Increased regulation of the three boat lines serving Mackinac Island likely will begin as early as March or at least within a year, say Mackinac Island city officials, who are weighing the options they will exercise in the new ferry franchise agreement now under consideration. If the city chooses to tap into more of its regulatory power, the final agreement could impact the number of boat lines serving the Island, the cost of ticket prices, schedules, and the number of boat trips between Mackinac Island and the mainland communities of St. Ignace and Mackinaw City.

The current agreement between the city and Shepler’s Mackinac Island Ferry, Star Line, and Arnold Transit Company, won after seven years of litigation and untold legal expenses, expires March 31, 2010.

The new agreement is also being examined in view of wide-spread rumors about boat line mergers and buyouts.

Terms of the agreement now being discussed at the committee level will require guaranteed boat operations until winter ice makes travel impossible, said Transportation Committee members meeting Wednesday, December 16.

Until now, the city only requires a franchise fee from each of the three boat lines that serve the Island. That will change, said committee members, who say they have grown weary over high ticket costs, lack of competitive pricing, and concerns that boat service could end for the season even before ice forms in the Straits.

At the city's request in May, the ticket price was dropped one dollar to $24 for an adult, round-trip fare. City council urged the reduction with concerns over rising costs tourists have to pay to visit the Island. For example, a family of four traveling to the Island paid $72 for boat fare last summer.

In 2008, the three boat lines charged a $3 surcharge as fuel prices rose. The fuel surcharge was dropped for the 2009 season, although the boat lines raised ticket prices by $3 to $25. The boat lines balked at the council's request to drop the prices to previous levels, saying the increase was needed, although they compromised with city leaders by dropping the price by one dollar to the $24 amount.

The current franchise agreement stipulates each boat line pay 2% of its gross passenger ticket revenue to the city. In 2008, the city collected $285,753.16 from all three boat lines.

This is the third time the committee has met recently. At an October meeting, city leaders discussed the future of boat operations with representatives from the three boat lines. In November, the committee met in a closed-door session to discuss legal options with city attorney Tom Evashevski and Mike Cavanaugh, a Lansing attorney with Fraser, Trebilcock, Davis, and Dunlap. Mr. Cavanaugh has represented the city in the franchise agreement for more than 25 years.

"I need to get out of the picture," said Mr. Evashevski. "Mike Cavanaugh knows 10 times more about the franchises than I do. He's represented us all the way back to the original case. [He's] probably more knowledgeable than anybody in the state on these things. Furthermore, I have, if not a direct conflict, an appearance of a conflict because my relatives and current law partners have an interest in this."

Mr. Evashevski's mother is a member of the Brown family which owns Arnold Transit Company, although she long ago divested herself of interest in the company.

At the recommendation of Mr. Evashevski, the city named Mr. Cavanaugh attorney of record as the municipality considers the extent of its legal rights and how much control it will exercise when finalizing the ferry franchise agreement. That decision was approved by the City Council when it convened shortly after the committee meeting Wednesday.

During Wednesday's meeting, Mr. Evashevski reviewed the list of possible options available to the city from Mr. Cavanaugh. The list, he said, was not exclusive and other options may yet be added.

Mr. Cavanaugh did not attend the Wednesday committee or council meetings.

"We could have a city-owned and operated ferry. That's allowed. We can let one company do it all, if we think that is more efficient, which is an exclusive franchise, or they [boat lines] could have some kind of a combined effort to have an exclusive franchise."

The city, he said, also could have direct regulation and tell the boat lines what to charge and when to run.

"I think it's fair to say any one of those three would be a fairly radical departure from the way things have been done in the past," said Mr. Evashevski. "I'm assuming that all of you want to be very prudent and cautious going forward."

He suggested the committee request financial information and solicit ideas from each boat line on how the system can work better.

The committee agreed to recommend to the council, which later approved, having Mr. Cavanaugh to advise on the cost to hire an economic expert to review the efficiency and provide an economic analysis of the transportation system, which would include determining the average number of passengers per trip.

Committee member Armin Porter suggested the city consider a one-year franchise agreement with the boat lines to give more time to review information and consider its options.

Mr. Evashevski said the city could extend the current contracts through the end of October, for example, just for the season and not even for a year.

"I think we've got to be proactive and I think you bring up a good point," said Mayor Margaret Doud. "Our window is getting short because there are so many issues here, but we have to keep moving."

Mr. Porter also questioned what he called a lack of competitive ticket pricing, wondering how the boat line businesses managed to come up with the same rate schedule each year for the last 25 years.

Uniform pricing, said Mr. Evashevski, is part of the efficiency issue that will be researched.

The committee agreed that requiring boat operations to continue as late as possible in winter would be a top priority in the new ferry franchise agreement.

"I guess we will have to put 'pending weather conditions,'" said Mayor Doud. "That has got to be a guarantee. Our concern here is people who live here year-around and I think we've got to really look out for them."

After ferry service is discontinued for winter, people reach Mackinac Island by air.