

Community members have suggested the following for further investigation:

A number of Grant opportunties were explored. While the ferry may qualify for some grants, the very stringent requirements accompanying the funds may surpass the grant benefit. This requires additional analysis.

Can a road or bridge district be established for the ferry and docks?

Outsource bookkeeping, ridership records, and other non-managerial functions, possibly with Skagit County.

Have some clerical functions performed by someone also qualified as crew and stationed in the island office. Could reduce crew in slack periods to only one on-deck if coast guard approves.

Develop long term capital asset management plan and update replacement costs in 14 year ferry plan.

30

28

29


Recommendation Comments Appendix


Discounts and free fares are offered to various groups of riders. This practice "hides" the giveaways and does not clearly disclose:

• True value of discounted passage provided to County agencies •• • Discount value of needs based tickets • Value of employee benefit of free passage • Free passage provided to schoolchildrenNew fare technology recommended can readily provide this data.

Modify accounting practices for ERR Fund charges: • Record “ERR” fund in recognizable components such as fuel, drydock, repair & maintenance.

• Current ERR Fund charges are reported as a single lump sum that is a material (20%) of total expenses. These can be broken out so readers understand the cost.

• Adjust ERR charges to Actual at year end • ERR costs are charged monthly at the amount estimated during budget preparation. Adjust the budgeted charged amounts periodically to actual costs so the Ferry Fund records reflects the actual cost of running the system.

43 Utilize a Dry Dock project code to accumulate all ERR and cost center dry dock expenses. Dry dock expenses, a significant cost component, can be easily available and analyzed. C1

44

Record MVFT revenue attributable to docks as separate revenue item in the ferry fund to enhance transparency and understanding of revenue attributable to the ferry system.

This MVFT revenue is current recorded as road fund revenue. Presenting the MVFT revenue clearly in the ferry fund assists taxpayers and manager to understand revenue sources related to the ferry system, whether they are fuel tax collections passed through from the state attributable to the ferry, or local county property taxes. The MVFT attributable to ferry assets is easily quantified (it is part of the CRAB calculation for the deficit funding calculation). This modification would change the result of the current county/farebox calculation.

B1

45 Evaluate the Whatcom Chief's salvage value and remaining useful life and adjust depreciation, if needed.

1964 accounting presumed a $100,000 salvage value. If the current salvage value is less, the remaining net book value should be depreciated over the remaining useful life. B6

46Examine the Professional Services Account charges and reclass (budget and actual) to comply with BARS definitions.

Few of the services classified as Professional Services meet the BARS or conventional definitions. The majority of these charges are drydock related. C1

47

Examine Clerk/Receptionist allocation (.4 FTE) to ferry fund. Updated technology or business process improvement analysis may identify methods to reduce time spent on support function.

.4 FTE (about 3 hrs/day) seems high for $2.7m operation to answer phones, perform data entry, sell passes, fold brochers, and 7update website (Note: there is also a ferry coordinator position). Consider tracking/logging phone calls to determine whether a website FAQ or communication method can eliminate some staff time. Examine outsourcing pass sales, eliminating paper brochures, and reducing service hours.

C2

42

41 C4

C3

Modify revenue recognition practices to record fare revenues at gross, with applicable discounts recorded to contra accounts. Discounts and free passage should be clearly disclosed in accordance with GAAP


Section C: Recommendations related to Classification of Ferry Expense and Accounting Practices


Recommendation Comments Appendix


48 Examine Accounting Supervisor FTE (.25)

25% of Accounting Supervisor time is spent on 5% of the budget. Even considering the unique ferry requirements (revenue, leasing, rate setting, customer base), this appears high. Consider a reduction of time for accounting staff after the current period of intensive work requirements for ferry fare anlaysis and Lummi Nation negotiations. Utilize objective costing methodology (ex: Activity Based Costing) to quantify FTE.

C2

No Recommendation at this time:

49 C3

50 C3

51 C3

Classification of Lummi Nation Land Lease as an Operating vs Capital lease . A piece of county charter code (Sec 6.90) states that real property shall not be leased to the County for more than a year unless it is included in a capital budget appropriation ordinance. This code is contrary to GAAP which clearly promulgates that only land leases with title passng may be capitalized.

Accounting classification of Repair and Maintenance (R&M): expense vs capital expenditure . Concern had been raised whether work on ferry and docks had been properly categorized as R&M (paid by the ferry fund) vs Capital (paid by the road fund). Generally, accounting has been in accordance with GAAP (exception: 2006 on-board toilet $18,600).

Dock repair and maintenance (R&M) costs. While citizens are concerned that the county road fund used to bear the cost of dock R&M, the current treatment appears to be in accordance with RCW 47.04.140 and WA State Ferry System procedures.



Section D: Recommendations on fare levels and fare structures.

The Ferry Task Force in consultation with the community arrived at these guidelines for fares: Appendix D1

1) We want the ferry system financial support to be fair, and also to appear to be fair, therefore we recommend:52 Current and retired crew and families use punchcards; this is subject to a county-union negotiation but we included the cost in fare calculations53 All county vehicles and employees not actively maintaining or inspecting the ferry system pay via punchcards or cash54 Revise the criteria and the application process to obtain needs-based discounted tickets so that one standard applies to everyone

2) We value having families, children, teenagers, and people of varied economic status living on the island; therefore we recommend:

55 Establish multi-ride ticket fares that give regular ferry users a discount from single ride cash fares56 Offer an additional pedestrian and passenger vehicle discount for residents with low incomes of whatever age or disability57 Ages 6 through 18 (through high school) have free passage as passengers/pedestriansake, 58 Focus should be on reducing operational expense to benefit both the island and the county.

3) We recommend that the fare structure be altered as follows, and as illustrated on the fare tables following:59 Insitute a summer surcharge for single trip (cash) purchases for June through September of $1 to $3 per trip.60 Change bicycle and motorcycle fares into a flat surcharge of $3 on the appropriate pedestrian fare61 Discontinue motorcycle punchcards62 Replace current 10 and 25 trip punchcards with 20 trip punchcards63 Discontinue July - August student punchcards64 Revise truck fares to be based on length after information is gathered on how many are in each length category, no change in truck fares now.65 When truck fares are length determined, measure trailers as combined pulling vehicle and trailer length and charge one fare for both.66 Add fare category of one extended run at end of day

2011 Budget Baseline

2011 Budget Fare Box

2011 Budget

Road Fund2011 Dept. Public Works Projected Operating Costs as in Budget $2,666,188

Transfers from Road Fund from 2011 budget -$1,198,621 -$1,198,621Farebox Revenue from 2011 budget -$1,321,710 -$1,321,710

2011 Motor Vehicle Fuel Tax Deficit (MVFT deficit) Funding from budget: -$160,000 -$160,0002011 Projected Ferry Fund Interest as in budget: -$1,999 -$1,999

2011 MVFTattributed - not in Ferry Budget $0 $140,000not identified $16,142 $16,142

$0 -$1,468,000 -$1,059,000



Recommended Changes in Operational Expense and Farebox Revenue

2011 Dept. Public Works Projected Operating Costs As in Budget $2,666,188 at 55/45% $1,466,403 $1,199,785

Recommended Changes in Calculation: correct MVFTdeficit funds based on ordinance -$160,000 at 55/45% -$88,000 -$72,000recommended change in ordinance for interest funds -$1,999 -$1,999 $0

recommended addition of MVFT attributed funds to ordinance -$140,000 at 55/45% -$77,000 -$63,000increase in farebox revenue to fund cash reserves (Ferry Fund) $86,000 $86,000 B3

2011 Operational Budget with Changes $2,450,189 $1,385,404 $1,064,785

Recommended Changes in ExpensesFor security service, substitute camera system/emergency call button(s) tied to Lummi Police $77,000 $42,350 $34,650 A3

Reduce hours of operation by making the last trip at 10:30 p.m. Sunday - Thursday. $47,000 $25,850 $21,150 A4Go to single engine operation when schedule and weather allow $40,000 $22,000 $18,000 A4

Do not renew lease Gooseberry Point parking; also eliminates maintenance expense $36,000 $19,800 $16,200 A3Reduce Safety Specialist FTE (now .25) to be in line with standards. $27,000 $14,850 $12,150 C2

Implement web based ticket sales, outsource ticket sales, etc. $5,000 $2,750 $2,250 C2Reduce crew from three to two for 30 minute boat preparation/engine start-up $3,600 $1,980 $1,620 A4

Reduce hours of operation by eliminating the extra trip after midnight on Saturdays. $2,500 $1,375 $1,125 A4Implement electronic ferry ticketing system with database and reporting system. $2,000 $1,100 $900 A1

Begin drydock in April instead of September. Adds income, but risks added costs. may be + A2Install Camera/DVR system on ferry for accident records. (Revenue exceeds expense) -$3,000 -$1,650 -$1,350 C2

Estimated expense Increase by cost of crew punchcards -$27,400 -$15,070 -$12,330 D2$209,700 $94,365 $115,335 $94,365

$2,240,000 $1,270,000 $970,000

Recommended Changes in RevenuesImplement electronic ferry ticketing system with database and reporting system. $15,000 A1

Additional revenue from vehicle trips as a result of removing parking $15,000 A3Begin drydock end of Sept or late April to capture tourist market in September $7,000 A2

Transfer interfund receivables immediately $2,000 B2Estimated revenue increase by crew punchcards $27,400 D2

Ferry District Net after admin costs; if legal questions resolved $184,000 B4$250,400

$1,019,600 D2

all divided 55% / 45%

B2

App

endi

x

Road Fund Share

Fare Box Share

Changes to 2011 Budget

Estimated Increase in RevenueNet Fare Box Revenue Target

Net Operational Cost After Recommendations ImplementedEstimated Reduction in Operational Costs



Recommended Fares and Fare Classes

Fare Classes Rate Rate Basis Projected Revenue

Appendix D3 provides examples of fares that meet other Fare Box Recovery Targets using the same method. Appendix D2

$7.00 $5.00 Passenger/Pedestrian $5.00 1 RdTrip 26,857 $134,285$4.60 $3.00 Passenger/Pedestrian Multiride $60.00 20 RdTrips 41,103 $123,309$3.68 $2.50 Needs Based Passenger/Pedestrian $50.00 20 RdTrips 3,756 $9,390

free free Children under 12 W/Adult free 1 RdTrip n.a n.a.$3.92 free Children and Youth 6-18 yrs free 1 RdTrip n.a n.a.

new $2.00 June 1 - Sept. 30 Peak Surcharge on single trips $2.00 1 RdTrip 14,228 $28,455new $3.00 Bicycle or Motorcycle Pedestrian surcharge $3.00 1 RdTrip 1,104 $3,312

$13.00 $10.00 Vehicle W/Driver < 20' $10.00 1 RdTrip 23,236 $232,360$9.40 $6.50 Vehicle W/Driver < 20' Multiride $130.00 20 RdTrips 63,961 $415,747$6.60 $5.00 Needs Based Vehicle W/Driver $100.00 20 RdTrips 6,584 $32,920

new $2.00 June 1 - Sept. 30 Peak Surcharge Vehicle W/Driver (cash) $2.00 1 RdTrip 10,327 $20,653$32.00 $29.00 Vehicle W/Driver 8,001 - 20,000 lbs $29.00 1 RdTrip 558 $16,182$23.70 $26.10 Vehicle W/Driver 8,001 - 20,000 lbs $237.00 10 RdTrips 520 $13,572$68.00 $65.00 Vehicle W/Driver 20,001 - 36,000 lbs $65.00 1 RdTrip 171 $11,115$52.40 $58.50 Vehicle W/Driver 20,001 - 36,000 lbs $524.00 10 RdTrips 403 $23,576

$133.00 $130.00 Vehicle W/Driver 36,001 - 50,000 lbs $130.00 1 RdTrip 83 $10,790$107.00 $117.00 Vehicle W/Driver 36,001 - 50,000 lbs $1,070.00 10 RdTrips 314 $36,738

$18.00 $15.00 Trailer under 16 feet $15.00 1 RdTrip 340 $5,100$34.00 $25.00 Trailer 16-30 feet $25.00 1 RdTrip 252 $6,300$63.00 $65.00 Trailer over 30 feet $65.00 1 RdTrip 16 $1,040

new $100.00 Additional trip at end of day: plus add regular fare for all vehicles $100.00 1 RdTrip 0 $300578 $600.00 Special Trips requiring crew call-out after shut-down $600.00 1 RdTrip 6 $3,600

Totals 193,818 $1,129,000 * Projected Trips for 2011 were based on recent past experience.

-12.1% Vehicle/Wdriver punchcard trips decline from 2010 Farebox Revenue Target: $1,019,600-1.8% All other trips decline from 2010 Allowance for Changes $109,400

The recommended fares below are based on the Fare Box Recovery Target that results from implementing the recommendations in this document: they are an interdependent package. See Appendix D2 for explanation of process that determined these fares.

Proposed Price /Trip

2011 Price /Trip

Projected* 2011 Trips Purchased


Whatcom County Ferry Task Force Report

History of Ferries Serving Lummi Island

Automobile and passenger ferries have operated from Gooseberry Point for over 90 years. These ferries have been an integral part of the community of Whatcom County, serving multiple generations of families who have kept homes and businesses on Lummi and Orcas Islands. As the Whatcom County economy shifted from a fisheries and forestry base, the use of the ferry to reach jobs, schools, and extended families has grown.

Early Days Although the starting date of the formal ferry service has been lost, unofficial sources quote 1916 and 1919 dates. Originally the Ferry was operated by Lummi Navigation Company and later by the Lummi Island Ferry Company (LIFC). Both were divisions of the local Carlyle Packing Company who owned the largest salmon cannery and was the largest private property owner and employer on the island.

At different times, ferries varied from barges towed and pushed by powered launches to steam powered ferry boats. Docks were minimal. Lummi Navigation Company also operated both steam and petroleum powered passenger and freight boats from the Island’s west side docks on seasonally dependant schedules.

LIFC sold the Hales Pass route to Whatcom County in 1924, including both docking sites and the wooden hull, wood-fired steam powered, 6 car ferry Central. In time, the County replaced the docks, moving the island dock to slightly to the north of where it is now and in 1928

JDickinson page 1 of 10 History


relocating the mainland dock about 100 feet to the east to its current location. In 1929, the U.S. Coast Guard condemned the steam boiler of the Central which caused the County to put forth an emergency appropriation for $13999.13 for a new Ferry. The result was the Atlas diesel powered, wooden six car ferry Chief Kwina.

Early operations of the ferry service by the County were considered less than satisfactory by those who lived on Lummi Island. Until the later part of the 1930s, the system operated with a very sketchy schedule and sometimes without any at all. The operating crews were sometimes “contracted out.” These operators ran the ferry with their compensation being whatever they could charge those who used it, which of course brought accusations of gouging.

Chief Kwina with School Bus on Ramp, Acorn in WWII drab on side

The islanders successfully petitioned the County to take back control and pay the operators. Often these crews were hired through political patronage by the Third District County Commissioner. In 1931 the Island Grange brought forth a lengthy complaint about the service, partially dealing with the absence of a schedule. A further complaint, elaborated in the letter to the County Commissioners, was the fact that the County was allowing Puget Sound Freight Lines, a subsidiary of Puget Sound Navigation (PSN) who were the progenitors of the Washington State Ferries, to use the newly built Chief Kwina to go to Orcas from Gooseberry Point up to 4 times per day instead of servicing the island, and sometimes substituting their own dilapidated ferry Pioneer for the Kwina while it went to Orcas.



The last reference of the Chief Kwina going to Orcas was a two trip daily schedule during the winter of 1934. PSN operated the 20 car ferry Mt. Vernon from Gooseberry to Orcas in the summers.

In 1941 the Whatcom County Commissioners, in co-operation with San Juan County, leased the 20 car ferry Fox Island for the summer of 1941 to operate between Gooseberry and Orcas. The run was successful, however it was considered non-essential in WWII, and the Fox Island was assigned to service the Bremerton Navy Yard.

In the 1950’s the Chief Kwina was joined by the used diesel powered wooden six car ferry Acorn, leased from Bob Granger, as a backup and overload vessel.

Whatcom Chief By the early 1960s, it became apparent that the aging wooden ferries were no longer adequate. In 1962 the County built the current ferry, the steel, double-ended, dual diesel powered Whatcom Chief, for $444,000. The Acorn was sold by its owner, and the Chief Kwina was retained as a spare boat until 1970 when it was sold to local resident Frank Granger and extensively rebuilt. It is still in service as a contract commercial fishing tender.

The Whatcom Chief was considered huge by islanders used to a six car ferry, as it had been sized by the County to provide a two trip a day connection to Orcas. This inter-island connection was never realized as San Juan County never provided a landing site. The Whatcom Chief had a projected capacity of 16 cars. Over the years the load has averaged about 20 cars which is very close to the Washington State Ferry System target load of one car per 18 feet of vessel length multiplied by the number of car lanes. The Whatcom Chief can make a maximum three trips per hour across Hales Pass, with up to 97 people on each trip, for a maximum of 60 cars and 291 people per hour traveling in one direction.

Whatcom Chief

In historical perspective, the Whatcom Chief has been one of the most reliable car and passenger ferries ever built. Since 1970 it has operated without backup almost flawlessly, with less then 20 complete breakdowns; almost all repaired within a few hours, at worst a few days.

Its early career was marred by consistent engine problems due to the originally installed large Waukesha diesel engines not being able to handle the stop and go cycling required by this route. Even so, the ferry never missed a trip; it simply operated on one engine, a procedure no longer allowed by the Coast Guard on double ended passenger vessels. When the early engines were in

full tune the acceleration of the vessel was incredible, with emergency stops in less than its length. Installation of later engines remedied the engine problems almost completely, although the ferry never again had the performance it had with the original engines.

The Whatcom Chief is now on its 5th set of engines. As time passes it has become apparent that the ferry again has become dated with increasing age related maintenance problems, metal deterioration, not being in compliance with current auto lane widths and a tenuous ability to handle the increased ferry traffic, especially during the peak seasonal demand.




In the late1970s the county, tired of the maintenance of the long wooden island dock, moved the island terminus to a fill slightly to the south. The originally installed rotary screw ramp lifting apparatus failed repeatedly over several years and was replaced by a conventional cable/counterbalance setup which has performed well.

The Future Although the lease for using the Gooseberry Point dock is close to being settled for the next 25 years, future cost increases may lead to investigating other possible terminals. Several alternate ideas were considered during lease negotiations, including the possibility of changing the mainland terminus to Fairhaven, a distance of 10 nautical miles, versus the current .75 nautical miles. This destination would bring about a completely different mode of operation which would preclude use of the existing ferry. A change in destination, a larger ferry, or a large change in fares would have significant impacts on the composition of the island community. As can be seen by comparing the photograph from 1948 below to what we see today, what the future would hold for the roads of Whatcom County would have been difficult for anyone to imagine 60 years ago.

Jim Dickinson, Lifelong 60 year Lummi Island Resident, Commercial Fisherman Vessel Operator since age 11

Gooseberry Point Ferry Terminal 1948

Ferry terminal between mainland and Lummi Island. The Caption: "The Portage. Fish Cove. Taken from alpine flight in Russell's airplane. 1948." Unknown photographer. No restrictions.


Ferry Ridership

Potential Ridership Data Sources There are two potential sources of Whatcom Chief ridership data: crew-completed trip sheets and ferry ticket sales. Some elements of these data sources overlap, but their distinct elements have unique strengths and weaknesses. Because data source selection influences measured traffic volumes and traffic trends, and because these are used for future traffic projections, data source selection can influence long-term ferry planning decisions in unanticipated but significant ways.

Trip Sheets For every ferry trip, the purser logs traffic on the Gooseberry to Island journey. Consistent with the terminology used by the ferry crew and Public Works, the Ferry Task Force report refers to these logs as “trip sheets.” These detailed logs report crew counts of the number of passages by every fare class, including cash, punch-card, and free passages. After collecting fares, the purser returns to the in-cabin pursing station to complete the trip sheet. To complete the cash sales section, the purser need only look at the recently punched receipt book. To complete the punch-card and free passage section, fare classes for which the purser does not retain any physical evidence, the purser must either remember exact ferry traffic, or estimate traffic. Conversations with pursers revealed that a highly efficient estimation procedure has emerged. An example of the internal dialogue accompanying that estimation procedure is as follows: “When full, the ferry holds about 20 cars. I probably could have put 3 more cars on the ferry, so there were probably 17 cars. My cash sales indicate that 4 cars paid cash. That leaves 13 spots unaccounted for. But there was also a medium-sized truck that used a punch-card. That probably took up 2 spaces, leaving 11 spaces unaccounted for. So I probably had 11 punch-card vehicle passages. In addition to the cars, I think there were 6 passengers. There were also 7 pedestrians in the cabins. Cash sales indicate that I collected 5 pedestrian fares, meaning that 8 remain unaccounted for. Come to think of it, one of those was a tribal member on official business. So I probably had 7 pedestrian punch-card passages.” Our understanding is that trip sheets emerged to fulfill an Army Corps of Engineers requirement for detailed traffic volume reports. When needs-based fares were introduced, trip sheets changed to include a ‘needs-based’ column. Though both needs-based pedestrian and vehicle punch-cards existed, only one column was added to the new trip sheets. To comply with the Army Corps’ reporting requirements, crew continued to count needs-based punch-card traffic as traditional “vehicle” and “pedestrian” punch-card passages. To comply with the County’s need to track needs-based traffic, the crew has been entering the sum of needs-based pedestrian and needs-based vehicle traffic in the “needs-based” column. When aggregating traffic data, it appears that Public Works has been adding the “needs-based” column values back into pedestrian traffic. This combination of independent procedures to deal with complex reporting requirements has effectively over-counted pedestrian passages. Because needs-based tickets have grown in popularity, this over-counting incorrectly suggests growth in pedestrian ferry traffic.

CJohnson page 5 of 10 History


Public Works reconciles reported cash sales against actual receipt issuance, and the Whatcom County Treasurer reconciles reported cash sales with actual cash received. There is no existing method to audit punch-card or free passages.

Ticket Sales Actual ticket sales represent the second potential source of ridership data. Total ticket sales are based on four distinct sales categories: 1. On-deck cash sales during the Gooseberry to island ferry trip 2. In-cabin punch-card sales during the island to Gooseberry ferry trip 3. Punch-card sales at the Whatcom County Public Works Administration’s office 4. Needs-based punch-card sales at the Whatcom County Treasurer’s office Of these four sources of sales, on-deck cash sales perfectly match trip sheet cash sales. Similar to on-deck cash sales, the remaining sales channels are reconciled against both physical ticket inventory and cash received. Because ridership can be inferred from ticket sales based on the ticket multiple (e.g., 1 passage for a cash sale versus 25 passages for a 25-punch punch-card), ticket sales offer a second source of ferry ridership volume.

Trip Sheets or Ticket Sales? Trip sheets and ticket sales both have advantages and disadvantages as sources of ridership data. These include: 1. Trip sheets provide more granular data. They indicate traffic on particular days and at

particular times, while punch-card sales indicate date of purchase but not date of use. Because the large volume of punch-card sales will have certain statistical limiting properties, this issue of granularity is not a problem for annual aggregations. But it renders punch-card sales completely useless for day or trip-level analyses.

2. Trip sheets contain data on non-paying fare classes, including: tribal members on official business, school children, and county employees. Because no sale occurs, these passages are absent from ticket sales data.

3. Unlike trip sheets, every data element in the ticket sales dataset has been audited. Ticket sales are therefore more reliable. As discussed above, the crew estimation procedure adopted to accommodate memory constraints is really quite good; and inaccuracies are likely to average out over time. But estimation is not as good as the doubly audited count available from ticket sales.

4. As discussed above, the treatment of needs-based fares artificially distorts ridership data based on trip sheets. This problem can be backed out of the trip sheet data by subtracting needs-based punch-card traffic from pedestrian punch-card traffic.

Choosing from the two potential data sources depends in part on the objective. For highly detailed, trip-by-trip analyses, trip sheet data are essential. For analyses of annual traffic patterns, the audited accuracy of ticket sales is the preferred dataset. The Ferry Task Force found it necessary to use both datasets, each for different purposes. For annual history and trend assessment, we exclusively used ridership inferred from ticket sales.



Ridership History and Assessment The following table summarizes ticket sales and inferred ferry trips from 2007 to 2010. Highlighted sections indicate similar traffic streams utilizing different fare classes.

The detailed ridership table illustrates the increasing dependence of punch-card sales over cash sales. For example, note that total ticket sales 2007-2010 fell by more than 40%, but total passages fell ~20%. This discrepancy is attributable to the much greater fall in cash ticket sales. This change in traffic composition renders ‘ticket sales’ an extremely poor measure of either historical ferry traffic or future revenue. The task force encourages all entities to move away from discussions of ticket sales, and instead to focus on the ridership supported by ticket sales – inferred annual ridership. These numbers are much better able to support analysis of historical data because they are not susceptible to changes in underlying ridership composition.



Among the various classes of ferry traffic, the pedestrian and vehicle cash and punch-card fare classes represent the overwhelming bulk of both ridership and revenue. Focusing on just those four categories, the following chart illustrates ridership trends over the last several years.

Figure 1 reveals that recent years have seen relative stability in punch-card sales, but dramatic reductions in both pedestrian and vehicle cash sales. Figure 2 suggests an explanation, revealing that Whatcom County ferry traffic varies seasonally by passage type.



At one extreme, vehicle punch-card sales are basically flat throughout the year. At the other extreme, pedestrian cash sales exhibit a strikingly seasonal pattern, increasing to about fourfold their winter volume during the summer. The pedestrian cash and vehicle cash categories have experienced the most pronounced ridership drop, and they are also the most seasonal. Combined with the stability of the punch-card classes, these facts suggest that Whatcom County ferry revenue erosion is largely driven by a dramatic reduction in seasonal or tourist traffic. As reflected in the following table, which summarizes inferred ridership by passage type (e.g., all pedestrian cash and punch-card passages are collapsed into an ‘Aggregate Pedestrian’ class), vehicle and pedestrian traffic has plummeted in recent years. According to the above charts, this precipitous decline is largely attributable to reductions in cash ticket sales.

Inferred Annual Ridership

Fare Class 2007 2008 2009 2010

Aggregate Pedestrian 87,821 83,004 80,564 71,875

School Child (25) 150 50 1,375 1,400

Bicycle 37 1,131 635 372

Motorcycle 624 788 418 302

Motorcycle (25) 0 0 850 450

Aggregate Vehicle 127,253 109,568 112,585 103,622

Aggregate Truck 3,487 3,929 2,751 2,087

Aggregate Trailer 772 766 717 619

Special Trip 5 11 8 6

TOTAL 220,149 199,247 199,903 180,733

% CHANGE -9.49% 0.33% -9.59%

Summary Recent years have witnessed four significant, revenue-eroding trends in ferry traffic and composition.

1. Total passenger vehicle and pedestrian traffic both have fallen about 18% since 2007, which is inconsistent with the perception that drivers have increasingly opted to walk on as pedestrians.

2. The fall in vehicle and pedestrian traffic has primarily occurred in the cash ticket sales, while punch-card sales have remained stable.

3. Needs-based ticket sales have grown, presumably capturing sales from the higher cost vehicle and pedestrian categories.

4. Commercial truck traffic has fallen almost 50% since 2008. Though trucks represent a small portion of ferry traffic, high truck fares mean that reductions in truck traffic have a disproportionately negative effect on ferry revenue.




The consequence of these four trends has been a net reduction in ferry revenue despite increases in ferry fares. The complex interplay of the trends, the small number of recent fare changes, and the time required to reach new equilibrium makes causal analysis of declining ferry revenue impossible. We know the sources of revenue erosion, but we cannot conclusively identify their causes. There are too many explanatory variables and too few observations to support statistically significant analysis. However, this combination of changes suggests that the reduction in ferry revenue is primarily attributable to changes in the macroeconomic climate. Reduced truck traffic is heavily related to the reduction in island construction. Vehicle and passenger traffic has fallen predominantly in the cash fare passages, which are heavily concentrated in the summer months due to increases in tourist traffic. As macroeconomic conditions improve, these traffic streams should rebuild, and thereby increase revenue and cyclically replenish the ferry fund. NOTE: For this report, the task force has assumed that fare price elasticities and cross elasticities are near zero. That is, ferry traffic is assumed to change due to macroeconomic conditions, population changes, and other factors outside the direct control of the ferry system, but it is assumed to be constant in relatively small fare changes. This is consistent with the bulk of existing research, including a recent study of the Washington State Ferry system.1

1 For a study of the Washington State Ferry system, see: Adler, Thomas. 2010. Estimating Price Elasticities of Ferry Demand. For an excellent summary of more than twenty years of research on tollway, bridge, and tunnel price elasticities, see Table 1 in: Matas, Anna and Juse-Luis Raymond. 2002. “The Demand Elasticity on Tolled Motorways.”

Recommendations on Expenses and Revenues Whatcom County Ferry Task Force Report

Recommended Changes in Expenditures and Potential New Revenue Sources

Table of Contents

Appendix A1 Ferry Fare Technology ...................................................................... 2 Appendix A2 Drydock ............................................................................................... 9 Appendix A3 Gooseberry Point Parking ................................................................. 5 Appendix A4 Changes in Level of Service

Revised Operations and Schedule.................................................... 10

Use Patterns and Hours of Service................................................... 11

PEDunn page 1 of 14 Section A


Appendix A1 Ferry Fare Technology Ferry Task Force, April 11, 2011 (superceded July 16, 2011)

Current State: 1. The ferry accepts only US cash and checks. 2. Ridership data is handwritten on a piece of paper, submitted to the ferry coordinator, and

manually keyed into an Excel spreadsheet. Excel is a cumbersome, inefficient method of collecting this type of data. It was awesome back in the 90s, though.

3. In 2001, many, if not most, people and businesses no longer carry much cash. It is assumed that most entities accept credit and debit cards. There are numerous Canadians riding the ferry who do not carry US cash. These situations result in “no pays” on the ferry.

Comment: Historical (2005 era) off-boat ticketing options study is obsolete and cost-prohibitive. Available Technology: 1. Girl Scouts1 as well as Susie’s Lemonade Stand2 accept credit cards on Smartphones.

Other mobile technology is also available. 2. Numerous mobile technologies record detailed ridership and location data. 3. A “few” companies out there sell products on their websites. And Facebook. Objectives: 1. Accept credit and debit cards 2. Accommodate cash purchases. Produce receipts for cash payments. 3. Collect ridership data during fare collection and upload this data to database. 4. Sell punchcards (or tech equivalent) online or thru mobile technology, if cost effective. The primary objectives are to accept credit/debit cards and collect data efficiently. Costs: Preliminary Cost/Benefit estimates indicate that over a 5 year period, the ferry fund will save between $50,000 - $100,000 from reduced supplies, personnel costs, and lost revenue. Costs considered include solution implementation, supplies, credit card fees, and maintenance. Recommendations: 1. Public Works issues an RFI (Request for Information) that describes current state and

objectives, and requests technology solutions. Information from this process will provide a foundation for an RFP leading to a cost efficient solution. The group developing the RFI should include a ferry crew member familiar with environmental and time constraints.

1 http://www.fastcompany.com/1730937/iphones-girl-scout-cookie-drive-mobile-credit-card-system-high-tech-win 2 http://www.youtube.com/watch?v=MUcpCB7Wls8


http://www.fastcompany.com/1730937/iphones-girl-scout-cookie-drive-mobile-credit-card-system-high-tech-win

http://www.fastcompany.com/1730937/iphones-girl-scout-cookie-drive-mobile-credit-card-system-high-tech-win

http://www.youtube.com/watch?v=MUcpCB7Wls8



2. County Council adopts an ordinance (similar to Snohomish County Ordinance 02-004), if needed, stating that it is in the best interests of the ferry fund to not charge transaction processing costs for these transactions, as required by RCW 36.29.190. Without this, the ferry fund must charge cardholders for the transaction fee, which would be an administrative burden that is not recommended.

Analysis of Potential Savings LI FerryAutomated Ticketing & Data Collection

Current System:Printing - Interfund 6,500$ Tickets, Trip sheetsNo Pays Est $50/day 18,250$ No trackingData Recording, Reporting 0.25 17,500 2 hrs daily for 2 emp. Total 42,250$

Five year cost, current system 211,250$

25,000$ Est: $15k - $25KAnnual costs: Data Reporting 0.05 3,500 Credit Card fees 3% 12,500 Est $500k in sales Printing 3,000 Supplies 1,500 Maintenance 1,500 Est annual Costs 22,000

Five Year Cost, automated system 135,000$

Savings over 5 Years 76,250$

Est Cost to Implement Automated System:


Appendix A2 Drydock Recommendation Compare drydock bids and risks for the current Sept schedule, April, and early October. If costs (considering risk) is less, move to to late April or early October to take advantage of additional tourist traffic in September. . Background The Whatcom Chief at 49 years old now requries drydock every year, and the period of drydock has extended from two weeks to a longer three week period. There are three cost components of drydock that vary with time of year:

1) The cost of the maintenance work, including the number of days occupying a berth. 2) The cost of a replacement vessel. 3) The lost revenue from passenger instead of vehicle trips, and from tourists and

weekend visitors who simply do not travel to the island. There is a relationship between these three - the weather. Good weather allows work on the boat to be completed sooner, and that allows the replacement vessel to be leased for fewer days. The conflict is that good weather also attracts heavier use of the ferry by tourists, weekend residents, and construction activity on the island. Currently drydock starts two days after the Labor Day weekend, a time when parents are scrambling to get kids ready for school, businesses are exhausted from the busiest weekend of the year, and people are unpacking from their vacation. To get ready for drydock, arrangements must be made to get a car off the island, stock up on gas, groceries, and other necessities, all in two days to prepare for a three week period with no car ferry. There is no compelling reason that the drydock has to occur at this time, causing so much upheaval. Potential drydock cost savings should be compared to the loss of tourist, construction, and weekender vehicle revenue. The ferry also has significant impacts on island businesses that depend on summer revenue. In 2010 when drydock was not in September, single ticket fare revenue was 27% higher in September than in April. Island businesses report a significant difference in business. However the cost of drydock and replacement boat rental mean that a delay of longer than 1-2 days due to rainy weather would use up the increased revenue, and past a few days would actually cost more. Shipyards report they are about equally busy in April and October with the Alaska and crabbing fleets. A fourth weather consideration is the impact rainy, windy, or cold weather has on all those who must use the ferry during this time. There are extremely limited covered waiting areas, and getting on and off the boat and getting to vehicles can be difficult in stormy weather. The tradeoffs between cost of drydock and replacement boat, ferry revenue, support of island businesses, and passenger comfort, all make questions of weather important.

RStarks/DHarper page 4 of 14 Section A


RStarks/DHarper page 5 of 14 Section A

Late April is recommended for drydock, for these reasons: • Temperature and rainfall are moderate, very similar to the second half of September. • There are fewer windstorms compared to October. • Vehicle traffic is historically low compared to any of the later months • There is little difference between September and April regarding passenger inconveniences.

The graphs below show three week periods beginning in mid-April and the last week of September in blue shading. The yellow band is the current drydock schedule.

Average Precipitation by Day 1971 – 2000, Sea-Tac Airport

March – April – May Sept – Oct – Nov

Average High and Low Temperatures by Day, 1971 – 2000, Olga


Appendix A3 Parking at Gooseberry Point The Gooseberry Point ferry parking lot, north of Lummi View Drive, provides island-bound traffic many amenities. When lines are long the parking lot induces some drivers to park, reducing line length and driver wait time. During dry dock, when no passenger vehicle service exists to Lummi Island, parking constitutes an essential stage in the island’s transportation network. The parking lot also offers drivers a lower cost ferry passage option. Instead of driving onto the ferry, a driver can park and walk onto the ferry and pay the lower fare. If ferry traffic and line lengths return to pre-recession levels, or if alternate parking is not available during dry dock, the existing ferry parking lot may be an essential component in the ferry system. At present, however, the fenced leased Gooseberry Point parking lot does not meet two key litmus tests: 1. It appears to cost the ferry fund more to pay for parking than a would-be driver saves by

parking. 2. Implementing paid parking would cost more to implement than the system could collect. The Gooseberry Point parking lot is an annual $116,000 cost:

Expense CostSecurity 77,000$ Lease 18,000$ Maintenance 20,000$ Miscellaneous 1,000$ Total 116,000$

A common theme during the Ferry Task Force proceedings has been “pay to park.” The Task Force studied two paid parking scenarios: 1. An electric gate opened with a proximity card. A user would pay a monthly fee and have

unlimited use of the lot. Access would be controlled by the prox card at the gate and could be turned off/on at PW offices. This system would cost about $40,000 to install, and could not realistically break even if security were not retained. Assuming that security is canceled, this system would require that all 83 spaces be “rented” at $77 a month for total parking operations to break even (table 1, page 3).

2. A meter system, modeled on the City of Bellingham’s equipment, is estimated to cost about

$37,000 to install. Even with maximum utilization, the system could not break at a $3 daily parking rate. A $4 daily rate could break even with an unrealistically high 97% occupancy rate 365 days a year (table 2, page 4)

PEDunn/CJohnson Page 6 of 14 Section A



Rates could not increase much more in either scenario, because the parking fee would quickly equal the marginal cost of driving across the ferry. Any increase in parking fees would quickly erode parking occupancy rates, as drivers would just drive across the ferry. Neither of these models appears financially feasible. For someone riding the ferry 20 days a month, the monthly charge with gated parking would represent $3.85 per trip, only slightly less than the $4.80 difference between current vehicle and passenger punch fares. It is unlikely that 83 users would pay $77 a month for parking year-round. Under the meter system it is similarly unlikely that about 81 users a day, year round, would pay $4 for parking. This analysis does not address administrative or logistical issues associated with either pay for parking scenario such as equipment failures, line-ups to pay for parking when the ferry is arriving, vandalism, or cash controls. The Gooseberry Point parking facility is a valuable resource, especially during dry dock and when lines are long. But the service generally is more costly to provide than the value received by drivers, and more costly than could be recouped through parking fees.


Ferry Fund Gooseberry Parking Analysis Electric Gate # Cost Total Comments

Electric Gate 25,000$ COB recommends at least 2 meters to speed lines and in case of breakdown.

Prox Card Hardware/Software 3,000$ Parking space markings 3,000$ Installation 10,000$ Need electrical and communications line. Total capital cost 41,000$ Estimated system life 5 Annual Depreciation 8,200

Estimated Revenue: Spaces available - Right of Way 27 Free Spaces available - fenced 83 Estimated monthly renters 83 Monthly Rate 77.00$ Note: Airport = $9, Amtrack = $6 daily rates Revenue 12 6,391.00$ 76,692$

Maintenance/Admin Cost: Lease Cost 18,000$ Parking lot maintenance 20,000$ Current interfund charge Issue prox cards 100 15$ 1,500$ Comm & electrical 12 100$ 1,200$ Accounting/cash mgt 5 hrs/wk 260 35$ 9,100$ Depreciation 8,200$ Enforcement 7x wkly 364 50$ 18,200$ Total annual admin/maint cost 76,200$ Does NOT include any allocated costs

Net Income (Loss) from Parking Ops 492$ Prior to Allocations Electric Gate: Table 1



Ferry Fund Gooseberry Parking Analysis Parking Meters # Cost Total Comments

Parking meters (COB) 2 12,260$ 24,520$ COB recommends at least 2 meters to speed lines and in case of breakdown.

Parking space markings 3,000$ Installation 2 5,000$ 10,000$ Need electrical and communications line. Total capital cost 37,520$ Estimated system life 5 Annual Depreciation 7,504

Estimated Revenue: Spaces available - Right of Way 27 100% occupancy Spaces available - fenced 83 Estimated occupancy rate (fenced) 97% Daily rate 4.00$ Note: Airport = $9, Amtrack = $6 Revenue 365 430.04$ 156,965$

Maintenance/Admin Cost: Parking space marking & lot maintenance 22,000$ Interfund + space marking Lease Cost 18,000$ $$ collection & maintenance (1x month) 12 150$ 1,800$ Maybe more often; dust gums up meters. Comm & electrical 12 100$ 1,200$ Accounting/cash mgt 2 hrs/wk 52 35$ 1,820$ Depreciation 7,504$

Enforcement and Security 4 hrs monitor + 8

hours security 365 days $25/hr 103,000$ Total annual admin/maint cost 155,324$ Does NOT include any allocated costs

Net Income (Loss) from Parking Ops 1,641$ Prior to Allocations Parking Meters: Table 1



Appendix A4 Changes in Level of Service Revised Operations and Schedule Although the Coast Guard requires both engines to be running at all times, significant fuel savings have been recorded in trial periods when one engine was kept idling while the other propelled the boat. Crew estimated that about one third of the average fuel consumption was eliminated when the slower operation was run all the time for two weeks. One engine operation limits crossings to two round-trips per hour. Although five crossings can be made in an hour with limited engine operation, from the users’ perspectives it is important to have a standard departure time as much as possible. An example schedule on the next page indicates the changed departure times that would allow one-engine operation, except in certain weather conditions. Three roundtrips per hour are required in the commuting periods to handle the traffic, and this is not altered in the example schedule. On Saturdays, Sundays, and holidays the ferry often makes an additional “overload” trip between the scheduled trips. By not having it on the schedule, trips do not have to be made if traffic does not warrant them. All trips on Saturday and Sunday can be operated at the slower speed.

DHarper Page 10 of 13 Section A


Example of Ferry Schedule Island to Mainland with one-engine operation and recommended changes in service hours. Table 1. Weekday

One of the advantages of the schedule shown on the right is that it answers ferry users’ requests for trips that leave at the same time every hour. In the case of peak periods, trips would leave the island on the hour, at 20 minutes past the hour, and at 40 minutes past the hour. For the trips in periods where one engine operation would meet the traffic demands, the leave time moves from 20 minutes past the hour to 25 minutes past the hour. This change means that no one arriving for a ferry 20 minutes after the hour would miss their intended trip. This allows use of the ferry without having to consult a schedule, something much appreciated by mass transit users everywhere. Revised Level of Service Data Sources Ridership for each trip is recorded by the purser, as explained in the Rdership History section. The purser records traffic from the mainland to the island as part of the fare collection records. In order to obtain data on island to mainland traffic, the pilot in the wheelhouse made counts for a week in June and a week in July of 2011. The pilot can count vehicles and walk-on adult and children pedestrians, but cannot record passengers inside vehicles. This data is limited in usefulness since ferry use is highly seasonal, as explained in the Ridership History section. It may be that some hours of service that traffic in the summer make necessary would be able to be eliminated. Other ferry systems, such as Guemes Island and Washington State ferries, offer a different schedule in winter that offers less service. Accurate counts of island to mainland trips are needed in every season to determine if this would be practical.



As shown in the table below on marginal cost of service, fuel consumption is not the major cost in Whatcom Chief service.

The following analysis of costs is based on summer 2011 traffic as shown in the graph below for two days in June. Both the costs of trips and the estimated fare revenue are readily analyzed if data exists on traffic per trip; also dependent on good traffic data is determining how much of the traffic on the eliminated trips could be handled in adjacent hours. The other question is whether the elimination of a trip would force households to move off the island, and if so, how many total trips will be lost. Anecdotal evidence is the best we have to decide how many trips would be foregone versus how much would move to other times. Traffic from Lummi Island, June 2011 Note that these hourly totals show sharp changes between hours with two trips and hours with three trips, but generally represent about the same number of vehicles per trip.

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Evaluation of Potential Service Cuts and Fare Revenue


Example of typed trip level data for June 2011 – To Island from Mainland

DHarper page 13.B Section A

Recommended Policies for Long Term Fiscal Health Whatcom County Ferry Task Force Report

Recommendations on Policies to Improve Long Term Fiscal Balance in the Ferry Fund

and to Improve the Efficiency and Quality of Ferry Operations

Table of Contents

Appendix B1 Motor Vehicle Fuel Tax and the Ferry Fund .................................... 2 Appendix B2 Who Pays for What? the 45%-55% Formula ...................................... 4 Appendix B3 Enterprise Fund Accounting and Cash Reserve Policy.................... 9 Appendix B4 Funding a Ferry System: Grants and Districts ................................ 11

Addendums: Potential Grant Programs

Potential Districts Appendix B5 Citizen Advisory Groups ................................................................... 16 Appendix B6 Capital Needs of the Ferry System ................................................... 18

Addendums: Used versus New Example Life-cycle Cost Analysis

Coast Guard Boat Classes Appendix B7 Maintenance ....................................................................................... 25

page 1 of 25 Section B


Appendix B1 Motor Vehicle Fuel Tax and the Ferry Fund

Ferry Task Force, April 4, 2011 Background The State of Washington distributes a portion of the Washington State Motor Vehicle Fuel Tax collected to the counties. Part of this allocation is designated for ferry operations. There are two components:

Table 1 WSDOT MVFT Allocation Attributable

to Ferry Systems WSDOT Deficit Funding

Purpose State road funding to counties. Ferries are part of road systems & share in the funding.

To partially offset losses from county ferry operations.

How determined?

Amount the county receives is based on county road system inventory (including ferry systems). CRAB calculates the amount attributable to the ferry (difference between what county would have received with and without ferry).

Expense- (Tolls+MVFT attributable) =Deficit Calculation used to allocate deficit funding (up to 50% of deficit) to county ferry systems. Expense excludes depreciation expense and capital.1

Payment Single payment from State Treasurer deposited to Road Fund.

Dedicated revenue.

Reporting Included as part of the transfer from the Road Fund to the Ferry Fund. There is no separate reporting or disclosure of this revenue.

Recorded and reported as “State Grants, Revenue, and Entitlements.”

Oversight County road system inventory is submitted to CRAB board.

DOT audits revenue and costs (This audit is in addition to the single audit/State Audit by SAO). SAO audit only after 2010.

Full Disclosure Generally Accepted Accounting Principles include “full disclosure” as an important aspect of the Reporting Principle. The Reporting Principle maintains that financial statements should be designed and prepared to reasonably assure complete and understandable reporting of all significant information relating to the economic affairs of the entity. The financial statements must be complete in the sense that all information reported is necessary for a “fair” presentation so that a reasonably prudent reader would not be misled. Sufficient information must be present to permit a knowledgeable user to reach an informed decision. Dedicated Revenue is a Critical Part of the Current Fare Recovery Formula If the MVFT attributable to the ferry is considered dedicated revenue, the portion of the Ferry Expenditures paid by the County Road Fund will increase. There will be a corresponding decrease in the portion to be paid by ferry fares. The allocated MVFT tax is part of the transfer from the Road Fund payment (45% of cost) to the Ferry Fund. The State of Washington does not define this allocation as dedicated

1 GCA 6431 Interagency Agreement Between the State of WA Dept of Transportation, Highway & Local Programs AND Whatcom County

PEDunn page 2 of 25 Section B



revenue. The only means of considering this dedicated revenue is by Whatcom County ordinance. Whatcom County Ordinance 10.34 establishes Ferry Rates; 10.34.005.D defines fare box recovery rates: “. . . the calculated percentage of total revenue generated through ferry user fees in comparison to total actual operating costs for the same period of time minus any revenue from the motor vehicle fuel tax meant for ferry operations, or from interest.” (emphasis added)

The ordinance does not define what is meant by “meant” – is this revenue attributable to ferry operations or does this exclusively mean dedicated revenue? The ordinance definition is unclear in the context of the MVFT revenue attributable to ferry operations. Without additional evidence proving intent, it can be interpreted to be either in or out of the deduction to expenditures in the formula. Ferry Fare Recovery Formula and Illustrative Example: Formula: (Expenditures – MVFT Funding – Interest Income) * 55% = Fare Recovery Example:

Expenditures $2,500,000MVFT Deficit Funding $100,000MVFT Allocable to Ferry $150,000Interest Income $10,000

With MVFT Attributable included in MVFT Funding: ($2,500,000 - $100,000 - $150,000 - $10,000)= $2,240,000 * 55% = $1,232,000 to be recovered by fares. Without MVFT Attributable included in MVFT Funding: ($2,500,000 - $100,000 - $10,000)= $2,390,000 * 55% = $1,314,500 to be recovered by fares ($82,500 more to be recovered through fares in this illustrative example). Obviously, users would prefer that the MVFT be included in the formula, thereby reducing fare recovery. The County would be incentivized to include the MVFT in the 45% contribution by the Road Fund, and increase the fare recovery. Recommendations

1. It is recommended that the MVFT attributable to the ferry be reported separately to enhance transparency and understanding of revenue attributable to the ferry system, in accordance with GAAP. This presentation assists taxpayers in understanding revenue sources related to ferry operations, whether they are fuel tax collections passed through from the state attributable to the ferry or local county property taxes. The MVFT attributable to the ferry is easily quantified, as it is part of the CRAB calculation for the deficit funding calculation. Precedent for this accounting treatment is demonstrated by the Pierce County Ferry Fund.

2. Clarify (or reinvent) the current fare recovery formula.


Appendix B2 Who Pays for What? The 45% - 55% Formula

The current recession has impacted the ability of the county and state to provide necessary road, bridge and ferry maintenance and also the ability of ferry users to sustain past use patterns with current rates. No method has been established to meet the future capital needs of the ferry system, and both maintenance and operating costs have inceased. Appropriately dividing system cost between ferry revenue and county road fund is a difficult issue. Over a decades-long funding cycle, there is ample incentive for both parties to minimize present costs in favor of future taxpayers and ferry users bearing higher costs. This can only be addressed through statutory requirements enacted to require reserves for both capital and operations, as discussed in the section on the Enterprise Fund. Recommendations • Adopt changes in definitions that specifically include other potential funding sources, such

as grants or property taxes. • Investigate further how ferry system costs could be supported in the future. See section 4

below for descriptions of two distinct approaches. 1. Background: How are costs divided now? The current fare box recovery formula is largely derived from historical precedent. Since the mid 1980s, something akin to the fare box recovery rate has existed in Whatcom County Code at a 55% rate. In 2005 some definitions and a cost recovery formula were provided in ordinance 2005 – 0090. Formula for Farebox Recovery Requirement: Operational Cost = Operations - ferry fund interest – MVFT from the state. This MVFT funding is to help make up the deficit between operational costs and farebox revenue (MVFTdeficit). A Fare Box Recovery Rate of 55% is applied to the Operational Cost. The remaining 45% of Operational Cost is provided by the county road fund. This is offset to some extent by the additional MVFT that the state provides counties with ferries (MVFTattributed). All capital costs are covered by the county and, as with other transportation infrastructure projects, grants or very low cost loans from federal or state governments are sometimes available. Motor Vehicle Fuel Tax: Counties with ferries receive two additional sums from the state fuel tax. Please see preceding appendix for a full description. One sum is recognized by all the counties with ferries as devoted to ferry expense. The second may be assigned to the ferry or to general road fund purposes by each county.

Harper/Johnson/Dunn page 4 of 25 Section B


Capital costs: The County is responsible for providing 100% of the capital needs of the ferry system as a part of the county road and bridge network. The ferry has reached the end of its depreciated lifespan, and no funding is set aside for replacement. The County has sole decision-making authority over the ferry system. From the County’s perspective, $1.00 in capital costs are the same amount as ~ $2.22 of maintenance or wages or fuel ($1.00/.45). From the fare-payers’ perspectives, the capital dollars are free but maintenance dollars are a concern. 2. Analysis: Should the present formula be revised? 1.1. The formula does not consider other potential funding sources other than fares. 1.2. Life-cycle cost issues may be distorted when one party bears all capital costs and another

party bears none of them. 1.3. Lightly populated rural residential areas in unincorporated Whatcom County could not on

their own justify the costs of the roads serving them, and yet that is the situation for Lummi Island that arises in every county budget cycle.

1.4. The division of funding sources between fare revenues and county road fund creates

tension between stakeholders, as fare-payers benefit when costs are categorized as capital and the County benefits when costs are categorized as operations.

1.5. The current split of 55% ferry revenue and 45% county road fund was established in the

mid-1980s. Over time the base for the formula has shifted: as the county has brought its accounting practices into line with standards, the formula has been outdated. In 1986, as illustrated in the budget below, the costs were divided between “total operating cost” and “true operating costs.” The 55% to be paid by fares was based on the “true operating costs” at that time, not including dock maintenance and operations. Because the 55% fare box recovery rate is largely a byproduct of historical precedent, and because the composition of ‘operations’ has changed, there is a valid argument that the percentage should be revised.

Table 2



1.6. Knowledge is unequal. Most ferry-users are not able to make informed choices about

ferry maintenance needs, the record-keeping and purchasing procedures required of local governments; most county decision-makers are not familiar with how the ferry is used or with how it impacts county residents. This has led to distrust about how and why decisions are made.

3. Definitions The immediate need is to enhance the definitions in to allow different funding sources for the ferry system. Current language:

10.34.005 Definitions.

D. “Fare box recovery rate” means the calculated percentage of total revenue generated through ferry user fees in comparison to total actual operating costs for the same period of time minus any revenue from the motor vehicle fuel tax meant for ferry operations or from interest. E. “Ferry user fees” means the rates and charges required of and collected from any and all users of the ferry system, as established and periodically amended in the Unified Fee Schedule.

10.34.030 Use of ferry user fee revenues.

Beginning January 1, 2006, a 55 percent fare box recovery rate shall be applied and evaluated continuously from that time forward. Beginning January 1, 2007, any interest income or income from the state motor vehicle fuel tax for ferry operation will be deducted from the actual operating costs before the actual 55 percent fare box recovery rate is calculated. (Ord. 2010-054 Exh.A; Ord. 2008-052 Exh A; Ord. 2008-017 Exh A; Ord. 2007-001 Exh A; Ord. 2005-090 Exh A; Ord. 2002-012; Ord. 2001-064).

Suggested revisions:

10.34.005 Definitions. D. “Fare box Ferry system revenue recovery rate” means the calculated percentage of total revenue generated through ferry user fees, property taxes levied via districts as allowed by the state, interest on the ferry fund, advertising rights, grants, gifts and any other revenue received specifically for the support of or attributable to the existence of the ferry system in comparison to total actual operating costs for the same period of time minus any revenue from the motor vehicle fuel tax meant for ferry operations, including both the funding allocated for deficit reduction and the funding allocated because there is a county ferry or from interest. 10.34.030 Use of ferry user fee system revenues. “Beginning January 1, 2012, a 55 percent fare box ferry system revenue recovery rate shall be applied and evaluated continuously from that time forward.




4. What are the alternative ways for dividing ferry system financial support? The objective in any formula change is to better incent all stakeholders to opt for the best overall long term solution. • The current formula incents Public Works to opt for expenditures as the farebox recovery

will “pay for” 45% of the cost. The county pays for 100% of capital, even if it will reduce expenses over the long term.

• The current formula incents fare paying stakeholders to advocate for capitalizing

expenditures that should be classified as costs. Alternative A: Combine all expenses, operational and capital, and develop a new ratio that leaves both parties no worse off than the current ratio. This alternative is the most straightforward in concept and probably the most difficult to adopt.

Proposed Formula A for Ferry System Revenue Recovery Rate:

Operations + capital – operational grants – capital grants = Net System Cost Ferry System Revenue Recovery Rate = (Net System Cost * % Rate) – Interest County’s financial responsibility = (1 – % Rate) * Net System Cost

Establishing a recovery rate (% Rate) becomes the issue. Realistically, the new % Rate would have to be chosen so that all stakeholders felt they would be no worse off. The way to do this would be to set the % Rate such that it would yield the same total cost to fare-payers and the County over the system lifecycle. This would be difficult, but not impossible. The expected capital requirement can be calculated based on financing replacement cost over asset lifecycle. Adding this to known operations costs, we could work back to an appropriate % Rate.

Capital and maintenance expenses vary widely from year to year. This would have to be accommodated by amortizing the ferry system revenue contribution to total costs. Also, the county bears the costs of staff efforts to obtain and administer grants and loans, and it might be wise to recognize this in the formula.

Pros:

• Synchronizes incentives – everyone has an interest in minimizing life-cycle costs.

• Completely unambiguous; all stakeholders pay a set amount of all costs.

Cons: • Initially agreeing to the capital costs and % Rate is politically difficult.

• Suggests a fundamental change in ferry funding, as the County no longer has the sole responsibility for funding the road to Lummi Island.


Alternative B: Ferry revenues pay for all ferry service and user amenities such as parking. The county provides all maintenance and capital required to keep assets of the Whatcom County road system functional.

Proposed Formula B for Ferry System Revenue Recovery Rate: Ferry System Revenue Recovery Rate = (Vessel Operations cost center – vessel maintenance expense) + Lummi Island parking cost center + (Gooseberry Point Dock parking – County-Lummi Nation contracts) County’s financial responsibility = Maintenance expenses for the Vessel + Lummi Island Dock and Staging cost centers + Gooseberrry Point Dock and Staging cost centers + Contracts between the County and Lummi Nation Capital costs: The county is still responsible for 100% capital costs; however by combining that with responsibility for all maintenance costs, it provides a better framework for decisions that in the long term will reduce capital and maintenance costs.

The budget (shown below in Table 3) indicates what are considered vessel maintenance expenses in this formula using 2010 costs. Historically, year to year infrastructure costs are volatile. Because direct operating costs tend to be predictable (other than changes in fuel price), budget versus actual shortfalls or excesses would be balanced over multiple years within a cash reserve for operations.

Pros: • Eliminates incentives for capital vs expense issues as county is responsible for

both capital and maintenance on the “road and bridge” part of the system

• Isolates fare recovery to direct operating costs and ferry user amenities (amenities such as parking areas that are not required to keep the ferry operating) where users can more easily understand costs and benefits.

• Makes the county solely responsible for its agreements with the Lummi Nation.

Cons: • Does not consider ferry system as a whole • Ferry users have no decision-making method or authority to balance the price of

fares versus vessel operating practices and user amenities such as parking security.

• It reduces the county’s incentives for minimizing direct operating costs, such as when in union negotiations, or considering crew required for a future replacement ferry, making fuel contracts, and others.




Table 3


Appendix B3 Enterprise Fund Accounting: A Ferry Fund without a Ferry

The County Council established the Ferry System enterprise fund in January of 2006. The enterprise fund was “seeded” with a cash account of $1,587,137. An enterprise fund is defined as “…a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.2” GASB 34.1300.109 states that “Enterprise funds may be used to report any activity for which a fee is charged to external users for goods or services. Activities are required to be reported as enterprise funds …” if certain criteria are met. The word “required” was not used in GASB’s previous definition and now essentially requires an entity to use an enterprise fund for any activity where a law, regulation or pricing policy is established to recover the cost (including depreciation and debt service) of providing the activity or service. An Enterprise fund allows the surplus or retained earnings generated by the operation of the enterprise to remain with that fund rather than transfer at year end to the general fund. The surplus may be used to help fund future capital expenditures to retain fares during tough economic times. The structure also prevents Officials from taking a predatory action against enterprise fund revenues. Although not clearly defined by ordinance for the Ferry Fund, Whatcom County provides this definition3 of an Enterprise Fund for another entity: “a fund established to account for operations that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. As such, enterprise funds must report actual financial position and results of operations such as actual assets, liabilities, fund equity balances, revenues, expenditures, and expenses.” An Enterprise Fund is clearly an appropriate structure for the ferry system, however, the current structure lacks certain “standalone” features of enterprise funds:

• Assets directly related to operations (ferry, docks, and related components) are included in the ERR fund instead of the ferry enterprise fund. Fixed assets and infrastructure of the enterprise as not shown as assets in the ferry fund financial statements. Analysis of a business enterprise requires that all components be clearly reported and understood.

• Actual costs of ferry operations are not clearly reported. • A cash account/reserve policy has not been established, how reserves should be funded,

and how optimal balances are calculated.

2 National Council on Governmental Accounting Statement No. 1(NCGAS 1), entitled Governmental Accounting and Financial Reporting Principles 3 Whatcom County Code Chapter 100.07: Birch Bay Watershed and Aquatic Resources Management District Funding Mechanism




Recommendations: 1) Examine the ferry structure in conjunction with Ordinance 2005-94. Determine exactly how

this “enterprise fund” should be structured.

2) Move the ferry and related system assets from the ERR Fund to the Ferry Fund. As stated in Whatcom County’s Enterprise Fund definition noted above “enterprise funds must report actual financial position and results of operations such as actual assets, liabilities, fund equity balances, revenues, expenditures, and expenses.”

3) Create a cash reserve policy.

a) Use GFOA’s Best Practice “Appropriate Levels of Working Capital in Enterprise Funds” as a guideline to develop the policy.

b) Establish policy guidelines to address balances in excess of reserve guidelines as a cushion for the proverbial rainy day and not as an offset to the fare setting formula (to an upper limit).

c) A cash reserve policy may include: the number of years to fully fund a reserve, capital acquisitions, forecasting parameters, etc.

d) The reserve policy could also include Claims, Emergency, Capital Projects, Fare Stabilization or other reserves as needed (and when able).

Table 4 Example of a Cash Reserve Policy Formula

Proposed Reserve Components:Operating Cash (3 months) 675,000$ Less: Ptn attributable to drydock ($450,000/12*3) (112,500)$ Less: Ptn attributable to R&M ($250,000/12*3) (62,500)$ Operating cash net of drydock & R&M expense 500,000$ Annual Est Dry Dock Cost 450,000 Annual Est Repair & Maintenance (not Dry Dock) 250,000 Recommended Minimum Cash Reserves (excluding Capital) 1,200,000$

Cash Balance, 12/31/2010 771,000$ Shortfall 429,000 Recovery period 5 Annual Recovery added to fare base 85,800$

4) Include cash reserve deficiencies (as calculated by policy) in the fare setting formula

target. Note: In the fares recommended in this report, $86,000 is included.


Appendix B4 Grants and Districts An examination of the available transportation grants indicated that there is limited grant availability at this time. Skagit County funded their new ferry terminal via the federal stimulus transportation funding; however, that program has ended. A table of potential transportation grants that were examined is attached. Capital improvements and operating expenses can be supported in Washington State through special taxing districts. There are a variety of districts under state law that can fund transportation. The task force examined these, with results shown in the attached table. The two districts examined further are Road and Bridge Service Districts and Ferry Districts. Just as it is appropriate for Whatcom County to conduct regular inspections of ferry facilities to detect potential problems in time for proactive measures, it is also appropriate to establish mechanisms to detect and resolve potential issues with ferry system users. Whether governed by Road and Bridge District Commissioners (RCW 36.83.010) or the County Executive and Council, citizen advisory groups as discussed in the next appendix can be helpful. Recommendations • Form a county-wide or Lummi Island ferry district.

• Update the long range ferry capital plan (part of the Transportation Improvement Plan) with specific plans for needed improvements so an application can be submitted if grant funding becomes available.

Bridge or Road District - RCW Chapter 36.83

1) The County Council may create a Bridge or Road Improvement District after holding a public hearing, The purpose of the district is to provide and fund capital and maintenance costs for any bridge or road improvement. A service district is a quasi municipal corporation and is an independent taxing authority. It can hire employees, enter into contracts, hold real and personal property, and sue and be sued.

2) Three Bridge or Road District Commissioners are appointed by the County Executive, with approval of the Council. The Commissioners must reside within the boundaries of the district. They serve for 5 years; receive no compensation (may have travel expenses refunded); may be recalled by citizens of the district; and may be removed for malfeasance by the county executive. The county treasurer is the ex officio treasurer of the service district. A Ferry Advisory Committee also could be formed to advise the district commissioners.

3) The electors of a service district are all registered voters residing within the district.

4) Any road or bridge improvements financed in whole by funds of a service district is owned by the district. Improvements financed jointly by a service district and the county may be owned jointly by the service district and that county via an interlocal agreement.

5) A service district may issue general obligation bonds, not to exceed an amount, together with any other outstanding nonvoter approved general obligation indebtedness, equal to three-eighths of one percent of the value of taxable property within the district.

DHarper page 12 of 25 Section B



Lummi Island has approximately $253,000,000 in taxable value, so barring other non-voter approved general obligation indebtedness, about $930,000 bonding capacity.

6) Other financial provisions include specific limits and voting requirements on bonding and that user fees and special assessments may be used to refund bonds. For Lummi Island, the maximum these bonds could provide would be about $3.2 million, or about $2.2 million in addition to the bonds the district can issue without voter approval.

A service district may form a local improvement district to provide an improvement, impose special assessments on all property specially benefited by the local improvements, and issue special assessment bonds or revenue bonds to fund the costs of the local improvement. The interest and principal on the bonds are paid only from special assessments made for the improvement for which the bonds were issued, plus any local improvement guaranty fund that the service district has created.

Pro: Local Commissioners; District designed for funding capital projects. Con: Another taxing authority; potential for increased expenses funding district office Ferry District - RCW Chapter 34.54

Legal questions about whether Washington State law allows a Ferry District taxing authority to be established for vehicle ferries and whether a Ferry District must be county-wide have been raised. The following information assumes that a Ferry District can support a vehicle ferry.

1) The Whatcom County Council would be the Ferry District commissioners and the governing body. A Ferry Advisory Committee could be formed.

2) The County Council may levy an ad valorem tax on property located in the district of up to 75 cents per thousand dollars of taxable value. “Excess levies” on real property to be used for operating or capital purposes could be implemented by super-majority vote of the registered voters residing within the boundaries of the district. This approval is for a period of one year and would have to be renewed each year via vote.

3) A Lummi Island Ferry District could generate approximately $192,000 per year at the maximum taxing rate allowed without a vote. A county-wide ferry district could achieve the same amount at a much lower taxing rate.

4) The District would have separate accounting requirements, but the County Treasurer serves as the District Treasurer.

Pro: Acts as a utility connection fee for absent property owners; its establishment and basic funding is not subject to vote Con: Adds another tax; ambiguous RCW could result in legal challenge and fees.


Addendum: Grant Funding Findings Grant opportunities are generally for capital expenditures. Following is a summary of potential funding opportunities. With grants come heaving compliance requirements. These requirements should be carefully evaluated and budgeted.

Table 5

Grant Results Potential?

FTA 5307 Must be: Areas of eligibility must have populations above 50,000 people. They can also be a designated transportation management area (which has a population of 200,000 or more).

Limited to Transportation Mgt Area of more than 50,000

FTA 5311 Formula Grants for Other than Urbanized Areas

This has potential; worth additional research. May be used for operating expenses, but there are significant compliance issues.

FTA 5309.b.2

Fixed Guideway Modernization (includes ferryboats). Eligible activities are capital projects to modernize or improve existing fixed guideway systems, structures, passenger terminals, security equipment and systems, and equipment, operational support equipment including computer hardware and software, system extensions, and preventive maintenance.

Worth additional research, but there are significant compliance issues.

FTA 5316 The Job Access and Reverse Commute (JARC) program was established to address the unique transportation challenges faced by welfare recipients and low-income persons seeking to obtain and maintain employment. Only 20% of JARC funding goes to rural areas.

Use in conjunction with Needs Based tickets?

DOT FHA Ferry Boat Discretionary Program

For the construction of ferry boats and ferry terminal facilities.

Whatcom County received these grant funds in 2001, 2000, 1999 (prior to 1999?). Monitor.

FTA 5303 State & Metro Transportation Planning No FTA 5307 New Freedom (Individuals w/ Disabilities) No FTA 5310 Transportation for Elderly & Disabled No FTA 5317 New Freedom: Getting disabled individuals to

work No



Addendum: Potential Districts

Table 6



Appendix B5 Citizen Advisory Group

Recommendation Create a Citizen Advisory Group to advise the County on service and capital issues. Whatcom County conducts regular inspections of ferry facilities to detect potential problems in time for proactive measures. It is also appropriate to establish mechanisms to detect and resolve potential issues with ferry system users. There are two models that seem appropriate. It is possible to have a citizen advisory group to advise the commissioners of the district, so the one does not preclude the other.

A. Establish an ongoing Ferry Advisory Committee appointed by the Council and comprised of island residents and/or property owners.

B. Periodically form a Task Force to examine the ferry system, its budget and long range

capital improvement plans, and other items as needed. Citizens’ Advisory Committee (the Anderson Island model) 1) A Citizen’s Advisory Committee (CAC) of 5 to 7 island residents and/or property owners

would be appointed by the County Council. These committee members be nominated by and represent various island organizations, or could be appointed based on expertise in particular areas. Anderson Island has such a group appointed by Pierce County to advise on a number of issues including the ferry.

2) The Committee’s responsibilities would be to hold open public meetings at least quarterly,

maintain a public record, and establish a process that would enable objective fact-finding and consensus-building.

3) The CAC would serve as liaison with the island community and assist the County

administration and Council to identify potential problems and solutions. The Anderson Island and Guemes Island Ferry Advisory Committees have:

a. Met quarterly with ferry management staff to review system health;

b. Solicited both public and crew input on ferry operations and provide ferry management with pertinent information;

c. Reviewed cash flow and balance sheet of the ferry (Ferry Enterprise Fund and/or Ferry District) at least annually; and

d. Advised the County Council and Administration on fares, other revenues, expense reductions, and service changes at least biannually as part of the budget preparation process.

e. Researched and developed other information as seems useful to the County.




Biannual Citizens’ Task Force 1) A Citizens’ Task Force would be appointed every two years by the County Council. It

would consist of at least 7 residents and/or property owners of Lummi Island, plus appropriate experts.

2) The Task Force’s responsibilities would be to examine the biannual budget for ferry operations and the 14 year ferry capital program forming part of the Six Year Transportation Improvement Plan and provide recommendations on both documents.

3) The Task Force would serve as liaison with the island community and assist the County administration and Council in identifying potential expense reductions, revenue increases, and other ways to improve the ferry system. Other Ferry Advisory Committees have:

4) Requested reports and data from the Public Works Department on ferry use, revenue, and expenses;

5) Solicited both public and crew input on ferry operations and provide ferry management with pertinent information;

6) Reviewed cash flow and balance sheet of the ferry (Ferry Enterprise Fund and/or Ferry District) ; and

7) Researched and developed other information useful to the County.


Appendix B6 Capital Needs of the Ferry System Recommendations • Update the 14 year ferry plan to include current replacement costs. • Widen the docks when major maintenance needs to be done. • Consider acquiring the Christine Anderson from Pierce County when it becomes available;

lifecycle analysis also would include these two options for a replacement vessel:

1) a new boat using a tested design, such as the design that Pierce County has commissioned and used;

2) a new boat as a prototype - such as the new ferry design that Whatcom County has purchased.

Recommendations • Update the 14 year ferry plan to include replacement costs.

• Widen the docks when major maintenance needs to be done.

• Consider three options for a replacement vessel via a thorough life-cycle analysis:

1) acquiring a used ferry, particularly the Christine Anderson from Pierce County;

2) building a new boat using a tested design, such as the design that Pierce County has commissioned and used;

3) building a new boat as a prototype – although we purchased this new design, a 50 year investment justifies a thorough analysis before proceeding.

I. Capital Management Plan RCW 36.54.015 Ferries — Fourteen year long range improvement plan — Contents. The legislative authority of every county operating ferries shall prepare, with the advice and assistance of the county engineer, a fourteen year long range capital improvement plan embracing all major elements of the ferry system. Such plan shall include a listing of each major element of the system showing its estimated current value, its estimated replacement cost, and its amortization period. Whatcom County has adopted long range capital improvement plans for the ferry system over the past decade. The following information is taken from the most recent plan available from Pierce and Skagit Counties website data. The Whatcom information is from “Whatcom County 2011 – 2024 Fourteen-Year Ferry Capital Program” ( Exhibit B to the Six-Year Transportation Plan adopted by the County). The current book value of the Whatcom Chief seems - appropriately - very low, and was calculated as: “the depreciated original construction cost and any depreciated improvements/major repairs.” On page 3, under “Vessel dry-docking” it describes the

JDickinson/DHarper page 18 of 25 Section B


replacement value as based on a three to five years vessel survey “conducted to assess the vessel’s overall condition, establish the fair market value, estimate replacement cost, and provide a detailed hull strength assessment.” Comparing the results of this approach to the values detailed in the Pierce and Skagit County plans raises questions about the method Whatcom County used to establish replacement value. Below is a table comparing how the three counties value their ferry systems:

Table 7

II. Existing Ferry System: Overview of Capital Requirements Vessel: The single most expensive component of a ferry system is the operating vessel. The Whatcom Chief has been one of the hardest working and most reliable car ferries operating in the Northwest. It is 49 years old, and maintenance required is accelerating. A very rough Initial cost benefit analysis that follows this appendix shows the Whatcom Chief is now costing more to keep operating than the costs of bonding to buy a new vessel. This was done as an example, and needs to be done in depth by those who have familiarity with the frequency and cost of the various maintenance, drydock, and rebuild options and expenses.) Major rebuilds the state of Washington does on large ferries at 30 years can extend useful life, however they have not proven cost-effective for small ferries. The Whatcom Chief no longer meets current operating standards, specifically: narrow car lanes (2 lanes per side in just over15 feet), ADA requirements, thinning decks, and engines that do not comply with current pollution standards. If forced to comply with minimum car spacing, it would significantly lower fare returns. It is possible that planned upgrades and modifications could exceed the cost of a good used replacement vessel.



Docks: The current docks are narrow and cannot accommodate replacement boats. Whena new boat is procured, the docks will need modifications. There are two reasons to move ahead with widening before a replacement boat is on the way:

• Widening provides the option of emergency use of other county ferries and smaller WSF

Ferries such as the Hiyu;

• The time lag inherent in obtaining the necessary permits. Given the expense of widening, bids should include an estimate of the additional cost of making them wide enough to take the largest ferry in the county fleets, at this time the Pierce County Ferry Steilacoom II at 68 feet wide. The additional width would allow more options in the future on ferry replacement.

• The Island dock is in better shape than the mainland dock due to recent dolphin and

fender replacement. The next portion to be replaced is the south breakwater. The dock could be widened at that time as the outer dolphins do not have to be moved. Only replacement of the southern dolphins is needed which would not impede Whatcom Chief operations. Unofficial estimates indicate that this might be done at the time of the breakwater replacement for very little additional cost compared to replacing them in the current location, and we suggest that bids be requested for this expansion.

• The mainland dock needs significant dolphin replacement. The landing slip is narrower

than the Island dock and ferries larger than the Whatcom Chief or the Guemes could not land there. The slip could be widened; and when the dolphins are replaced, we suggest that bids include the extra cost of doing so as part of the dolphin replacement project.

Terminals, Staging, Parking: These do not present major capital needs at this point. Please see the discussion of mainland parking and the implementation of technology for security and communication with ferry riders. III. Vessel Replacement Comparing the benefits of acquiring a used vessel in good enough condition to be used for decades given proper maintenance good with having a new one built is complex. A complete life-cycle cost analysis is required. Soime issues to examine include:

Issues with building a new ferry: • Expense. It is difficult to find a way to lower the cost of a new boat. The entire burden

of prototype construction, such as programming for computer controlled metal cutting is solely borne by the initial purchaser. The boat must be built in the US,, and though some saving might be accomplished if the boat were built outside of Puget Sound, it would be partially offset by increased transport and construction management costs. It is unknown whether obtaining state grants would limit place of construction.

• Any new design will experience problems in initial use and engineering which must be remedied. For example, engines in the new Whatcom Chief had to be replaced twice, even though that type of engine had been operating very successfully for years in other boats. That engine was simply not a good fit for the operating characteristics needed for a Hales Passage ferry. New designs that have problems can take decades to fix,



with unexpected periods out of service, such as the Washington State Issaquah class first build in the 1970s.

Issues with buying a used ferry • Availability. The used ferries that are available are typically worn out, badly designed or

otherwise inappropriate.

• Accurate assessment of condition and suitability for the Hales Passage and Fairhaven voyages on a daily schedule.

• The maintenance needs of an older boat versus a new boat.

• Whether new or used, a life-cycle analysis must consider capacity, revenue, and crew composition. Personnel are the largest, ever increasing, cost of operations and a critical component of the analysis.

• Fuel use can be widely divergent with different designs and engines.

• With the recent questions about the location of a mainland terminal consider reliability and passenger comfort for operations outside of Hales Passage.

Options for new and used ferries: 1) Used Ferry:

There are two good appropriate used ferries (one local) that may become available, although neither is for sale at this time. Pierce County Ferry Christine Anderson.. The 54 car Christine Anderson was built in 1994 for 5 million dollars. At that time our Ferry Captain, Bill Hawley, wanted to join in the purchase and have a second one built for Whatcom County. It has been an extremely reliable boat with very few problems and is ADA compliant. This ferry currently serves Anderson Island and is unable to meet current load demands. Pierce County may build an extended version of this design for a primary vessel, making one of their two smaller ferries, likely the older Christine Anderson available for sale. Either of these two ferries could be used in most weather for a run to Bellingham. However, although able to make the passage better than the Whatcom Chief, neither are big or seaworthy enough for a regularly scheduled Fairhaven/Bellingham route. With continued use of the Hales Passage route, It could be a good option for several decades of use. State grants might be easier to obtain if both counties are able to improve their vessels by Whatcom County buying the used boat when Pierce County is ready to obtain a new one. Costs are unknown, but would be far less than building a new boat. Lake Champlain Ferry Plattsburgh. Much further afield, the Plattsburgh is a 172 foot long K class ferry operating in Vermont. It was built in 1984 and has been in fresh water since, so there is little if any corrosion. Lake Champlain Ferry Company is operating over capacity as they are providing service between New York and Vermont. A bridge is being built. Upon completion, the Plattsburgh will be available. This would be suitable as an interim boat on the Hales Passage route, and not suitable for passage to Bellingham. Cost is unknown, but could be about $3 million, based on informal conversation with the Ferry Company plus some additional transportation costs.




2) Building a New Boat Using a Tested Design The boat design that appears best to avoid prototype problems and start up expense is the Pierce County Christine Anderson design. Design and engineering is owned by Pierce County and may be available. The newer boat, Steilacoom II, was built in 2007, and has had only three very minor design corrections. This 54 car design has shown itself to be reliable, user friendly, easy to navigate, load and unload, ADA compliant, and economical. A ferry built to this design could be used in most weather to run to Bellingham, but probably not on a consistent basis. 3) Building a New Boat as a Prototype The problems inherent in building any prototype vessel have been discussed above. Currently Whatcom County has purchased the conceptual design for a new ferry with 35 car capacity, four adjacent lanes for ease of loading, passenger spaces and pilot house on one side, (similar to Skagit’s Guemes), shallow draft to preclude dredging, and propelled by Voigt/Schneider drives. A thorough analysis by an impartial party should examine questions that have been raised about the prototype design and compare it to the alternative of building a new boat using the Pierce County design. Substantive questions include:

• It would only carry about 10 cars more per hour than the Whatcom Chief, yet require a fourth crew person on board when it neared capacity - how does this compare to expected revenues or the larger Pierce County design?

• Does the side cabin design present seaworthiness issues in the Hales Passage environment as it would have uneven wind loading, and when tied up in bad weather could roll into the dolphins causing damage to the cabin and windows? (State ferry Chetzemoka had to have rubrails expanded because windows were broken while in dock in the Everett Shipyard.)

• The Voigt/Schneider drives gain their maneuverability at the expense of increased fuel use, and there is anecdotal evidence that these drives are not as reliable or as low maintenance as was first thought. The high maneuverability is useful in narrow channels, but when compared to other engine designs, are they the most appropriate ones for this ferry?

• Is dredging an issue requiring a shallow draft, given the composition of the ground and the amount of outwash from ferry operation?.

• How do the life-cycle costs to build the proposed Whatcom County ferry design compare to the costs of building the Pierce County design?

.


Table 8: Example of a Life Cycle Cost Analysis



JDickinson page 24 of 25 Section B


Appendix B7 Maintenance

Whatcom County subcontracts nearly all the maintenance of the ferry at the shipyard. This is the second most expensive element in the ferry budget.

Recommended periodic expense evaluation: • Many shipyards run multiple shifts when needed. Although this is expensive, is the

daily cost more or less than the replacement boat vessel, additional costs of crew stationed elsewhere, and loss in vehicle fare revenue versus passenger revenue?

• Is it less expensive to have the shipyard do the painting with their experienced personnel versus the costs of stationing Whatcom Chief crew elsewhere for the longer time it takes them to complete the task? The crew staying with the boat in drydock could be reduced to only the engineer or other senior crew without the responsibility of painting the vessel.

• A third and more nebulous question is whether drydock has accumulated maintenance items that are done “every” year but could be reduced to less frequency.

Future considerations for maintenance expenses: When a newer primary vessel is acquired, analyze whether to retain the Whatcom Chief as a reserve vessel. Pierce County’s capital plan shows high maintenance costs for their new boat based on past practice of having the work done entirely at the shipyard. Their new on-the-water maintenance plan reduces this cost dramatically according to conversation with staff.

Compare the costs of keeping the old boat operable to these potential cost savings:

1) A much lower cost format for repair and maintenance for all work above the rubrails/guards and inside the hull as all this work could be done on the water in lay-up rather than in an expensive drydock berth. The shipyard work could be limited to the outside of the hull, props, shafts, and rudders. This is very similar to what the Washington State Ferries does at their Eagle Harbor Maintenance Facility.

2) Currently drydock costs include about $100,000 in passenger boat rental fees, setup, and lost revenues, and these costs would be avoided as well as costs of obtaining an emergency replacement when needed. It appears from recent year’s budgets that drydock also costs about $10,000 in travel expenses, and possibly (but unknown) additional crew expenses from being stationed elsewhere.

Whatcom County could also explore if there is interest in sharing the costs of a reserve vessel with other counties who have similar drydock costs, such as Skagit County, and perhaps Kitsap or San Juan counties. Other potential inter-local use could include carrying construction equipment between islands for San Juan County are carrying their construction equipment between islands, and also use in emergencies.

page 25 of 25 Section B

Recommendations on Classification of Ferry Expenditures and Accounting Practices



Table of Contents

Appendix C1 Professional Service Review............................................................... 3 Appendix C2 Cost Allocations and Overhead Review............................................. 4 Appendix C3 Capital or Expense?............................................................................. 9

Overview of Analysis.................................................................................................... 9 Repair & Maintenance Account ................................................................................. 16 ERR Fund Charges................................................................................................................ 20

Appendix C4 Revenue Recognition.......................................................................... 23

PEDunn page 1 of 24 Section C



Appendix C1 Ferry Fund Professional Service Review

(Ferry Task Force April 25, 2011) Professional Services are conventionally defined as a formal area of intellectual expertise requiring licensing or certification, or as consulting services. Few of the services classified as Professional services in the Ferry Fund meet either the BARS Manual definition (below) or the conventional definition. Charges to Professional Services Account #6630 for 2008-2010 are:

2008 2009 2010 Drydock 52,451 53,139 209,829 Emp 728 415 Inspection 2,368 6,242 675 Repair 2,357 21,964 Security 56,984 57,737 60,216 Sign 90 200 Testing 35 Lease Mediation 3,983 Marine Engineer 3,572 Tax/Fee 198 Septic 201 Grand Total 116,301 120,216 296,867

The Washington Budget, Accounting, and Reporting (BARS) manual defines various services categories, including Professional Services, as:

CLASSIFICATION OF EXPENDITURES BY SUBOBJECT Definitions

ONLY THE OBJECT (FIRST DIGIT) IS REQUIRED FOR REPORTING PURPOSES. THE SUBOBJECT (SECOND DIGIT) IS OPTIONAL FOR ACCOUNTING/MANAGERIAL PURPOSES.

40 SERVICES. This is a basic classification by object for services other than personal services which are needed by the government. Such services may be provided by a governmental agency or by private business organizations. For interfund payments for services see object 90. The following are principal types of services and charges included in this object classification: 41 Professional Services Examples: Accounting/Auditing Management Consulting Engineering and Architectural Legal Medical, Dental and Hospital Custodial Cleaning Computer Programming Messenger Investment 48 Repairs and Maintenance. Contracted (external) labor and supplies furnished by the contractors. See object 60 for construction contracts. Examples: Buildings Structures Improvements Equipment




49 Miscellaneous Examples: Court Costs and Investigations Judgments and Damages Dues, Subscriptions and Memberships Registration Information and Credit Services Laundry and Other Sanitation Services Filing, Recording and Witness Fees Printing and Binding Contractual Services not Otherwise Classified Observations: The charge for mediation for County lease with the Lummi Nation (Nov 2010) has been charged to the Ferry Fund, inconsistent with other expenses incurred in the lease negotiation process charged to other County agencies. This appears to be the only legal expense charged to the ferry fund. Recommendation: Modify outside service expenditure classifications to follow BARS definitions to enhance transparency and improved readability of the Ferry Fund financial reports. Utilize accounts titled “Contract Maintenance Services”, “Security Services”, etc. to clarify the purpose of outside services expenditures. Related Suggestion: Create a Dry Dock project code to accumulate all Dry Dock expenditures if the current accounting system accommodates Expense (vs capital) Project Accounting. This would be a convenient method of accumulating dry dock expenses from various object codes and cost centers, as the expenditures occur. Utilization of this process would allow readers to readily identify a major ferry expenditure without significant investigation and assistance from the Public Works staff.




Appendix C2 Cost Allocations and Overhead Review Ferry Task Force, April 4, 2011

Background: An enterprise fund was formed in 2006 for ferry operations. Prior to 2006 the road fund absorbed all ferry related overhead and administrative costs. Most of these costs were not included in calculation of ferry fares. When the Ferry Fund was implemented in 2006 Public Works began allocation of administrative and overhead costs to the ferry fund. Allocating administrative costs is a strongly recommended practice and is in compliance with government accounting standards and best practices as noted in the Cost Allocation Guidance section below. Allocating overhead and administrative costs and reassigning personnel increased the ferry budget $166,000 from 2006 to 2011 (see Table 1).

2006 2007 2008 2009 2010 2011PW Employees 94,793$ 23,204$ 24,088$ 97,874$ 104,029$ 108,537$ Ferry Employees - 100,000 156,456 61,326 66,138 70,486 PW Indirect Costs - (3,065) (4,006) 41,163 45,082 66,120 County Indirect Costs 31,716 40,802 42,026 45,002 47,529 47,529 Total Indirect Ferry Cost 126,509$ 160,941$ 218,564$ 245,365$ 262,778$ 292,672$

Indirect Ferry Costs Summary

Table 1

Cost Allocation Guidance: OMB Circular A-87 “Cost Principles for State, Local, and Indian Tribal Governments.” This circular provides guidance for determining costs for Federal awards carried out through agreements with the Federal government. Entities generally conform to A-87 guidance for all transactions, even if the transactions do not specifically require compliance, for consistency in policy and procedures. From GFOA (Government Finance Officers Assn) Best Practices: 1. “Measuring the Cost of Government Service” (2002)

This Best Practice recommends that governments calculate the full cost of the different services they provide. It also notes that “cost should not be the sole factor used to determine how a government will provide services. Efficiency and effectiveness also should be essential components of any service-delivery decision. It is important that full cost data be used appropriately in decision making.”

2. “Establishing Government Charges and Fees” (1996) This Best Practice states that “The full cost of providing a service should be calculated in order to provide a basis for setting the charge or fee. Full cost incorporates direct and indirect costs, including operations and maintenance, overhead, and charges for the use of capital facilities. Examples of overhead costs include: payroll processing, accounting services, computer usage, and other central administrative services.”

3. Cost Analysis and Activity Based Costing for Government, GFOA, 2004.




4. The Municipal Research and Services Center of Washington www.mrsc.org has several examples of municipal cost allocation policies.

Whatcom County Public Works (PW) Cost Allocation Practices: • PW allocates fully loaded (salary plus benefits) administrative/overhead personnel costs to

each PW Department based on staff’s estimate of time spent on each area. This subjective method of allocating resources may lead to skewed allocations of actual cost.

• The Ferry Coordinator salary & benefits (and 2007-2008 Ferry Manager) are included in

Direct Costs in the Budget and General Ledger. Because this position performs administrative functions, it is included in the overhead analysis (Table 3).

• The County allocates costs to PW that are then allocated to the Ferry Fund. These costs

include payroll, HR, IT, facilities expense, and other overhead expense. They are based on objective measurable allocation factors such as FTE’s, # of computers, # of vouchers or contracts, etc. These costs have increased a modest $7,000 since 2007 (Table 3)

Cost Allocation History • 2006 - Ferry Fund formed • 2007 - Ferry Manager position created • 2008 – Ferry Coordinator position created • 2009 – Ferry Manager position eliminated • 2009 – PW Director cost allocation increased 2% to 15% • 2009 – Clerk/Receptionist time increased from .1 FTE to .45 FTE • 2011 – PW Director cost allocation increased 15% to 20%

Public Works FTE FTE FTE FTE FTE FTEPersonnel Allocations: 2006 2007 2008 2009 2010 2011

Acctg Tech/AP Tech 0.02 0.02 0.02 0.02 0.02 Acctg Tech/ PR Tech 0.30 0.10 0.10 0.10 0.10 - Clerk/Recept 0.10 0.10 0.25 0.25 0.20 Clerk/Recept 0.20 0.20 0.20 Fin Accnt 0.10 0.05 0.05 0.05 0.05 0.05 Director 0.10 0.02 0.02 0.15 0.15 0.20 Admin Asst 0.02 0.02 0.02 0.02 0.02 Acct Sup 0.05 0.05 0.05 0.05 0.25 Safety Spec 0.25 0.25 0.25 RE Coord 0.02 0.20 0.10 0.10 - RE Mgr 0.10 0.10 - Ferry Manager 0.80 0.80 - - - Ferry Coordinator 1.00 1.00 1.00 1.00 1.00 Office Administrator 0.80

Total Personnel Allocations 1.30 2.18 2.36 2.29 2.29 2.19 % Annual Increase 68% 8% -3% 0% -4%

PWCost Allocation History


http://www.mrsc.org/



Observations: • The Whatcom County Public Work’s memo “Ferry Administrative Allocation Expenses –

2011 Administrative Notes” states: “These (allocated expenses) are not hidden costs and “redistribution” will not make the costs go away. They will simply be paid elsewhere, as in the past, or they will be part of the operation that generated the cost. The Department does not desire to consume the resources it would take to recover the expenditures of prior years that were not charged to the Ferry Operations.”

The first part of this statement is true assuming the “status quo.” However, with introduction of technology, a modern accounting system (current system is archaic), or business process improvements, these overhead and indirect costs may be reduced.

• The number of FTEs has remained consistent between 2007 and 2011, however, the cost

of these personnel increased 45%, due inpart to higher level (paid) positions allocated to this work.

• The Ferry Fund is approximately 5% of PW expenditures ($2.6m/$56.4m). Allocations that

exceed a 5% allocation would be expected in areas with activity that is unusual for PW. This would include mandatory federal and state reporting unique to the ferry, revenue activities, and activities reflecting current lease negotiations.

Most allocated costs are within expected outcomes (less than 10% of PW overhead). The following allocated costs are higher than expected:

Position Why This Seems High Options Clerk/ Receptionist .4 FTE (2 Headcounts)

For a $2.7m spend, 3 hours/day to Answer phones, data entry (duplicates Ferry Coord?), selling ferry passes, fold ferry brochures, update ferry website.

Outsource pass sales. Track/log reasons for phone calls; can info about common inquiries be placed on website? Develop mobile app. Go green. Eliminate paper brochures. Move website updates to Ferry Coord. Limit service hours. Technology can eliminate/minimize cash auditing and database entry

Acctg Supvr .25 FTE

25% of Acctg Sup time spent on 5% of the budget. Even considering unique ferry aspects (revenue, lease negotiations, rate setting, high maintenance customer base), this appears high.

Consider reduction of time after intensive time requirements for ferry fare analysis and Lummi Nation negotiations.

Safety Specialist .25 FTE

BNA “Environment, Health & Safety Benchmarks 2004” shows median EHS Dept Staff Ratio as .75 per 100 employees. This translates to .11 for a ferry crew of 15 (there are 11 budgeted FTEs). Conversations with an EHS Manager and an OSHA Director indicate this is a very high ratio.

• Analyze PW Utilization • Outsource • Shared Services with other entities • Utilize “train the trainer” opportunities

within Departments




Recommendations: • Consider using evaluation techniques such as Activity Based Costing or similar business

process improvement tools to seek procedural efficiencies as well as provide an objective method of allocating costs (vs current subjective method of estimating time spent).

• Explore technology (web based, IVR, social networking, etc) options that will reduce

overhead and indirect costs. Utilizing fare technology and related database technology that captures ridership data will significantly reduce the cost of current archaic data capture methods. A modern accounting system would also significantly reduce staff time and provide better quality data, however, this recommendation is outside the scope of the ferry fund or Public Works.

• Consider these punchcard sales related options to reduce clerk/typist FTE:

a. limiting service hours b. outsource pass sales c. sell tickets online (“direct deposit” and flexible response time within standards) d. eliminate punchcards through modern POS technology, if affordable.

Technology solutions may provide additional administrative savings.




Cost Allocation Schedule

$ $ $ $ $ $Personnel Allocations: 2006 2007 2008 2009 2010 2011

Acctg Tech/AP Tech 1,087$ 1,117$ 1,218$ 1,269$ 1,390$ Acctg Tech/ PR Tech 14,882 5,802 5,958 4,816 5,184 Clerk/Recept 3,887 4,125 10,696 11,536 10,730 Clerk/Recept 8,928 9,608 9,771 Fin Accnt 3,412 3,145 3,223 3,514 3,650 3,782 Director 12,713 2,930 2,983 24,484 25,935 36,100 Admin Asst 1,418 1,490 1,327 1,416 1,486 Acct Sup 3,715 3,924 4,649 4,956 25,746 Safety Spec 19,747 21,054 16,437 RE Coord 790 838 15,046 5,353 - RE Mgr 10,619 Office Administrator 63,786 Other 430 430 368 368 Safety - Extra Help 3,081 3,081 3,095

Total Personnel Allocations 94,793$ 23,204$ 24,088$ 97,874$ 104,029$ 108,537$ % Annual Increase -76% 4% 306% 6% 4%

NonPayroll Costs:Admin -$ 4,909$ 4,949$ 16,542$ 17,249$ 31,256$ Acctg - 1,835 1,848 5,510 5,582 5,827 Safety & Training - 6,995 6,920 19,111 22,251 29,037 Admin Adj (16,804) (17,723)

Total NonPayroll Overhead -$ (3,065)$ (4,006)$ 41,163$ 45,082$ 66,120$ 31% -1128% 10% 47%

County Alloc. to PW to Ferry:County (Exec, Treas, etc) 12,809$ 13,193$ 14,392$ 14,824$ 14,824$ County Admin(HR, Fin, IT) 31,716 27,993 28,833 30,610 32,705 32,705

Total County Allocations 31,716$ 40,802$ 42,026$ 45,002$ 47,529$ 47,529$

Total Allocated Cost 126,509$ 60,941$ 62,108$ 184,039$ 196,640$ 222,186$ % Increase: Prior Yr -51.8% 1.9% 196.3% 6.8% 13.0%

Direct Charge Emp:Ferry Manager -$ 100,000$ 100,000$ -$ -$ -$ Ferry Coordinator 56,456 61,326 66,138 70,486 Total Direct Charge - 100,000 156,456 61,326 66,138 70,486

Total Indirect Overhead Exp 126,509$ 160,941$ 218,564$ 245,365$ 262,778$ 292,672$

Total Ferry Fund Exp 1,852,078$ 1,876,317$ 2,124,508$ 2,545,688$ 2,593,833$ 2,666,188$ Overhead as % of Total Exp 6.8% 8.6% 10.3% 9.6% 10.1% 11.0%





Appendix C3 Capital or Expense?

Ferry Task Force, April 4, 2011 The Citizen’s Task Force for the Lummi Island Ferry has been tasked to present a written report that shall include “relevant facts and recommendations concerning the classification of ferry expenditures as operating costs, with different options or scenarios presented and evaluated.” One specific area to be addressed is whether certain expenditures should be classified as capital (asset) or expensed. This section of the report includes technical references, analysis of Ferry Fund expenses classified as expense, analysis of capitalized ferry and dock assets, and a concluding statement. Capital vs Expense: Why? Certain principles have been accepted by the accounting profession and business community on the basis of reasonableness, lack of bias, and relevance. The principle related to whether to capitalize or expense an expenditure is the Matching Principle. “The matching principle states that for any period for which income is to be reported, the revenue recognized should be determined according to the revenue principle, then the expenses incurred in generating that revenue should be determined and reported for that period. The matching of expenses with revenue frequently is a difficult problem. Many costs are deferred to the future by reporting them as assets because the things to which costs attach aid in the generation of future revenues. Subsequently, as they are “used up” they are recorded and reported as periodic expenses to match them with the revenues their incurrence served to generate. Their deferral as assets, and their subsequent write off as periodic expenses in accordance with the matching principle, is generally based on cause and effect. Some are written off as expenses based on physical association . . ., some on a time basis (such as . . . depreciation), and some . . . because there is no reasonably objective way to measure future benefit.” 1 How to Determine Capital vs Expense? In general, costs incurred to create or enhance an asset are capitalized. Costs to maintain an asset are expensed. The two most significant factors that determine capitalization are:

• Has the value of the asset materially increased? • Has useful life been increased?

Additional factors may include materiality or whether the cause of the expenditure was ongoing or unusual.

1 Intermediate Accounting Welsch, Zlatkovich, Harrison, Chapter 2 Theoretical Foundations of Financial Accounting and Reporting



Unit of Property (UOP) The first step is to determine the appropriate unit of property (UOP) on which the tests for capitalization vs expense are to be applied. Generally, the level at which an asset was capitalized when first placed into service will be considered the unit of property. Another factor is whether the UOP can exist without another UOP. For example, can the ferry engine exist without the boat and vice versa? The obvious answer is “No.” The ferry as a whole would be considered a unit of property. The ferry and engine together were capitalized in 1964 (for a period of 40 years) as a single unit of property, which affirms the unit of property consideration. Increased Value Increased value alone is not a determinative factor for the purpose of characterizing the replacement of a part or component. Any increase in property value attributed to repairs must be assessed relative to the condition of the property in its original functioning state. Otherwise, every repair would be deemed a capital expenditure since it would always be the case that a repair would enhance the value of property relative to its deteriorated condition.3 Materiality The relative importance of a component part will play a vital role in determining whether its replacement is treated as an ordinary and necessary business expense or a capital expenditure. The significance of the part under repair to the operation of the property is a critical factor. While the high cost of the work performed may be considered in determining whether an expenditure is capital in nature, cost alone does not determine treatment.4 Increased Useful Life Substantial improvement near the end of an assets useful life that extend the useful life, modify the structure, add new components, and upgrade equipment should be capitalized. This would include costs incurred to rebuild a significant portion of a structural component and to install modifications.5 Restoring Property to its Previous Condition An expenditure that merely restores the property to the state it was in before the repair was required, and does not make the property more valuable, more useful, or longer lived, is usually considered an expense.6 A capital expense is generally considered to be a more permanent improvement ie, the longevity, utility or worth of the property.7 Conclusion: None of these factors is determinative by itself, but must be considered in context with all relevant factors. There are no bright line tests or clear-cut guidance that can be matched to a set of facts.8 3 300 F.3d 1023, 1031 (9th Cir. 2002): Richard L. Smith; Vanalco, Inc., Petitioners-appellants, v. Commissioner of Internal Revenue, Respondent-appellee 4 Compare R.R. Hensler, Inc. v. Commissioner, 73 T.C. 168 (1979), acq. in result, 1980-2 C.B. 1, where the expense was large but did not change its character as ordinary, and Griffin v Commissioner, T.C. Memo 1995-404, where the installation of a trailer hitch resulted in a modification to a pickup truck was a capital expenditure. 5 Rev Rule 2001-4,2001-1 C.B. 295 and IRS Section 263A(g)(1) 6 Plainfield-Union Water Co. v. Commissioner, 39 T.C. 333 (1962) nonacq., on other grounds, 1964-2 C.B. 3. See also Norwest Corp. & Subs. V. Commissioner, 108 T.C. 265, 279-80 (1997). 7 Smith v. Commissioner, 300 F. 3d 1023 (9th Cir. 2002) 8 WashingtonCPA March/April 2011 Rethinking Capitalization by Craig Chase, Senior Manager, Moss Adams, LLP




The following table8 summarizes many of the factual considerations considered by the courts. These factors, although not exhaustive, should be considered in an analysis to distinguish between capital expenditures and deductible repairs.

Capital Repair (Expense) Improvements that “put” property in a better operating condition

Improvements that “keep” property in efficient operating condition

Restores the property to a “like new” condition Restores the property to its previous condition

Addition of new or replacement components or material sub-components to property

Protects the underlying property through routine maintenance

Addition of upgrades or modifications to property Incidental Repair to property Enhances the value of the property in the nature of a betterment

Extends the useful life of the property Improves the efficiency of the property Improves the quality of the property Increases the strength of the property Increases the capacity of the property Ameliorates9 a material condition or defect Adapts the property to a new use Plan of Rehabilitation Doctrine

8 IRS Audit Technique Guide Appendix B Capitalization v Repairs Nov 2010 9 Amelioration of a material condition or defect that either existed prior to acquisition of the Unit of Property (UOP) or that arose during the production of the UOP. Stoeltzing v. Commissioner, 266 F.2d 374 (3rd Cir. 1959).




Expenditures Subsequent to Acquisition Ordinary Maintenance and Repairs Ordinary maintenance is expense incurred on a more or less continuous basis to keep equipment in normal usable condition. Maintenance work is generally minor in scope and cost, repetitive, and controls asset deterioration. Ordinary repairs are outlays necessary to keep the equipment in normal operating condition, but do not add materially to the use value of the asset nor extend its life significantly. Ordinary repairs are recurring and normally involve relatively small expenditures. Ordinary maintenance and repair is expensed. Extraordinary or Major Repairs, Betterments, Improvements Extraordinary or major repairs involve relatively large amounts, are not recurring in nature, and usually increase the efficiency and use utility or the service life of the asset beyond what it was before the repair. A betterment10 or improvement is an addition made to, or change made in, a capital asset, other than maintenance, that is anticipated to prolong its expected useful life or to increase its capacity, efficiency, or quality of output. Extraordinary or major repairs, betterments, and improvements should be capitalized. The Washington State Auditor issues the Budget, Accounting, and Reporting System Manual (BARs Manual) which promulgates accounting practices for all government agencies in Washington State. The BARS Manual states:

“Major Repairs should be capitalized if they result in betterments/improvements. The difficulty arises in the case of capital outlays that are partly replacements and partly betterments/improvements. To the extent that the project replaces the old part of a capital asset, outlays should not be capitalized (unless cost of the old part was removed from the cost of the asset); and to the extent that the project is betterment/improvement, outlays should be capitalized. The distribution of the total cost in such a case is a matter of managerial determination. When the distinction between replacement and betterment/improvement is not easily determinable, the government should expense the entire cost of the project.”11

The State of Washington Office of Financial Management, State Administrative and Accounting Manual (SAAM), Section 30.20.20.c “Capitalization Policy for Extraordinary Repairs, Betterments, or Improvements” directs its agencies to capitalize outlays that increase future benefits from an existing capital asset beyond its previously assessed standard of performance . Increased future benefits typically include:

• An extension in the estimated useful life of the asset • An increase in the capacity or efficiency of an existing capital asset. • A substantial improvement in the quality of output or a reduction in previously assessed

operating costs. Note: the State of Maine State Administrative & Accounting Manual 30.20.20c promulgates

10 http://www.ofm.wa.gov/policy/glossary.asp#betterment 11 BARS Manual: Part 3, Ch 7, Page 13


http://www.ofm.wa.gov/policy/glossary.asp#betterment

http://www.ofm.wa.gov/policy/glossary.asp#betterment



identical guidelines. California and Missouri have similar, if not identical, policies. The identical name and numbering indicates that this may be a national standard for state governments. For Washington State ferries, improvements are defined as projects that primarily achieve a program goal, such as changing or improving the characteristics of an existing asset to meet new program requirements, or creating a new asset through construction, lease and/or purchase. This category is less concerned with life extension of an asset and includes projects ranging from building new assets to significant renovation of existing assets. 12 Replacement Replacement involves the removal of a major part or component of . . . equipment and the substitution of a new part or component of essentially the same type and performance capabilities.13 Replacements may be capitalized or expensed, depending on the fact set. As noted above in the section above on Extraordinary or Major Repairs, Betterments, Improvements, the BARS manual (a promulgating authority) specifies that:

“The difficulty arises in the case of capital outlays that are partly replacements and partly betterments/improvements. To the extent that the project replaces the old part of a capital asset, outlays should not be capitalized (unless cost of the old part was removed from the cost of the asset); and to the extent that the project is betterment/improvement, outlays should be capitalized. The distribution of the total cost in such a case is a matter of managerial determination. When the distinction between replacement and betterment/improvement is not easily determinable, the government should expense the entire cost of the project.”14

The IRS provides guidelines that while costs of incidental repairs that keep an asset in an ordinarily efficient condition are expensed, repairs in the nature of replacements, to the extent that they arrest deterioration and appreciably prolong the life of the property shall be capitalized (IRS Sec 167). Following are examples of the accounting treatment of replacements by other government entities and related industries:

The State of Washington SAAM policy on capitalization, Sec 30.20.20.d, states that “For . . . equipment, capitalize the cost of outlays that replace a part of another capital asset when the cost of the replacement is $100,000 or more and at least 10% of replacement value of the asset.” Pierce County’s capitalization policy15 states that “Replacement . . . will be considered capital outlay only where the value of the improvement or replacement is at least 50% of the book value of the asset being improved or replaced. . . .. If the new costs are less than 50% of the book value, the expenditure will be considered repairs/maintenance or materials/supplies. However, whenever the improvement or partial replacements costs exceed $50,000 contact Budget and Finance for a

12 Washington State OFM 2011-2013 Biennium Transportation Addendum to the Operating Budget Instructions: Ferry Improvement Considerations ,pg 13 13 Intermediate Accounting Welsch, Zlatkovich, Harrison, Chapter 13: Property, Plant and Equipment – Acquisition, Use and Retirement 14 BARS Manual: Part 3, Ch 7, Page 13 15 Pierce County Policy and Procedures Manual: Capital Outlay Guidelines, Rev Nov 2003




determination. It is possible that the items may be considered capital outlay simply because the absolute dollar amount is significant.”

Regulated transportation entities are required to comply with federal regulations that dictate accounting treatment. For railroads, when an item of property other than a complete unit is replaced, independent of the complete unit of which it is a part, the cost of replacement shall be treated as maintenance and charged to operating expenses. If the replacement constitutes an improvement then the cost of replacement should be accounted for as a rebuilding expenditure.16 The IRS audit technique guide states that “repairs in the nature of replacements, to the extent that they arrest deterioration and appreciably prolong the useful life of the property, shall … be capitalized. . ..”17

Preservation The Washington State Ferry System defines a preservation project as18:

• Extending the life of existing assets by replacing systems of the asset that are determined to be at the end of their structural, mechanical or electrical lives.

• Upgrading systems needing to be replaced for structural, mechanical or electrical reasons so long as the replacements do not significantly change the program use.

• Having generally little effect on future operating programs and budgets, except for reductions in maintenance costs and any deferred preservation backlog.

Costs incurred to rehabilitate or preserve an asset are capitalized if they meet the conditions met for improvements or betterments. The existence of a written plan is not sufficient to trigger capitalization. Whatcom County does not have a ferry preservation plan.

16 CFR (Code of Federal Regulations) 49 Part 1201 Subpart A Uniform System of Accounts (Railroads) Instruction 2-9 Additions and retirements of other than units of property 17 IRS Audit Technique Guide Appendix B Capitalization v Repairs Nov 2010 (Ref IRS Code Section 162) 18 RCW 47.60.005(5) and (8)




Other Factors or Cases of Interest to Ferry Fund Affectionados

What constitutes a Unit of Property, the engine or the boat? The IRS has addressed whether the costs of cleaning, inspecting, and repairing towboat engines were capital expenditures. The Service focused on the engines and argued that the work performed increased the value and prolonged the useful life of the engines. The taxpayer argued that the appropriate focus was on the towboat, and the court agreed, stating that the record did not support a practice (industry or otherwise) to purchase or treat towboat engines separately from the towboats. The court reasoned that the towboats and engines, if properly maintained, were both expected to last 40 years, that the towboats were purchased with the engines, and that the engines were designed to be maintained without removing them from the boat. The court also noted that there was no evidence indicating that towboat owners regularly and periodically replaced the towboat engines. Ultimately, the court held that the expenditures did not increase the value or useful life of the towboat or the engine and could be deducted.19 More on engines from the IRS: Should the costs of servicing engines must be treated as capital expenditures? The following four factors are relevant in determining the appropriate UOP (Unit of Property): (1) whether the taxpayer and the industry treat the component part as a part of a larger UOP for regulatory, market, management, or accounting purposes; (2) whether the economic useful life of the component part is coextensive with the economic useful life of the larger UOP; (3) whether the larger UOP and the smaller UOP can function without each other; and (4) whether the component part can be and is maintained while affixed to the larger UOP. A UOP aircraft engine example cited by the IRS states that “The engines should not be considered a UOP separate and apart from the airplane. Specifically, the court found probative that “airplane” was defined by the Federal Aviation Authority to include the engines and the airframe, that the airplanes were appraised with their engines, that the engines and airframes were acquired by the taxpayer at the same time and as one unit, that maintenance on the taxpayer’s engines and airframes was governed by a single department and a unified maintenance plan, that the engines and airframes were expected to have the same economic life of approximately 30 years, and that neither the engines nor the airframe could function as an airplane without each other. On the other hand, the court did not place significant weight on the fact that the engines were removed from the airframe for maintenance and replaced with previously repaired engines. The court held that the taxpayer was not required to capitalize the costs of its engine service costs because they did not increase the value or life of the aircraft.”20

The characterization of any cost as an expense or capital improvement depends on the context in which the cost is incurred.

19 Ingram Industries, Inc. v. Commissioner, T.C. Memo 2000-323. From IRS Audit Technique Guide Appendix C: Unit of Property. Nov 2010 20 FedEx Corp. v. United States, 291 F.Supp. 2d 699 (W.D. Tenn. 2003), aff’d, 412 F.3d 617 (6th Cir. 2005)




Real Estate Lease: Capital or Operating? The County leases certain real property (tidelands and parking lot) for ferry operations. These leases have been treated as operating leases and have not been capitalized. Capital leases and their related amortization would not be considered Operating Expense and therefore not included in the farebox recovery calculation. Ferry related capital is paid 100% by Public Works. Operating leases are included in the farebox recovery calculation. GAAP: The County classes the current leases as operating leases, in accordance with Generally Accepted Accounting Principles (GAAP). FAS 13 Paragraph states “If land is the sole item of property leased and the criterion in either paragraph 7(a) or 7(b) is met, the lessee shall account for the lease as a capital lease, otherwise, as an operating lease.” The criteria noted in 7(a) and 7(b) is as follows:

7(a) The lease transfers ownership of the property to the lessee by the end of the lease term. 7(b) The lease contains a bargain purchase option (BPO).

Because the land never transfers to the County, these leases are recorded as operating leases in accordance with GAAP. Possible Conflict: The Whatcom County Charter has a clause that appears to require land to be in a capital budget and therefore capitalized regardless of whether title passes at the end of the lease, directly in conflict with FAB 13: Section 6.90 Illegal Contracts.

Except as otherwise provided by ordinance, any contract in excess of an appropriation shall be null and void; and any officer, agent or employee of the County knowingly responsible shall be personally liable to anyone damaged by his action. The County Council when requested to do so by the County Executive may adopt an ordinance permitting the County to enter into contracts requiring the payment of funds from appropriations of subsequent budget cycles, but real property shall not be leased to the County for more than one year, unless it is included in a capital budget appropriation ordinance. (Ord. 97-042, 1997; Ord. 2005-075 Exh. A).

Questions: 1. Are these leases real estate leases (vs rights or other vehicle)? 2. If these leases are real property leases, is there an overriding ordinance or other local

authority? 3. If not, does GAAP override County Charter?

Generally, the broader authority, the FASB in this instance, would override the local rule, however, research has not revealed any clear guidance on this issue.




Ferry Fund Repair & Maintenance Costs Following are analysis of the Ferry Fund Repair & Maintenance (R&M) accounts accounting. Ferry Fund Accounting: R&M Account 7069 The following chart shows repair and maintenance (R&M) costs, Account 7069, charged to the Ferry Fund in 2008 – 2010, by cost center. Cost centers showing high or irregular patterns of R&M costs include the boat, Gooseberry dock, and island docks. These items warrant additional inquiry.




Selecting Expenses (7069) for Further Inquiry: Expenses for 2008-2010 were sorted by center and by monthly spend. These were analyzed for spend groups (center, time range) exceeding $5,000, the capitalization limit. While it is possible that adjacent months could accumulate costs >$5,000 for a single project, scrutinizing monthly spends in excess of $5k should reveal any spend patterns. A summary of these spends (below) was forwarded to Public Works with a request for description of the reason for the costs. Public Works responded with explanations and detailed back up. The explanation is included in the following table. Table of spends exceeding $5,000:

Center $ Month Yr From Explanation Potential

Capital?

200 15,749.79 9 2008 Road Fund

Deliver, set up, break down, pick up floats for dry dock. Install cables, repair whaler.

No.

200 13,899.37 6 2009 Road Fund Repair whaler Yes. 200 2,937.69 8 2009 Road Fund Sheaves, Yes 200 21,774.88 9 2009 Road Fund Dry dock, No 200 7,086.62 10 2009 Road Fund 200 3,736.64 11 2009 Road Fund 200 2,511.18 12 2009 Road Fund

Dry dock prep & break down. Labor to replace sheaves, offload floats and cleanup (dry dock ended 10/1).

510 6,193.20 6 2009 ERR Dock inspection by mechanics, replace apron cylinder.

Yes

510 7,855.38 8 2009 ERR Assemble sheaves

Yes

510 2,250.68 8 2009 Road Fund 510 19,808.70 9 2009 Road Fund Replace sheaves Yes 510 12,641.68 9 2009 ERR Dry dock labor & parts. Parts, yes

610 22,902.91 10 2009 Road Fund Replace rub strips on Lummi whalers, cable inspections.

Rub strips, yes.

200 21,221.91 6 2010 Road Fund Floats, signs, work for ferry incident (hole in stern tube).

Yes

200 12,798.64 7 2010 Road Fund

Repair & setup floats for dry dock, prepare & paint non-skid on plywood, prep sheaves and repair floats.

No

200 5,541.07 8 2010 Road Fund

Remove & unload dry dock floats. Move fuel trucks off Lummi Island.

No

510 5,675.48 8 2010 Road Fund Clean and paint shafts and sheaves.

No

530 8,466.58 7 2010 Road Fund

Signage, striping, mow, and prepar Gooseberry parking for dry dock.

No

610 5,436.59 1 2010 ERR

Parts & labor to repair Lummi Island dock gate, monthly dock inspection.

No

Some months with < $5,000 spends were included in the request as they are adjacent to monthly spends for that center with > $5,000 R&M costs.




Additional Investigation:

Item Ctr $ Month Yr From

Explanation

Potential Capital?

1. 200 13,899.37 6 2009 Road Fund Repair whaler Yes. 2. 200 2,937.69 8 2009 Road Fund Sheaves, Yes 200 21,774.88 9 2009 Road Fund Dry dock, No 200 7,086.62 10 2009 Road Fund 200 3,736.64 11 2009 Road Fund 200 2,511.18 12 2009 Road Fund

Dry dock prep & break down. Labor to replace sheaves, offload floats and cleanup (dry dock ended 10/1).

3.

510 6,193.20 6 2009 ERR Dock inspection by mechanics, replace apron cylinder.

Apron Cylinder, Yes

4. 510 7,855.38 8 2009 ERR

Assemble sheaves

Yes

510 19,808.70 9 2009 Road Fund Replace sheaves Yes 5. 510 12,641.68 9 2009 ERR Dry dock labor & parts. Yes 6.

610 22,902.91 10 2009 Road Fund Replace rub strips on Lummi whalers, cable inspections.

Rub strips, yes.

7. 200 21,221.91 6 2010 Road Fund

Floats, signs, work for ferry incident (hole in stern tube).

Yes

1. Repair Whaler $13,899.37

Whaler is a certain part of the wing walls at docking locations. This item consists of $10k labor, $2k bolts, and $3k equipment use. There is no (material or significant) replacement, increased life, or increased value. The item is correctly classified as a repair.

2. Sheaves Sheaves are part of the pulley system that raises and lowers the ramps. The sheave charges consist of labor, benefits, and equipment use totaling $7,086.62. There is no equipment replacement, increased life, or increased value. The item is correctly classified as a repair.

3. Apron Cylinder The June 2009 ERR charges of $6,193 included $410 for inspection and $993 for a motor brake. $3,918 (part and labor) was charged to the apron cylinder. This is below the $5,000 limit for capital consideration and so is correctly classified as a repair.

4. Replace Sheaves Remove, rebuild, and replace costs total $26,221.96, well above the capitalization limit. The project did not increase the value of the system nor did it extend the life. Could this project be considered a replacement and therefore be capitalized? To capitalize a replacement, the item must be a betterment or improvement not merely a replacement of the old part of a capital asset.21 The State of Washington SAAM policy promulgates capitalizing an asset when “the cost of the replacement is $100,000 or more and at least 10% of the replacement value of the asset.22” Pierce County’s capitalization policy indicates that qualifying replacements are to be capitalized when the exceed 50% of the

21 BARS Manual: Part 3, Ch 7, Page 13. 22 State of Washington SAAM policy Sec 30.20.20.d




book value of the asset. (The Gooseberry dock has a book value in excess of $400k). There are no scenarios under which this project should be capitalized. The sheave replacement is appropriately classified as maintenance.

5. Dry Dock Labor and Parts This was selected for review to determine if there are any capitalizable items included in this month’s $12,641.68 maintenance charges. $9,060.00 of labor charges was coded to ferry drydock. Numerous supplies and small parts totaling $3,219.28 and $362.40 of shop charges rounded out this total. There is nothing to indicate any capitalization opportunities.

6. Replace Rub Strips on Lummi Whaler

This $22,902.91 charge is internal labor and equipment. This is appropriately classified as maintenance/repair.

7. Work for Hole in Stern Tube Reviewed for potential capitalization. These charges are all Public Works employee labor and equipment. This is appropriately classified as maintenance/repair.




Equipment Rental/Revolving (ERR) Fund Charges: Acct 6869 The ferry is “owned” by the Public Works Road Fund, not the Ferry Fund. Services performed on assets owned by the Road Fund are managed and paid by the Whatcom County ERR Fund. These services include operating fuel, dry dock, inspections, bi-monthly toilet service, and certain inspections. The ERR Fund charges the Ferry Fund a flat monthly rate for the services and items it projects the Ferry Fund will consume during the year (similar to the cost allocation for ferry administration). The charge hits the Ferry Fund as an accounting blob with the obtuse account description “Equipment Rental – Interfund.” This does not adequately describe the variety of expenditures in this account. The reason for these charges is obfuscated to both casual and sophisticated readers of financial statements. The actual costs incurred by the ERR fund will exceed or be less than the flat monthly charge. This over/under charged amount is not adjusted at year end to the Ferry. For the five year period 2005-2010, this has been to the benefit of the Ferry Fund by almost $60,000.

Account 6869: Capital vs Expense? Detailed schedules of dry dock and professional services tasks/items were provided for review. While the majority of items are not candidates for potential capitalization, the following items could potentially be capitalized: 2006 Build On‐Board Restroom 18,6572006 Propulsion Machinery/Stern Tube 37,0322007 Propulsion Machinery/Stern Tube 23,5822008 Propulsion Machinery/Stern Tube 119,7982008 Rudders 14,9662008 Steel replacements 123,2652009 Deck Plates 64,3632010 Deck Drains 20,1632010 Hold Hatches 39,3092010 Searchlight replacement 6,6582010 Steel doublers on cabin decks 9,965




Capitalize: Building a new restroom adds functionality that did not previously exist. Although this could be considered incidental to the function of the ferry, it is significant enough be considered a betterment which should have been capitalized23. Expense: It is assumed that the remaining items are replacements. Replacement involves the removal of a major part or component of . . . equipment and the substitution of a new part or component of essentially the same type and performance capabilities.24 Replacements may be capitalized or expensed, depending on the fact set. Consideration should be given to the materiality of the expenditure. The State of Washington SAAM policy on capitalization, Sec 30.20.20.d, states that “For . . . equipment, capitalize the cost of outlays that replace a part of another capital asset when the cost of the replacement is $100,000 or more and at least 10% of replacement value of the asset.” Using the state ferry system guidelines (without considering the state minimum capitalization limit of $100,000) for the Ferry Fund, only replacement items in excess of $375,000 would be considered for capitalization. None of the above costs, or annual totals, breach this floor. The Washington State BARS manual (a promulgating authority) specifies that “To the extent that the project replaces the old part of a capital asset, outlays should not be capitalized (unless cost of the old part was removed from the cost of the asset).25 The Ferry Fund must adhere to BARS rules, as a promulgating authority. BARS clearly defines when replacements should be expensed. The replacement items noted in the schedule above (except the restroom) are correctly expensed. Repair and Maintenance (Vendor Payments) Acct 7060 This account consists of expenses paid to external vendors for repairs and maintenance. The expense totals for this account from 2006-2010 are:

Year Amount 2010 11,0792009 20,7552008 18,5632007 189,4062006 10,285

The high level of 2007 expenditures is due to the cost to fabricate and install replacement sheaves (Woods Logging $176,220 and electrical contractor). As noted previously, the Washington State BARS manual (a promulgating authority) specifies that “To the extent that the project replaces the old part of a capital asset, outlays should not be capitalized (unless cost of the old part was removed from the cost of the asset).26

The sheave replacement was correctly recorded as an expense. 23 Extensive experience in outhouses in sub-zero temperatures in Alaska and subsequent appreciation of flush facilities may have prejudiced the author’s evaluation. 24 Intermediate Accounting Welsch, Zlatkovich, Harrison, Chapter 13: Property, Plant and Equipment – Acquisition, Use and Retirement 25 BARS Manual: Part 3, Ch 7, Page 13 26 BARS Manual: Part 3, Ch 7, Page 13




Observations and Suggestions:

1. Accounting and reporting transparency should be enhanced, overall. Current account descriptions do not adequately inform the reader.

2. Repairs and maintenance have been correctly classified, with the exception of the on-board toilet.

3. Painting for $116k was capitalized in 2002. Painting is usually not capitalized, however as this project went through the federal grant application process and approval as well as single audit review, it is presumed that the capitalization criteria was met for this specific project.

4. The county’s fixed asset schedule states the Whatcom Chief has a salvage value of $100k and a 40 year life. The salvage value and useful life should be reviewed and adjusted, and any remaining net book value depreciated accordingly if necessary.

5. ERR Fund: Accounting Suggestions

a. It is strongly recommended that these charges be made more transparent. This

could be done by breaking out the components of this charge into its primary categories (Fuel, Dry Dock, Services, and Other R&M) and coding accordingly.

b. It is recommended that these estimated charges be “trued up” or adjusted to actual at year end to enhance transparency and accuracy in financial reporting. These are significant material expenses critical to analysis and understanding of Ferry Fund costs and trends.

c. Explore moving ferry system assets to the Ferry Fund, which is an enterprise

fund. Many (most?) enterprise funds do not segregate the assets utilized in an enterprise fund from operations of those assets. Including these assets in the fund will provide a more complete and transparent picture of the entity.





Appendix C4 Revenue Recognition

Ferry Task Force, April 4, 2011 The ferry system offers discounted and free ferry fares to various groups: low income island residents, students, Lummi Nation employees, and ferry employees. The Whatcom Chief discounted and free ferry fares are recorded at gross, not net. This practice “hides” the give-aways, and does not clearly show:

• True value of discounted passage given to County agencies ($10 credited to revenue) and Lummi Nation employees

• Discount value of needs based tickets. • Value of employee benefit of free passage. • Free passage provided to schoolchildren.

Discounts and free passage should be clearly disclosed at gross and in contra accounts27, in accordance with GAAP.28 The concept is that “Transactions need to be accounted for based on their true economics rather than just their form29.” Suggestion: Modify revenue recognition practices so that fare revenues are recorded at gross, with applicable discounts recorded to revenue contra accounts.

27 Gross vs Net Presentation of Revenue27” (EITF 99-19) 28 The Right Way to Recognize Revenue” June 2001 Journal of Accountancy 29 Lynn E. Turner, SEC Chief Accountant, from remarks at Lylton Lecture Series in Accountancy, Critical Issues in Accounting Forum, Wake Forest University, April 25, 2000

Fare Recommendations Whatcom County Ferry Task Force Report

Recommendations on Fare Levels and Structure

Table of Contents

Appendix D1 Fare Structure ..................................................................................... 2

Fare Discounts ................................................................................................ 2 Other Fare Classes ........................................................................................... 3 Needs Based Fare Eligibility and Administration............................................ 5

Appendix D2 Ferry Financials Simulation Tool ......................................................... 9

Parameters and Summer Surcharge............................................................... 10 Fare Box Recovery Simulation........................................................................ 11

Appendix D3 Fares to Meet Varying Budgets.......................................................... 13

DHarper page 1 of 16 Section D


Appendix D1 Fare Structure: Fare Levels and Classes The Ferry Task Force has examined fares from the standpoint of the overall financial needs of the Whatcom County ferry system, the historical and current Lummi Island community values, and the practices of the other two island ferries operated by counties in Washington State. We developed a simulation model that allows the user to vary the assumptions made for rate of ridership change, changes in operational costs, changes in revenue, and changes in the percentage of costs covered by fares. We decided on four individual fare schedules for four specific budgets, and we recognized that any one fare schedule quickly would be outdated by changes in operational costs or numbers of trips purchased. The simulation method is shown in Appendix D3, along with additional information on fare classes and fare schedules. An electronic file with a working simulation model is included on the disk accompanying this report. We decided that: • The simpler the fare structure and the more consistently applied, the easier it would be for

ferry users to find fares equitable and supportable. • Flexibility in fares is important for the county to be able to address changing costs and

revenues; yet • Predictability is important for island residents and potential residents so as to be able to

make both business and life decisions. We have attempted to address these issues, as well as the values expressed by the community, in the following recommendations. Fare Discounts Ferry crew and county employees: The ferry crew, retired crew, and their immediate families are known by sight to crew members on duty on the ferry, but since many ferry users do not know who they are it leads to the perception that not everyone pays for passage. Multiple trips on the ferry each month by the county Health Department, Building Inspection Department and Library System are internally credited to the ferry, and this is also not visiible to other ferry users. In order to prevent future criticism of the ferry crew for showing favoritism, and ameliorate any doubts about other county departments being charged for use, we recommend that all adults pay fares. Emergency vehicles are exempt from fares: fire department, sheriff, and ambulances. We acknowledge that the number of punchcards to be supplied to each crew member is a decision that will be made in negotiations between the county and crew; however, we have included the cost of providing those punchcards in our calculations of a revised operational budget. We also have included estimated numbers of punchcard fares for county employees and vehicles as part of the calculation of how many trips will be made. Only those employees or contractors who are working on or inspecting the ferry system should be exempt. Children and youth fares: We value having families with children through age 18 resident on the island, and also value the opportunity for families from the mainland to visit at a reasonable cost. We recommend that passage for pedestrians/passengers under 19 be free. We encourage island youth to bring friends home with them, and youth groups from other areas of



Whatcom County to come to the island to participate in Boys-and-Girls Club, Grange, church events and other community activities. The current system of charging for those over 12 in the summer makes it difficult for family activities off-island, or for friends to visit island children and this fare policy eliminates the summer only punchcard. Any youth driving a motorized vehicle, including motorcycles, does not have this discount and must pay regular fare. Motorcycles and bicycles: We recommend that motorcycle and bicycle fare be a $3.00 surcharge added to the appropriate pedestrian fare. This surcharge allows children or youth on bicycles to pay only the surcharge; while it increases revenue from adults by collecting both pedestrian fare and the surcharge. Since pedestrian punchcards are available, those riding motorcycles frequently no longer need to have a discounted punchcard for motorcycle passage and we recommend that the motorcycle multi-trip punchcard be eliminated. Multi-trip ticket (punchcard) discounts: We recommend that regular ferry users should have a discount via multi-trip pricing. In our simulations, a discount from single trip tickets of 25% to 35% was chosen for passenger vehicles and drivers; and a discount of 30% to 40% was chosen for adult passengers/pedestrians. These discounts provided a set of fares that we could adopt as the best trade-off between low cost for those that best meeting the needs of the community. We also recommend that punchcards be issued in a 20 trip denomination; and that the 10 and 25 trip denominations be discontinued. This simplifies the system, offers only one discount for multi-trip purchase; and 20 trips instead of 25 trips is a compromise to lower the cost of purchase. Needs-based fares: We recommend that low income households be enabled to continue to be part of the island community, and that needs-based punchcards for pedestrians and for pedestrian vehicles be priced at 50% of the single ticket cash price. This discount is standard in other ferry systems for those over 65 or disabled; instead we recommend that this discount be available only to those of whatever age or ability whose incomes meet the HUD Very Low Income guidelines. (Separate discussion of administration follows this section.) The discounted fare punchcards would be available in the same 20 trip denomination. Other Fare Classes Whatcom County has had a fare class of “Special Trips after regularly scheduled runs” with fares of $578. Since calling in ferry crew in the middle of the night to make one trip is only done for emergencies, is there a billing process for ambulance and sheriff vehicles, or are they exempt from fare payment as they are during regular service hours. The crew report six of these trips in 2010. A new category is recommended that is modeled on Skagit County: “Extended service of one roundtrip at the end of the day.” The Task Force recommends the deletion of some of the currently offered late-night trips, and this new fare class would allow those who have major events on or off island to schedule one trip leaving 20 minutes later. Scheduling would need to be done through the Ferry Coordinator with advance payment. A fare of $100 plus the regular fare matches the policy of Skagit County; in any case, it should more than cover the additional crew and fuel costs. The other use for this extended service is as insurance. The current policy is that no additional trips are made after the last scheduled trip even if someone is left on the dock. This



fare class could allow the captain to determine if an additional trip would be made. Allowing the captain to make the decision implies trust that those needing the additional trip have funds to pay the additional cost, so this provision perhaps should be delayed until an electronic ticketing system that accepts credit cards is implemented.

Summer Surcharges: We recommend a summer surcharge between June 1 and Sept. 31 of from $1 to $3 per trip on all single trip tickets for pedestrians and for passenger vehicles. Table 2 indicates the revenue expected depending on the surcharge selected - varying the surcharge would give the County some year to year flexibility in addressing changes in traffic patterns.

Table 1: Summer Fare Surcharges and Projected Revenues

Trucks and trailers: We recommend that the scarcity of deck space on the Whatcom Chief be recognized by charging vehicles according to their length, as do the other ferry systems in Washington State. The current fare class of a 50% surcharge on “Over-width vehicles/trailers > 1 lane” is difficult to apply on the Whatcom Chief since whether or not a vehicle extends beyond one lane has to do with position on the deck as determined by place in line. An escalating charge based on length accommodates both the possibility of a vehicle blocking other vehicles from use of the adjacent lane and the additional system wear expected with increasing size. Trailers are currently charged by length plus an additional charge for the towing vehicle. Once trucks are also charged by length, separate classes for trailers are eliminated. The total length of vehicle and trailer determines the fare, and no additional fare for the pulling vehicle is charged. We recommend offering a truck and trailer punchcard worth 10 trips at a discount of 10% as a convenience for businesses who frequently deliver to the island and to support continued agricultural operations on the island. The current system of fares uses truck weight, so making good estimates of fare revenue based on length is not possible based on prior experience. In order to recommend an appropriate fare level in this report, we have used the weight classes. We recommend the county investigate the relationship between the current weight classes and the length of trucks, and establish fares based on length as soon as possible. The standard length for passenger vehicles is set at 20 feet; and other ferry systems charge by 5 or 10 foot increments. After examining the multipliers for Pierce County and the smaller state ferries, the truck/trailer fares used a multiplier of approximately one passenger vehicle price per 10 feet in length. For longer vehicles, the multiplier was increased to 150% of the passenger vehicle charge per ten feet of length. Since the Whatcom Chief deck space is more constricted than any of these ferries, the larger multiplier of 1.5 would account for times when more than one lane is occupied.



We recommend that:

• The multipliers in Table 3 be adopted and applied to single ticket passenger vehicle fares to determine the rate for trucks and trailers;

• The length of the combined towing vehicle and trailer be used; and no separate fare be charged for the towing vehicle or for the vehicle driver; and

• Fares be rounded to the nearest dollar for ease of collection on deck.

• 10 trip punchcards be sold at a 10% discount over single ticket purcharse.

Table 2 Fare Multiplier for Trucks and Trailers, with Examples

Needs Based Fare Eligibility and Administration

The ferry fare discount program based on need is the successor to prior programs that oftered discounts for those over 65 or having a disability of more than 40%. The program and the discount levels have varied, and with experience some issues in the current system have become evident. See Exhibit 1 for the three programs and issues.

Issues Associated with Needs Based Fares

• Currrently three different sets of eligibility criteria and each has a different income level

for qualifying. This makes the program complex, and it unequally benefits different groups.

• Many islanders support lower fares for those whose income is obviously low. They do object to the current program that allows those that are relatively well-off to obtain the discounted fares. They also have stated that the discount is too high: in 2010 discounts from cash fares were 83% for pedestrians and 64% for vehicle/driver trips.

• Other islanders object to the program on several philosophical grounds: government should not provide this kind of assistance; it is unfair for this particular aid program to



be funded only by islanders when all other county aid programs are funded from county-wide revenues; it is unfair for those whose incomes are just above the cut-off points to have to pay higher fares to help those just below the income cut-off levels. These views were in the minority of those expressed to the Task Force.

• The Treasurer’s Office does not have staff who are as comfortable and expert at screening people as those in agencies that primarily work with needs-based programs. The Treasurer estimates that about $3750 in staff time was spent in 2010 to qualify households.

• In 2010 the discounted tickets decreased fare revenue by about 2%. The total of $1,021,000 fare revenue would have been increased by about $21,000 if all those who used needs-based fares made the same number of trips and used multi-ride punchcards. It is highly unlikely that this increase would occur, as anecdotal evidence suggests that fewer trips are being made with the additional $3 surcharge per trip.

EXHIBIT 1 Whatcom County’s Three Current Eligibility Methods for Needs-Based Fares

1. Island residents who have a senior/disabled property tax exemption or deferral. (This category included 54% of households qualifying for needs-based fares in 2010) • Be age 61 or older on December 31 of filing year (no age requirement for disabled

persons). • The owner and occupant of a single family dwelling, mobile home, or one unit in multi-

unit or cooperative housing. • Have combined disposable income of $35,000 or less for the prior year (including

income of spouse and co-tenant).

ISSUE: The Island has over-61 property owners who are not “needy” as the word is usually understood but who may technically qualify for the Washington State law that gives them a break on property taxes. The lower ferry fare is not a county-wide or state supported program, and using that as the criteria makes the proportion of the island community who qualifies for help by other islanders large. The recommended HUD Very Low Income level that is equivalent is for a household of 4 people.

2. Island residents who meet the income levels listed below. Proof of income and family size will be required. (This category included 31 island households in 2010.)

1. Family of four or more with less than $40,000 total annual income; 2. Family of three with less than $30,000 total annual income; 3. Family of two with less than $20,000 total annual income; 4. Individual with less than $10,000 total annual income.

ISSUE: Difficult for Assessor’s Office personnel to verify income, and qualifying income levels are significantly different for those property owners over 61.

3. Island residents who qualify for medical assistance by Medicaid (not Medicare). Most Medicaid programs are based on between100% and 200% of federal poverty guidelines.

"Medicaid is a program that provides health coverage to some low-income Washington residents.” Income eligibility levels for these categories are described below. Assets and some expenses also may be taken into account.

ISSUE: The Medicaid cards now being issued do not have dates and program information on them, and due to privacy issues, the WA DSHS offices do not provide information to the Treasurer’s Office.



Recommendations

1. Revise needs-based fares qualification from three methods to one method.

2. Remove the requirement that county staff determine income by adopting the following criteria:

Applicants for needs-based fares must provide a letter from the Opportunity Council that income level matches the current HUD Very Low Income guidelines annually issued for the Bellingham area, or that applicants have furnished to the Opportunity Council letters or other documentation that indicates dates of qualification for the applicant for Medicaid, Section 8, Home energy assistance, Workfirst Program enrollment, NW Regional Council medical transportation eligibility. Recipients must re-qualify annually. See exhibit 2 for the HUD Very Low Income guidelines.

3. Contract with the Opportunity Council to screen applicants. The Opportunity Council has indicated that it could screen applicants at a cost of $40, less than the current cost the Treasurer’s office has calculated per qualified household. (See Exhibit 3.)

4. The recommended discounts are 50% of the cash fare, which is the rate that other transportation services who receive federal grants use for all those over 65, per the requirements of FTA 49 CFR part 609.

EXHIBIT 2 Recommended Qualification Method Instead of the three different income standards: the Very Low Income level below would apply to all. It is adjusted annually by geographic area without requiring county staff effort; and would allow those with limited incomes to remain in their homes on the island.




EXHIBIT 3


Appendix D2 Ferry Financial Simulation Tool Introduction: In Need of an Accessible Analytical Tool The Ferry Task Force’s mission was to recommend a fare structure that would support operational costs as described in WCC 10.34. The Ferry Task Force wanted to simultaneously evaluate potential cost and revenue changes, and to obtain public feedback on the least onerous fare structure. To do this, the Task Force needed an analytical tool that could reflect fare changes’ impacts on total revenue, revenue changes’ impacts on the fare box requirement, etc. To meet this need, the Task Force developed a simulation tool. This tool was used during multiple meetings, and was made available on-line through the Ferry Forum. Members of the community offered valuable input as different fare structures were considered. This tool allows users to assess the interplay of personal values and the cost of fares, and it was central to both the Task Force’s analysis and its solicitation of public feedback. The focused, precise nature of the tool encouraged vigorous public discussion, kept the discussion of fares to concrete proposals, and made it possible to objectively evaluate proposals’ financial results. Because it allowed the public to observe the effects of limitless changes, the tool supported analysis of diverse and opposing proposals. The tool became the Task Force’s means of translating values into concrete proposals that then could be immediately evaluated by participants. Use and Application The following pages illustrate of the simulation tool, a set of three tabs in an MS Excel computer file. These illustrations show the Task Force recommendations.

• The ‘Parameters’ tab allows the user to specify both cost savings and new revenue, and uses those totals to adjust the amount of fare box revenue needed.

• The ‘Surcharge’ tab allows the user to specify the months that a peak use surcharge

would be applied, and the amount of the surcharge. • The ‘FareBox Recovery’ tab allows the user to specify fares. Whether or not the

selected set of fares will be sufficient to meet the fare box revenue needed is automatically calculated and displayed at the top as a ‘Surplus/Shortfall’.

The set of Task Force recommendations in this report grew out of repeated utilizations of this tool. By its integrated design, the recommendations are thus very much a package, and not a smorgasbord of independent ideas. This tool allowed the community to select an interdependent set of recommendations, carefully balanced through community discussion, one recommendation slightly offsetting the sacrifice of another, until the Task Force arrived at a package of mutually reinforcing and collectively acceptable recommendations. A more detailed line by line description of the calculations follows.

CJohnson page 9 of 16 Section D


Ferry Financial Simulation Tool: Ferry Task Force Recommendations Illustration



Ridership Trends: In the ‘Parameters’ tab, the Task Force simulation tool begins by stating the projected rate of ridership change. The rates of ridership changes used in the simulation were computed based on year-to-date ridership changes as of June, 2011. The purchased trips in each existing fare class were projected forward using these rates of change for use in estimating ticket sales in 2011-2012.

Ferry Net Operating Budget: In the ‘Parameters’ tab, the simulation tool budget starts with Whatcom County Public Works Administration’s 2011 budgeted amount, then deducts external funding such as the State MVFT. This yields ‘2011 Projected Net Operating Costs.’

Expense Reduction Recommendations: The following section of the ‘Parameters’ tab lists recommended cost changes. For example, the Ferry Task Force recommended not renewing the Gooseberry Point parking lease, also eliminating maintenance expenses for that lot, resulting in an estimated $36,000 cost savings. Some items, such as the introduction of crew punch cards, would increase total ferry expenses. The Task Force’s recommended cost reductions totaled more than $200,000.

Increased Revenue Recommendations: The next section of the ‘Parameters’ tab allows a user to enter new revenue items. For example, the Task Force estimated that eliminating Gooseberry Parking would increase ferry vehicle traffic, and generate a $15,000 net ferry revenue increase. The total revenue change attributable to Task Force recommendations was more than $250,000.

Adjusted Net Operating Expenses and Farebox Recovery Requirement: The final section of the ‘Parameters’ tab,’ integrates the Public Works budget with recommended cost and revenue changes. Row 43 contains the Fare Box Recovery Rate stated in WCC 10.34. This rate is applied to the Net Operating Costs to obtain the WCC 10.34 Target Fare Box Recovery in Row 44. Row 45 then adds an additional expense associated with replenishing the ferry cash reserves, and Row 46 restates aggregate increased revenues. Row 47 combines these items with the Target Fare Box Recovery to arrive at the Adjusted Fare Box Recovery.

FareBox Recovery Tab: The Adjusted Fare Box Recovery developed on the ‘Parameters’ tab becomes the top item in the ‘FareBox Recovery’ tab. Users can develop their own set of preferred fares:

1) For every highlighted yellow cell (e.g., F11, Passenger/Pedestrian Cash), supply a fare. These fares must be in full dollar amounts to ease crew on-boat cash collection.

2) For all remaining fare classes, use the highlighted blue cells in column D to enter a percentage discount from the fare class’ cash fare (e.g., 40% for Passenger/Pedestrian Multiride). OR

3) Enter a fare into the green cells in column F (e.g., $0 for Child).

4) If a summer surcharge is desired, enter the dollar amount in the selected months on the ‘Summer Surcharge’ tab. (These surcharges are applied to the percent of annual ridership that historically occurs in the respective month)

Based on the information provided in the above steps, the simulation tool will calculate the recommended fare schedule’s standard expected revenue (cell K4), revenue attributable to any specified summer surcharges (cell K5), and resulting total revenue (cell K6). The difference between Total Fare Revenue and the Target Fare Revenue is the Total Shortfall/Surplus.



Ferry Financial Simulation Tool: Ferry Task Force Recommendations Illustration

Fare Box Recovery Tab:



Appendix D3 Fares for Different Budgets The fares the Task Force recommended were demonstrated in prior Appendix D2 explaining the financial simulation tool. The recommended fares are interdependent with a particular set of recommendations on cost savings and revenue increases. If no changes are made to the Fare Revenue Target of $1,371,710 in the Public Works Administration 2012 budget (as of February 2011), the recommended fares would not be sufficient. The Task Force strongly recommends that the county use this tool to make future adjustments in fares. Three examples of fares that would meet other Fare Box Recovery Targets are shown below, along with the fares and fare revenue for 2010 and the fares and projected fares revenue for 2011. The example middle three Farebox Recovery Targets of $1,000,000, $1,200,000, and $1,400,000 each have a set of fares developed using the simulation tool. They were guided by some general principles that emerged from the four different fare schedules that the Task Force and community participants developed.

• Vary the summer surcharge and the amount of the pedestrian discount to encourage more or fewer vehicles on the ferry.

• Passenger vehicleW/Driver fares, including any summer surcharge, should be < $15.

• Set punchcard fares based on a discount from single ticket cash fares of from 25% to 35% for passenger vehiclesW/Drivers and from 30% to 40% for pedestrians.

• Leave truck fares approximately the same; move trailer fares to multiples of the cash vehicleW/Driver fares.

The simulation tool illustrations that follow show the choices made in developing these fares.



Fares for Low Example Budget: approximately $20,000 lower than Task Force Recommended Fare Box Recovery Target



Fares for Medium Example Budget: approximately half-way between Task Force and 2012 Public Works Fare Revenue Targets Note that with the $2 and $3 summer surcharges, the pedestrian and vehicleW/driver cash fares would be the same as in summer 2011.




Fares for High Example Budget: approximately $30,000 higher than 2012 Public Works Projected Fare Revenue

Public Works Administration Ferry Operational Budget 2006 - 2010Total Ferry Total Total Total Total Total Projected Projected

object acct Cost Center 2006 2007 2008 2009 2010 Draft 2011 2012

4334,4336 State Grants Revenues & Entitlements 159,143 241,777 144,319 97,655 119,890 160,000 160,0004344 Transportation 663,803 907,020 1,128,360 1,145,978 1,021,801 1,321,710 1,321,7104361 Interest Earnings 68,747 67,164 37,645 16,386 7,924 1,995 2,7754369 Other Misc. Revenue 44 (82) (329) (122) 658301 Transfers In 566,435 409,126 945,138 1,152,957 1,162,727 1,198,621 1,218,448

Net Revenue 1,458,172 1,625,006 2,255,134 2,412,853 2,312,407 2,682,326 2,702,933

6100,6110 Salaries & Wages 628,236 624,951 641,878 665,963 643,230 668,595 671,9896120 Extra Help 33,977 43,345 50,740 54,980 62,406 26,746 26,7466130 Out of Class 21,737 24,786 28,523 32,141 36,301 35,000 35,000

Leave Payout 3,1516140 Overtime 11,491 11,625 16,415 11,649 17,703 41,150 41,1506200,6299 Benefits 277,051 226,841 241,093 239,723 245,690 283,811 314,385

Total Salaries & Benefits 972,491 931,547 978,650 1,004,456 1,008,479 1,055,302 1,089,270

6020 Depreciation Expense 3,279 3,577 3,845 3,578 3,5786320 Office & Operating Supplies 6,294 4,335 2,478 21,147 1,979 4,400 4,4006329 Office & Op. Supplies - Interfund 13,922 21,820 5,258 14,816 1,288 2,500 2,5006330 Printing 225 3,070 3,422 4,500 4,5006339 Printing - Interfund 5,116 4,104 4,7116340 Books/Publications/Subscrip. 159 8 226410 Fuel 3,180 6,929 8,877 7,673 8,952 12,500 12,5006429 Fuel - Interfund 368 313 110 1,630 400 4006510 Tools & Equipment 4,927 1,475 474 10,729 (300) 4,000 4,0006630 Professional Services

6630.1 Drydock 51,211 135,943 52,451 53,139 209,829 104,000 104,0006630.2 Repair, Inspection, 5,940 8,469 22,639 22,000 22,0006630.3 Misc. services 22,182 1,662 926 871 4,183 2,250 2,2506630.4 Security 55,299 56,369 56,984 57,737 60,216 62,000 64,325

6635 Health Care Services 394 1,000 1,0006659 Building Maintenance 2,248 2,388 979 1,012 1,089 1,0896700,6710 Postage/Shipping/Freight 2,119 1,460 2,230 1,685 1,685 2,500 2,5006719 Postage - Interfund 614 634 678 644 460 2,000 2,0006720 Telephone 2,346 2,628 2,591 2,482 2,686 2,500 2,5006780 Travel-Educ/Training 2,838 16 6,000 6,0006790 Travel - Other 8,399 12,402 448 10,302 6,121 16,200 16,2006800,6810 Advertising 280 339 108 112 124 300 3006860 Equipment Rental 13,893 21,060 15,887 24,200 15,279 16,800 16,8006869 Equip Rental - Interfund - misc 1,152 1,032 326 141 81

6869.2 Fuel 126,361 135,902 179,352 109,741 137,943 138,000 138,0006869.4 Dry Dock /Services 205,460 292,593 419,837 245,365 348,955 349,000 349,0006869.6 Parts/Oil/Labor 63,181 58,045 42,041 63,067 53,539 53,000 53,0006869.8 ERR Overcharge(Undercharge) (96,126) (172,764) (75,474) 165,827 59,563 60,000 60,000

6870 Space Rental 11,648 12,476 12,721 14,203 217,024 223,500 231,0466879 Space Rental - Interfund 16,897 21,657 21,028 10,392 1,640 1,389 1,3896900,6910 Insurance Premiums 34,001 32,870 48,936 69,744 52,250 70,000 70,0006949 Insurance Premiums - Interfund 4,985 6,583 7,241 6,651 10,179 10,559 10,5596960 Water/Sewer 1,514 1,569 1,554 1,657 1,670 1,750 1,7506980 Electric 5,516 4,467 5,220 5,444 5,234 5,500 5,5006990 Solid Waste 1,199 1,530 466 399 370 1,900 1,9007060 Repairs & Maintenance 11,079 20,755 18,563 189,406 10,285 1,000 1,0007069 Repairs & Maintenance - Interfund 157,430 173,153 119,960 223,925 124,963 171,000 171,0007100,7110 Registration/Tuition 1,807 385 5,000 5,000

Meeting Refreshments 25 444 5097159 Administrative Cost Allocation 126,509 60,940 62,110 184,042 194,508 224,071 230,1487190 Other Miscellaneous 2,850 2,759 2,857 1,345 1,612 2,200 2,2007230 Taxes & Assessments 12,785 17,462 21,721 22,072 18,541 22,500 22,500

Equipment - Capital Outlays 17,886 6,419(blank) (17,886) (2) (6,419)

8351 Transfers Out 4,250 637Total Non-Salary Expenditures 879,588 944,775 1,054,860 1,541,218 1,585,354 1,610,886 1,626,834Total Expenditures 1,852,079 1,876,322 2,033,510 2,545,674 2,593,833 2,666,188 2,716,104

Ferry Operational Budget /Dunn/Harper Datapage 1 of 10

Public Works Administration Ferry Operational Budget 2006 - 2010

2010 Draft 3/9/2011 2010 Draft 2010 2010 2010 2010 2010 2010 2010 2010

object acct Cost Center Total FerryFerry

Admin Vessel Ops GB dockstagin

gGB

parking LI dockstagin

g parkin

gTotal Expenditures 2,593,833 233,622 1,974,403 232,467 9,904 89,226 43,722 7,589 3,537

4334,4336 State Grants Revenues & Entitlements 119,890 119,890 0 0 0 0 0 0 04344 Transportation 1,021,801 1,021,801 0 0 0 0 0 0 04361 Interest Earnings 7,924 7,924 0 0 0 0 0 0 04369 Other Misc. Revenue 65 65 0 0 0 0 0 0 08301 Transfers In 1,162,727 1,162,727 0 0 0 0 0 0 0

Net Revenue 2,312,407 2,312,407 0 0 0 0 0 0 0

6100,6110 Salaries & Wages 643,230 46,265 596,965 0 0 0 0 0 06120 Extra Help 62,406 0 62,406 0 0 0 0 0 06130 Out of Class 36,301 0 36,301 0 0 0 0 0 0

Leave Payout 3,151 0 3,151 0 0 0 0 0 06140 Overtime 17,703 0 17,703 0 0 0 0 0 06200,6299 Benefits 245,690 27,919 217,771 0 0 0 0 0 0

Total Salaries & Benefits 1,008,479 74,183 934,296 0 0 0 0 0 0

6020 Depreciation Expense 3,845 0 3,845 0 0 0 0 0 06320 Office & Operating Supplies 1,979 487 1,492 0 0 0 0 0 06329 Office & Op. Supplies - Interfund 1,288 0 1,231 36 0 21 0 0 06330 Printing 3,422 313 3,109 0 0 0 0 0 06339 Printing - Interfund 0 0 0 0 0 0 0 0 06340 Books/Publications/Subscrip. 22 22 0 0 0 0 0 0 06410 Fuel 8,952 0 8,952 0 0 0 0 0 06429 Fuel - Interfund 1,630 0 1,630 0 0 0 0 0 06510 Tools & Equipment (300) 0 (300) 0 0 0 0 0 06630 Professional Services 0 0 0 0

Drydock 209,829 0 209,829 0 0 0 0 0 0Repair, Inspection, 22,639 0 22,639 0 0 0 0 0 0

Misc. services 4,183 200 0 3,983 0 0 0 0 0Security 60,216 0 0 0 0 60,216 0 0 0

6635 Health Care Services 394 0 394 0 0 0 0 0 06659 Building Maintenance 1,012 1,012 0 0 0 0 0 0 06700,6710 Postage/Shipping/Freight 1,685 0 1,685 0 0 0 0 0 06719 Postage - Interfund 460 460 0 0 0 0 0 0 06720 Telephone 2,686 13 2,673 0 0 0 0 0 06780 Travel-Educ/Training 0 0 0 0 0 0 0 0 06790 Travel - Other 6,121 0 6,121 0 0 0 0 0 06800,6810 Advertising 124 0 124 0 0 0 0 0 06860 Equipment Rental 15,279 3 1,640 1,602 3,500 0 1,924 6,610 06869 Equip Rental - Interfund - misc 81 81 0 0 0 0 0 0

Fuel 137,943 137,943Dry Dock /Services 348,955 348,955

Parts/Oil/Labor 53,539 53,539ERR Overcharge(Undercharge) 59,563 59,563

6870 Space Rental 217,024 30 355 200,004 0 16,635 0 0 06879 Space Rental - Interfund 1,640 1,640 0 0 0 0 0 0 06900,6910 Insurance Premiums 52,250 0 52,250 0 0 0 0 0 06949 Insurance Premiums - Interfund 10,179 0 10,179 0 0 0 0 0 06960 Water/Sewer 1,670 0 0 270 0 0 700 0 7006980 Electric 5,234 0 0 217 0 0 4,567 0 4506990 Solid Waste 370 0 28 0 0 0 0 342 07060 Repairs & Maintenance 10,285 0 0 1,146 195 0 8,944 0 07069 Repairs & Maintenance - Interfund 124,963 5,539 46,417 25,107 6,209 12,354 27,587 0 1,7507100,7110 Registration/Tuition 385 0 385 0 0 0 0 0 0

Meeting Refreshments 509 407 0 102 0 0 0 0 07159 Administrative Cost Allocation 194,508 149,114 45,394 0 0 0 0 0 07190 Other Miscellaneous 1,612 118 1,494 0 0 0 0 0 07230 Taxes & Assessments 18,541 0 18,541 0 0 0 0 0 0

Equipment - Capital Outlays 6,419 0 6,419 0 0 0 0 0 0(blank) (6,419) (6,419) 0 0 0 0 0 0

Total Non-Salary Expenditures 1,585,354 159,439 1,040,107 232,467 9,904 89,226 43,722 7,589 3,537Total Expenditures 2,593,833 233,622 1,974,403 232,467 9,904 89,226 43,722 7,589 3,537



2,009 2,009 2009 2009 2009 2009 2009 2009 2009 2009

object acct Cost Center Total FerryFerry Admin

Vessel Ops GB dock

GB stagin

gGB

parking LI dockLI

staging

LI parkin

g

4334,4336 State Grants Revenues & Entitlements 97,655 97,655 0 0 0 0 0 0 04344 Transportation 1,145,978 1,145,978 0 0 0 0 0 0 04361 Interest Earnings 16,386 16,386 0 0 0 0 0 0 04369 Other Misc. Revenue (122) (122) 0 0 0 0 0 0 08301 Transfers In 1,152,957 1,152,957 0 0 0 0 0 0 0

Net Revenue 2,412,853 2,412,853 0 0 0 0 0 0 0


Leave Payout 0 0 0 0 0 0 0 0 06140 Overtime 11,649 0 11,649 0 0 0 0 0 06200,6299 Benefits 239,723 18,658 221,065 0 0 0 0 0 0

Total Salaries & Benefits 1,004,456 61,326 943,130 0 0 0 0 0 0

6020 Depreciation Expense 3,577 0 3,577 0 0 0 0 0 06320 Office & Operating Supplies 21,147 449 4,215 10,403 62 0 6,018 0 06329 Office & Op. Supplies - Interfund 14,816 0 12,780 530 69 677 385 0 3756330 Printing 3,070 224 2,846 0 0 0 0 0 06339 Printing - Interfund 0 0 0 0 0 0 0 0 06340 Books/Publications/Subscrip. 0 0 0 0 0 0 0 0 06410 Fuel 7,673 0 7,673 0 0 0 0 0 06429 Fuel - Interfund 110 0 75 35 0 0 0 0 06510 Tools & Equipment 10,729 345 384 5,000 0 0 5,000 0 06630 Professional Services

6630.1 Drydock 53,139 0 53,139 0 0 0 0 0 06630.2 Repair, Inspection, 8,469 0 2,807 5,662 0 0 0 0 06630.3 Misc. services 871 90 0 0 0 0 580 201 06630.4 Security 57,737 0 0 0 0 57,737 0 0 0

6635 Health Care Services 0 0 0 0 0 0 0 0 06659 Building Maintenance 979 979 0 0 0 0 0 0 06700,6710 Postage/Shipping/Freight 1,685 0 1,685 0 0 0 0 0 06719 Postage - Interfund 644 644 0 0 0 0 0 0 06720 Telephone 2,482 18 2,464 0 0 0 0 0 06780 Travel-Educ/Training 0 0 0 0 0 0 0 0 06790 Travel - Other 10,302 0 10,302 0 0 0 0 0 06800,6810 Advertising 112 0 0 0 0 112 0 0 06860 Equipment Rental 24,200 0 1,462 5,709 4,102 0 5,736 7,191 06869 Equip Rental - Interfund - misc 141 141 0 0 0 0 0 0

6869.2 Fuel 109,741 109,7416869.4 Dry Dock /Services 245,365 245,3656869.6 Parts/Oil/Labor 63,067 63,0676869.8 ERR Overcharge(Undercharge) 165,827 165,827

6870 Space Rental 14,203 45 0 0 0 14,158 0 0 06879 Space Rental - Interfund 10,392 1,640 0 8,752 0 0 0 0 06900,6910 Insurance Premiums 69,744 0 69,744 0 0 0 0 0 06949 Insurance Premiums - Interfund 6,651 0 6,651 0 0 0 0 0 06960 Water/Sewer 1,657 0 0 257 0 0 700 0 7006980 Electric 5,444 0 0 210 0 0 4,800 0 4346990 Solid Waste 399 0 0 0 0 0 27 372 07060 Repairs & Maintenance 189,406 136 0 91,360 0 1,386 91,166 4,121 1,2377069 Repairs & Maintenance - Interfund 223,925 16,135 54,027 75,831 4,796 10,716 57,195 185 5,0407100,7110 Registration/Tuition 1,807 0 1,807 0 0 0 0 0 0


Equipment - Capital Outlays 0 0 0 0 0 0 0 0 0(difference PWA total and totalled column) (2) (2) 0 0 0 0 8 0

8351 Transfers Out 4,250 4,250 0 0 0 0 0 0 0Total Non-Salary Expenditures 1,541,218 164,270 887,921 203,749 9,029 84,786 171,607 12,078 7,786Total Expenditures 2,545,674 225,596 1,831,051 203,749 9,029 84,786 171,607 12,078 7,786



checked 2008 2008 2008 2008 2008 2008 2008 2008 2008 2008

object acct Cost Center Total Ferry Ferry AdminVessel

Ops GB dockGB

stagingGB

parking LI dockLI

stagingLI

parking

4334,4336 State Grants Revenues & Entitlements 144,319 144,319 0 0 0 0 0 0 04344 Transportation 1,128,360 1,128,360 0 0 0 0 0 0 04361 Interest Earnings 37,645 37,645 0 0 0 0 0 0 04369 Other Misc. Revenue (329) (329) 0 0 0 0 0 0 08301 Transfers In 945,138 945,138 0 0 0 0 0 0 0

Net Revenue 2,255,134 2,255,134 0 0 0 0 0 0 0



Total Salaries & Benefits 978,650 56,456 922,194 0 0 0 0 0 0

6020 Depreciation Expense 3,279 0 3,279 0 0 0 0 0 06320 Office & Operating Supplies 2,478 366 1,849 0 0 0 263 0 06329 Office & Op. Supplies - Interfund 5,258 0 3,145 1,261 0 453 399 0 06330 Printing 225 0 225 0 0 0 0 0 06339 Printing - Interfund 4,711 0 4,711 0 0 0 0 0 06340 Books/Publications/Subscrip. 8 8 0 0 0 0 0 0 06410 Fuel 8,877 0 8,877 0 0 0 0 0 06429 Fuel - Interfund 0 0 0 0 0 0 0 0 06510 Tools & Equipment 474 26 448 0 0 0 0 0 06630 Professional Services

6630.1 Drydock 52,451 0 52,451 0 0 0 0 0 06630.2 Repair, Inspection, 5,940 0 3,374 1,283 0 0 1,283 0 06630.3 Misc. services 926 0 926 0 0 0 0 0 06630.4 Security 56,984 0 0 0 0 56,984 0 0 0

6635 Health Care Services 0 0 0 0 0 0 0 0 06659 Building Maintenance 2,388 2,388 0 0 0 0 0 0 06700,6710 Postage/Shipping/Freight 2,230 0 2,230 0 0 0 0 0 06719 Postage - Interfund 678 678 0 0 0 0 0 0 06720 Telephone 2,591 10 2,581 0 0 0 0 0 06780 Travel-Educ/Training 16 0 16 0 0 0 0 0 06790 Travel - Other 448 0 448 0 0 0 0 0 06800,6810 Advertising 108 0 0 108 0 0 0 0 06860 Equipment Rental 15,887 0 3,309 1,439 3,774 0 1,048 6,317 06869 Equip Rental - Interfund - misc 326 326 0 0 0 0 0 0

6869.2 Fuel 179,352 0 179,352 0 0 0 0 0 06869.4 Dry Dock /Services 419,837 0 419,837 0 0 0 0 0 06869.6 Parts/Oil/Labor 42,041 0 42,041 0 0 0 0 0 06869.8 ERR Overcharge(Undercharge) (75,474) 0 (75,474) 0 0 0 0 0 0

6870 Space Rental 12,721 0 0 0 0 12,721 0 0 06879 Space Rental - Interfund 21,028 4,131 0 16,897 0 0 0 0 06900,6910 Insurance Premiums 48,936 0 48,936 0 0 0 0 0 06949 Insurance Premiums - Interfund 7,241 0 7,241 0 0 0 0 0 06960 Water/Sewer 1,554 0 0 234 0 0 660 0 6606980 Electric 5,220 0 0 444 0 0 4,375 0 4016990 Solid Waste 466 0 40 0 0 0 0 426 07060 Repairs & Maintenance 18,563 92 0 6,750 0 972 8,273 2,476 07069 Repairs & Maintenance - Interfund 119,960 18,186 23,229 29,652 913 16,516 29,173 29 2,2627100,7110 Registration/Tuition 0 0 0 0 0 0 0 0 0


Equipment - Capital Outlays 17,886 0 17,886 0 0 0 0 0 0(blank) (17,886) (17,886) 0 0 0 0 0 0

8351 Transfers Out 0 0 0 0 0 0 0 0 0Total Non-Salary Expenditures 1,054,860 46,471 799,696 58,235 4,687 87,646 45,554 9,248 3,323Total Expenditures 2,033,510 102,927 1,721,890 58,235 4,687 87,646 45,554 9,248 3,323



2007 2007 2007 2007 2007 2007 2007 2007 2007

object acct Cost Center Total FerryFerry Admin Vessel Ops GB dock

GB staging

GB parking LI dock

LI staging

LI parking

4334,4336 State Grants Revenues & Entitlements 241,777 241,777 0 0 0 0 0 0 04344 Transportation 907,020 907,020 0 0 0 0 0 0 04361 Interest Earnings 67,164 67,164 0 0 0 0 0 0 04369 Other Misc. Revenue (82) (82) 0 0 0 0 0 0 08301 Transfers In 409,126 409,126 0 0 0 0 0 0 0

Net Revenue 1,625,006 1,625,006 0 0 0 0 0 0 0




6020 Depreciation Expense 0 0 0 0 0 0 0 0 06320 Office & Operating Supplies 4,335 592 3,651 0 0 0 0 78 146329 Office & Op. Supplies - Interfund 21,820 0 5,134 10,108 2,483 68 2,795 1,062 1706330 Printing 0 0 0 0 0 0 0 0 06339 Printing - Interfund 4,104 950 3,154 0 0 0 0 0 06340 Books/Publications/Subscrip. 0 0 0 0 0 0 0 0 06410 Fuel 6,929 0 6,929 0 0 0 0 0 06429 Fuel - Interfund 313 0 0 235 0 0 78 0 06510 Tools & Equipment 1,475 0 451 0 0 0 536 488 06630 Professional Services 0

6630.1 Drydock 135,943 0 135,943 0 0 0 0 0 06630.2 Repair, Inspection, 0 0 0 0 0 0 0 0 06630.3 Misc. services 1,662 1,388 0 0 0 0 274 0 06630.4 Security 56,369 0 0 0 0 56,369 0 0 0

6635 Health Care Services 0 0 0 0 0 0 0 0 06659 Building Maintenance 2,248 2,248 0 0 0 0 0 0 06700,6710 Postage/Shipping/Freight 1,460 500 960 0 0 0 0 0 06719 Postage - Interfund 634 431 203 0 0 0 0 0 06720 Telephone 2,628 335 2,293 0 0 0 0 0 06780 Travel-Educ/Training 0 0 0 0 0 0 0 0 06790 Travel - Other 12,402 64 12,338 0 0 0 0 0 06800,6810 Advertising 339 0 0 0 0 0 239 0 1006860 Equipment Rental 21,060 0 2,683 1,245 3,881 0 6,315 6,936 06869 Equip Rental - Interfund - misc 1,032 1,032 0 0 0 0 0 0

6869.2 Fuel 135,902 135,9026869.4 Dry Dock /Services 292,593 292,5936869.6 Parts/Oil/Labor 58,045 58,0456869.8 ERR Overcharge(Undercharge) (172,764) (172,764)

6870 Space Rental 12,476 0 0 0 0 12,476 0 0 06879 Space Rental - Interfund 21,657 4,760 0 16,897 0 0 0 0 06900,6910 Insurance Premiums 32,870 0 32,870 0 0 0 0 0 06949 Insurance Premiums - Interfund 6,583 0 6,583 0 0 0 0 0 06960 Water/Sewer 1,569 0 0 249 0 0 660 0 6606980 Electric 4,467 0 0 158 0 0 4,080 0 2296990 Solid Waste 1,530 0 13 50 1,002 0 0 465 07060 Repairs & Maintenance 20,755 88 1,313 3,474 0 1,165 14,086 629 07069 Repairs & Maintenance - Interfund 173,153 18,740 34,384 40,377 7,210 13,949 55,433 287 2,7737100,7110 Registration/Tuition 0 0 0 0 0 0 0 0 0


Equipment - Capital Outlays 0 0 0 0 0 0 0 0 0(blank) 0 0 0 0 0 0 0 0

8351 Transfers Out 0 0 0 0 0 0 0 0 0Total Non-Salary Expenditures 944,775 51,383 623,599 72,793 14,576 84,027 84,496 9,945 3,956Total Expenditures 1,876,322 121,020 1,485,509 72,793 14,576 84,027 84,496 9,945 3,956



2006 2006 2006 2006 2006 2006 2006 2006 2006 2006

object acct Cost Center Total Ferry Ferry Admin Vessel Ops GB dockGB

stagingGB

parking LI dockLI

stagingLI

parking

4334,4336 State Grants Revenues & Entitle 159,143 159,143 0 0 0 0 0 0 04344 Transportation 663,803 663,803 0 0 0 0 0 0 04361 Interest Earnings 68,747 68,747 0 0 0 0 0 0 04369 Other Misc. Revenue 44 44 0 0 0 0 0 0 08301 Transfers In 566,435 566,435 0 0 0 0 0 0 0

Net Revenue 1,458,172 1,458,172 0 0 0 0 0 0 0




6020 Depreciation Expense 0 0 0 0 0 0 0 0 06320 Office & Operating Supplies 6,294 2,500 3,777 0 0 0 17 0 06329 Office & Op. Supplies - Interfund 13,922 0 4,061 1,440 0 98 7,546 176 6016330 Printing 0 0 0 0 0 0 0 0 06339 Printing - Interfund 5,116 425 4,691 0 0 0 0 0 06340 Books/Publications/Subscrip. 159 9 150 0 0 0 0 0 06410 Fuel 3,180 0 3,180 0 0 0 0 0 06429 Fuel - Interfund 368 0 0 218 0 0 150 0 06510 Tools & Equipment 4,927 4,817 110 0 0 0 0 0 06630 Professional Services

6630.1 Drydock 51,211 0 51,211 0 0 0 0 0 06630.2 Repair, Inspection, 0 0 0 0 0 0 0 0 06630.3 Misc. services 22,182 0 0 0 0 0 22,182 0 06630.4 Security 55,299 0 0 0 0 55,299 0 0 0

6635 Health Care Services 0 0 0 0 0 0 0 0 06659 Building Maintenance 0 0 0 0 0 0 0 0 06700,6710 Postage/Shipping/Freight 2,119 0 2,060 0 0 0 59 0 06719 Postage - Interfund 614 582 32 0 0 0 0 0 06720 Telephone 2,346 568 1,778 0 0 0 0 0 06780 Travel-Educ/Training 2,838 0 2,838 0 0 0 0 0 06790 Travel - Other 8,399 241 8,158 0 0 0 0 0 06800,6810 Advertising 280 0 102 58 0 0 58 0 626860 Equipment Rental 13,893 0 2,624 673 4,624 0 768 5,143 616869 Equip Rental - Interfund - misc 1,152 1,152 0 0 0 0 0 0 0

6869.2 Fuel 126,361 126,3616869.4 Dry Dock /Services 205,460 205,4606869.6 Parts/Oil/Labor 63,181 63,1816869.8 ERR Overcharge(Undercharge) (96,126) (96,126)

6870 Space Rental 11,648 0 84 0 0 11,564 0 0 06879 Space Rental - Interfund 16,897 0 0 16,897 0 0 0 0 06900,6910 Insurance Premiums 34,001 0 34,001 0 0 0 0 0 06949 Insurance Premiums - Interfund 4,985 0 4,985 0 0 0 0 0 06960 Water/Sewer 1,514 0 0 194 0 0 660 0 6606980 Electric 5,516 0 0 444 0 0 4,896 0 1766990 Solid Waste 1,199 0 0 0 747 0 0 452 07060 Repairs & Maintenance 11,079 0 2,069 119 0 0 7,566 1,325 07069 Repairs & Maintenance - Interfu 157,430 13,349 50,050 5,071 4,138 13,377 67,037 2,265 2,1437100,7110 Registration/Tuition 0 0 0 0 0 0 0 0 0

Meeting Refreshments 0 0 0 0 0 0 0 0 07159 Administrative Cost Allocation 126,509 94,793 31,716 0 0 0 0 0 07190 Other Miscellaneous* 2,850 909 821 545 0 0 575 0 07230 Taxes & Assessments 12,785 0 12,785 0 0 0 0 0 0

Equipment - Capital Outlays 0 0 0 0 0 0 0 0 0(blank) 0 0 0 0 0 0 0 0

8351 Transfers Out 0 0 0 0 0 0 0 0 0Total Non-Salary Expenditures 879,588 119,345 520,159 25,659 9,509 80,338 111,514 9,361 3,703Total Expenditures 1,852,079 198,146 1,413,849 25,659 9,509 80,338 111,514 9,361 3,703

* "other misc." for administration includes $635 for software (object 6520), $92 for office equip. maintenance (object 6680)



Vessel Operations Vessel Vessel Vessel Vessel Vesselobject acct Cost Center 2006 2007 2008 2009 2010

6100,6110 Salaries & Wages 571,908 575,154 602,799 623,295 596,9656120 Extra Help 33,977 43,345 50,740 54,980 62,4066130 Out of Class 21,737 24,390 28,273 32,141 36,301

Leave Payout 3,1516140 Overtime 11,491 11,625 16,395 11,649 17,7036200,6299 Benefits 254,577 207,397 223,987 221,065 217,771

Total Salaries & Benefits 893,690 861,910 922,194 943,130 934,296

6020 Depreciation Expense 3,279 3,577 3,8456320 Office & Operating Supplies 3,777 3,651 1,849 4,215 1,4926329 Office & Op. Supplies - Interfund 4,061 5,134 3,145 12,780 1,2316330 Printing 225 2,846 3,1096339 Printing - Interfund 4,691 3,154 4,7116340 Books/Publications/Subscrip. 1506410 Fuel 3,180 6,929 8,877 7,673 8,9526429 Fuel - Interfund 75 1,6306510 Tools & Equipment 110 451 448 384 (300)6630 Professional Services

6630.1 Drydock 51,211 135,943 52,451 53,139 209,8296630.2 Repair, Inspection, 3,374 2,807 22,6396630.3 Misc. services 9266630.4 Security

6635 Health Care Services 3946659 Building Maintenance6700,6710 Postage/Shipping/Freight 2,060 960 2,230 1,685 1,6856719 Postage - Interfund 32 2036720 Telephone 1,778 2,293 2,581 2,464 2,6736780 Travel-Educ/Training 2,838 166790 Travel - Other 8,158 12,338 448 10,302 6,1216800,6810 Advertising 102 1246860 Equipment Rental 2,624 2,683 3,309 1,462 1,6406869 Equip Rental - Interfund - misc

Fuel 126,361 135,902 179,352 109,741 137,943Dry Dock /Services 205,460 292,593 419,837 245,365 348,955

Parts/Oil/Labor 63,181 58,045 42,041 63,067 53,539ERR Overcharge(Undercharge) (96,126) (172,764) (75,474) 165,827 59,563

6870 Space Rental 84 3556879 Space Rental - Interfund6900,6910 Insurance Premiums 34,001 32,870 48,936 69,744 52,2506949 Insurance Premiums - Interfund 4,985 6,583 7,241 6,651 10,1796960 Water/Sewer6980 Electric6990 Solid Waste 13 40 287060 Repairs & Maintenance 2,069 1,3137069 Repairs & Maintenance - Interfund 50,050 34,384 23,229 54,027 46,4177100,7110 Registration/Tuition 1,807 385

Meeting Refreshments 1977159 Administrative Cost Allocation 31,716 40,802 42,026 45,002 45,3947190 Other Miscellaneous 821 2,657 2,681 1,211 1,4947230 Taxes & Assessments 12,785 17,462 21,721 22,072 18,541

Equipment - Capital Outlays 17,886 6,419(blank) (17,886) (2) (6,419)

8351 Transfers OutTotal Non-Salary Expenditures 520,159 623,599 799,696 887,921 1,040,107Total Expenditures 1,413,849 1,485,509 1,721,890 1,831,051 1,974,403



Ferry Administration Admin Admin Admin Admin Adminobject acct Cost Center 2006 2007 2008 2009 2010

6100,6110 Salaries & Wages 56,328 49,797 39,079 42,668 46,2656120 Extra Help6130 Out of Class 396 250

Leave Payout6140 Overtime 206200,6299 Benefits 22,474 19,444 17,106 18,658 27,919

Total Salaries & Benefits 78,801 69,637 56,456 61,326 74,18374,183

6020 Depreciation Expense6320 Office & Operating Supplies 2,500 592 366 449 4876329 Office & Op. Supplies - Interfund6330 Printing 224 3136339 Printing - Interfund 425 9506340 Books/Publications/Subscrip. 9 8 226410 Fuel6429 Fuel - Interfund6510 Tools & Equipment 4,817 26 3456630 Professional Services

6630.1 Drydock6630.2 Repair, Inspection, 6630.3 Misc. services 1,388 90 2006630.4 Security

6635 Health Care Services6659 Building Maintenance 2,248 2,388 979 1,0126700,6710 Postage/Shipping/Freight 5006719 Postage - Interfund 582 431 678 644 4606720 Telephone 568 335 10 18 136780 Travel-Educ/Training6790 Travel - Other 241 646800,6810 Advertising6860 Equipment Rental 36869 Equip Rental - Interfund - misc 1,152 1,032 326 141 81

6869.2 Fuel6869.4 Dry Dock /Services6869.6 Parts/Oil/Labor6869.8 ERR Overcharge(Undercharge)

6870 Space Rental 45 306879 Space Rental - Interfund 4,760 4,131 1,640 1,6406900,6910 Insurance Premiums6949 Insurance Premiums - Interfund6960 Water/Sewer6980 Electric6990 Solid Waste7060 Repairs & Maintenance 88 92 1367069 Repairs & Maintenance - Interfund 13,349 18,740 18,186 16,135 5,5397100,7110 Registration/Tuition

Meeting Refreshments 25 4077159 Administrative Cost Allocation 94,793 20,138 20,084 139,040 149,1147190 Other Miscellaneous 909 92 176 134 1187230 Taxes & Assessments

Equipment - Capital Outlays(blank)

8351 Transfers Out 4,250Total Non-Salary Expenditures 119,345 51,383 46,471 164,270 159,439Total Expenditures 198,146 121,020 102,927 225,596 233,622



Gooseberry Dock GB dock GB dock GB dock GB dock GB dockobject acct Cost Center 2006 2007 2008 2009 2010

6100,6110 Salaries & Wages6120 Extra Help6130 Out of Class

Leave Payout6140 Overtime6200,6299 Benefits

Total Salaries & Benefits

6020 Depreciation Expense6320 Office & Operating Supplies 10,4036329 Office & Op. Supplies - Interfund 1,440 10,108 1,261 530 366330 Printing6339 Printing - Interfund6340 Books/Publications/Subscrip.6410 Fuel6429 Fuel - Interfund 218 235 356510 Tools & Equipment 5,0006630 Professional Services

6630.1 Drydock6630.2 Repair, Inspection, 1,283 5,6626630.3 Misc. services 3,9836630.4 Security

6635 Health Care Services6659 Building Maintenance6700,6710 Postage/Shipping/Freight6719 Postage - Interfund6720 Telephone6780 Travel-Educ/Training6790 Travel - Other6800,6810 Advertising 58 1086860 Equipment Rental 673 1,245 1,439 5,709 1,6026869 Equip Rental - Interfund - misc


6870 Space Rental 200,0046879 Space Rental - Interfund 16,897 16,897 16,897 8,7526900,6910 Insurance Premiums6949 Insurance Premiums - Interfund6960 Water/Sewer 194 249 234 257 2706980 Electric 444 158 444 210 2176990 Solid Waste 507060 Repairs & Maintenance 119 3,474 6,750 91,360 1,1467069 Repairs & Maintenance - Interfund 5,071 40,377 29,652 75,831 25,1077100,7110 Registration/Tuition

Meeting Refreshments 167 1027159 Administrative Cost Allocation7190 Other Miscellaneous 5457230 Taxes & Assessments


8351 Transfers OutTotal Non-Salary Expenditures 25,659 72,793 58,235 203,749 232,467Total Expenditures 25,659 72,793 58,235 203,749 232,467



Lummi Island Dock LI Dock LI Dock LI Dock LI Dock LI Dockobject acct Cost Center 2006 2007 2008 2009 2010

6100,6110 Salaries & Wages6120 Extra Help6130 Out of Class

Leave Payout6140 Overtime6200,6299 Benefits

Total Salaries & Benefits

6020 Depreciation Expense6320 Office & Operating Supplies 17 263 6,0186329 Office & Op. Supplies - Interfund 7,546 2,795 399 3856330 Printing6339 Printing - Interfund6340 Books/Publications/Subscrip.6410 Fuel6429 Fuel - Interfund 150 786510 Tools & Equipment 536 5,0006630 Professional Services

6630.1 Drydock6630.2 Repair, Inspection, 1,2836630.3 Misc. services 22,182 274 5806630.4 Security

6635 Health Care Services6659 Building Maintenance6700,6710 Postage/Shipping/Freight 596719 Postage - Interfund6720 Telephone6780 Travel-Educ/Training6790 Travel - Other6800,6810 Advertising 58 2396860 Equipment Rental 768 6,315 1,048 5,736 1,9246869 Equip Rental - Interfund - misc


6870 Space Rental6879 Space Rental - Interfund6900,6910 Insurance Premiums6949 Insurance Premiums - Interfund6960 Water/Sewer 660 660 660 700 7006980 Electric 4,896 4,080 4,375 4,800 4,5676990 Solid Waste 277060 Repairs & Maintenance 7,566 14,086 8,273 91,166 8,9447069 Repairs & Maintenance - Interfund 67,037 55,433 29,173 57,195 27,5877100,7110 Registration/Tuition

Meeting Refreshments 807159 Administrative Cost Allocation7190 Other Miscellaneous 5757230 Taxes & Assessments


8351 Transfers OutTotal Non-Salary Expenditures 111,514 84,496 45,554 171,607 43,722Total Expenditures 111,514 84,496 45,554 171,607 43,722


Terminus

Trip Distance

Round Trip Time Best, Shortest

In Bad Weather

Most Optimistic

In Bad Weather

Best, Shortest

In Bad Weather

Whatcom Chief too small too slow,

Unsafe for passage

Cars per Passage 20 20 20 20Passengers per Passage 100 100 100 100 100 100Round Trip Time 20 minutes 25 minutes 2.25 hours 4.5

hours???1.5 hours 2 hours

Maximum Cars/hr-Ave 60 48 7 3.5 13 8Maximum Trips Per Day 39 39 8 4 ???? 15 10Maximum Passengers/hr 300 240 44 22 66 50Maximum Cars/Day 760 (920

abs max)608 128 64 240 180

Max. Passengers/Day 3900 3120 800 400 1200 90035 Car-Hiyu*

too small too slow,

Unsafe for passage

Cars per Passage 35 35 28 28 35 35Passengers per Passage 200 200 200 200 200 200Round Trip Time 28 minutes 30 minutes 2.25 hours 4.5

hours???1.5 hrs 2 hrs

Maximum Trips Per Day 28, current 28 8 4 12 9Maximum Cars/hr-Ave 75 70 12 6 23 17Maximum Passengers/hr 428 400 88 44 133 100Maximum Cars/Day 980 980 224 122 420 315Max. Passengers/Day 5600 5600 1600 800 2400 180054 Car-Anderson** (too slow,

too small notadequate in

bad Cars per Passage 54 54 54 54 54 54Passengers per Passage 250 250 250 250 250 250Round Trip Time 25 min; 2 25 min; 2 /hr 2 hours 4 Hrs 1.5 hours 2 hoursMaximum Trips Per Day 26 26 9 5 12 9Maximum Cars/hr-Ave 108 108 27 13.5 36 27Maximum Passengers/hr 500 500 125 62 166 125Maximum Cars/Day 1404 1404 486 270 648 486Max. Passengers/Day 6500 6500 2250 1250 3000 2250

Passages expressed in one way trips. Revised 7/08/2010 7/25/2011

The Washington State Ferry (WSF) Hiyu, previously available to the County, under rated at 34 cars is of similar size, although a better weather boat than above, it is still unsafe for passage to Fairhaven. Minimum crew of 5, due to current USCG classification. ** Vessels the same size as Pierce County Ferries, 54 car/250 passenger Christine Anderson (1994) and the 54 car/300 passenger Steilacoom II (2007), 12 Naut/hr speed. Current cost about 12 million to build, each. Vessels can run with a crew of three with less than 150 Passengers- same as our current ferry, crew of four up to 300 Passengers.

16 (USCG max - per route)

* Vessel the same size as the one Whatcom County considered building, and later rejected in 2007. Projected to run with a minimum crew of three, four at 3/4 to full loads.

(works well, has good future growth capacity

( less than current car capacity

barely adequate, won’t be as demand increases not adequate too small

not adequate too small

6.5 Nautical miles

Bellingham Cruise Terminal

10 nautical miles min., 10-14 in Bad Weather

Current Ferry Dock

.75 Nautical miles

Gooseberry Point Fairhaven Neptune BeachPossible Future Ferry

Landing Location

Jim Dickinson

Terminus

Trip Distance

Round Trip Time Best, Shortest

In Bad Weather Most Optimistic In Bad

WeatherBest,

Shortest In Bad

Weather

64 Car- New State *# under minimum size

Capacity, weather OK

Cars per Passage NA NA 64+ 64+ 64+ 64+Passengers per Passage NA NA 700 700 700 700Round Trip Time NA NA 2 hrs 3 hrs 1.5 hours 1.5 HoursMaximum Trips Per Day NA NA 9 6 12 12Maximum Cars/hr-Ave NA NA 32 22 42 42Maximum Passengers/hr NA NA 350 233 462 462Maximum Cars/Day NA NA 576 381 768 768Maximum Passengers/Dy NA NA 6300 4200 8400 840066 Car-PC L252’ *1 (under

minimum sizecancels in

bad weather)(way too

smallcancels in

bad weather)Cars per Passage 66 66 66 66 66 66Passengers per Passage 300 300 450 450 450 450Round Trip Time 1.5 hours 2 hours 2 hours 4 Hrs 3 hours 5 hours???Maximum Trips Per Day 12 9 9 5 6 4Maximum Cars/hr-Ave 44 33 33 17 22 15Maximum Passengers/hr 200 150 200 # 111 # 133 # 89 #Maximum Cars/Day 792 594 594 297 396 270Max. Passengers/Day 3600 2700 3600 2000 2400 160072 Car-PC L270’ *2 (under

minimum sizecancels in

bad weather)Cars per Passage 72 72 72 72 72 72Passengers per Passage 300 300 450 450 450 450Round Trip Time 1.5 hours 1.75 hours 2 hrs 3 hrs 3 hrs 5 HoursMaximum Trips Per Day 12 10 9 6 6 4Maximum Cars/hr-Ave 48 40 36 24 24 16Maximum Passengers/hr 200 150 350 233 133 89Maximum Cars/Day 864 720 648 432 432 288Maximum Passengers/Dy 3600 2700 3600 2400 2400 1600

Passages expressed in one way trips. Revised 7/08/2010 7/25/2011

Gooseberry Point Fairhaven Neptune BeachPossible Future Ferry

L di L i Bellingham Cruise Terminal10 nautical miles minimum,

10-14 in Bad Weather

Current Ferry Dock.75 Nautical miles

*1-2 , Vessels are USCG K class lighter weather Ferries based on the 2007 Pierce County 216’ 54 car, 300 passenger Ferry Steilacoom II (STII) platform and lengthened.*1 , 66 car, PCL252= STII lengthened 36’ to 252 feet. Current cost about 14+ million to build. 12 Naut+/hr speed, maximum length for standard Cat 3508C engines.

# Vessels require minimum crew of five (5) for Fairhaven and Bellingham routes. Additional Crew Member (s) allow increase of passenger capacity. Neptune Beach route requires minimum crew of four (4) hence the lower passenger capacity. Estimated fuel usage - 5 to 6 times, depending on Terminus, then the existing Ferry on the current route.

6.5 Nautical miles

too big for landingsslightly less than current

car capacity

(works OK here, low growth capacity

(works well, some growth capacity (way too small

Jim Dickinson

Ferry Rate Comparisons, Short Version. 11/16/2010See Key Below on Page 2

RT Route Length

RT Full Fare Passenger

RT Multiride Passenger

RT Full Fare Car & Driver

RT Multiride Car & Driver

Ferry RouteStatute Miles Minutes

Fare Paid

Paid per Mile

Paid per

Minute

Lowest Fare Paid

Paid per Mile

Paid per

MinuteFare Paid

Paid per Mile

Paid per

Minute

Lowest Fare Paid

Paid per Mile

Paid per Minute

County Operated Routes in Washington2010 Lummi IslandGooseberry Pt 1.74 12 $4.00 $2.30 $0.33 $1.60 $0.92 $0.13 $10.00 $5.75 $0.83 $6.40 $3.68 $0.532011 $3 surcharge 1.74 12 $7.00 $4.02 $0.58 $4.60 $3.07 $0.38 $13.00 $8.67 $1.08 $9.40 $6.26 $0.78Anacortes - 1.5 12Guemes- Summer $3.00 $2.00 $0.25 $1.80 $1.20 $0.10 $9.00 $6.00 $0.75 $6.30 $4.20 $0.35Skagit County Winter $2.00 $1.33 $0.17 - same - $7.00 $4.67 $0.58 - same -Steilacoom/ 7.4 44Anderson Island Summer $4.70 $0.64 $0.11 $3.70 $0.50 $0.08 $19.00 $2.57 $0.43Pierce County Winter - same - - same - $15.84 $2.14 $0.36Puget Isle, WA/ 2.25 20 $2.00 $0.89 $0.10 N/A N/A $10.00 $4.44 $0.50 $4.55 $2.02 $0.23Westport, OR

Washington State Ferries (WSF)Point Defiance - Tehlequah, WSF 3.5 30 $4.45 $1.27 $0.15 $1.84 $0.53 $0.06 $15.30 $4.37 $0.51 $12.10 $3.46 $0.40

Vashon - Southworth, WSF 4.2 20 $4.45 $1.06 $0.22 $1.84 $0.44 $0.09 $15.20 $3.62 $0.76 $12.16 $2.90 $0.61

Mulditeo - Clinton, WSF 5.4 40 $4.10 $0.76 $0.10 $1.69 $0.31 $0.04 $14.00 $2.59 $0.35 $11.20 $2.07 $0.28

Fauntleroy - Vashon, WSF 7.3 40 $4.45 $0.61 $0.11 $1.84 $0.25 $0.05 $15.20 $2.08 $0.38 $12.16 $1.67 $0.30

Edmunds - Kingston, WSF 8 60 $6.90 $0.86 $0.12 $2.85 $0.36 $0.05 $23.60 $2.95 $0.39 $18.76 $2.35 $0.31

Keystone - Port Townsend, WSF 14.5 70 $5.30 $0.37 $0.08 $4.24 $0.29 $0.06 $18.30 $1.26 $0.26 $14.60 $1.01 $0.21

N/A - Senior Disabled Rate Available

Ferry Rate Comparison - Jim Dickinson - Feb.2011 page 1 and 2 of 3

Ferry Rate Comparisons, Short Version. 11/16/2010See Key Below on Page 2

RT Route Length

RT Full Fare Passenger

RT Multiride Passenger

RT Full Fare Car & Driver

RT Multiride Car & Driver

Ferry RouteStatute Miles Minutes

Fare Paid

Paid per Mile

Paid per

Minute

Lowest Fare Paid

Paid per Mile

Paid per

MinuteFare Paid

Paid per Mile

Paid per

Minute

Lowest Fare Paid

Paid per Mile

Paid per Minute

Seattle - Bainbridge, WSF 15.6 70 $6.90 $0.44 $0.10 $2.85 $0.18 $0.04 $23.70 $1.52 $0.34 $18.96 $1.22 $0.27

Seattle - Bremerton, WSF 31 120 $6.90 $0.22 $0.06 $2.85 $0.09 $0.02 $23.70 $0.76 $0.20 $18.96 $0.61 $0.16

Anacortes - Lopez, WSF* 21 90 $10.10 $0.48 $0.11 $7.28 $0.35 $0.08 $24.55 $1.17 $0.27 $20.50 $0.98 $0.23

Anacortes - Shaw, WSF* 25 100 $10.10 $0.40 $0.10 $7.28 $0.29 $0.07 $29.45 $1.18 $0.29 $24.53 $0.98 $0.25

Anacortes - Orcas, WSF* 27 100 $10.10 $0.37 $0.10 $7.28 $0.27 $0.07 $29.45 $1.09 $0.29 $24.53 $0.91 $0.25

Anacortes - Friday Harbor, WSF* 30 150 $10.10 $0.34 $0.07 $7.28 $0.24 $0.05 $35.05 $1.17 $0.23 $29.18 $0.97 $0.19

Public Ferries that are Privately OperatedBurlington, Vermont - Port Kent, LCT** 24 120 $9.30 $0.38 $0.08 Unknown $32.75 $1.36 $0.27 Unknown

Charlotte, Vermont - Essex NY, LCT** 4 20 $6.25 $1.56 $0.31 Unknown $18.00 $4.50 $0.90 Unknown

* Time on San Juan Island Routes averaged, different Ferry Boats have different speeds** LCT = Lake Champlain Transportation Company, a private company, not subsidized on the above routes

NOTES:Route Length expressed in Stature MilesPassage time, expressed in minutes, when Ferry is underway only, as per Washington State Ferry StandardFor Brevity, Lowest Fare Rates are the least paid non-needs based, via Multi-ride Purchases.Fare amounts averaged to the nearest cent.

Ferry Rate Comparison - Jim Dickinson - Feb.2011 page 1 and 2 of 3

Gooseberry Point - Lummi Island Keystone - Port TownsendTrips per Day

Gallons per Day

Fuel Cost per Day

Max. Car RT per

Day

Min Cost/ Car

Trips per Day

Gallons per Day

Fuel Cost per Day

Max. Car RT per Day

Min Cost/ Car

Whatcom Chief- 20 Cars 35 39 142 $341 780 $0.44 9 450 $1,080 180 $6.00Steilacoom II- 54 Cars 51 19 105 $252 1,026 $0.25 10 600 $1,440 540 $2.67Envisioned, Steilacoom II type, lengthened to 72 Cars

60 19 110 $264 1,368 $0.19 10 660 $1,584 720 $2.20

Currently the Lummi Island Route passage fares are very high when compared to others. This is, we know, due to the much higher assigned costs for the Whatcom County Ferry: costs that other systems do not reflect.

The adopted rate increases for the ferry cannot be described as anything other than excessive and confiscatory . The excess is due to the very high costs that Whatcom County assigns to the ferry and to the arbitrary manner in which the County has set fares.More realistic assigned costs, pricing and better value marketing to ferry riders is needed.

Vessel Cruise GPH

To allow accurate comparison, each route should be weighted to reflect the costs of its Infrastructure, Vessel and Fuel Costs. The very short routes use much less fuel per passage since only about half the passage is done at cruising speed. In longer routes, the vast majority of Vessel passage time is at cruising speed and, therefore, fuel is consumed at a much higher rate.

The longer routes with larger ferries reflect an economy of scale with far lower rates per mile and minute. Please note that in some of the Washington State Ferries (WSF) routes, the Passenger Rates are far lower in proportion to the car rates. This is due to a lack of car capacity, increased Passenger Capacity and the proximity to large urban settings where distances to destinations are small.

All of the displayed routes, with the exception of the Lake Champlain routes, are within Washington State. As you can see, the current Lummi Island Ferry Rates are already the most expensive in the State. The Lummi Island surcharge of $3/trip will exceed any other rate by multiples.

The table below illustrates these facts by comparing three different size Ferries running on two routes: the 1.74 mile round trip Gooseberry Point/Lummi Island Route; and the 14.5 mile Keystone/Port Townsend Route. The dollar costs displayed are actual for the Whatcom Chief at Lummi Island and the Steilacoom II at Keystone. Fuel cost is WSF standard, $2.40 per gallon.

Ferry Rate Comparison - Jim Dickinson - Feb.2011 page 3 of 3

Chapter 10.34 with Recommended Changes FERRY RATES1

Sections: 10.34.005 Definitions. 10.34.010 Effective date for ferry user fees. 10.34.020 Interpretation of rate schedule. 10.34.030 Use of ferry user fee revenues. 10.34.005 Definitions. A. “Ferry system” means all physical elements of the Lummi Island ferry operations, including both the Gooseberry Point and Lummi Island vehicle and pedestrian staging areas, vehicle parking areas, and ferry docks, and any and all boats utilized for transport purposes. B. “Operating cost” means all actual daily running expenses and all actual regular and routine maintenance and administrative expenses associated with the use and operation of all physical elements of the ferry system. C. “Capital cost” means all capital expenditures, including financing and depreciation expenses applied to the replacement, expansion, or creation of ferry system physical elements. D. “Fare box Ferry system revenue recovery rate” means the calculated percentage of total revenue generated through ferry user fees, property taxes levied via districts as allowed by the state, interest on the ferry fund, advertising rights, grants, gifts and any other revenue received specifically for the support of or attributable to the existence of the ferry system in comparison to total actual operating costs for the same period of time minus any revenue from the motor vehicle fuel tax meant for ferry operations, including both the funding allocated for deficit reduction and the funding allocated because there is a county ferry or from interest.

E. “Ferry user fees” means the rates and charges required of and collected from any and all users of the ferry system, as established and periodically amended in the Unified Fee Schedule. F. “Rate schedule” means the combination of ferry user fees and operational policies affecting the use of the ferry system. (Ord. 2010-054 Exh. A; Ord. 2008-052 Exh. A; Ord. 2008-017 Exh. A; Ord. 2007-001 Exh. A; Ord. 2005-090 Exh. A). 10.34.010 Effective date for ferry user fees. Ferry user fees are set forth in the Whatcom County Unified Fee Schedule and become effective as set forth in the ordinance adopting or amending such schedule. (Ord. 2010-054 Exh. A; Ord. 2008-052 Exh. A; Ord. 2008-017 Exh. A; Ord. 2007-001 Exh. A; Ord. 2005-090 Exh. A; Ord. 2002-012; Ord. 2001-064; Ord. 93-080 Exh. Q). 10.34.020 Interpretation of rate schedule. The following provisions should be observed in application of the ferry rate schedule:

A. Trailers shall include, but not be limited to, ball hitches, military hitches, fifth wheel in bed of pickup, dump trailers, recreation trailers and mobile homes. B. Special trips are a surcharge in addition to the applicable fare. Special trips are those that require crew call-out after normal operating hours or one additional round trip after the last scheduled trip at night. C. A weekly run limited to fuel trucks, charged at the regular rate, shall be scheduled by the public works department and published appropriately. D. Trucks and tow vehicles with trailers shall be charged a rate based on length and weight. Heavy machinery and motor homes shall be charged based on length at the corresponding vehicle rate. E. All trucks shall be charged regular round-trip rates based on length legal license capacity. F. Over-width vehicles or trailers occupying more than one lane shall be charged a 50 percent surcharge. In addition, vehicles towing over-width trailers shall also be charged a 50 percent surcharge. G. Student multi-ride cards shall be sold to full-time students only. Proof of age and enrollment shall be required at time of purchase. No special student discount is available for drivers of vehicles. H. A special rate may be applied to children under 12 and children 12 to through 18 years of age. No special child discount is available for drivers of vehicles. I. County employees on official county business shall pay fares at the corresponding vehicle and pedestrian rate, except that those who are working on or inspecting the ferry system itself shell be exempt from fares. All county employee trips exempt from fares will be tracked, and $10.00 per trip will be credited toward the fare box recovery rate each year. J. Enrolled members of the Lummi Indian Tribe who are issued appropriate identification cards by the tribe, or current fishing cards, licenses, or Lummi Indian Business Council ID cards and who have legitimate tribal business upon Lummi Island, as indicated by the Lummi Indian Tribe, shall have free foot passage upon and across the ferry operated by Whatcom County between Gooseberry Point and Lummi Island.

K. A special-needs-based discount is provided for Lummi Island residents who meet the HUD Very Low Income levels as adjusted annually for the Bellingham area. income levels listed below. These special tickets will only be sold at the Whatcom County treasurer’s office in Bellingham and will require a letter from the Opportunity Council that income level matches the current HUD Very Low Income guidelines annually issued for the Bellingham area, or that applicants have furnished to the Opportunity Council letters or other documentation that indicates dates of qualification for the applicant for Medicaid, Section 8, Home energy assistance, Workfirst Program enrollment, or NW Regional Council medical transportation eligibility. Recipients must re-qualify annually. in June.

of income and family size. Eligibility will be reviewed at least annually. Agreements with the Opportunity Council Forms and procedures will be developed by the Whatcom County treasurer’s office.

1. Family of four or more with less than $40,000 total annual income; 2. Family of three with less than $30,000 total annual income; 3. Family of two with less than $20,000 total annual income; 4. Individual with less than $10,000 total annual income.

L. Eligibility for a special “senior/disabled” discount is available to all Lummi Island residents who currently hold property tax exemptions or deferral as defined under RCW 84.36.381 and 84.38.030 and WAC 458-16-020 and 458-18-020, and as these may be hereafter amended. Eligibility for a special “senior/disabled” discount is also available to all Lummi Island residents who also qualify for medical assistance within the Medicaid Program. M. Repealed by Ord. 2010-054. N. All children under the age of 12 years when traveling on the Whatcom County ferry must be accompanied by an adult. An exception to this policy will be made only if the adult parent or guardian signs a waiver exempting Whatcom County from all liabilities for any and all injuries, loss of life, etc., while the child is traveling on the ferry. (Ord. 2010-054 Exh. A; Ord. 2008-052 Exh. A; Ord. 2008-017 Exh. A; Ord. 2007-001 Exh. A; Ord. 2005-090 Exh. A; Ord. 2002-012; Ord. 2001-064; Ord. 93-080 Exh. Q). O. A peak season surcharge may be applied to all single trip tickets purchased for passengers/ pedestrians or for vehicles, 10.34.030 Use of ferry user fee system revenues.

“Beginning January 1, 2012, a 55 percent fare box ferry system revenue recovery rate shall be applied and evaluated continuously from that time forward. Beginning January 1, 2006, a 55 percent fare box recovery rate shall be applied and evaluated continuously from that time forward. An annual review of ferry system services, actual and projected operating costs, and actual and projected revenue from ferry user fees shall occur in order to verify the 55 percent fare box recovery rate is being achieved. In any given year the actual fare box ferry system revenue recovery rate exceeds 55 percent, the excess revenue shall be retained in the ferry system fund and applied only to future operating costs. In any given year the actual fare box ferry system revenue recovery rate is below 55 percent, the difference shall be recovered in a future ferry user fee increase unless there is adequate excess ferry user fee revenue remaining in the ferry system fund collected during prior years. Beginning January 1, 2007, any interest income or income from the state motor vehicle fuel tax for ferry operation will be deducted from the actual operating costs before the actual 55 percent fare box recovery rate is calculated. (Ord. 2010-054 Exh. A; Ord. 2008-052 Exh. A; Ord. 2008-017 Exh. A; Ord. 2007-001 Exh. A; Ord. 2005-090 Exh. A; Ord. 2002-012; Ord. 2001-064). ________________________________________ 1 Prior legislation: Ord. 89-103

Process and Public Participation Whatcom County Ferry Task Force Report

Public Process It was the agreed intent of the Citizen’s Task Force for the Lummi Island Ferry, also called

• Lummi Island Ferry Task Force, and • Whatcom County Ferry Task Force,

to educate ourselves and others, make the task force process and analysis transparent, as well as make all information gathered readily available for others to use. A Plan for communication with the island and county community was adopted and then that plan improved and evolved with use. The task force was governed by two broad legal requirements: 1. The task force is defined as a public agency by RCW 42.30 whose intent is that

“…actions be taken openly and that their deliberations be conducted openly.” 2. This Open Public Meetings Act requires that the public be invited and that the meetings

be noticed at least 24 hours prior. Meetings and Community Participation A regular meeting schedule of three Monday meetings per month was scheduled and noticed as required. Additional Monday meetings were added as needed and noticed, usually one week prior or more. A total of 24 working meetings were held between the first meeting on January 18, 2011 and the last official meeting on August 1, 2011. Members of the public attended every meeting. The high attendance was 60 audience members for an open house to discuss draft recommendations and the low was 6. The average attendance was 15 members of the public at 24 meetings. Audience members were invited to speak at the beginning of every meeting and then again at the end. The audience generally took part in the discussions throughout each meeting as well. Guest speakers / presenters included:

• Frank Abart, Whatcom County Public Works Director • Steven Oliver, Whatcom County Treasurer • Mark Richardson, Whatcom Chief Master and Captain • John Mulhern, Whatcom Chief Master and Purser • Geoff Beaumont, former BC Ferries Twawwassen Terminal manager • Special guest attendees included Whatcom County Council members: • Kathy Kershner • Barbara Brenner, and • Carl Weimer.

Lummi Nation employees and an elder attended several task force meetings. Meeting locations were usually the Lummi Island Grange Hall but also included:

• 2 at The Willows Inn on Lummi Island, • 2 at Whatcom County’s Garden Room in Bellingham, • the WECU meeting room in Ferndale, and • Northwest Indian College on the Lummi Nation. • Some task force members attended a dinner hosted by the Lummi Nation, and

KBerg page 1 of 33 Public Process


• some attended the open house of the new mainland facility for the Skagit County ferry

(Guemes Island Ferry). Organization A chair, vice-chair and secretary were elected at the first meeting. There was no task force treasurer nor was there any monetary support from Whatcom County. All expenses incurred by the task force for meeting space and the cost of making copies were borne by three Lummi Island organizations: The Grange, LICA, and PLIC. In addition, individuals on the island contributed paper and making of copies for meetings. Whatcom County Council member Kathy Kershner became the holder of record for all task force e-mail correspondence. The task force secretary sent out notices of meetings and adopted minutes went via e-mail to:

• Whatcom County Council office, • Whatcom County Executive, • Dept. of Public Works, • Whatcom County Council of Governments (WCOG), • Community Transportation Advisory Group (CTAG), • Squol Quol (Lummi Nation monthly newspaper), • Bellingham Herald daily newspaper, • several Whatcom County weekly newspapers and radio stations, • Lummi Island community newsletter Brown Betty and The Tome, • Two island organizations that published on-line: PLIC http://www.PLICferry.org , Lummi Island

Ferry Forum http://lummiislandferryforum.wordpress.com/ • and hard copies were posted at the Island Library, Islander store and at the island ferry waiting

area bulletin board. The task force secretary was the receiver of and conducted general correspondence via email and US Mail. Copies of comments received by the task force have been compiled and placed at the end of this report. 53 comments were received. Draft report materials were sent via email to:

• the task force, • the volunteer recording secretaries who kept detailed notes of the comments in some of the

meatier meetings, In addition, two community organizations received draft materials and published them on their web sites, where they were subject to on-line discussion:

• Lummi Island Ferry Forum, and • PLIC,

Whatcom County Ferry Documents Archive http://lummiislanders.com/ferrydocs/ was created by Lummi Island volunteers to provide a searchable archive of documents related to the operation of the Whatcom County Ferry.


http://www.plicferry.org/

http://lummiislandferryforum.wordpress.com/

http://lummiislanders.com/ferrydocs/


May Public Comment

----- Original Message ----- From: "Klayton Curtis" <[email protected]> To: <[email protected]> Sent: Tuesday, May 03, 2011 5:36 PM Subject: Answers to Ferry Questions Hi Kathy, I am an island resident and have answered the questions posed in the ferry forum. * What about drydock in April instead of September? - April would be preferable to me. Better weather in September means more runs to the hardware store, and also there are more family visits in September. * Should age 5, 12, or 18 be the cutoff for free rides? - Age 16 or 18 should be the free cutoff. 16 would work better, but if it is 18 it should be free walk-on only. * What’s the difference between operational and capital costs, and why does it matter? -Not sure I can answer this. * What do you think of crew fares? -Crew should pay the same rates as everyone else. * What do you think of needs-based fares? -There should no needs based fares given. Low income citizens can get financial help in other ways and transportation subsidies from government agencies. * Should the rented Gooseberry parking lot be eliminated to reduce expenses? -Yes. People who park on the mainland should pay for that service individually. * What do you think of peak season fares? -No. I don't see any reason to charge residents more just because it is summer. * Should service hours be cut to reduce expenses? -Yes. * What about vehicles being charged by length instead of weight? -Yes, and if there is an extremely heavy vehicle that limits other vehicles it should be charged with the length that it limits other vehicles. * What about electronic ticketing and credit card payment? -Absolutely. This could also be used to set up resident accounts for those who have been verified as island residents. Then non-residents could be charged more using this electronic system instead of having higher seasonal fares for everyone. It will also relieve the deck crew from that added task. Many thanks, Klayton Curtis From: [email protected] To: [email protected] Sent: Tuesday, May 03, 2011 9:36 AM Subject: Comments on 5-2 meeting topics Dear Members of the Ferry Task Force,

Thank your for the tremendous amount of time and effort that you have given on behalf of the Lummi Island community. We truly appreciate it. Per your suggestion at last night’s meeting, here are some additional comments on the topics you raised:

1. Please consider assessing a fee for parking on the Gooseberry Point side. Even if it does not entirely cover the lease costs for the site, it would certainly help mitigate total operating expenses. This would be fair in that it would allow those who use the lot (both locals and visitors) to assume some responsibility for that use.

2. A single trip summer surcharge seems to make sense for occasional visitors to the island.

3. Certainly if the ferry crew must live on the island, it is appropriate that they receive free fares – but only for their immediate family members who reside with them on the island. In addition, their free fares should be logged via a punch card or other method for good order and to eliminate any abuse such as the transport of crew-owned vehicles for other small businesses they may operate.

4. Once retired, former ferry crew members should revert to resident status and pay fares as do other retirees on the island.

5. If we want the island to continue to be a vibrant and diverse community, low or no cost fares for children and youth to age 18 should be allowed, as well as should need-based fares. Betsy Schneider’s suggestions seem to make the most sense for evaluating needs-based applicants.

6. Home-owners who are not full-time residents should also be valued as members of the community. Many have long family ties to the island, some support island non-profits through donations and volunteering, almost all patronize island businesses. To charge them a higher fare or a date-based multi-fare because they cannot live on the island full-time may have the following



effects: a.) reducing the time they spend on the island; b) diminishing their donations and purchases so that the money can be used for their higher-priced ferry tickets; c) renting their homes to short-term visitors who don’t have any concern or care for the island.

7. Instead, instituting a ferry taxing district is entirely appropriate to recognize that the quality of ferry service has a direct, largely proportional impact on property values. We own (based on data quoted by Riley Starks and Mike Skeehan last night) a home of median value here, which we use 15-20 weeks a year, and believe 75 cents per thousand to be a minimum appropriate mill rate.

Sincerely, Barbara & Tobey King ----- Original Message ----- From: "Lorraine Dukes" <[email protected]> To: <[email protected]> Sent: Friday, May 06, 2011 2:40 PM Subject: Lummi ferry fares To our dedicated task force members: First, thank you all for giving your valued time for this important effort. Secondly, let me express much appreciation for Betsy Schneider's thorough and insightful exploration of needs-based Lummi Island ferry fares and costs involved. I wholeheartedly support her observations, and think it is imperative that there be a continuation of needs-based fares in order to enable a number of important and valued members of our community, both working and/or retired on a limited income, to remain on the Island. As Betsy pointed out, they would otherwise be placed in an untenable situation: 1) unable to sell their homes or find a reasonable rent off island 2) unable to work off island to earn a living because they couldn't afford the daily fare 3) for those with health problems, unable to get regular medical treatment This would be an impossible hardship to impose on our perhaps less affluent but nonetheless equally valued Island friends and neighbors. I strongly urge you, as representatives of the Island, to wholeheartedly support a continuation of these necessary, needs-based fares. Thank you. Lorraine Dukes, resident From: Fisherman Thomas To: [email protected] Sent: Saturday, May 07, 2011 11:02 PM Subject: ferry stuff What about dry dock in April instead of September. Lets be honest, September is much nicer weather to be standing on the end of a dock.

Should age 5, 12, or 18 be the cutoff for free rides? At sixteen a child can be left at home. On that note maybe the county should be charging fares for pets, they can stay at home also.

What’s the difference between operational and capital costs, and why does it matter? Whats the difference between principle and interest. One is an asset and the other an expense. Is the ferry a County asset or an Island asset. If its a County asset then the County should pay.

What do you think of crew fares? Bullshit…. I would like to know what the IRS thinks about free fares. A term of fare Market value come to mind.

What do you think of needs-based fares? I think it folks get into tight times and need a helping hand once in a while for a while. They need to be limited for a period of time, 6 months would be enough time to get a better paying job or leave the island.



Should the rented Gooseberry parking lot be eliminated to reduce expenses? The folks who use the parking need to pay for it.

What do you think of peak season fares? Are talking cash fare only? If I couldnt purchase a discounted punch card I wouldnt like it.

Should service hours be cut to reduce expenses? The ferry needs to run when people use the boat and the crew may need to work a split shift. Reduce expenses with a split shift. Maybe the boat doesn’t run from say 130pm to 530 pm and between 9pm and 11pm or what ever the slowtraffic times are. A reduction of 6000 man hours would save $$$.

What about vehicles being charged by length instead of weight? Yes

What about electronic ticketing and credit card payment? Why

From: Carole Petralli To: [email protected] Sent: Saturday, May 07, 2011 7:33 PM Subject: questions answered

1. What about dry dock in April instead of September? I would say the weather is much nicer in September which makes all the walking, carrying groceries & waiting with no shelter easier in September. April would be too wet and cold.

2. Should age 5, 12, or 18 be the cutoff for free rides? 12

3. What’s the difference between operational and capital costs, and why does it matter? I am assuming operation are what it costs to operate the ferry and capital are the total costs including administration etc.

4. What do you think of crew fares? Crew should not have to pay a fare

5. What do you think of needs-based fares? I approve

6. Should the rented Gooseberry parking lot be eliminated to reduce expenses? Absolutely NOT

7. What do you think of peak season fares? I approve - they could even be higher

8. Should service hours be cut to reduce expenses? Perhaps a few runs during the off season

9. What about vehicles being charged by length instead of weight? BOTH, they should be charged by weight (cement trucks, garbage trucks) and length/width!

10. What about electronic ticketing and credit card payment? NO and NO From: Eileen martin To: [email protected] Sent: Sunday, May 08, 2011 8:49 AM Subject: ferry questions answered. Thank you for your time. Eileen Martin

1. What about dry dock in April instead of September? Our thoughts are September is usually better weather. Though April would be better as there isn’t as much going on.

2. Should age 5, 12, or 18 be the cutoff for free rides? 12… Though I believe kids over 12 should pay if not school related.

3. What’s the difference between operational and capital costs, and why does it matter? Capital is one time (most of the time) operational is everyday cost. Who’s responsible for the Capital cost. I would have thought we were responsible for the O&M costs only.

4. What do you think of crew fares? I believe they should get a limited free trips or maybe discounted.

5. What do you think of needs-based fares? I’ve always believed and felt the senior citizens on Social Security should receive discounted fares. Others I believe abuse it. If you chose to move and live in a place that requires you to pay to get there than they should have to PAY easy as that.



6. Should the rented Gooseberry parking lot be eliminated to reduce expenses? No, there was a push for people to walk

on. So we bought cars to keep over there. Where would we park otherwise? That unfortunately is a cost that is well used.

7. What do you think of peak season fares? No, we are already losing money everytime they raise the fares. They are losing tourist and family and friends visiting. My family do not come over very much anymore because they can’t afford it. We also use to have a party in the summer which we have ended because we didn’t want them to pay the cost.

8. Should service hours be cut to reduce expenses? Yes but my husband is on the 5:40. People with shift work would not be able to live on the island. How many catch the midnight ferry on the weeknights vs the weekends? Do we need all the runs during the day? I’m sure once some are dropped people will just change to routine again. We are use to change.

9. What about vehicles being charged by length instead of weight? No… The length of a vehicle shouldn’t matter if they are standard vehicle. We have a crew cab I do not think we should have to pay more just because it’s a foot longer. I didn’t think a 3500 truck should be paying what they are.

10. What about electronic ticketing and credit card payment? Electronic ticketing would help the crew and it would be easier for all. As far as CC payment not sure how they would work that.

From: Myra Ramos To: [email protected] Sent: Sunday, May 08, 2011 2:10 PM Subject: Ferry task force preliminary questions Hello Kathy Berg, and thank you for soliciting input from the Lummi Island community! I apologize for this last-minute response to your preliminary questions, but have just returned from several weeks in the mountains. My husband Ben Rogers and I have thoughts about four of your questions: #1 We support moving dry dock from September to April as we believe it will have less impact on tourists and other visitors. #7 We think that establishing higher peak season fares (as I believe the state ferries to the San Juans do) is a potentially interesting idea--as long as those peak fares apply to single tickets and not to multi-ride cards purchased by Island residents. #9 We think that charging by size (length and width) is good, as large-size vehicles reduce the number of other vehicles that can be carried and therefore the total revenue for a given trip. Excessive weight can impact the docks; if it were possible to combine the size/weight charges in a way that were not confusing to crew and riders, that could also be considered. #10 How about letting the Islander sell multi-ride tickets to reduce the hassle for crew and purchasers (and also to bring traffic into the Store)? Thank you again for asking for our comments! Myra Ramos and Ben Rogers Myra Ramos Ben Rogers From: Anne Gibert To: [email protected] Sent: Monday, May 09, 2011 8:57 AM Subject: Ferry fares Dear Cathy, Here are my answers to the questions on the list. Drydock in April would be okay. Probably better than in September. Children under 5 should be free. Everyone else should pay. I have no opinion about operational and capital costs. I suppose both will result in fare increases. I am strongly in favor of the crew, like everyone else, paying full fare. Needs based fares are difficult. Some people really need help, but the way the fares are now structured people with considerable assets are getting reduced fares. The Gooseberry parking lot must be retained so that commuters can walk on. But a 24 hour parking limit should be enforced. It would be a good idea to have fares go up somewhat in summer. Service hours should not be cut. Some working people don’t have standard day time working hours.



Yes, vehicles that take up a lot of space should pay more. I think it would be a good idea to have a lower rate for small cars. Very large pick-up trucks should pay more. I don’t see what the savings would be for electronic ticketing. Two deck crew are needed anyhow, and it doesn’t seem to be a problem to have one of them collect fares. The question of passenger fares was not on the list, but I think the fare of $7 for a foot passenger is unreasonable. It should be lowered, and fares for large vehicles should be raised. I would like to thank the Task Force for the opportunity to have some input into this matter. I just hope the County will pay some attention to the Task Force and to us. Sincerely, Anne Gibert and Jerry Hook From: Michael Skehan To: [email protected] Sent: Monday, May 9, 2011 Subject: Ferry fares Your work on these subjects is much appreciated. Please accept my input into your deliberations and recommendations to the Council as your work plan progresses.

Key Values contained within my fare proposals:

1. The ferry is a common asset to both users and landowners on Lummi Is, and as such, both should shoulder a fair share of the fixed cost, just as water system users are expected to share their burden of the basic infrastructure costs with having a system in place. The most reasonable way to accomplish this is through a council adopted property tax, which acknowledges a portion of the ferry ‘fixed costs’.

2. The ferry is an amenity of Lummi Island, has common value, and common costs. Properties on Lummi Island share the rewards of a well functioning link to the mainland, through higher property values.

3. Everyone who uses the ferry should pay a fair share of the fixed and variable costs. Radical discounts for multi ride tickets should not induce demand, but only reward frequent users for the economies they create by using a multi-ride media.

4. Needs based discounts should be consistent with federal guidelines for such fares in similar situations. As such needs based (however the Council may define that) should be no less than 50% of a regular ‘full fare’ passage.

5. Fares should reflect the fact that both car slots and cabin seats are for sale. Both have a value and marginal costs for filling available slots that are currently undersold. Boat trips (or Level of Service) should be established based on historical norms, by season, and fares priced accordingly to achieve the highest level of return on investment for each mode (Car or Ped).

6. Parking costs should be reflected in Pedestrian costs as the majority of that class of users is substituting a lower crossing fare for free parking on either side.

7. Fares should be set to maximize revenue. Lowering current fares should be an objective of the Ferry Task Force to accomplish this. That would fill some existing unused capacity, with a marginal cost of zero.

8. Finally, any property tax enacted, should acknowledge where those funds will be spent as a principle of basic fairness. If taxes collect will end up helping to fund road, sidewalk and Gooseberry Pt Marina improvements within the boundaries of the Lummi Nation, then Lummi Nation must be within the taxing district as they are the chief beneficiaries of the improvements.

With those eight principle stated as simply as I can make them, I offer a much simplified fare structure for your consideration. I used both Chandler’s and Diane’s worksheet to arrive at the fares, and have attached both. My target base fare is considered to be ONE CAR SPACE on the deck. Every other fare is a derivative of that basic unit of sale. A pedestrian seat is valued at 1/3 of a car space. A motorcycle is one half. Bicycles are free, as they are few and generally displace nobody. Trucks are charged based on how many equivalent car spaces they consume. Likewise for trailers. I choose $12 as the basic charge per full fare vehicle crossing. Needs based is 50% of full fare. Multi-rides would only come in 10 punch varieties and be priced at 80% of full fare. (I eliminated 25 punch cards for a variety of reasons – card cutting, different discount levels expected, simplicity, and introduction of electronic fare collection at some point)

Thank you for the many hours of dedicated work you have put forth on my and fellow islanders behalf. It is much appreciated. Also, accept this input as my best effort to guide you towards the best solution for Whatcom County and us.



Sincerely, Michael Skehan Attach: 2 File: doc.ferry fare input From: Megan Crouse To: [email protected] Sent: Monday, May 09, 2011 12:21 PM Subject: RE: Task Force questions--thanks! Kathy, I can't thank the Task Force enough for it's careful, thorough work. I realize that I didn't include feedback on taxation district options. I favor Rich Frye's approach just published on the Ferry Forum website--a county-wide taxation district that supports a County owned-and-operated ferry. It's important for citizens to know that the ferry's costs and its benefits are shared, not exclusive to what some incorrectly perceive as an "elite" lifestyle by Lummi Islanders. Megan

11. What about dry dock in April instead of September? I am in favor of moving dry dock to a spring date, if the costs of reservations at dry dock facilities are comparable or less than the September costs.

12. Should age 5, 12, or 18 be the cutoff for free rides? None of the above. I’d pick 16 yrs, when youth can get driver’s licenses.

13. What’s the difference between operational and capital costs, and why does it matter? Too complex for me too make informed feedback.

14. What do you think of crew fares? I think crew members after retirement and their dependent children up to age 16 yrs. should have free passes. I think these passes should be accounted for just like other fares.

15. What do you think of needs-based fares? I am strongly in favor. Please use the suggestions offered by Betsy Schneider, which would streamline administration and add safeguards against fraud.

16. Should the rented Gooseberry parking lot be eliminated to reduce expenses? No, but I think cost of security should be decreased and the parking area improved if the County continues to rent parking areas. Perhaps the area could be reduced in size if car+passenger ferry fees were reduced.

17. What do you think of peak season fares? In favor only if there’s a way to discount full-time island residents. In HI. These discounts are called “kama’aina” rates.

18. Should service hours be cut to reduce expenses? Only in favor of cutting out two hours mid-day at shift change.

19. What about vehicles being charged by length instead of weight? No opinion.

20. What about electronic ticketing and credit card payment? Excellent options.

Submitted by: Megan Crouse, LICSW, LMP, D.Min.. PO Box 247, Lummi Island. Comments to the Lummi Island (Whatcom County) Ferry Task Force – May 9, 2011 From: Steve Schneider * Dry dock should be moved to April.

* Children under age 12 ride free. Students under age 18 either living on Lummi Island, or with parents living on Lummi Island, ride free if they are passengers (not drivers) during the school year. All free passes must be tracked and accounted for.

* Employed crew members (not their families) only receive free passes during employment and retirement. All free passes must be tracked and accounted for.

*Continue needs based fares for low income. Age should not be a consideration. Both income and assets must be considered as parameters. All reduced fares must be tracked and accounted for.

*A Gooseberry Point parking lot is needed. Explore options to relocate off Lummi Nation property if possible. Replace hired security with permanent surveillance cameras (maybe these cameras can be used by the ferry crew to observe when “overload” lines are developing, and extra run is required). Parking fees should be established to offset the cost of the parking lot and surveillance. Perhaps daily or monthly parking permits could be sold by the ferry crew, just as ferry passes are now. These would be placed visibly on the vehicle dash board. Perhaps short breaks on the GP dock between runs could allow ferry crew members to check parking permits.

*Peak season fares for single tickets (Not multi ride discount tickets) from June to September should be considered.




*Service hours: The 11PM run should not be cut. Many Islanders (not just “young people”) enjoy midweek concerts, or other performances off island (i.e.Mt Baker Theater or Western Wash. University). These rarely are finished in time for the 10PM ferry. Maybe two runs eliminated during the day, and the midnight run could also be eliminated.

*I think vehicles should be charged by length if it is practical to administer that. Seems like I should pay more when I drive my 18’ full sized truck, than when I drive my wife’s 13’ sub compact car.

*I support both electronic ticketing and credit card payment if they can be administered as cost saving mecahanisms, or if they allow fares to be collected, which are not collected (i.e. ferry users with only credit card available).

*All Whatcom County Departments pay for using the ferry (including Public Works if they are not directly working on a ferry related job). They are taking up space, and are taking away from the ferry users 55% income. I work closely with one County Department, and have observed both them and other County departments make multiple trips, when efficient planning could have saved trips. They need more incentive to not abuse their “free” use of the ferry. Even though there is inter department transfer of funds now, it is not easily verified, and the ferry users are losing part of their 55% income.

*Multi ride discounted tickets (25 trips) should expire in 4 months to avoid non residents, or non frequent users from taking advantage of them. Multi ride 10 trip discounted ticketed should be sold at a higher rated than 25 trip tickets, and they should expire in one month

*Fee structure should be changed to bring multi ride discounted walk on / passenger prices within two to three dollars of multi ride vehicle- passenger tickets (only if GP parking fees are NOT charged). I have not had time to explore the fares’ variation and percentage worksheets provided by members of the Task Force, however I will make these suggestions:

Leave single ticket vehicle – diver at $13; reduce multi ride vehicle driver to $8.50. Increase single ride

Passenger/walk- on to $8 ; increase multi ride passenger/ walk-on to $6.

It has been demonstrated by Fred Kinny (PLIC) that as the price between vehicle/driver tickets and passenger/walk-on become greater the overall ferry user income decreases. It has also been shown by Chandler Johnson that because of the $90,000 parking lot and security expenses, (which will probably increase) taht encouraging walk-ons with the present fare rates and free parking is not cost effective. If cheaper GP parking/security alternatives are found it will help, but not eliminate this problem. The more users who opt to take their vehicles the better- so the ferry can have a full vehicle load and optimize income per run, as will as help eliminate the need for a larger GP parking lot.

* This leads into the question of a purchasing a larger ferry. It appears that in some ways this would be like “buying a parking lot”, since more ferry capacity would require less need for an expensive lager GP parking lot. Also since loading of the ferry can happen within an hour of sailing, it could be used to effectively reduce queuing lines on GP, if the ferry schedule was set to allow for that. I have not been a supporter of a larger ferry in the past, but because of the above points, I have changed my mind. Purchasing or building a new ferry must be carefully analyzed to keep costs down, and to effectively offset additional costs of keeping the old Whatcom Chief operating.

*A “Whatcom County Ferry Taxing District” should be investigated. However I believe it should include all of Whatcom County. I include all Whatcom County for two reasons: First, when I pay my real estate property tax, and part goes to Whatcom County for road maintenance, I expect to be able to go wherever I want on Whatcom County roads- I don’t say “I never go on Mosquito Lake Road, or to Pt Roberts, so I should not be required to help pay for these roads; Second, many people and business residing in Whatcom County benefit from the use of the Whatcom County – Lummi Island ferry. In my 31 years of living on Lummi Island, and working throughout Whatcom County, I could identify hundreds of Whatcom County residents who use, or receive benefits from the ferry, and the Lummi Island residents and visitors who use it. This will be a difficult recommendation for the Whatconm County Council to accept politically, but that does not mean it should not be recommended. I could support a ferry district taxing plan which might tax Lummi Island .75 per $1000 , while the rest of Whatcom County property owners are taxed at .25 per $1000. If a tax is imposed on Lummi Island and/or Whatcom County property owners, multi-use, low income, and other fares should be structured to focus savings on ferry fares for frequent users, not for occasional tourist, or business use.

.The suggestion to have a taxing district of only Lummi Island, and Lummi Nation – GP residents should not be pursued, not because it is not fair, but because if it is not included in the present negotiations with Lummi Nation it will be too controversial, and is a waste of time.

A huge thank you to everyone on the Task Force. You have an arduous agenda of topics and meeting schedule, and have put an incredible amount of volunteer time to assist the residents of Whatcom County and Lummi Island and our elected representatives. You are really appreciated.

Sincerely, Steve Schneider (360) 319 7674 [email protected] From: Rhayma Blake To: John Chandler Johnson Cc: Kathy Berg Sent: Monday, May 09, 2011 11:54 AM Subject: My Fare Simulation Suggestion



Kathy and Chandler,

Here is one iteration of the fare simulator. It assumes no GP Parking Lot, a TBD, a mid-day break in schedule, gives pedestrians a low fare and leaves a $61,000 surplus to negotiate a shuttle deal with WTA to get pedestrians (and bikers) to a lot in town. Dorlyn(???) who lives where N. Nugent turns into West Shore Drive, said she had talked with Dan Gibson about there being a farm property on Marine Drive in town that could be used as an off-reservation parking lot. Also, I suggest is a big discount between cash and punchcard to act as a year-round seasonal fare to catch tourists at Christmas and Valentine's Day as well as summer.

As always, thanks for the important work you are doing!

Rhayma Blake


June Public Comment

From: paige gronhovd Sent: Monday, June 06, 2011 8:57 AM Cc: Bob D Gronhovd Subject: ferry

Kathy,

Thanks for your work on the Ferry Task Force. I'd like to share my views in response to Colleen's excellent and helpful list of considerations from previous Task Force meetings, which I printed off the Ferry Forum. I agree that the more islanders heard from, the better.

My schedule has not allowed me to attend the task force meetings, so I put my thoughts into an email.

Should we continue to allow children under 18 to ride for free? I say yes, during the ten months of school, even for students who are not enrolled off-island. That is, while riding as passengers children and students under 18 ride free. Teens driving their own vehicles ought to pay the fare. I feel that families with children are so important to life on Lummi, it is worth preserving this small incentive for families to stay, if they can.

Should service hours be cut to reduce expenses? Sure, a bit. I recommend the following schedule:

Mon. - Thu.: 5:40 am - 12:40 pm and 3:20 pm - (10:30 or ) 11:00 pm with the same frequency of trips between those hours. This would allow a mid-day break that would hopefully encompass the ferry workers' lunch break and the change of shift. I think the earliest boat should remain unchanged for many reasons, including that my spouse must ride that ferry to work 4 days a week. The late night boat(s) could be cut, unless there is demand in Summer.

Fridays: 5:40 am - 12:00 am with the same frequency. (unchanged) Traffic is more constant on Fridays, it seems to me, especially in Summer, so a mid-day break would be a mistake.

Saturdays: 7:00 am - 12:00 am (unchanged)

Sundays: 7:00 am - (10:30 or) 11:00 pm

Speaking for myself, an even longer mid-day break could be gotten used to. My only worry is that the lines could become dreadfully backed up if the break goes on too long.

Should the Gooseberry parking lot be eliminated? I say emphatically NO! I park there frequently, sure, but I believe that everyone benefits from having the parking lot available. With schedule cutbacks, I think more riders will opt for using the parking lot, especially those with appointments that must be attended on time.

Who should pay for the lot? That's a good question. I, of course, prefer not to, but I'd rather have the option to park than no choice. If a parking fee must be imposed, it should amount to less than the fare difference between walking on and driving on. Otherwise, what's the point? Oh yeah, the point is not missing your boat because you choose to bring your car along. Well, it seems that ferry riders who walk on are helping all the drivers make the boat they want, so I don't see why pedestrians should have to pay more than folks in cars. (ferry fare + parking fee). I think it is important to incentivize parking and walking on, because that makes the trip easier for all riders, especially when lines are likely to be long, such as Summer or around a mid-day break. I urge you to keep the parking lot, and keep it free or very inexpensive to use.

Better bus service could help for many islanders, but not my household. My spouse travels at times of day unlikely to be served by even expanded bus service, and I use my car in the performance of my job intown.

Should a ferry taxing district be established? I am willing, if it means that property owners who ride infrequently would be required to pay a fair share for ferry service, without which their property values would certainly decline. The arguments for a taxing district are compelling, as it seems more equitable than the user-funded fare model we now have. The idea that funds collected with the new tax could lead to an actual fare reduction is very interesting. Since the fares went up in January, I am paying $12 - $15 per week in "surcharges". As long as the new tax burden is less than $600 - $750 per year, trading the "surcharge" for a tax makes financial sense for me. Will revenue estimates be discussed publicly before any new taxing authority is set up? Of course, adding a tax on top of the "surcharge" will be a burden, but it at least comes a little closer to fairness, having all property owners pay relative to their land's value.

Should drydock be scheduled in Spring time? Fine with me.

What about crew fares? I don't know how this rule is applied currently, but what makes sense to me is:

Crew members and their spouses ride for free. The children of crew members ride for free even while driving, and during July and August, until age 18, or high school graduation, whichever is later. Other household members and relations of crew will not ride for free. Passengers riding with a free-pass crew or family member should be charged the fare. If these suggestions differ from the current policy, will new, stricter, rules be enforceable?

What about needs-based fares? It seems that only a few island families and individuals are using these tickets. The diversity our community enjoys is worth preserving by continuing the needs-based discounts. Perhaps showing ID each time one's ticket is punched could calm peoples' ideas about inappropriate use or sharing of these tickets.

What about peak-season fares? Sure, as long as multi-ride tickets cost the same year-round. That is how WSF managed seasonal fares when I lived on Vashon Island. The surcharge should not be very large, I think.



What about a non-peak hours discount? It is hard to see how the added complexity would pay off.

What about charging vehicles for length instead of weight? Why not use both to determine fares? Ferry fares should be kept reasonable for people who live and work here. Other riders (delivery trucks, RVs, commercial and official vehicles, livestock and trailers) should expect higher fares. It is a cost of doing business on Lummi.

What about electronic ticketing and credit cards? If this can be implemented while still allowing for three ferry runs per hour, it is fine with me. If it slows down the turn-around, it may still be worth it financially, but would require all islanders to learn a new schedule. That could be pretty disruptive, on top of all the other changes.

I hope this is helpful. These questions are hard to answer. Generally, I am OK with change, and am not overly fearful about having a more restricted ferry service. I will adapt, as long as the parking lot isn't priced out of all proportion.

Thanks again for all your work on our behalf.

Sincerely, Paige Gronhovd

From: John Robinson Sent: Saturday, June 11, 2011 6:53 PM Subject: Cost cutting calculation LI Ferry Task Force

Thank you Task Force for all your work.

I reviewed your 2nd draft Summary of Enhanced Revenue and/or Reduced Cost Recommendations.

I mostly support all your suggestions and can make life/financial adjustment as they may be implemented except for weekend start time for ferry being 8 am. I have an island business and this would mean I would not be able to meet my obligations about 5 to 6 time/yr. Our business can’t afford this loss in revenue. I think many people work off island during the weekends and this option is a high negative for us.

Implementing an automated ticketing system is a good ides and I hope it happens. I think you can calculate a savings not only in uncollected revenue but also less admin time for bookkeeping. A good automated system could go wireless and directly feed into a bookkeeping program without additional data entry and save staff time. I don’t see this staff saving reflected in your spreadsheet.

I’m sorry, but I don’t see how putting expiration dates on punch cards will “save” much money. Only create more hassles and frustrate the very part-time users. Please note in your calculations that the purchase of a punch card is pre-use sale and could be collecting interest revenue for the county) The way things are going now fare adjustments and issuance of new punch cards are happening so frequently it may be a mute point.

Whatever you do The island must keep Needs Based category for low income workers to stay on island. Our business depends on them. Finding off island employees would be next to impossible.

Purchasing punch cards more easily on-line is a must. (As a business owner I know sales could increase 20-30% ) And don’t stop at punch cards on-line sales. Make it so buying vehicle and passenger/pedestrian fares on-line in advance can be done as well. From movie to airplane tickets more and more people are purchasing electronically and using electronic access to their funds. The ferry system needs have this capacity as well.

Good luck and Thank you for considering these points I’ve offered.

John Robinson at Tree Frog Farm, Inc. Lummi Island, WA USA http://www.treefrogfarm.com/nativeplants Even after all this time the Sun never says to the Earth, "You owe me." Look what happens with a Love like that, It lights the Whole Sky. " Hafiz From Colleen McCrory [email protected] Date Sun, Jun 12, 2011 at 10:52 PM subject Re: WCFTF--Meeting Notices & Minutes Hello All,

I appreciate the information you've provided regarding cost cutting ideas, and for the most part, can reluctantly live with most of them.

I do want to put in a plug for NOT including expiration dates on punch cards. It's not a big savings, and would be challenging for irregular ferry users to coordinate usage and expiration dates on the cards. It might also take up much more of the crew's time, having to sell more 10 trip tickets instead of 25 trip cards because people are worried about using up the cards in time.

I also want to thank you all for the enormous contribution you are making to the well being of our community, and how impressive you are in addressing the very complex issues connected with the ferry. What would do without you!

Sincerely,



Colleen McCrory Owner/Designated Broker, Lummi Island Realty LLC www.lummiislandrealty.com Dennis Mathewson <[email protected]> On Sat, Jun 18, 2011 at 12:46 PM

hi Diane

Thank you for your time and informative discussion yesterday ....as suggested in our conversation I am very much opposed to having a time limit on the the punch cards. I always have three , a pedestrian card , a car and driver and a motorcycle and driver card and Anne has another car and driver and a pedestrian card ....all these are used at various times ,some seasonal in the case of the motorcycle card ......attempting to keep track of the expiry dates would be difficult at best. I believe we have paid for a service in advance of its use and the county enjoys the time value of money in their account. There appears to be precious little to gain in complicating something that has proven to work quite simply and well only to risk further alienating a supportive customer base .

Another thought/question why is the ferry collector made to issue a receipt when it appears unnecessary and at times (bad weather ) unsafe for the collector ....has this been looked into ? Bus drivers do not provide receipts !

My last thought has to do with dry dock ....a period of down time that continues to expand over the 20 years I have observed it ....I understand the time element may have to change depending on the quantity and complexity of work being done (e.g. engine change out ) what I don't understand is why the dry dock repairs are not being worked on 24 hours a day while it is down ....shipyards and large machine repair is normally done on this basis ...the cost difference is the shift differential premium paid to the workers ...which would be more than off set by the reduction in the alternate boat rental and crew.

regards

Dennis Mathewson

From: Mary Jane Van Hoesen Sent: Saturday, June 18, 2011 3:01 PM Subject: Ferry Task Force documents

Good afternoon,

I have been unable to attend forum meetings until this past Monday. I believe the group has done a great job of fact finding and distillation and creative thinking. While the suggestion to ask the council accept the cost cutting proposal as a whole rather than line by line is great I am concerned about some of the items on the list presented last week. I am also concerned by the low turnout at Monday’s meeting. I am one of perhaps three attendees at the meeting with an off island job. How many people on the task force work off island daily with a regular schedule?

As an example I was on the 5:40 ferry Thursday morning. There were 10 cars and a couple foot passengers. Days when I am required to be at work at 6:00 I must take the 5:40. There are nurses and other shift workers as well as folks who commute for work and school who would be affected by early and late schedule changes. Lacking a 7:00 am Sunday ferry I would miss the 7:45 service at my church in Bellingham. I understand the need for cost reductions but why are the islanders (and the crew) bearing the brunt with schedule and parking changes (256K of $384, 67%.) Add in the ferry district tax $192K and it becomes 78%. The surcharge has already impacted my monthly budget by $75 -$100. As a renter I won’t directly pay the ferry district tax although it might be imposed through my rent. I also have the option of moving from the island which some property owners may not. I would miss the community, safety and peace of the island greatly.

I have a question about single engine operation proposed for 10 months during the year. The note states this would require longer round trip times. This implies schedule changes for the hours when three trips are made. How will this be addressed?

As I was unable to stay for the entire meeting would you please forward the latest versions of the Cost Reduction Recommendations and the Fare Schedule? Although Brown Betty sends meeting notices and Wynne posted the second cut of the cost reductions there is definite a lack of communication to the islanders. As of yesterday at least I have seen no flyers or email attachments with specifics of the Task Force findings or announcing the coming meeting.

Thank you for doing a perhaps thankless job.

Regards, Mary Jane Van Hoesen1210 Beach Avenue

From: Bert MacKinnon Sent: Saturday, June 18, 2011 5:11 PM To: [email protected] Subject: ferry fares

Other cost saving and revenue generating ideas that should be considered include:

(a) a parking charge for the lot on the island



(b) charging different rates for different sailings (both time of day and time of year) [ could be partial to exclude fare card payers]

(c) renting space a ferry landing to vendors ( coffee and food, etc.)

(d) special "Island Tour" rate that includes fare and tour of Island Artisans and perhaps lunch or dinner at Beach Store Cafe or Willows ( requires use of county van and rate for meals) and could arrange for groups from seniors facilities ( generally they like to eat dinner early which would allow for second sitting)

(e) having ferry considered part of school bus system and charged to the proper budget item ( bureaucrats love this kind of thing)

From [email protected] [email protected] Date Sat, Jun 18, 2011 at 12:42 PM Subject my principles for decision-making

To clarify my own thinking, I wrote this set of my own principles for assessing proposed cost reductions/revenue enhancements. Maybe the Task Force will find some of them useful as well. I'll probably post these or some version of them on the Ferry Forum.

Financial, Economic and Civic Essentials Guiding Revenue and Cost-Cutting Recommendations

1. Fiscal responsibility 1.1. Reduce operational costs by 10% this year 1.2. Select fare structure that should yield an annual fare box recovery surplus of ~$100,000 under the ‘worst case

scenario’ of continued 12% decrease this year in multi-ride cards purchased (goal: replenish the Ferry Fund within 5 years or prepare for unexpected expenses).

1.3. Select a fare structure that will incentivize increased vehicle/driver multi-ride fares (maximum revenue source) 1.4. Adopt an “Everybody pays” policy, even if it’s just $1 1.5. To ensure long-term accountability, adopt ‘best practice’ accounting methods that make tracking and reporting of all

ferry revenues and expenses accurate and time-efficient. 2. Rationalize fares, fare structure, collections and accounting

2.1. Reduce (simplify) the number of fare categories 2.2. Set the cost of all multi-ride fares to a percentage of full fare (simplify future changes in less arbitrary manner than

now) 2.3. Charge trucks and trailers by length (easily measured by stripes on deck) 2.4. Adopt electronic ticketing methods that will bring long-term cost savings to the County 3. Economic responsibility

In these hard economic times (where people cannot, practically, ‘just move off island’), do not reduce ferry service or alter policies that would:

3.1. prevent working citizens living on Lummi Island from keeping their mainland jobs 3.2. harm island business owners 3.3. put children and families at risk (education, emergencies, etc) 3.4. would impose serious hardships on those in need of frequent medical services. 3.5. increase property taxes 4. Civic rights and responsibilities

In these hard economic times (where people cannot, practically, ‘just move off island’), do not reduce ferry services or adopt fare structures that would:

4.1. hinder the timely delivery of essential regular and emergency delivery of County and commercial goods and services (e.g., fuel runs, emergency medical transport, sheriff, library, mail, regular, food and water delivery, emergency public works services, health department services, emergency or regular utility services, septic, garbage, etc)

4.2. make it impossible for islanders to participate in civic responsibilities and rights (e.g., attend County Council, Commission meetings and other civic events without paying for overnight housing, which no other county citizens have to do)

4.3. effectively prevent the Whatcom County Comprehensive Plan (and Lummi Island Subarea Plan) goals and requirements for ensuring feasibility of an economically diverse community from being met.

From: Mike Skehan, 2040 Granger Way, Lummi Island, WA 98262 Date: June 19, 2011

Subject: Recommendations to the Whatcom County Council

As a future candidate for Council Position 8, let me cut to the chase and give you my ‘broad stroke’ list of things you should present to my fellow Council members. Failure for us is not an option. Soon, a deal will be announced, and the annual costs, plus inflation, nailed down for some time to come. Any recommendations you present must help balance the current ferry budget, be sustainable, and not create chaos every time the CPI, labor or fuel costs take another spike upwards.

Ref: http://lummiislandferryforum.files.wordpress.com/2011/06/recommendation-costs20110611-p-draft.pdf

TOTAL SAVINGS and NEW TAX REVENUE supported by me are: $471,000

Administrative Savings: ($73,000) net annual


http://lummiislandferryforum.files.wordpress.com/2011/06/recommendation-costs20110611-p-draft.pdf


The TF is to be commended for many hours of report reading, data crunching, hour after hour of listening to ideas, and reams of drafts to get to this point. Referring to the 2nd Draft dated 6/11/11, I would support the following recommendations:

Transfer interfund, reduce safety specialist, single engine operations (only if 30 min. consistent ‘clock-face’ schedule is adopted), and reduced crew for start-up operations.

Ticketing ($25,000) net savings

I support nearly ALL of the recommendations in this category, with the exception of the last two – Expiration dates on punch cards (they change often enough to be self policing), and ticket sales on the website for single rides (transaction costs too high).

Level of Service ($81,000) net savings

Service cuts are reasonable to expect while ferry demand is low, which it currently is. This will create hardships for some individuals, but must be balanced against the sustainability of the current operation overall, and reasonable fare structures for the majority of users. With that said, I would support the following service reductions:

No 12:20am Sat Svc, no 1st Sun 8am trip, no 5:40am trip M-F, no service between 12:30 pm thru 2:00pm (except summer).

Note: Service levels can always be increase to meet demand, but that demand is not justified at this time. Nearly full boats are more productive.

Ferry Taxing District ($192,000) New Revenue

The ferry is a basic service for island existence, it enhances property values, and as such both frequent and infrequent users should share expenses. This accomplishes that goal.

Fare Structure (Unknown cost as yet)

While I don’t know the total cost of ferry operations in the future, I can assume that the 55% recovery ratio will not change near term, and current capital and road improvement agreements with the LIBC will not be ‘stacked’ upon an already overburdened fare structure. NOTE: FARES WILL RISE, sometimes dramatically to keep pace with uncharted economic conditions in the future. For this very reason, the basic ratios between vehicles, passenger, punch cards, needs based, and commercial vehicles should remains reasonably predictable. This can only be attained in a ‘values statement’ as to intent of cost recovery. That’s to say a commercial vehicle is worth X compared to a single vehicle occupying 1 of 20 deck spaces. Like wise, pedestrians are valued at a proportion of a vehicle space. Discounts for punch cards, or electronic ‘purse’ should be discounted at Z percent of full fare, single ride prices.

This makes fare changes in the future predictable and fair, rather than just arbitrarily picking numbers to fill in the needed revenue target – often times with grossly unfair results, as occurred when the flat $3 surcharge was hurriedly suggested then enacted.

I’m not as concerned about my values listed below, but that a consensus of Islander’s values be preserved in any enacted fare ordinance and future adjustments.

My suggested fare structure: 1. All punch cards are 10 punch, and are discounted from full fare – single ride by 25% 2. All needs based punch cards are discounted from full fare by 50% 3. All over length, over width combinations of vehicles and trailers are proportional to a single vehicle deck space consumed (ie: 30 ft. motor home, taking both lanes, is 4x a single space vehicle.) (50 ft truck and trailer is 6x a single vehicle) A permanent surcharge is added to this calculation to account for excessive wear and tear on deck and shore facilities. 4. All single vehicles fares are based on one deck space (under 20’) in even dollar amounts 5. Pedestrian single ride cash fares are somewhere between 33-50% of a full fare vehicle.

Note: I also support the recommendations on ferry crew punch cards, electronic ticketing. All single cash fares are adjusted to the nearest whole dollar amount consistent with current practice.

Respectfully Submitted,

Michael Skehan

Disclaimer: My wife, Diane Harper is a member of the TF, but has not unduly influenced my thinking on the above. Truth is, we disagree on many things! And no, I don’t plan to run for County Council, so no need for another seat.

From: The Turners Sent: Monday, June 20, 2011 10:20 AM

As a property owner for more than 25 years on Lummi Island But NOT a commuter I believe one fare for all is essential., and the only fair way I would support a tax levy for property owners.

Mary Turner

Tel. 604 859 7550

From: [email protected] Sent: Sunday, June 19, 2011 9:24 PM



Subject: ferry thoughts

These are a few thought I have regarding ferry fares and structure. I'm sure some of it is contrary to what a lot of people think it should be.

Thanks for doing a great job! Dave Wing

To the members of the LIFTF

I've been wrestling with several things in regards to the structure of ferry fees. One relates to the walk on fees and parking. The more I think about it the more I think it has to change. For one thing, I know a lot of the people that park at Gooseberry Pt. and walk on as a way to save money. It’s not that they can’t afford to pay the fee, they just choose not to. Others choose to walk on to avoid waiting in long lines and arrive at the last minute. I can understand people wanting to save money or not wanting to wait 2 or 3 ferries, but to do so at the expense of islanders that choose to drive on isn't right.

I think that there should be a charge for parking at Gooseberry Pt. I also think that the cost of the parking fee plus the walk on fee added together should be equal to the cost of a vehicle/driver fee. All passage fees, except additional passengers in the same vehicle, should be the same. Proportionally, islanders that drive on the ferry pay more towards the parking than the people that actually use it, the ones that walk on. People that drive on don’t even benefit from it, except during dry dock. We are all going from point A to point B so why should it cost less for some than others? If one of the reasons more people walk on is because the cost of driving on is getting so expensive, then why not make everyone pay the same. The result would be that the cost for some would go down and the cost for others would go up. I don’t think anyone can argue with the fact that the greater the cost difference gets between walk on and drive on fees, the bigger the deficit gets as more people decide to walk on.

Why is it that a small segment of Whatcom County citizens, specifically Lummi Islanders, are expected to subsidize fellow islanders when it comes to getting on and off the island. When money is needed for transportation, or any other program in the rest of Whatcom County, all of its citizens, including Lummi Islanders, help pay for it.

If there are people living on Lummi Island that require assistance with their transportation needs, or anything else, then the county should administer programs that help them out. Otherwise, the entire burden is placed on islanders by making them pay more or cutting back on service in a futile effort to keep costs under control. If the “cost” of “diversity” starts costing too much, then no one will be able to afford to live here. Just maybe, some people won’t be able to afford the “lifestyle” they would like to live! That’s life.

Since ferry revenue continues to fall short of expectations, maybe free passes for ferry crew members needs to be looked at differently. At today’s cost to use the ferry, a “free pass” per ferry crew employee, vehicle/ driver, has the potential to cost $3431 each per year based on one trip per day. I realize that once a day every day would be an extreme situation. But, when there is no cost involved and unlimited use available there really isn’t an incentive to conserve trips like most of us have to do. The cost above doesn’t even include additional passengers in the employee vehicle! Maybe I’m wrong, but as I understand it the ferry workers never asked for this benefit but were asked by the county if they wanted it (possibly during contract negotiations). How about issuing a pass for a certain amount of trips during a specified period of time? Maybe issue a quarterly pass with 24 trips or less per quarter. If they exceed the allotted amount of free trips then they pay like everyone else or maybe they pay a discounted amount. This could all be negotiated during contract talks which I presume will follow settlement of the main ferry issues.

I know the thinking is that if they work on the ferry they have to live on the island. Maybe it should be looked at differently. How about if they want to work on the ferry then they have to live on the island? It’s their choice if they want the job. They don’t have to work on the ferry. Another option would go along with one of the task forces suggestions that only two employees do the startup of the ferry, not three. Maybe an exemption could be obtained for the first and last runs of the day if a crew member lived off island. This exemption might allow the Captain and one deck hand to run the ferry until the first actual run got to the other side to pick up vehicles and the employee that lives off island or leaving the employee back on the mainland before the last return run at night back to the island. Even if the Captain and one crew member drove the ferry to the other side to pick up, or return, a crew member before or after the first and last scheduled run it seems like that would still cost less than giving all crew members and family free passage.

Don’t get me wrong, I think the ferry crew does a great job. What I’m trying to do is maybe suggest ideas no one else has thought of to try and bring costs under control and increase ridership revenue.

Sincerely,

Dave Wing

From: Colleen McCrory Sent: Monday, June 20, 2011 1:12 PM Subject: Fwd: 5:40 ferry run

Hi Kathy, I asked Sue Brooks (aka Myra) to let you all know who's on the 5:40 ferry. She sent this to me--I'm forwarding it to you. Colleen ps: Kent Dixon, a new crew member, also told me this morning that the 5:40 is important to workers.

---------- Forwarded message ---------- From: Myra Brooks <[email protected]> Date: Mon, Jun 20, 2011 at 8:18 AM



Subject: 5:40 ferry run

Colleen, I went to the ferry dock with Alec at 5:40 today. 11 cars drove on and one person walked on. All drive ons were year around residents. Two cars had family members that both commute, I've seen one of the spouses walk on on the way home.

Have a good day!

From Rhayma [email protected] Date Tue, Jun 21, 2011 at 8:38 AM Subject My notes from last night

50+ in attendance

Deadline for input to Kathy Berg is 6/24

Ticket expiration dates seem unfair (although universally used by transit systems) to part time residents.

Needs-based recommendation will be modified to higher income level.

Level of service is important to both islanders and CC county council...school/parent needs to pick up children at 2:10...or when sick or attend after-school activities...health care workers need current schedule. If shortened, cannot work late shifts. Indication that retirees have already halved their # of trips. Savings per hour of service cut estimated at $60k. Incremental gas only is $15. CC comparing our service to that of islands with gated-community values. Will take 5 years for island population to rebalance to a major level of service change. County pays for 45% of our "road" and 100% of all other roads/bridges.

GP parking elimination: We could buy land to park there. County ROW would allow us to park along side of road during drydock. Still worth checking on WTA vanpool options for commuters. Those rules aren't clear to Task Force yet. Concern over safety of passengers if no late-night security. Should clarify current security measures before dropping them.

Taxing Districts: taxing property owners for the benefit of lower commuter fares seems fair. TBD Pros: prop values of seasonal users are sustained by having good ferry service. Everyone who owns prop benefits. TBD Cons: Nobody likes taxes. Might want to save it for new ferry instead. Current law limits use to passenger ferries. County would control use of these funds. Never needed such a tax in the past.

Fares: should NB include Medicare-eligible? They often get reimbursed for travel. Check with NW Regional Council. Pick up truck fares not clear. Should agriculture be added as a LI value? Sliding fares only work when you have a capacity problem. Should fares increase during low ridership runs (to cover costs)? Variable pricing is our most impt tool. Could be implemented with punch cards.

From: williwaw Sent: Tuesday, June 21, 2011 8:57 PM

To: [email protected]

I think the first ferry of the day could be the 0620. However, cutting the 0700 on Sunday would preclude nurses from working day shift at St. Joes because weekend shifts are mandatory. Stopping the ferry at 1020 precludes them from working the evening shift and that would only leave the night shift which doesn't work forever. Jane Phillips

DATE: June 21, 2011 TO: Lummi Island Ferry Task Force Comments FROM: Meredith Moench/1185 Beach Ave. Lummi Island, WA SUBJECT: Needs- Based Fares/Senior discount

I have been receiving senior discounted ferry fares for the past year. I am objecting to the perception that many of the senior discounted fare holders are not really needy and only qualify on a technicality. I have heard that some crew members have objected to this perceived abuse of the system. While this may be true in some cases, I fear you are proposing to dismiss this whole category of people based upon a lack of real information.

Although there may be asset-wealthy people who somehow manage to qualify for a property tax exemption (or deferment-they are different) due to the way income is calculated, that is certainly not true for everyone receiving this discount. If this qualification criterion is eliminated, presumably everyone would be subjected to the recommended income levels based on poverty figures. Among these, I note that the level for a single individual is not realistically calculated. A single individual cannot live at half that of a family of two. Many household expenses such as taxes, mortgage, home owners insurance, maintenance, and even some utilities like heat, remain fundamentally the same regardless of how many people live in the household. When you make the qualifying income level for a single individual half that of a family of two, you are not taking any of this into account. This leads me to question all of these calculations.

As a single individual, without the senior discount, I would be expected to qualify at the level of less than $10,000 annual income. This is absurd. I can’t imagine anyone on Lummi Island being able to live on $830/month. That is below needy. Add it up. Homeowner expenses of property taxes (even at a discount), water, fuel for heat, electricity, home owners insurance (could go without I suppose…), food, car maintenance and gasoline (could go without but very difficult—lots of long walks or hitchhiking),



home maintenance, etc. add up to far more than that per month, and this does not include any medical expenses. If one does not own a home free and clear, then there may be a mortgage payment, or if one rents, monthly rent would take up most of that income.

I for one am trying to manage on less than $20,000 a year. That includes social security and a few thousand dollars earned at a part-time job in Bellingham which requires commuting to town two or three days a week and $1200/year from a retirement fund. The bus doesn’t work, either schedule or location-wise and I won just one car so I commute on the ferry with my car. There is no possibility of car pooling due to variable hours. I estimate that the discounted senior fares save me about $400/year. This would not be a lot of money in the county’s scheme of things, but it is a lot to someone trying to live on less than $20,000/year. I could not get by without the part-time income as my social security provides just $9,828 per year. I have a modest IRA set aside to replace my 16 year old car when replacement becomes unavoidable. I have a small retirement account of less than $40,000 to last for the rest of my life (I’m only 65). I have no intention of trying to sell my home at a loss, a home I put a great deal of my own labor into building. I’m just getting by as things are currently and am not asking for sympathy or complaining about my life choices which, although responsible and community-oriented, did not leave me wealthy in my senior years. But I think it is unfair to penalize people like me because some have abused the system.

If you go to a strictly income-based qualification system, you need to re-examine those income levels in light of what it really costs people to live, and not based on some broad generalization of what constitutes “poverty level” or need. Clearly these income cut-offs exclude a number of people who are struggling to remain in their Lummi Island homes. If you are going to ignore aging and disability in your calculations, maybe you need to provide an adjustment for that. For example, take an individual who is certifiably disabled or over the age of 65 and add a percentage to raise the income cut-off level to make up for his/her reduced ability to cope or find additional sources of income.

From: Doreen Sent: Thursday, June 23, 2011 7:25 AM

Subject: ferry issue

Hi Kathy- Thank you and the ferry task force for all of your hard work in coming up with a draft of recommendations. I attended Monday's meeting and was impressed by all of the time and effort put into these recommendations. Here are some of my comments:

1) I am in favor of reducing hours on the ferry midday- I think that consideration needs to happen to make sure that it does not take place during school bus times, but I think it it reasonable to suspend services from 12-2:00 on a daily basis. Most students live on the island and other emergency arrangements could be made with parents so that there would be a plan in place if needed to get your child at that time. That's what most parents do that work too.

2) I also think that ending services earlier at night is reasonable though I think the 11:00 ferry is prob. better than 10:30 - I work at night two nights a week and am often on the 9 or 9:20 boat and it is rather full. A few weeks ago, I was on the 10 boat and it was packed and it was a school night.

3) I like the idea of a summer surcharge to help tap into additional revenue from summer visitors.

4) I think the automated ferry ticketing system sounds good even though crew members I spoke to said it wasn't needed. I like it because it can eventually give us authentic hard data to make decisions with.

5) Going to a single engine when we can makes alot of sense.

6) I definately think we should reduce the safety specialist's time to .25 but I still don't think that a camera/DVR system is necessary.

7) Redefining needs based and having a better screening system in place is warranted and should be implemented.

8) I am not in favor of eliminating the Gooseberry Pt. parking lot and security because I think that people do need protection at night there- it is not a safe area to be walking to and from but I wonder if there is a cheaper alternative for security- I don't think cameras quite do it though.

9) I think a ferry service district is good though I would want to make sure that the monies actually go towards our 55% operations fee and not get absorbed somewhere else.

10) Last- I think the ferry rates should go back to where they were without the surcharge- I think there would be more ridership and more revenue generated than is now. I think that people are discouraged from coming to the island because of the costs- there is nothing much in the way of services here and while they may come once- they prob. won't come back with rates as high as they are now. I also think we are really doing a disservice to our community and our values and we are discouraging diversity on the island- the very thing most people say they really love about being here. I feel that somehow the council needs to really understand that we are tax paying property owners and we do contribute to the county coffers and if our property taxes go down or if people keep moving off then it will affect the revenue coming into the county and it will continue to affect us all. I also feel that the ferry lease is still a big mystery as to what was really negotiated and as a result, I am not very trustful that our recommendations and all of your hard work will even be considered seriously- I hope I am wrong.

Again, thank you and your committee for all you have done and are doing to help Lummi Island.

Doreen Richmond



From Island Belladonna [email protected] Date Thu, Jun 23, 2011 at 12:41 PM Subject Comments on Ferry Task Force Reccomendations To All,

First of all, thank you very much for your many hours of work and commitment to our community. We appreciate your efforts to help create a plan that will sustain our community and ensure our future here on Lummi Island.

I have only one comment. All of us who live on Lummi Island do so by choice. We are willing to manage the weather, traffic, parking, added expense and ferry fairs to live in a very wonderful and beautiful place and community. Choosing to work on the ferry is the same as choosing to work at any job only without our daily commute off the island. I am opposed to providing free or discounted fares to ferry personnel out of hand with no controls. Trips off island for shopping, children's soccer games, medical and other appointments are not different for our ferry workers than for the rest of us. And it becomes increasingly unfair when it is extended to other family members and their commutes and excursions.

I do not believe that these individuals should be singled out for such an unaccounted for benefit. If the County would instead provide them with ferry passes as part of their earned compensation so that there is a use limit on the benefit and a way of ensuring it is not abused, I would consider that more appropriate with the provision that salaries and benefits are determined to be sufficiently low by county standards to warrant such a subsidy in line with other reduced ferry fares.

Thank you for your consideration.

Respectfully Submitted Mary Beth Watkins

From: Beverly Baldwin Sent: Thursday, June 23, 2011 4:01 PM To: [email protected] Subject: Ferry Task Force

Hello Kathy,

We want to extend our thanks for all the work you folks on the Ferry Task Force have been doing. You have done a marvelous job on a most complicated problem! We very much appreciate your interest and dedication to those of us who depend upon the ferry.

Sincerely, Bev and Jack Baldwin

From: C Chow & D Thane Sent: Thursday, June 23, 2011 9:07 PM To: [email protected] ; [email protected] ; [email protected] Subject: Ferry task force recommendations

Hi Folks,

Thanks for all your hard work on this. Unfortunately we aren’t on the island on Mondays for the meetings. We are on island from Thursday to Sunday each week.

Just a couple of things that caught my attention. The early runs (especially the 8:00 on Sunday) allow those with jobs off island to get to work. The latest runs allow those with later jobs to get home, or come back from a night out with friends. To eliminate the ability to travel on or off the island at those times would have an isolating effect on all of us. If the number of runs need to be pared back it should be accommodated during the day. If the earliest and latest runs are at risk then I would rather have a slightly higher fare structure for the freedom keeping those would allow. Having the ability to come and go as needed is very important to most islanders. And, wouldn’t eliminating the 8:00 on Sunday just ensure an overrun or two on the 9:00?

I don’t see the gains or fairness in putting an expiration on the punch cards. That creates an inequity between those who are full time and part time residents. If there were a 3 month expiration on a 25 punch card then those of us who are part time residents and stay on the island once we arrive pay the same amount as the tourists because our cards would expire before they are used. We pay the same taxes and have the same investment as full time residents and should be treated the same.

Again, thanks for taking the time out of your busy lives to address the ferry issues.

Dan Thane and Christopher Chow

From Michael/Betsy Schneider [email protected] Date Thu, Jun 23, 2011 at 10:27 AM



Subject needs-based fares Dear Task Force members,

These comments relate to the Task Force's proposed recommendations about needs-based fares. First, I want to repeat in writing the comments I made at last Monday's meeting about some language in the proposed recommendation that was handed out at the meeting:

2. Qualification: Remove the requirement that the Treasurer’s Office examine income

eligibility by adopting the following criteria: Applicants for needs-based fares must provide letters or other documentation that indicates date of qualification for Medicaid, Section 8, Home energy assistance, Workfirst Program enrollment, documentation by the NW Regional Council of medical transportation eligibility, or documentation from the Opportunity Council that income level is at current years federal poverty level for the household after deducting child-care expenses. Once the applicant shows proof of eligibility, an application is filled out with information and filed. Recipients must re-qualify annually in June.

The various low-income programs mentioned above, as well as other programs for low-income people, have different eligibility thresholds, ranging from 100% of the federal poverty level at the low end to 300% of the poverty level at the high end. The Task Force should recommend using 200% of the federal poverty level for needs-based fares, which is fairly close to the levels used by the County in the past and is the level used for the Washington Basic Health Plan and Community Health Services. So, I would suggest changing the underlined wording above to: "or documentation from the Opportunity Council that income is at or below 200% of current year's federal poverty level for the household after deducting child-care expenses."

With regard to the cost of the needs-based fares, I think the Task Force should lower the discounted fare for needs-based passengers/pedestrians, which is presently recommended at the same level as the discounted fare for other passengers and pedestrians (that is, no reduction for low-income people). The amount appears to be a significant increase from current fares.

It is my understanding that this current fare recommendation for discounted needs-based passengers/pedestrians ($3.60) was arrived at more or less by chance during the deliberative process and not based on any determination that low-income passengers/pedestrians should pay the same as others. With the low income fares now being available only to the truly needy, it's important to actually provide a reduction in the fare. If the current $3.60 were reduced to, say, $2.00, the overall shortage could probably be made up by a very slight increase in another fare category (since there are relatively very few needs-based individuals compared to other categories of ferry users).

At last Monday's meeting it was suggested that low-income people do not need the reduced fare because various poverty programs reimburse them for their transportation expenses. This is not correct. The Medicaid program will reimburse Medicaid recipients for transportation costs to and from medical appointments only. There are no other programs that provide transportation reimbursement (other than reduced WTA fares). I called both the Opportunity Council and the Regional Council to double check on this, and they both agreed that, other than Medicaid reimbursement for travel to medical appointments and reduced WTA fares, they knew of no other program that would reimburse a low-income person for transportation expenses. So the reduced fares are definitely needed if low-income people are to be able to live on Lummi Island and commute to work and otherwise travel back and forth to the mainland.

Thank you for your consideration of these suggestions, and please let me know if you have any questions about them.

Betsy Schneider

From: Don Wines Sent: Friday, June 24, 2011 11:42 AM Subject: Final report questions

First, thank you all for your tremendous efforts you people have put forth for the benefit on the Island community.

I may have missed it in past reports, but in your investigations on existing operating costs, a few questions.

In particular, in your "draft recommendation report" there appear to be no comments or recommendations concerning actual boat or docks repairs management.

1. The big driver beyond labor has been drydock expenses. It appears that you have questioned annual timing as a potential impact, but of the actual drydock activities, how do the costs break down due to the actual mandated Coast Guard inspections, actual required drydock repairs, verses maybe nice to have but really not needed? For example is a complete boat repaint required every year, or can a partial or spot repair put off a complete repainting to every second or third year. Are there other activities that have become so automatic under a "preventative maintenance" activity but in reality is not needed each year. In industrial plant operations, things do crepe in "because we did it that way last year", that when compared to five or ten years ago are not actually needed every shutdown.

One of the things that keeps coming back to my thoughts occurred about 4-5 years ago when the county administration was pushing for a new boat, but when pressed by the public to the council, it turned out (or appeared to be the case) that none of the "higher ups" had actually read or reviewed the annual surveyors report and the Chief was actually in better shape then the general opinion. So part of the same basic question becomes are the actual drydock activities being managed to be best value, or being managed to make sure there are no service problems year to year at a resultant cost that maybe much higher then it needs to be.

2. Is the 2010 Gooseberry dock at 5 times the Lummi dock an abnormality or a 10 year rolling average about the same? I saw last week there was a question concerning the monthly bridge (dock) inspections, etc. Are you satisfied that the inspections are



not overkill, ie. send out a crew of six(?) every month just because that's just what the road department does or there actually are finding problems and the constant repair expenses are appropriate? If the inspections are required by CG (?) is there an actual listing of what is required to be looked at or has this turned into soft job once a month that just keeps getting bigger?

Thanks again,

Don Wines From: nancy [email protected] Date: Fri, Jun 24, 2011 at 2:28 PM

Ferry Task Members, CONGRATULATIONS on an excellent, excellent job. You put in many, many hours of hard work. Your presentation of facts and your recommendations are professional, clear and to the point. The process you employed is something of which we all can be proud! Whatever the County’s response to your report, you have done a huge service to the Lummi Island community. You have been a unifying influence; you have helped to clarify some very complex issues; and you have stimulated thoughtful, respectful discussions. I support the creation of an ongoing Ferry Advisory Committee and recommend that careful and full consideration be given to the suggestions made in the document entitled Whatcom County Ferry District which is posted at http://lummiislandferryforum.wordpress.com . I would like to see us Islanders undertake a campaign to make the Advisory Committee a reality. Count me in! I attach my comments in response to the various documents posted on the Lummi Island Ferry Forum.

Nancy Gale West Shore Drive

From: Beach School PTO Sent: Friday, June 24, 2011 10:49 AM Dear Ferry Task Force Members (Kathy Berg, Jim Dickinson, Patricia Dunn, Diane Harper, John Chandler, Barbara Ryan and Riley Starks),

Lummi Island parents and Beach School Parent teacher Organization (PTO) understand that the County may be weighing reductions in the level of ferry service to one 10 hour shift per day, with elimination of mid-day runs and possible fare institution for students. We also understand that the Ferry Task Force does not recommend this reduction in service and that they are proposing students ride free until they reach 18 years of age. We support the Ferry Task Force in their recommendations that demonstrate the value this community places on families.

Cost is among many repercussions that fare institution for students and loss of mid-day service would present including emergency management risks. This school year 19 Lummi Island students commute to high school in Ferndale, 9 students commute to middle school and 2 elementary students attend school in Ferndale. Ferndale School District is in the process of deciding whether to move 6th grade off island in 2012-2013 which would separate additional students from their families in the case of emergencies. Hardships would affect families with students at all grade levels including;

• medical emergencies • families with kids in multiple schools with different bus runs • fieldtrips • Beach teachers would be unable to attend meetings at the district office • regular bus run scheduling for middle and high school students bus including the activity bus • ferry outages with students trapped on mainland • special education pre –school • high/middle school sports activities • parents attending music, sports events • graduation activities

Islanders have demonstrated support for Beach School and its families in the past and expressed that they value a diverse island demographic. Loss of mid-day ferry service during the school year would present hardships for students and their families and it would threaten the fabric of the Lummi Island community.

We appreciate the opportunity to comment and the commitment of the Ferry Task Force.

Sincerely,

Buffy Fox, President, Beach School Parent Teacher Organization Angie Dixon, Vice President Jackie Granger, Treasurer Kathleen Buford, Secretary Julie Hirsch, Volunteer Coordinator Cc: Whatcom County Council, Bill Knutzen, Tony Larson, Kathy Kershner, Ken Mann,



Sam Crawford, Carl Weimer, Barbara Brenner, Ferndale School District Superintendent, Linda Quinn

June 24, 2011 From: Darlyn Re: Fares - How to determine them First, Thank you all for your intense work.

As regards fares: "Cosmic Zoom"

Perhaps you have seen the short film, shown in movie houses several decades ago, titled Cosmic Zoom in which "the picture" - the issue or issues - are looked at from the very gross to the very miniscule. Your mandate has sadly been limited to the miniscule, though you have done an excellent job of bringing to it information from the hinterlands because we have the good fortune of having other ferries in operation in our region. I firmly believe that this issue - this picture - needs to be examined from a larger scale. By that I mean examining the problem from community planning, especially community economic development, and transportation planning perspectives.

We cannot assume that the island will afford to continue to enjoy its present lifestyle. As we see happening everywhere, growth has its limits. In the current Nation, an article by Leslie Christian, A Richer Shade of Green, helps frame the problem, one which we at this scale have the opportunity to speak to our government officials about as regards the ferry: "...according to Global Footprint Network, it would take 1.5 earths to keep up with the present pace of human consumption. Any financial analyst should know that this kind of growth is a recipe for disaster. We cannot borrow another earth... The need to put a premium on sustainability is not widely acknowledged in the investment community and certainly not among our elected officials, policy-makers and advisers. That means Whatcom County Government...and the FTF.

The Lummi Island community has reached, and I would contend, surpassed the natural sustainability limits of the geography it inhabits. I will not go into specifics, but I believe ONE OF THE BEST RECOMMENDATIONS YOU CAN MAKE TO WC COUNCIL RELATED TO THE FERRY FARES - AND THE FERRY IN TOTAL - IS TO CONCENTRATE EFFORTS ON COMMUNITY ECONOMIC DEVELOPMENT FOR SUSTAINABILITY OF THE LUMMI ISLAND SUBAREA WITH EMPHASIS ON:

a. enabling (an all-out effort, not just by means of the Comp Plan/Zoning Ord.) residents to be employed in living-wage jobs ON-island; b. enabling island-based food security - agricultural production, food processing, food storage; c. enabling residents to obtain island-based medical services; d. enabling residents to obtain and maintain on-island affordable housing and services necessary to keeping housing stock viable; e. enabling island-based education grades kindergarten through 12; f. enabling island-based production and procurement of building and furnishings products; g. and all other things islanders have stated as community deficiencies which generate the need to go to the mainland (via the ferry).

By developing a sustainable community the demand or need for marine transportation will very likely be found to be intrinsically reduced, and with that comes a reduction in the "COS" - cost of services county-wide which is the big issue for the Council throughout all subareas of the county.

As to how to fund this, I suggest WC Government and the Island Community look at the USDA Rural Economic Development Program(s). I found in one area of Eastern Washington the use of funding from this agency for construction of a rail spur to enable movement of agricultural products to market (a form of transportation infrastructure). Look also at the federal departments responsible for ensuring communities are not "medically underserved" or for lack community-based educational programs. The State also has departments of Community Development, Education and Agriculture. In fact we have the state's small farm specialist residing in WC. Even though the Federal and State budgets are suffering budget problems too, it should not be assumed by islanders and county government that these departments cannot assist.

Darlyn DelBoca

From Dennis Mathewson [email protected] Date Sat, Jun 25, 2011 at 9:52 AM Subject out of the box

hi diane

i know the deadline for idea submissions was friday but thought this idea was worthy ....and its not mine but i warmed to it after thinking about it for a while ...it came from one of my neighbors while having a roadside chat on friday

the suggestion was to sell advertising of and on the ferry ...perhaps to the point of selling the rights to renaming the ferry eg " WHATCOM BANK ONE " and advertising aboard the ferry ...kind of like the boards on a hockey rink or ball diamond ....i know its crass commercialism but desperate times call for desperate solutions .....once one gets over the initial shock it makes a lot of sense in our normal commercial world

regards

Dennis Mathewson



From Fred Kinney [email protected] Date Sun, Jun 26, 2011 at 3:42 PM Subject Re: Ferry Task Force Comments Chandler,

The following is my thinking on fares, I hope this will address some of your comments. I doubt that it is possible to come up with a palatable and effective fare structure that will meet the County's requirements and maintain needed the hours of operation:

As a very successful Corporate President once told me, “Management is 60% intuition and 40% analysis. It is nice when they both agree, but when they don’t I go with my instincts every time.” My point in mentioning that comment is that it is time to step back and look at the forest rather than the trees. Unfortunately there are many variables at play involving ferry fares and ridership. Given the data available, I doubt that any statistical correlation will prove to be very meaningful or enlightening, only that there is or is not some degree of correlation. Even a high degree of correlation does not necessarily mean there is a causal relationship.

Rather than a statistical approach, it may be appropriate to look at what are the (1) key drivers of fare-box revenue, (2) what is known or is reasonable to assume, (3) what has changed and is it controllable, (4) what is the expected logical outcome of that change?

Key Drivers 1) Roughly 90% of the fare-box revenue is from two sources, therefore any significant increase in revenue must necessarily impact these fares.

a. Car & driver fares (approx. 72%) and b. Passenger fares (approx 18%).

What is known or is reasonable to assume 1) For whatever reason, increases in fares have been ineffective in producing the desired increased revenue 2) Ridership has decreased and multi-ride discounts have largely offset price increases. 3) It is obvious to anyone who has lived here that walk-on passengers have increased since 2006. 4) There are many factors affecting how people decide to use the ferry.

c. Affordability – ability, need or desire to economize d. Needs – commuters, school, medical, other necessities e. Convenience –discretionary travel f. Economic conditions (an adverse impact that is not controllable) g. Price of fuel for vehicles (another adverse impact that is not controllable) h. Weather –impacts on tourism, visitors, discretionary trips i. Etc., etc.

What has changed? (1) Fares have increased. (2) Discounts have increased for multi-ride fares. a. Passenger discounts –2006 = 8 cents; current discount = $2.40 b. Car & driver discount –2006 = 32 cents; current discount = $3.60 (3) Ridership has declined for both car & driver and passenger fares.

(4) The County has purposely encouraged walk-on passengers by providing free parking and by increasing difference between car & driver fares and passenger fares.

(5) Economic conditions are poor and fuel prices are high. (uncontrollable)

What is the expected logical outcome from what has changed? (1) Increased fares (and high fuel prices) will reduce discretionary use of the ferry for both islanders and visitors alike. (2) As fares increase people use the ferry less; fares are no longer an insignificant cost. (3) People will generally utilize the least expensive means of ferry transportation that suits their needs.

One thing that is obvious that that the large discounts for many different fare classes has been a factor in the switch from cash fares to multi-rides (slides 8 & 9). Although statistical documentation is not available, it is also obvious that there has been a transition from vehicle to walk-on as it has become more convenient and less expensive than driving aboard. If you can find one person on the entire island that has lived here year-round for the past ten years that would tell you differently, I would suspect they have a memory problem. If your data suggests that this transition is incorrect as you indicated, I can only conclude that there are other factors affecting your analysis which cannot be quantified. The fact is that prior County Councils were attempting to encourage that transition by increasing vehicle fares more than passenger fares and by providing free parking on both sides. It appears to me the County has succeeded in this effort, which is only one factor that has contributed to the failure to raise the required revenue.

The ridership data I used came from your presentation on “Ridership Measured and Applied”. Whether or not you had adjusted that data for the duplication in needs-based ridership I do not know, however I doubt that it would cause any major distortion or change my conclusions as long as it is treated consistently year to year.

Far greater distortions can occur simply by what time period is being used for comparison. For example, the conclusion you reached that a major reduction in revenue resulted from fares collected from trucks based on the difference between 2008 and 2010 is accurate. However, if you compare 2007 to 2010 you would reach an entirely different conclusion with the truck revenue collected in 2007 approximately equal to the 2010 level. Truck revenue peaked in 2008 as a result of several large construction projects and the implementation of two major rate hikes, one effective in March 2007 and the other in June 2008. End result; the change in truck revenue is completely dependent upon what time period you choose to compare. In fact if you were to compare



truck revenue from 2005 or 2006 (before the large increase in truck rates) with 2010 you would find that truck revenue was a major contributor to increased revenue, increasing by more than 100% while other revenues increased by about 60%.

There is no doubt that truck traffic has declined in the past several years as a result of the decline in construction and general economic conditions. However, the cause of the decline is uncontrollable, so the revenue loss must be made up in some other way.

I believe you have misinterpreted what I was attempting to point out in slide (10) which states that fare increases have been largely ineffective. The message was that although there have been very large fare increases they have produced very little added revenue as Islanders (1) switched from cash to multi-ride fares to take advantage of the discounts, (2) switched to walk-on to take advantage of fare differentials and free parking and (3) simply reduced the number of discretionary trips to economize. While reductions in fares may increase ridership, like you, I seriously doubt that simply decreasing fares will result in increased revenue. I have seen nothing to convince me that is true, although I wish it were.

The real questions are: (1) how much will narrowing the differential between car & driver fares and passenger fares increase revenue and (2) how much will reducing the discounts for multi-ride fares increase revenue? The answer probably depends upon how these changes are made. A few years ago ferry fares were not a significant consideration for most people when there was a need to go to the mainland for whatever reason. That is simply not the case today nor is it likely to be in the foreseeable future.

What I believe is the key to maximizing revenue is to keep the car deck as full as possible by attempting to find the point where the differential between car & driver fares and passenger fares is reduced and more people choose to pay a reasonable premium to drive-on rather than walk-on. A charge for parking is probably an even more equitable way to reduce the incentive to walk-on and could increase revenue both from increased car and driver fares and from parking revenue. Similarly, reducing the discount for multi-ride fares would probably increase revenue and some people might again decide to pay higher cash fares rather than have their money tied up in multi-ride tickets. When multi-ride discounts were only 8% most riders failed to take advantage of the discount with today’s increased fares and larger discounts the bulk of the revenue comes from multi-ride fares.

It is unfortunate that there are no good alternatives and whatever is done to the fare structure will be unpopular with everyone, create hardships for more islanders and will cause extreme hardships for some. That said I believe the task force should consider the following: (1) eliminate all discounts and free passages except for a $2.00 per ride discount for multi-ride car and driver fares and a $1.00 discount for multi-ride passenger fares. This would serve to compensate punch-card holders for paying in advance of using the ferry, and as a convenience for the crew (2) reduce the difference between car & driver fares and passenger fares to $3.00, (3) free parking should be eliminated, (4) there should be a 6-month seasonal $2.00 or $3.00 surcharge for cash fares and (5) need-based fares should be eliminated with some Whatcom County non-profit organization providing funds to the extent they are willing to administer financial aid to individuals that are truly in need of financial assistance for the purchase of a multi-ride fare. It is clear to me that the County does not want to be in the business of administering the needs-based fares, so I believe that task force must find an alternative solution or the program is likely to be eliminated. The above changes or some variation of those changes would serve to narrow the differences for what different islanders pay for the same services. I also believe the rate structure is unnecessarily complicated (there are 27 different fares) due in part to the multitude of discounts and free passages, which means everyone else must pay more.

I have spent more time on this subject than I can spare, I hope there is something in this that the task force will find useful. It is important that the task force recommendations are well received and taken seriously by the County Council. For that to happen, fare proposal must be well thought out and it must be clear that it will reach the necessary revenue target.

I would also like to remind the task force that when the $3.00 surcharge was imposed, the County was targeting to collect fares of at least $1,530,000 including $155,000 for deficit reduction. That was before the 2010 deficit was known, so it is reasonable to assume the target is considerably higher today. I believe the revenue target that task force is using is roughly $1,380,000 and does not include anything for recovering the deficit over the next five or six years. It would be a mistake not to address the deficit. The task force has an extremely difficult charter. I wish you a successful conclusion and thank you for all the time and effort that has been required of each and every one of you.

Here are some of the comments about the draft recommendations (by topic) made by community members last Monday, June 20th, Task Force meeting and at the June 22 LICA meeting. Some comments have been consolidated, for the sake of brevity. - Wynne

Cost-savings ideas Administrative services

• reduce administrative service costs, including Frank Abart’s percent salary; think Abart’s salary should not be set to a percent of the Ferry budget, prefer an ‘activity based’ cost approach to his salary;

• Why can’t we return to historical approach where the Master handles most of administrative tasks now taken on by Public Works? • Concern that accounting and other clerk services are too high • Is it possible to outsource administrative services, or consolidate with other similar county ferry system operations • Concern that County’s out-dated accounting and reporting system is inefficient and costly, needs to be modernized • Favor single-engine operation when service allows. Masters are already doing that (though depends on crew) where feasible, so

the estimate of cost-savings might be too high; need more accurate data on this • For recommendations, prefer seeing reasonable range of costs rather than descriptors in table • Inefficient processing of punch card payments, at least 2 weeks now until checks clear




• Consider county role in modifying ferry user behavior Ticketing

• Need better information about ‘no-pays’ — current estimates by crew are rather wide-ranging and confounded by number of people who return to pay now

• Electronic ticketing (esp. card swipe) has numerous cost and accuracy benefits, short and long-term. Estimate of cost may be too high, given rapidly changing technology

• Punch card expiration date generally disliked for various reasons related for perceived unfairness; most people didn’t want to see this on the Task Force’s recommendations Needs-based fares

• punch-card fares eligibility should be specific and consistent with other governmental definitions but not overly restrictive • simple to administrate (including by crew) • Age alone should not be qualifier

Fares for crew (current, retired) passage

• This is part of union contract. • Multiple advantages to having tickets or punch cards (still can be part of contract), including more accurate tracking of riderships

and revenues, eliminating perceived problem of crew riding ‘for free’ more than is ‘fair’ Ticketing and service

• Reducing mid-day runs has several problems for school-age children (early release days; emergency or health situations; may not be legal to prevent access by parents to children during school hours; inability of school to function normally (staff; special services; field trips, etc)

• Reducing evening runs hard for parents and children in middle and high school, given multiple off-island events • 5:40 AM run is used by multiple commuters (nurses, Intalco, BP, teachers) • 10:30 PM for last run might work for nurse commuters, but only if Sunday 7 AM run remains, due to shift work requirements • OK with eliminating last (12:20 AM) ferry • Consider variable rate structure to get people to shift usage; but hard to do without electronic ticketing; one person thought it could

be done with punch cards • To cut costs, some runs at ends of shifts need to be cut; cutting # runs per hour wouldn’t have substantial cost-savings • If Task Force/islanders offer no suggestions for service cuts, then County Council could do whatever they want/feel necessary

without guidance (like the unexpected $3 surcharge this year) • Reducing runs of commuters (including school-related) would have biggest impact on high revenue-generating frequent users;

retirees have already reduced and consolidated runs to cut their own costs • County has in recent times allowed fares to remain low and service excellent, encouraging people to move to the island, so the

County has the obligation to not make changes now that would hurt islanders who’ve moved here assuming fares and service would remain about the same – raising fares or lowering service is ‘changing the rules of the game’

• Need to seriously consider what is practical (fiscally) not just what is ‘right’ re: past history • Islanders need to assess what we can tolerate – can argue all we want but it may not matter in current situation • Would like to hear more about the consequences of cutting runs after 10:30PM • Make some changes, e.g., to some night-time runs, then review what happens — consider gradual rather than all-at-once

alterations to service. • Need solid data on usage from island (#/run, destinations, etc). Right now, no such data are routinely acquired; only information is

from very extremely limited periods of time. Gooseberry Pt parking

• If secure Gooseberry Pt parking is eliminated, what would the impact be on total vehicle traffic (including long lines) and fare revenues?

• Might there be private parking options at Gooseberry Pt, or ways to improve WTA service? Could some islanders use van pool option?

• Might be substantial vandalism problems if secure parking were eliminated; there’s a lot of traffic on Haxton/Lummi Shore Road late at night

• Who really uses the secure lot? Need data.


July Public Comment

From: [email protected] Sent: Friday, July 01, 2011 10:47 AM To: [email protected] Subject: another thought

Hi Kathy:

After last nights PLIC meeting a few of us were standing around after wards talking about various things. I had a thought about the administrative costs I thought I'd pass on. Someone has probably already considered it but just in case.

Why can't the county "contract out" the administrative part of the ferry cost. I would think that someone/firm could be found for under $100,000/year to do all the book keeping work that the county does at a cost of almost $300,000 and do it more efficiently. When having county employees do the work you have all the added benefit costs such as vacation time, sick time, health insurance, bereavement leave and who knows what else that increases the per hour cost charged off to the ferry.

As I said, it's just a thought.

Keep up the good work.

Dave Wing.

From: Myra Ramos Sent: Saturday, July 02, 2011 3:39 PM To: [email protected] Subject: comments on ferry task force 2nd draft Hello Kathy Berg, These comments are past your deadline and thus probably not useful to you. I offer them in any case, with apologies for my tardiness due partly to travel and partly to overload. Regarding service cuts: * No 12:20 a.m. on Saturday is a winner. * Ben and I could live with the last boat on Sun thru Th being 10:20 p.m. if necessary; 11:00 p.m. for sure * We could live with no service 12:30‐2 p.m. (except 4 summer months Fri‐Sun) * Having only one split crew shift with nothing between the morning and evening commuter hours would be draconian; the Council should not go there. Parking changes: * We don't use the GP parking lot, but believe many islanders count on it Ferry District: * We could support the creation of a ferry taxing district, since all LI property owners, whether residents or not, benefit from the ferry. Operating changes: * Single‐engine operation sounds good, unless it is harder on the engine, with increased maintenance/repair costs negating the savings * Drydock in April will impact the tourist season less, which makes economic sense; unclear whether it will save ferry $. Ticketing savings: * Why not have the Islander sell punch cards to residents? They might do it for no commission given that it would increase store traffic. Fares: * Either a 15‐ or 20‐punch card would be fine with us. Good luck and my deep thanks to the Task Force for its thoughtful efforts on behalf of us all! Myra Ramos Ben Rogers [email protected] [email protected] 2877 N. Nugent Rd. M‐1 Lummi Island WA 98262 360‐758‐2374 206‐999‐7042 (cell) From: Kathy Berg Sent: Saturday, July 02, 2011 4:24 PM To: Barbara Ryan ; Diane Harper ; 'Jim Dickinson' ; John Chandler Johnson ; Kathy Berg ; Kathy Kershner ; Pat Dunn ; Patricia Dunn ; Riley Starks Subject: Ferry Comments by snail Mail


mailto:[email protected]
















The following came via postal service. While my mail box got blown by an M-80 last night, it still works OK & Dick reattached it & tweaked it back into shape this afternoon. While not signed, I still consider these comments valid. -Kathy Berg, Secretary Citizen’s Task Force for the Lummi Island Ferry “Dear Task Force, I really appreciate the work you have done, the time put in. After thinking about the ferry issue for a long time I would like to send my thoughts. Having lived on Lummi Island for a total of 18 years, I consider it my home and love living here. My age is upward of 75 and I hope to remain here forever, at least until I no longer exist in physical form. I cannot do that without a needs based pass. My income is about $14,000 and I still make a mortgage payment. If I have to pay more than I can afford, I will have to move off of the island, as a few already have and more are thinking about it. However, I do think a pass should be more than it was, especially the passenger fare. Instead of the $0.68 it was, it could be raised to $2. or $2.50 for needs based. Also, car and driver, instead of the $3.60 it was, could be raised to $5 or $6. This would still be affordable for folks like me, and would allow us to stay in our homes. I am not signing this letter as I don’t want the world to know my finances, I generally keep to myself and would be very uncomfortable with others aware of my situation. Thank you for taking the time to read this letter, and again, thank you for all to the hours you have put in for all of us on the island.” ‐‐‐‐‐Original Message‐‐‐‐‐ From: Michael/Betsy Schneider Sent: Sunday, July 03, 2011 10:37 AM To: Diane Harper ; Patricia Dunn ; Riley Starks ; Barbara Ryan ; Jim Dickinson ; John Chandler Johnson ; Kathy Berg Subject: comments Dear Task Force members, I am hoping that you haven't quite finalized your decision about needs‐ based passenger/pedestrian fares and that comments are still welcome. I remain very concerned about the idea of eliminating the needs‐based passenger/pedestrian fares (NBPP fares). This seems like one of those irretrievable steps ‐‐ once this fare line is gone, we will never get it back, even if fares go up. And while I acknowledge the importance of giving the County some cuts to make so that they don't make cuts of their own, I think that is a risky tactic when it involves elimination of a whole category of discounted fares. First, I think it's important to emphasize that even without the elimination of discounted NBPP fares the Task Force is recommending (or is likely to recommend) a significant reduction in needs‐based fares generally. According to Steve Oliver's presentation to the Task Force, 43 of the 85 individuals presently using needs‐based passes are eligible based on the property tax exemption. The Task Force is proposing to eliminate the property tax exemption as a separate basis for eligibility. If we assume that half of those individuals will no longer be eligible or will not wish to pursue eligibility under the new income guidelines (which is probably a safe assumption), that creates a 25% reduction in the number of needs‐based discounts. Then there's the significant reduction (from $40,000 to $33,400) for eligibility for a family of four based on the HUD Very Low Income eligibility standards. And then there's the proposed reduction in the amount of the discount from cash fares that low‐income people receive. It seems that these reductions, if sold to the County as a package, would be enough to show that the Task Force is recommending significant cuts in needs‐based fares. Second, I question the assumptions that appear to underly elimination of NBPP fares. The Task Force seems to be operating on the assumption that these fares are primarily, or only, used by people who own two cars ‐‐ one on each side. The assumption seems to be that if the individual can afford two cars and two insurance payments, s/he doesn't need a reduced fare. Is there any hard data to support that assumption? I know a couple of low‐income people who do not own a car at all ‐‐ they get rides into town with other Islanders and use a NBPP pass to ride the ferry. Others may keep one car on the Gooseberry side and get a ride or walk to the Island ferry landing. Others may be part of a two‐person family who ride as a passenger with a spouse



who has a needs‐based vehicle pass. Still others may use the taxi service to get to town. Unless the Task Force has data to support the assumption that all or most people who have been using the NBPP fares have two cars, it would be a mistake to base such a drastic change on that assumption. At this point I'm not clear on what the amount of the recommended fare for passengers and pedestrians will be. The latest I heard was $3.60. At this level, there should still be a reduction for people with incomes low enough to qualify under the HUD standards. If the passenger/pedestrian fare is lowered to $2.50 or below, it might not be as critical, but I still think eliminating the separate line for NBPP fares could prove very harmful, both now and in the future. The higher the passenger/pedestrian fare, the greater the need for a discounted NBPP fare. On a different subject, I feel it would be a mistake for the Task Force to recommend eliminating the mid‐day ferry runs. I am sure that if you were able to poll the Islanders, there would be strong objections to this. Do we have data on how many people use these runs? Michael and I often use them, and the ferry is usually pretty full. Although I agree with the idea of offering cuts of our own to the County, it is never a good negotiating tactic to give away too much right off the bat. This is a huge concession to make, especially in view of the possibility that the County may basically ignore the bulk of the Task Force's recommendations, but just take what it wants from them to make reductions. Thanks for considering these comments and for all your hard work. Betsy Schneider From: Fred Kinney Sent: Wednesday, July 06, 2011 11:40 AM To: [email protected] ; [email protected] Cc: [email protected] ; [email protected] ; [email protected] ; [email protected] ; [email protected] ; [email protected] ; [email protected] Subject: Re: WCFTF-Re: Federal transportation funds eligibility - requirements for disabled and senior fares Pat is certainly more knowledgeable than I every want to be about the potential public transit grants (or the lack thereof) and has done a nice job of summarizing potential grant possibilities. As she pointed out the requirements of 5307 are for urbanized areas, however portions of the 5307 are incorporated by reference in other sections of the law. Also the formula apportionment section of the federal law allows the State to transfer funds received for urbanized areas (5307) to be used for non-urbanized areas (5311) and vice versa under certain circumstances. When the State administers funds provided to them from federal public transportation grants the federal requirements typically flow with them to local governments. I would presume that is the reason that the Washington State Ferry System, Skagit County and Pierce County have chosen to comply with this section of the law. As Pat said there are numerous other requirements, I only addressed the fare requirements for Seniors and Disabled persons to make the task force aware of what I was told a few years ago is the reason for the ferry fare structure the State and other counties are following.

Fred

-----Original Message----- From: Patricia Dunn <[email protected]> To: 'Kathy Berg' <[email protected]>; 'Fred Kinney' <[email protected]> Cc: 'Barbara Ryan' <[email protected]>; 'Diane Harper' <[email protected]>; 'Jim Dickinson' <[email protected]>; 'John Chandler Johnson' <[email protected]>; 'Kathy Kershner' <[email protected]>; 'Pat Dunn' <[email protected]>; 'Riley Starks' <[email protected]> Sent: Tue, Jul 5, 2011 9:40 pm Subject: RE: WCFTF-Re: Federal transportation funds eligibility - requirements for disabled and senior fares

Fred is correct, the Lummi Island ferry is not in compliance with FTA regs, however the ferry is not in the 5307 formula. This is an FTA urbanized area funding formula, and requires 50k population. If anyone wants to pursue the required discount path, I know a few experts in this field ☺ The 5311 formula is a formula grant for other than urbanized areas, which sounds much more like the ferry. These grant are run thru the state (WADOT) – governors choice. 15% goes to intercity bus, 10% to state admin, and 75% to regional apportionment. They must be in the STIP (State Transp. Improvement Plan). I have no clue what the formula is for 5311, but if it’s based on population or expenses, relative to WTA, the $$ received would be miniscule. Some more 5311 info: KBerg page 28 of 33 Public Process












Eligible projects must serve the general public in rural areas. Projects that primarily serve elderly persons and persons with disabilities, but that do not restrict service to other members of the public, are considered available to the general public if they are marketed as public transit services. Service may be restricted to Elderly and persons. Section 5311 is a reimbursement program. The FTA designates specific activities that are eligible for reimbursement with Section 5311 program funds. It also requires a local match. The local match has to be from a non-federal source. Eligible Uses Minimum Local Match Required Maximum Federal Match Bicycle facility project 10% 90% Planning/Technical assistance 20% 80% Capital purchases: vehicles with Americans with Disabilities Act (ADA) accessible equipment** 17% 83% Other Capital purchases (i.e. computers, transit facilities, equipment, etc.) 20% 80% Operating Expenses 50% 50% This is from the CA 5311 manual (can’t find a manual for WA); all 111 pages: http://www.dot.ca.gov/hq/MassTrans/Docs‐Pdfs/5311/5311‐Handbook.pdf WA would be almost identical, except state processing requirements. Compliance with any FTA grant program requires much much more than discounted fares. Every department is affected; reporting, DBE, and systems requirements skyrocket. There is a triennial review that examines 24 aspects of the business including procurement, hr, accounting, dbe, drug/alcohol, maintenance, recordkeeping, procurement, safety, disability screening, paratransit, operations, ad nausem. Attached is the grant summary summarizing grant possibilities from early on in the history of the task force. After putting this together & doing a little more research, I remember both the odds of getting into the formula and the dollars seemed minimal, especially considering the additional recordkeeping requirements, and stopped pursuing the 5311 route. I seem to remember Kathy Berg delving into these in more detail, but coming up with nothing positive, either? As a footnote, the formula grants are getting smaller and competitive grants are almost nonexistent. Demand for transit is increasing and funding (and service) is decreasing. Giving a 50% discount to every rider with a medicare card would certainly change the entire fare formula. Pat Subject: WCFTF-Re: Federal transportation funds eligibility - requirements for disabled and senior fares Citizen’s Task Force for the Lummi Island Ferry From: Fred Kinney Sent: Tuesday, July 05, 2011 7:21 PM To: [email protected] ; [email protected] ; [email protected] ; [email protected] ; [email protected] ; [email protected] Subject: Federal transportation funds eligibility - requirements for disabled and senior fares As you are undoubtedly aware, the Washington State Ferry System, Pierce County and Skagit County all have a reduced ferry fare rate for both seniors (age 65 or more) and/or disabled passengers. The reduction is equal to 50% of the peak passenger fares and applies both to passengers and to the driver portion of car and driver fares. This reduction in senior and/or disabled fares is to comply with federal regulations for public transportation grant funding eligibility in accordance with Title 49 U.S.C. § 5307 for state and local governments that have received the benefit of federal public transportation grants. The specific text of this requirement to be eligible to receive a grant follows: Grant Recipient Requirements.--A recipient may receive a grant in a fiscal year only if-- (D) will ensure that elderly and handicapped individuals, or an individual presenting a medicare card issued to that individual under title II or XVIII of the Social Security Act (42 U.S.C. 401 et seq., 1395 et seq.), will be charged during non-peak hours for transportation using or involving a facility or equipment of a project financed under this section not more than 50 percent of the peak hour fare; Washington State Department of Transportation—Ferries Division and a number of local Transit Authorities for various counties and cities have developed a uniform Regional Reduced Fare Permit System for Senior and Disabled Persons to comply with federal regulations and to ease the administration of these requirements. The Whatcom County needs‐based fare does not comply with the above federal requirements for public transportation financial aid. It would seem advisable that the fare structure recommended by the ferry task force be designed to comply with federal requirements as the State and other counties operating ferries have done. Between 1999 and 2003 Whatcom County received federal grant funds in excess of $400,000 for the Whatcom County ferry docks (County Road Projects CRP 994010 and CRP 998021). I do not know if these federal grant funds were public transportation funds and subject to the above requirements or if they were they were provided under some other program that does not have the same requirements. However it is clear that Whatcom County ferry fare structure is not in compliance with the requirements for federal public transportation grants or consistent with other ferry systems operating within the state. While I am opposed to the myriad of excessive discounts and special fares that Whatcom County provides, I do think it is appropriate that the County’s fare structure be in compliance with federally mandated requirements for public transportation grant eligibility. Fred Kinney From: Myra Ramos Sent: Friday, July 08, 2011 9:36 AM To: [email protected] Subject: ferry dry dock timing I believe I wrote earlier that Ben and I would support a spring dry dock in preference to September because September is still a major tourist month here on the island and our local businesses need all the traffic they can get. Myra Ramos and Ben Rogers


http://www.dot.ca.gov/hq/MassTrans/Docs-Pdfs/5311/5311-Handbook.pdf

http://www.dot.ca.gov/hq/MassTrans/Docs-Pdfs/5311/5311-Handbook.pdf









[email protected] [email protected] 2877 N. Nugent Rd. M‐1 Lummi Island WA 98262 360‐758‐2374 206‐999‐7042 (cell) From: karly tucker <[email protected]> Date: Sat, Jul 9, 2011 at 11:36 AM Subject: Spring dry dock To: [email protected] I hope this is the right way to contact the task force members..... I'd like to put in my vote for spring drydock. In my memory it seems that the weather was better, and we weren't so consumed with the urgency of getting our homes battened down for the onslaught of winter. I also want to thank you profusely for all the hard work you've accomplished and let you know that I am very supportive of all your recommendations including a ferry district with ongoing local oversight and taxing capability. I certainly hope that they can become a reality. I know it's difficult to gather public input, and you probably hear from a small minority of our population. Do you think that a volunteer phone survey would work? Thank you! Karly Tucker From: Wynne Lee Sent: Sunday, July 10, 2011 3:46 PM To: Diane Harper ; Kathy BerG ; Barbara Ryan Subject: thoughts about 'free rides' I agree with Mike Skehan's comment on the ferry forum that the 'free ride for all Lummis' clause is a bad idea. I think each and every user of the ferry should pay something (if only $1, e.g., and yes, even for children, even island children). It's going to be challenge enough to pay for future operating costs ‐ all users need to chip in. Plus, won't this put the crew in the unsupportable situation of having to confirm tribal status of each person who claims to be one, or risking misuse? I respect the rights of registered Lummi tribal members, but they are also citizens of Whatcom County, Washington State and the US ‐‐ with responsibilities as well as rights. As such, they should pay for ferry services they use just like everyone else. Heck, Canadians and other foreign nationals pay full ferry fees. I realize that the negotiation/agreement is not on the Task Force's to‐do list, but you are doing fare categories and fares. While the agreement/lease is probably done deal (given the agreement's explicit refusal to allow any "mere citizens" of Whatcom County (like us) any right to have any meaningful input, now or in the future) I hope you will at least consider giving pushback on this clause. Wynne From: Colleen McCrory Sent: Sunday, July 10, 2011 10:17 PM To: Kathy Berg Subject: note from colleen For the Task Force: Hello, Regarding free passage for children under 18: How about stipulating that children would ride free when accompanied by a parent or teacher (or when involved in school activities)? Otherwise, the fare would be the surcharge, or another discounted cash fare. That should eliminate "joy riding". Thanks, Colleen Owner/Designated Broker, Lummi Island Realty LLC www.lummiislandrealty.com 360‐758‐2094 fax: 1‐877‐651‐8040 Co‐Editor: Lummi Island Ferry Forum Subject: Re: WCFTF-Re: note from colleen Hi Again, After more thought, I think it should say children, accompanied by an adult, rather than parent or teacher... would not be charged. There are too many situations in which children would be accompanied by an adult other than their parent or teacher. Thanks, Colleen

From: [email protected] Sent: Monday, July 11, 2011 12:45 PM








http://www.lummiislandrealty.com/

http://www.lummiislandferryforum.wordpress.com/



To: county council ; Pete Kremen Cc Subject: free ferry passes for 6,000+ people for 35 years - NOT a good idea I urge you to modify Section 5 of the proposed contract with the Lummi Nation re: Gooseberry Pt before introducing those documents to the council. Otherwise, you will commit County taxpayers to giving free rides on the ferry to literally thousands of people for 35 years, with no recourse by citizens (per other language in the proposals). Section 5 of the proposed contract says that all employees and registered members of the Lummi Nation will have free ferry passage on the Whatcom County Ferry to Lummi Island for 35 years.

• According to a Bellingham Business Journal article http://bbjtoday.com/blog/report‐points‐way‐to‐tribes‐viable‐economic‐future/1179, the Lummi Nation employed about 1,000 people in 2010, (including quite a few Lummi Islanders). They are one of the top 10 employers in the County.

• As of April 2010, the tribe had about 4,500 registered members http://en.wikipedia.org/wiki/Lummi#Enrollment_Information. The LIBC is actively working to register the many remaining Lummi who are not currently registered, so this number will grow in the future.

If the Council and Executive approve unlimited free rides to these thousands of people, you will commit property taxpayers and fare‐paying users of the ferry to a heavier burden than we are carrying now. Some Council members have expressed concerns with even modest fare discounts to frequent ferry users (mostly island residents, property owners and businesses). Yet Section 5, as written, would give away a 100% discount ‐‐ unlimited free rides ‐‐ to thousands of people, with absolutely no restrictions or recourse, for 35 years. (Note that Section 5 doesn't even restrict free passage to full time Lummi Nation employees.) I would prefer elimination of Section 5 entirely. An alternative compromise would be to modify Section 5 as follows: Annually or quarterly, the County would issue a reasonable, specified number of distinctly marked, hard‐to‐forge punch cards to Lummi officials. Then the Lummis could loan out those cards to their registered members or employees who desire free/deeply discounted passage, then return then to the LIBC. At the end of each quarter or year, tribal officials would return all the cards to Public Works to include in their ridership data. (To ensure compliance and auditability, new cards should not be issued until the old ones are returned.) I would prefer that such cards have some cost, even if with a huge ‐‐ say 90% ‐‐ discount. With or without a charge, the value of the total fare revenue associated with the cards should be attributed to the Ferry Fund, for correct accounting and tracking of ridership. This revision would benefit the County by making it possible to fulfil its responsibilites for required accurate tracking of ridership by the Coast Guard, State etc. This mechanism also would ensure accurate ferry farebox revenue data, which are essential for budgeting, accounting and audits. Finally, it would place some reasonable, trackable constraints on free rides, thereby limiting the financial liability of county taxpayers and fare‐paying ferry users. If you do not want to consider such a revision, I urge you to vote against the entire proposal, as you have absolutely no idea and what the ultimate cost of the lease will be to County taxpayers. Dealing with this now is important, before the proposal is introduced to COuncil. That's because the proposals include explicit wording that seek to prohibit citizens from exerting our civil rights in the future to challenge any and all aspects of the agreement, no matter how onerous those might prove to be. Thank you for considering this issue. Wynne Wynne Lee 2171 Tuttle Lane Lummi Island, WA 98262 360‐778‐0271 http://lummiislandliving.wordpress.com http://lummiislandferryforum.wordpress.com From: Myra Ramos Sent: Monday, July 11, 2011 12:53 PM To: [email protected] Subject: Re: free ferry passes for 6,000+ people for 35 years - NOT a good idea Wynne Lee is calling attention to an easily‐overlooked provision with potentially huge financial (and service!) impacts to the ferry operation in general and islanders in particular. Section 5 absolutely should not be included in the lease language to be voted on by the County Council. Myra Ramos From: [email protected] Sent: Monday, July 11, 2011 1:43 PM To: Barbara Ryan ; Chandler Johnson ; Diane Harper ; Jim Dean, Democracy ; Jim Dickinson ; Kathy Berg ; Kathy Kershner ; Pat Dunn Cc: Colleen O. McCrory




http://bbjtoday.com/blog/report-points-way-to-tribes-viable-economic-future/1179

http://bbjtoday.com/blog/report-points-way-to-tribes-viable-economic-future/1179

http://en.wikipedia.org/wiki/Lummi#Enrollment_Information

http://lummiislandliving.wordpress.com/
















Subject: missing tonight's meeting I'll be absent from tonight's meeting; will have to get an update from Bill, I guess. Here are 3 comments for tonight. Comment 1. Please do not recommend giving up mid‐day runs unless there is compelling objective

1. public financial data (not just from informal conversations between individuals) indicating that it's really necessary. 2. data on mid‐day usage (from LI) ‐ otherwise you will have absolutely no knowledge of how many or who could be seriously

harmed by the cuts.

I know you don't have the latter data. A reasonable compromise could be to recommend that the County, new advisory board, whomever ... collect the needed relevant data next year and then make a data‐driven decision about cutting mid‐day runs. Comment 2. As I read the proposed negotiating agreement with the Lummi Nation, it sure sounds like the council and exec are planning on some sort of (?) transportation improvement district for 'raod safety' improvements, probably to include properties from Slater through LI. (Hope that doesn't happen ‐‐ I'd really resent paying for road safety improvements when there's no credible evidence that ferry traffic is a serious threat). If my reading of the situation is correct, I think it would be unreasonable to ask island property owners to support an additional ferry taxing district property tax hike. Perhaps you can hold off on including/excluding some taxing district recommendation until it's clear what the County is up to. Comment 3. Once you firm up any (partial) set of recommendations, please send them to me (Colleen will be on vacation the next 3 weeks) in PDF format for posting on the ferry forum. That will give people the maximum chance to read and think about them, should they want to. The whole final report will be large and intimidating. Smaller, more digestible packets are preferable, if that's possible. Thanks, Wynne Wynne Lee 2171 Tuttle Lane Lummi Island, WA 98262 360‐778‐0271 http://lummiislandliving.wordpress.com http://lummiislandferryforum.wordpress.com From: Barbara Ryan Sent: Thursday, July 14, 2011 1:34 PM To: [email protected] ; Patricia Dunn ; Kathy Kershner ; Riley Starks ; [email protected] ; Chandler Johnson ; Kathy Berg Subject: RE: admin info for Randy Benson Jim and Randy ‐‐ This is great stuff! I'm sure the County Public Works Dept. would look favorably on any effort to relieve them from ferry administration. Some County oversight would remain, such as negotiations with the Lummi Nation, folding ferry budgets into the County budget system, and legal costs, for example, unless this were a separate entity, in which case 45% of our operating budget is at risk, along with the entire capital budget. It would be interesting to see how an "Enterprise Fund" with a separate administration could work. Barbara

From: [email protected] To: [email protected]; [email protected]; [email protected]; innkeeper@willows‐inn.com; [email protected]; [email protected]; [email protected] Subject: FW: admin info for Randy Benson Date: Thu, 14 Jul 2011 12:44:12 ‐0700

From: [email protected] Date: Wed, 13 Jul 2011 13:14:56 -0700 To: [email protected] Hi Jim, Sorry about the delay responding. I had a couple of critical proposals that have been taking up most of my time. I've gone through the documents that you provided and I want to give you my impressions. First, I want to say that I'm very impressed by the careful thought and attention to detail that have gone into the Ferry Task Force's work. I'll try not to rehash it's findings. Here are some thoughts that came to me (in random order):

1. The County's cost allocations look relatively sophisticated in terms of detail items and the basis of allocation (usually FTE's). Still, it's not activity-based tracing. We can ask the County what these FTE's do and what specific activities drive costs to the ferry accounts. That would take time and significant work, so I think it's unlikely to get the County to agree -- unless someone can underwrite such a study. I know how to do the study and have done it for other organizations, but couldn't contribute all the time it would take. However, I'd be happy to help on some pro-bono basis.


http://lummiislandliving.wordpress.com/















2. The total allocated costs of $197K just seems high. Without the activity information I can't give a professional assessment, but I would think that a private organization could administer the ferry operations for under $100K. Again, this is just a gut feel based on my consulting.

3. Other than the costs already noted by the Task Force, I think that the allocated costs are inevitable given the nature of county government and their accounting methods. (Patricia's analysis were quite enlightening in this area.) In order to dramatically lower administrative costs, I agree with you that the County would have to set up a semi-private entity to operate the ferry. By operating with Lean (Toyota Production System) principles, I believe that the administrative costs could be halved.

4. Lean operations would be essential to lowering costs. They would include: 1. Co-location of the ferry administration with the ferry operations (i.e. on Lummi Island and on board the ferry) 2. Broadening direct employee responsibilities to handle routine admin responsibilities 3. Involving everyone in removing all forms of waste (and rewarding them when they do). 4. Making decisions as close as possible to the point of service 5. Tracking performance results visibly at the front line, not generating reports at the County offices 6. And many many other Lean principles that have reduce indirect costs by 50-80% in other industries.

5. Pete Kremen and his associates toured Paul Aker's company, Fastcap, last week and were very inspired (according to Paul). FastCap is a poster child for Lean. Those who toured got idea of what Lean can accomplish. There's every reason to engage the County in a serious conversation about applying Lean to the ferry operations. They are ready.

6. Ferry service is an extremely repetitive operation and should not be co-mingled with non-repetitive parts of government. County operations tend to be issue and project based (sporadic). In other words, the County must be able to do anything at any time for the residents. Therefore, the County must operate like a "job shop," and take on a the high administrative burden associated with non-repitive work. However, comparisons in other industries (e.g. auto parts production, healthcare), suggest that the overhead for a "job shop" is at least four times higher than for repetitive work. This supports my contention that we can easily cut ferry administrative costs by 50% or more if we run the operations separately. The ferry service administration needs be located and run separately from other County administration if the cost advantages of repetitive operation are to be realized. Note that in virtually every other industry, moving from "job shop" to repetitive has been the #1 driver of cost reduction.

7. Revenues from ferry operations must be used to offset costs. If ferry service administration is separated into a unique enterprise, I hope that this will be possible. Part of doing Lean is to deeply understand the "voice of the customer" and use that knowledge to dramatically increase the value provided. This will increase revenues. While other parts of Lean reduce costs (e.g. waste reduction), revenue increase must also be incentivized so that Lean is firing on all cylinders. Ferry riders should be paying a percentage of only those costs that are not covered by revenue, not a percentage of all costs regardless of revenues. Fixing the disconnection of cost from revenue is absolutely essential, even if it requires changing laws governing this issue.

8. Everything above is patently obvious to those who work on the ferry, but they were never asked until the Task Force took on the task. The County has been using their brawn but not their brains. A new entity operated with Lean principles would tap employee creativity, imagination, passion and commitment to dramatically improve operations and administration. If it were like other industries, the gains would be huge. I see the County employees as competent government types who simply don't live and breath ferry operations. The County has many other problems and will never be the key driver of cost and performance improvement. We must tap employee-driven innovations at the front line (and that would include co-located administration).

9. The statement that the County does not think it's worthwhile to backfill overlooked cost allocations into prior years is very scary because it says that they could if they chose to. What other overlooked allocations will be uncovered in the future? Even a small change to a percentage allocation could create a very material increase in costs for the ferry. We are always at risk of a cost and fare shock. Again, the safest thing for ferry riders and ferry beneficiaries is to operate the ferry as an separate enterprise so that administrative costs are known and predictable.

10. For those not familiar with Lean, I'm not talking about some strange, foreign or cutting-edge concept for government. Cases in point - Governor Gregoire is actively promoting Lean at the state level (http://www.accountability.wa.gov/leadership/lean/default.asp) and I just finished a Lean project with King County.

I hope these observations help. I am truly impressed by the work of the Ferry Task Force and appreciate all that you and the other Task Force members are doing for our community and for the County. Let me know what else I can do -- possibly a presentation to the Task Force, or arranging for a Task Force tour of FastCap to see Lean first hand. Regards, Randy Randall Benson 1412 Seacrest Dr Lummi Island, WA 98262 206-527-5343 office 206-909-0830 cell [email protected]

http://www.accountability.wa.gov/leadership/lean/default.asp
