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Detroit News, The (MI) April 22, 2001 Section: Business Page: 01C Car ferry fight builds Ludington battles

Muskegon's attempt to get its own ship Author: Francis X. Donnelly Dateline: LUDINGTON LUDINGTON -- A century after their introduction and 45 years after their heyday, ferries continue to loom large on the horizons of two west Michigan communities. How large? Large enough that Muskegon, which has been trying to resume car ferry service for two decades, sees it as a way to boost tourism and bury for good its image as one of the most unlivable U.S. cities. And large enough that Ludington, 60 miles up the coast, believes its economy if not identity is wrapped around the ferry -- the only one that still crosses the lake. "Ludington has always been the home port of cross-lake ferry service," said Bill Kratz, executive director of Mason County Economic Development Corp. "It's part of its identity." Ludington, seeking to protect that identity, has touched off a feud with Muskegon by fighting the larger city's attempts to get public money for its ship. The proposed Muskegon ferry was supposed to receive a $650,000 grant from the state but the money was withdrawn last year after opposition by Ludington. Muskegon's hopes depended on financing from a Wisconsin neurosurgeon. As it turned out, he had a troubled past -- including two bankruptcies, a tax fraud conviction and 27 malpractice claims in three years. Muskegon officials accuse their rivals of digging into the doctor's background to torpedo the effort. Supporters of the Ludington ferry deny the charge. "Ludington was trying to keep it alive," Muskegon Mayor Fred Nielsen said of the criticism. "Anyone would do that if they were trying to stop competition." Muskegon recently moved to a new suitor after the surgeon, Dr. Thomas Rankin, of Eau Claire, Wisc., failed to come up with financing. So how large are these floating slabs of Americana? Large enough that Ludington feels that its economic future depends on them. Advantage Muskegon A Muskegon car ferry would have several advantages over Ludington's in attracting tourists, travel agents say. The Muskegon boat would run to Milwaukee while the Ludington ferry connects with Manitowoc, Wisc.

Besides servicing larger cities, the Muskegon-Milwaukee run is located closer to other large metro areas, including Chicago and Detroit and is closer to interstate highways. And the Muskegon ferry would be twice as fast as Ludington's current service. Muskegon's plans call for a possible catamaran with a diesel engine that would let it cross Lake Michigan in two hours. The Ludington ferry -- the SS Badger -- is a renovated railroad-car ferry that is half a century old and powered by a coal-fired steam engine. The newest financial backer for a Muskegon-Milwaukee ferry seems to have a more stable footing than the last. It's a Milwaukee investment banking firm with ties to leaders of both political parties in Wisconsin. The company, Lubar and Co., said it has toured Muskegon and talked with city officials. The firm is studying the service's specific costs, which could range from $20 million to $30 million, and how it would come up with the money. "On paper it looks positive," David Lubar said. "It could be a good business proposition." Lubar, the company's president, said he should know in three to four months whether the firm will move ahead with the Muskegon project. He said he hasn't ruled out seeking public money, which has been the source of the dispute between the two cities. No meddling wanted Ludington's ferry, which is operated by Lake Michigan Carferry Co., hasn't used any public funds and has long maintained that the state should stay out of the ferry business. But it came as a surprise when the Ludington firm recently sought $1.2 million from the Legislature for renovations to its aging ship. A committee tabled the request last month and the ferry company then said it had never really wanted the money in the first place. Company officials explained they were just trying to set a precedent -- that the Legislature never spend money on such projects. But company officials failed to tell their true intentions to a miffed Sen. Bill Schuette, who pushed for the money. "Since then, we have tried to soothe any ruffled feathers," company spokesman Thom Hawley said. "If we did it again, we certainly would have handled it differently." Muskegon and Milwaukee officials scoffed at the explanation. "It's hard to believe any entity would be duplicitous with their elected representatives," said Kenneth Szallai, director of the Port of Milwaukee. "You don't use your state legislature like that. It's just not done." Trains supplant ferries

There was a time when more than a dozen ferries crisscrossed Lake Michigan. In the 1950s, 15 ferries ran between Ludington, Muskegon and Frankfort on the Michigan side and various ports in Wisconsin. They were run by railroads and carried rail cars, later adding people and their autos. During the same decade, however, the use of diesel locomotives proliferated, making it faster to run trains around the lake than across it piecemeal. The railroads eventually stopped running the ferries and by 1983 Ludington was the only Michigan port offering ferry service across Lake Michigan. That made the sleepy hamlet dotted with Victorian homes and tourist shops the sole gateway along the 300-mile coast for travelers entering or leaving the state by boat. The ferry produced 80,000 potential customers a year -- nearly ten times the town's population of 8,400 -for the resort's hotels, shops and restaurants. A study by a nearby community college found that the ferry pumped $15 million a year into the local economy. Keith Kolfage, who, along with his wife, owns the Four Seasons Hotel in Ludington, said the ferry accounts for a third of his bookings. "It's not just me," he said. "A lot of businesses benefit from the ferry. It brings a lot of people here. It gives us a lot of exposure." The ferry may have been good for the town but it struggled to make money and closed in 1990. The town, located in the middle of Lake Michigan's western shore, had no other major attraction to lure visitors. Tourism dropped. The cross-lake ferry looked like it was about to return to history and take Ludington's economy with it. Businessman to the rescue Ludington businessman Charles Conrad had an idea of how to make the ferry profitable. Conrad, who owned four resorts in Ludington, was a retired entrepreneur who had made millions of dollars by building atmospheric test chambers for aviation parts. He thought he could make the ferry more popular by no longer carrying rail cars and marketing it strictly for tourists. Conrad bid $500,000 to pluck the ferry and two sister ships from U.S. Bankruptcy Court and spent another $1 million renovating it. He resurfaced the flooring of the SS Badger, which is four stories high and 410 feet long, and doubled the size of the parking garage. He added a restaurant, gift shop, maritime museum and movie theater. "It was a tremendous risk on his part," said Kratz, the economic development director. "And he did it without any government subsidy." The gamble paid off. To break even, the ferry needed to carry 18,000 cars and 80,000 passengers a year. In 1992, his first

year of operation, he transported 34,000 cars and 115,000 passengers. The ferry runs from May 11 to Oct. 28 with a round trip costing $94 for the car and $64 per adult. Ridership rose throughout the decade. Conrad, who has since died, later sold the ferry to three Ludington businessmen. "Charles was a visionary," ferry spokesman Hawley said. "If not for him stepping in, the ferry would not be here today." Muskegon deal collapses While Conrad was single-handedly keeping the ferry afloat, Muskegon was failing in several efforts to revive its own service -- dormant since 1970. In 1987, the states of Michigan and Wisconsin and several communities cobbled together $7.1 million for a ferry to run between Muskegon and Milwaukee. The deal fell apart when Muskegon voters rejected a bond issue that would have raised another $6.5 million. Angry city leaders, who had been trying to get a ferry since 1981, said the vote was a sign that residents wanted to return to the days when they lived in a dirty foundry town. But local businesses didn't give up. "Good ideas never die," said Bob Morin, director of the USS Silversides and Maritime Museum in Muskegon. "If it's a viable idea it will eventually happen. And this is one of them." It wasn't just iron foundries that Muskegon was trying to remove from its image. Paper mills, chemical companies and leather tanneries besotted the city as well in the 1970s. Smokestacks and vacant warehouses littered parts of the coastline. Two nearby lakes were polluted and Muskegon County had more Superfund sites -- seven -- than any county in the state. The city of 40,000 usually finished in the bottom 10 of Money magazine's annual list of the best places to live in the United States. Muskegon has cleaned up some of the pollution and most of the foundries are gone, their departure spurred by the auto industry's shift toward lighter alloys. But it remains a factory town, although manufacturing has been joined by tourism as a major industry. The city cleaned up its shore and changed zoning laws to transform industrial sites into condominiums, restaurants and boat slips. "Every chance we get, I'm talking Muskegon up, up, up," Mayor Nielsen said. Brochures tout its fishing, boardwalk and wide, rolling dunes. What's missing is a new way to bring tourists to the threshold of the city, Nielsen said. He's not satisfied just trying to lure riders of the Ludington ferry.

It's time, he said, for the city to have its own. Caption: Crew members get Ludington's ferry -- SS Badger -- shipshape for its first spring voyage. Owners of the ship want the state to keep its nose out of the ferry business. Bob Reams moves up the Badgers's gangway at full speed, although the engine room controls show the ferry is at a dead stop. The Badger is based in Ludington. Ludington started a feud with Muskegon by fighting the latter's bid to get ship funds. A proposed $650,000 state grant was withdrawn last year after Ludington balked. Don Short paints Badger's bow rail. Muskegon is trying to resume ferry service. Ludington is a stumbling block. Copyright (c) The Detroit News. All rights reserved. Reproduced with the permission of Gannett Co., Inc. by NewsBank, inc. Record Number: det9624906

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