Glen Cove ferry effort still stalled as fear of federal money clawback lingers

Glen Cove Mayor Pamela Panzenbeck recently shelved a plan to operate a ferry pilot program at the city’s multimillion-dollar terminal, a facility that has languished on the city’s waterfront for nearly a decade.

Glen Cove built the ferry terminal in 2015, using $16.6 million in federal grants that will have to be repaid if the city doesn't run commuter service to Manhattan for at least two years. 

Nine years later, the ferry service still hasn't launched, and with the money spent, the threat of potential clawback hangs over the city's finances — a burden that could fall on taxpayers.

The city council was set to vote on a resolution on June 25 to enter into negotiations with New York Water Taxi to operate a two-month pilot program this fall, but Panzenbeck removed the measure from the agenda at the start of the meeting.

She said from the dais that the city didn't receive a commitment letter from RXR  that the Uniondale-based developer would provide some of the nearly $1 million funding it previously pledged to subsidize the ferry over two years. Instead, Panzenbeck said RXR expects the city to first incur losses from the pilot program to get the funding — a caveat she said she isn’t willing to accept.

The real estate company is majority partner with the Garvies Point developer, RXR Glen Isle Partners, which is building a $1 billion development of more than 1,000 condos and apartments next to the ferry terminal. So far, more than 600 units, including 55 units of workforce housing, have been built. The terminal was built to serve the development as well as the surrounding community.

“Our controller has determined that the city would incur an approximately $26K loss over the two-month pilot, even if the boat is 100% full,” Panzenbeck said at the meeting. “Until the matter of the RXR contractual obligation to the ferry subsidy is resolved to my satisfaction … I cannot in good faith bring this manner to a vote tonight."

When a commuter ferry briefly ran from Glen Cove to New York City in 2017, boats did not approach one-third of their capacity, on average, Newsday reported.

Developer: Left out of talks

Joseph Graziose Sr., RXR's executive vice president of residential development, said later in a Newsday interview that Glen Cove officials approached the developer last month with a letter seeking $250,000 to run the two-month pilot program.

RXR declined to share a copy of the letter, and a Freedom of Information Law request Newsday filed with Glen Cove hasn't yielded the document so far.

Graziose said the city should have included RXR in discussions about its latest proposal for ferry service, with a goal of creating "a long-term sustainable plan."

"My response to that was, ‘Mayor, I don't feel that is well-planned out,’ ” Graziose said of the letter RXR sent in response to Glen Cove's request.

Graziose confirmed RXR would reimburse the city for the losses it might incur from the pilot. 

Panzenbeck said in a June 24 email, the day before the ferry measure's tabling, that city officials expected the pilot program would run weekdays in September and October, at no cost to the city. Riders would pay about $35 round trip after the RXR subsidy, she said. 

Lingering problem

The latest development involving the stagnant ferry terminal follows years of questions state and federal agencies posed to Glen Cove officials as the possibility of a clawback of the millions used to build the facility lingered, according to Glen Cove email records between March 2022 and December 2023.

Newsday obtained the records through a Freedom of Information Law request filed with the city. 

The New York State Department of Transportation asked Glen Cove officials at least four times between March and August 2022 for updates on efforts to get the ferry running, sometimes inquiring explicitly on behalf of the Federal Highway Administration, the emails show.

On Aug. 24, 2022, the state Transportation Department's regional director, Jean Cai, emailed Ann Fangmann, executive director of the Glen Cove Community Development Agency, which runs city revitalization programs.

Cai wrote that the Federal Highway Administration was "extremely concerned that a large investment of federal dollars was made in a facility that is not providing the intended transportation services." 

Her email added: “They are requesting a status update.” 

Fangmann told Cai in an email about a week later that the city was interested in "moving expeditiously" with the launch of a survey to gauge interest in a commuter ferry. 

Separate records show that by early September, Rep. Tom Suozzi (D-Glen Cove) weighed in on the potential clawback. In a Sept. 8, 2022, letter to U.S. Transportation Secretary Pete Buttigieg, the congressman asked that the city not have to repay the $16.6 million.

The letter, which Suozzi's office provided to Newsday, said a clawback would "create a financial hardship for the struggling City and its residents."

A reply to Suozzi that December from the Federal Highway Administration's deputy administrator, Stephanie Pollock, said the agency had "not requested payback" of the money.

Pollock's letter, which Suozzi's office also provided to Newsday, said the agency instead was interested in cooperating with the state and Glen Cove "on how best to use the infrastructure already provided."

Late last year, the Federal Highway Administration referred questions about the clawback and other aspects of the terminal project to the state DOT. The state DOT referred Newsday to Glen Cove. 

'Indefinite extension'

Glen Cove's survey returned 1,158 responses, according to an email Fangmann wrote to state DOT officials on Jan. 26, 2023, while requesting time to go over the survey results. 

The trail of communications picked up again in an April 2023 email sent by Fangmann to state DOT officials that said Glen Cove officials were "contemplating providing a Pilot ferry service to NYC this summer." 

Then in a May 2023 email, Glenn Murrell, a NYSDOT regional planning and program manager, assured Panzenbeck that an “indefinite extension of time to launch the ferry” agreed upon two years earlier was still in effect. 

Murrell acknowledged the state DOT was aware that "questions have arisen" regarding when the federal government would require the city to return the money used to build the terminal, adding the Federal Highway Administration had "left the extension date open with respect to the date for reimbursement and NYS DOT is in full alignment."

Panzenbeck, who began her first term in office in 2022, said in a Newsday interview in January she hoped to run the ferry last year but grew concerned the program wouldn't be financially viable and would burn through the nearly $1 million subsidy that RXR pledged.

“I think at some point, I got a little nervous because of the cost of it and blowing a large chunk of the subsidy,” she said at the time, recalling how she questioned herself about the project. “Am I doing this because I want to see the ferry run? Is it the right time? Is it going to be a failure? And I really don't want something that's going to fail.”

Marc Scribner, senior transportation policy analyst for the Reason Foundation, a nonpartisan think tank based in Los Angeles, said federal clawbacks of funding for transportation projects are exceptionally rare and that there is a "low risk" it would happen in this case, especially in light of the impact of COVID-19 on transportation.

Before the latest setback, Glen Cove nearly executed a contract to run a two-year commuter ferry pilot program in 2020. The pandemic disrupted that plan. 

Scribner said the pandemic "sounds like maybe it's a very convenient excuse" for why the ferry isn't running, "but nonetheless it’s going to be treated as a valid excuse by a bunch of folks making these decisions,” he added.

However, a future federal administration that looks at unfinished projects in a different light could seek to reclaim the millions from Glen Cove, he said.

Before that scuttled plan, a commuter ferry ran for eight weeks between Glen Cove and Manhattan during the so-called “Summer of Hell” in 2017 as Penn Station track repairs triggered commuting nightmares. 

Former Glen Cove Mayor Reginald Spinello was at the helm of the city during that time.

Last year, Spinello recalled in a Newsday interview that there were underwhelming crowds on each boat and said with a limited number of daily trips to Manhattan, the option didn't seem to appeal to commuters.

An average of 45 passengers rode the 149-person Wall Street-bound ferry in each direction, Newsday reported, with an average of 35 riding the 225-passenger 34th Street boat. 

“It was really a good idea at that time,” Spinello said of the terminal. “But in my opinion, I don't think it's feasible now.”

By Joseph Ostapiuk

joseph.ostapiuk@newsday.com@OstapiukJ