Mackinac Island has an opportunity to shape the future of public access to the Island, say city officials, with a chance to purchase harbor property in three communities and a franchise with three boat lines that expires in six months. Last winter, the city learned from its attorneys that, if it wanted, it could franchise only one boat line to serve the Island in the future. And, although the city has not publicly specified the properties it may buy, some council members say that city ownership of mainland docks would give the city more control over future ferry operations.

With these possibilities on the table, and concerns expressed publicly in Mackinaw City as well as Mackinac Island about the far-reaching economic impact of these moves, The St. Ignace News has interviewed several city and boat line officials to help clarify their stance on the issues. What would be the benefits of a monopoly arrangement, if one is chosen, to the city and to the traveling public? What would be the economic impact on the Island and in neighboring mainland communities where the ferries operate? Why is the Island contemplating the purchase of waterfront properties owned by Union Terminal Piers in Mackinaw City, St. Ignace, and on Mackinac Island?

The issues are related, but separate, the mayor acknowledges. She and other city officials are awaiting word from the ferry companies about their plans for pricing, late season service, and efficiency, she says.

“The point we have to make is the city acquiring real estate is a completely separate issue from who will be granted a franchise when they expire” at the end of March, said Mayor Margaret Doud. “That's a completely different issue. We're going to have to look at the whole picture. We basically told the boat lines a year ago that the ball was in their court, to come back to the city [and tell it] how were they going to change, what kind of plan were they going to give to the city. We have not received anything yet. Of course, they have until the end of March.”

Concerned about ticket prices and winter service for residents, last spring the city executed one-year agreements and redefined the boat operating season to be from April 30 to October 31 for Star Line and Shepler's ferry companies, and set a franchise fee to the city of 2.5% of their gross passenger receipts. For Arnold Transit, which has steelhulled boats, the city negotiated operations from March 15 to January 15 and a smaller franchise fee of 2% of gross passenger receipts for the added responsibility.

Those agreements expire March 31, 2011, and the city is expected to begin drafting new agreements within the next few months in meetings open to the public. The city likely will sidestep the committee level and discuss the matter as a full council, as it did with similar meetings last spring.

The city's authority to franchise the ferry companies is granted in its 1899 legislative charter. The franchise fees were first imposed by former Mayor Clem Gunn as a means to pay for the services, such as water and sewer and fire protection, required because of the influx of almost a million annual visitors to a year-around community of only about 500 people. The fee was vehemently fought by the ferry companies, but after seven years of litigation, the city's charter authority was upheld by the U. S. Supreme Court in 1984.

Last spring, the city council began tightening its control over the boats, following complaints of escalating ticket prices. The high prices result from too many boat trips with too-few passengers. Three boats (one for each company) leave Mackinaw City and three leave St. Ignace every half hour during the peak season, most of the boats carrying only a small fraction of their capacity, but each boat line is hesitant to cut back for fear of losing passengers to the competitors. Citizens have long noticed that, competition aside, the standard ticket prices charged by all three companies are always the same.

“Ultimately, the three-boat system has failed the Island,” said Alderman Jason St. Onge. “They've failed to be competitive. They've failed to participate in free enterprise. That's clear by the schedule and rates that have been almost a duplicate of one another for 20 years. I'm not saying anything everybody doesn't already know. It can only go on for so long. . . The current system is not working. Nobody has approached us with proposals. Their system of operation is just to keep raising the rates every year. We've searched around, we've done our research. We have some of the lowest ferry franchise fees and the highest [ticket] rates in the Great Lakes.”

Mackinac Island Alderman Frank Bloswick said he finds concerns that the city might create a monopoly interesting, claiming the boat companies have already been operating an oligopoly with their equally priced boat tickets. Also, residents have been telling him boat tickets are too expensive.

“I have had people tell me that they have seen people inquire about ticket prices and walk away from the ticket booth,” he said.

The round trip adult ticket price this year is $24.

Alderman Sam Barnwell, new to city council in May, said talk that the city may grant any number of franchises, including the idea of the city operating a boat line itself, is speculation.

“There's been no discussions at council about the ferry franchise, except for this purchase of real estate, and that happened at a closed meeting,” he said. “Since I've been on [the council], we've been waiting for the boat companies to come back to us with a plan because they're the ones that understand their business. They're the ones who know how to be more efficient, and be more economical and provide better service. We asked them to come back with a plan and none of them have come back with a plan yet. So everything else is premature.”

With no apparent communication between the boat companies and the city, however, and with council deliberations being carried out behind closed doors, the public discussion already has begun. Concerns about the regional economic impact of the city creating a boat line monopoly were brought up at two Mackinaw City village meetings last week and expressed in a letter to the editor in the August 28 issue of the Town Crier. The Village of Mackinaw City has also sent a letter to the City of Mackinac Island, seeking clarification of the city’s plans. (See sidebar story)

In an October meeting on the Island last year, Lansing attorney Mike Cavanaugh said the charter allows the city to determine the number of franchises it grants. Mr. Cavanaugh of Fraser, Trebilcock, Davis, and Dunlapp, has represented the Island on the franchise agreement for more than 25 years, including during the U.S. Supreme Court case. At that October meeting, boat line representatives pointed out that there probably are too many boat lines.

“We have never discussed, at least at any meeting I was present, to go from one or even two boat lines,” said Mr. St. Onge. “But it sure sounds to me like competition is going to do that when they [boat lines], themselves, admit that there is not enough room for three.”

City Contemplates Property

Purchase From Union

Terminal Piers

Alderman Dan Wightman said he is waiting for the next discussion to be scheduled for the city council to consider the purchase of harbor property from Jim Wynn, owner of Union Terminal Piers, which operates Arnold Transit. Properties under consideration, while not publicly named by city council, are at St. Ignace, Mackinaw City, and Mackinac Island.

Chris Shepler of Shepler's Mackinac Island Ferry said he has concerns over what the purchase of property would mean to his business. For now, his only information has come from reading the article, “City Weighs UTP Property Purchase,” in the August 28 issue of the Mackinac Island Town Crier (also published in The St. Ignace News September 2).

“Just by reading the article in the Town Crier, it appears that the city wants to purchase some property from Union Terminal Piers, and through meetings that I've attended, as well as what is written here, that there's a possibility, possibly a good possibility, that they will eliminate franchises of the three ferry boat companies and only come to an exclusive agreement with one company,” said Mr. Shepler. “So if they are buying property from Union Terminal Piers and only have one franchise, it doesn't sound like Shepler's is in that equation. So, I guess I don't know what to think.”

Shepler's, a third-generation business, began providing ferry service to the Island in 1942 and has 150 employees, who they call “cast members,” said Mr. Shepler. Of those, 50 work yeararound.

Tom Pfeiffelmann of Star Line said the purchase of the property does not involve him and is between the city and Union Terminal Piers.

Mr. Wynn of Arnold Transit and Union Terminal Piers said it is too early to give any specifics about the potential sale of the property to Mackinac Island.

“We've had very preliminary discussions about it,” he said. “We haven't even started negotiations.”

At the Wednesday, August 25, Mackinac Island city council meeting, the council voted to authorize Mr. Cavanaugh to continue to evaluate the property purchase.

“I think it's an opportunity that the city probably will get once in a lifetime,” said Mayor Doud. “So we'll see what happens. It's strictly exploration at this time and we don't know if it will happen, but we are looking at it.”

So far, the city has held one closed session to discuss the purchase. Future discussions, she said, would be in closed session, but any decisions would be made in sessions open to the public.

The purchase of land could alleviate Island concerns for ferry travel and give the city more control over transportation needs, said Mr. Barnwell. It could prevent a single ferry boat owner from one day controlling access to the Island.

“On the land purchase, whether we have three, six, zero, or one boat line, it protects us in the future to where if, 20 years from now, we have somebody operating all potential boat lines,” he said. “It says, you know what? We own all the boats, we own all the docks, and we're going to cripple your city. We're going to make it a $50 ticket and we're going to make only four boats a day.”

He continued, “Owning the land gives us another tool in the tool bag to make sure we preserve access to the Island, and economical access to the Island. . . Where, if we own docks, we no longer have that problem. If we own docks, we can always compete, ourselves, with other companies, or be the only company, to make sure we preserve the lowest possible fare with a good schedule. We preserve a good package that preserves the Island and makes it as economically livable for the residents as possible.”

Alderman Mike Hart, who is a Union Terminal Piers employee, said when he is sitting on the council his focus is the city. In that respect, he said, owning harbor property would be a benefit to the community.

“I think it's a means of protecting the Island in the future, but it all depends on the details,” he added. Alderman Armin Porter said there have been no recent discussions at the city level on reducing the number of boat lines that serve the Island. Residents have told him they support the city's plan that could lead to the purchase of harbor property, he said.

“It's intriguing, and we're ready to look into it,” he said. “The purchase of the property would ensure Mackinac Island, if the need arose, that we could run our own boat line if we had to. That's basically what it boils down to.”

The council's job is to do what is best for Island residents and businesses, and owning property would give the city more options if ever they were needed, said Mr. St. Onge.

“It's a one-time opportunity for the city to take control if we ever have to revert to a city-run boat line,” he said. “That's not where we want to go, but if a lack of competition and free trade just continues to arbitrarily raise the boat fare every year, at some point the city will have to step in and say the boat lines have failed us, they have failed the tourism industry, they failed us in service to the Island, and we're going to have to start our own, which will result in lower boat fares and perhaps a better schedule. We don't want to do that. That's not been the discussion, but if we ever did want to do that, we can't do it without property. We can't land the boats at Turtle Park. We have to have harbor-side property, and here's a chance to buy the property and just kind of have it in our back pocket. If, in the case, it ever gets to that.”