OLD BUSINESS  8.

COMMITTEE MEMORANDUM

KEY INTENDED OUTCOME:
Ensure Comprehensive Mobility Addressing All Modes Throughout The City

HISTORY:

On April 30, 2016, the City Commission adopted Resolution No. 2016-29370 approving a water taxi pilot program (pursuant to ITN No. 2014-326-JR) with Water Taxi Miami, Inc. (Concessionaire) for a term of one (1) year serving the Purdy Avenue Dock, Sea Isle Marina, Bayside Marketplace, and Miami Beach Marina. Pursuant to ITN specifications, the water taxi service operates at no cost to the City. The service operates Friday through Sunday of every week, subject to weather conditions. The limited days and hours of operation, service frequency, and fare structure were established by the Concessionaire and approved by the City Commission. The limited pilot service was proffered by the Concessionaire as a means to test the service and build ridership in advance of a permanent commuter-based service. Attachment A depicts the water taxi route, schedule, and fares.

The total number of passengers boarding at Purdy Avenue Dock as part of the Water Taxi Pilot Program from December 30, 2016 to September 30, 2017 is 144.

Periodic site inspections conducted by the Transportation Department staff have determined that the Concessionaire is in violation of various terms of the Agreement including compliance with the type of vessels, on-site monitoring, and schedule. As a result, a Contractor Incident Report was issued to the Concessionaire on July 7, 2017 and subsequently, given the Concessionaire remained non-compliant with terms of the agreement, a Contractor Notice of Violation was issued to the Concessionaire on August 30, 2017 (Attachment B).

On October 27, 2017, the Neighborhood/Community Affairs Committee (NCAC) discussed the Water Taxi Pilot Program and whether or not to extend the City’s agreement with the Concessionaire, Water Taxi Miami, Inc., for a one-year pilot program (the Agreement), which was to expire on November 29, 2017. At the meeting, the Committee recommended extending the Agreement with the Concessionaire for one (1) month in order to enable for water taxi service during Art Basel; and, further, the NCAC recommended that staff return to NCAC in December with alternative options for operation of a successful waterborne transportation service in the City.

On October 31, 2017, the City Commission discussed the Water Taxi Pilot Program, and approved a one (1) month extension of the agreement until December 30, 2017 enabling for water taxi service during 2017 Art Basel; and waived the on-site monitoring requirement during the extension period. An Art Basel Water Taxi Plan of Operation was approved by the City and consisted of one (1) day of operation (Thursday, December 7) in addition to the regular days of service (Friday, Saturday, and Sunday). Based on input provided by the Concessionaire, no passengers boarded at Purdy Avenue Dock during this four (4) day period.

Currently, the water taxi service is using one of the City's existing docks at Purdy for its operation. The City allocated funding in FY 2016/17 for the design and construction of a dock for motorized vessels and a kayak launch at Purdy Avenue Dock.  Once constructed, the new dock for motorized vessels will be used for water taxi operation. The design of the new dock has been completed and the City is in the process of securing the environmental permits in order to issue a bid for the construction of the dock, with a contract award anticipated within the next six (6) months.

ANALYSIS:

The City’s agreement with the Concessionaire, Water Taxi Miami, Inc., for a one (1) year pilot program expires on December 30, 2017.  Given the City’s goal to provide mobility options, including a successful commuter-based waterborne transportation service, Transportation Department staff has conducted some research and contacted various water taxi operators in the region and throughout the country to identify elements that are essential in providing a successful waterborne transportation service.   

Based on these conversations, the key issues include:

• Operating subsidy

• Advertising on-board the vessels

• Amenities

Staff has developed various options for moving forward with water taxi service in Miami Beach.  The options are described below.

1. Enter into a new agreement with the current Concessionaire (Water Taxi Miami) on a pilot basis terminable at the City’s sole discretion

2. Issue a new competitive solicitation for commuter-based public waterborne transportation services at no cost to the City

3. Issue a new competitive solicitation for commuter-based public waterborne transportation service with a City subsidy

4. Partner with Miami-Dade County as part of a potential future regional water taxi service

1. Enter into a new agreement with current Concessionaire (Water Taxi Miami, Inc.) on a pilot basis terminable at the City’s sole discretion

Under this option, the terms of a new agreement would have to be negotiated with the current Concessionaire.  The Concessionaire has expressed an interest in revising the terms of the current agreement given that the current service is not profitable.  The new terms desired by the Concessionaire are included in Attachment C.  A synopsis of the terms is provided below.

• Providing free of charge commuter service from Purdy Avenue Marina to Sea Isle Marina (OMNI) and to Bayside Marketplace at 15-30 minute frequency of service

• The City would be subject to $125/hour operating cost per vessel (for the existing 38 passenger vessels)

• If larger and/or vessels equipped with A/C are to be used, the City would need to purchase desired vessels and the vendor would charge lower operating cost per hour

While this option can serve as an interim solution, considering the poor performance of the current water taxi service over the past year as well as the Concessionaire’s non-compliance with the terms of the pilot agreement, this option is not recommended as a long term solution.

2. Issue a new competitive solicitation for commuter public waterborne transportation service at no cost to the City

The City’s solicitation for waterborne transportation services was issued in 2014 and resulted in only one operator, Water Taxi Miami, bidding for the services.  The ITB stipulated that the services shall be provided at not cost to the City; however, since that time, the City has funded the construction of a new dock for motorized vessels at Purdy Avenue Dock.  This represents a material change in the provision of the services which favors the Concessionaire. 

As an example, the City of Miami provides water taxi service through a concession agreement between Bayfront Park Management Trust (an agency of the City of Miami) and Conway Tours, d/b/a Big Bus Tours (Concessionaire).  The water taxi operator, Water Taxi Miami (same operator that services City of Miami Beach), is a subcontractor to the Concessionaire.  The water taxi service operates at no cost to the City of Miami; in fact, the City receives a concession fee of $42,000 per year (effective January 1, 2014), plus a 5% revenue share on all transactions, including Big Bus Tour tickets, water taxi tickets, and Island Queen Cruises tickets as well as food, beverage, and merchandise sales, plus ticket surcharges. The Concession fee is subject to an annual increase of 3% or CPI increase, whichever is greater. 

As an additional example, the City of Fort Lauderdale currently provides water taxi service through an agreement with a private operator, Water Taxi of Fort Lauderdale, LLC, at no cost to the City.  The City requires a license fee from the operator of $100 per vessel for a two (2) year period.  Further, the City of Fort Lauderdale does not allow advertising on the vessels.  Given this business plan, the fare structure is similar to the current fare structure established by our water taxi operator, Water Taxi Miami. 

3. Issue a new competitive solicitation for commuter public waterborne transportation service with a City subsidy

This option is similar to the above option with the exception that the City would provide an annual subsidy to the operator to offset a portion of the operational cost of the service and, as a result, reduce fares to passengers.  This option would make the water taxi service a more affordable and competitive option for commuters. 

Based on a conversation with the water taxi operator for the City of Jacksonville (St. John’s River Taxi), the water taxi operator indicated that the City provides an annual subsidy of $120,000 or no more than $15,000 per month.  The operator is required to match the City’s subsidy in order to sustain the annual operation of the water taxi service estimated at $240,000.  Staff has not confirmed this information with the City of Jacksonville as yet. 

Many other cities throughout the country, such as New York City, San Francisco, and Boston operate successful subsidized commuter water taxi service.

4. Partner with Miami-Dade County as part of a potential future regional water taxi service

The County is currently working on updating a 2006 feasibility study on regional waterborne transportation solutions, including a plan for on-demand and fixed-route waterborne transportation.  At this time, however, the timeline for completion of the County’s feasibility study and a potential solicitation for such services has not been determined.    

It is worth noting that County staff has expressed an interest in a potential partnership with Miami Beach consisting of providing water taxi service along the coastal communities (including North Bay Village, Surfside, Bal Harbour, Bay Harbour, and Haulover) and using the City’s docks for their service. 

If/when feasibility of regional water taxi services is determined by Miami-Dade County, an option for Miami Beach could be to partner with the County on a potential future solicitation for the services.  However, given that the County is currently in the feasibility stage and it is not known if/when the County will procure these services in the future, this option is not recommended in the short term.

CONCLUSION:

With limited expertise in operating waterborne transportation, public entities have partnered with private maritime operators to provide these services as a mobility option using a variety of incentives including exclusive operating licenses, advertising and marketing, public infrastructure investments, and operating subsidies.  Regardless of which option is selected, based on discussions with several current water taxi service operators, allowing advertisement space on vessels is attractive to operators as it provides an opportunity to recover a portion of operating cost, particularly for systems of low ridership.

The Administration recommends further consideration of Options 2 and 3 above as both of these options would allow the City to reassess interest from prospective bidders in the water taxi industry and ultimately negotiate more advantageous terms for provision of commuter public waterborne transportation service in Miami Beach.

This item is presented to the Neighborhood/Community Affairs Committee for discussion and further direction.