After spending $5 million for ferry upgrades that had unintended negative consequences, Toronto’s cash-strapped parks department is now planning to put aside money to replace the aging fleet altogether.

The Parks, Forestry and Recreation division, which began managing the Toronto Islands ferries following amalgamation in 1997, is developing a “fleet replacement strategy” — a fund to buy new boats — after being told earlier this year that its ferries were too old to run at full capacity.

According to marine services supervisor William White, the division recently committed to setting aside $250,000 to $1 million each year to fund new ferries, which cost about $8 million each.

The department is also exploring “all other opportunities” to help fund the replacement, which White described as long overdue.

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“All the vessels are old. They were designed and built to do their job well in the 1930s. However, with modern demands being placed on them . . . this needs to happen,” said White, who began his job with the city in June 2011 and has since become a strong advocate for buying new ferries.

Last spring, Transport Canada ordered the department to limit passenger loads on the Sam McBride (built in 1939) and the Thomas Rennie (1951) — the city’s two main island ferries — nearly in half to comply with new federal marine safety standards.

Before the upgrades, the ferries ran under a grandfathered clause that exempts some older ships from current regulations. But Transport Canada legislation says that an aging vessel that gets a major capital investment loses that grandfathered status.

The ferries had their legal capacity slashed from 974 passengers each to 524. Negotiations with Transport Canada in early July — at the height of the island-going season — got that bumped back up to 736 passengers each, about 85 per cent of their 2011 levels.

Even with that concession, the restrictions sparked a stormy summer of lengthy passenger queues and concern that not enough had been done to keep up with growing demand.

Until earlier this year, the parks department had not been saving toward replacing its fleet.

Waterfront parks manager James Dann said the department traditionally put its money toward seasonal ferry upgrades to comply with federal regulations. In 2009, it put $5 million toward new engines for the Thomas Rennie and the Sam McBride — the move that triggered this year’s capacity restrictions.

The city was unaware of the consequences when the upgrades were done, he said. “Potentially, had we known some of the legislation was coming through, we may have saved that (money) and put it into a fleet replacement.”

Dann described the ferry operation as “a bit of a square peg in a round hole” in terms of how it fits into the parks department’s mandate.

Most of what the department buys relates to parks, and its regular replacement strategy usually involves Zambonis, trucks, mowers etc. — not $8-million ferries.

“We’re in a time where it’s not an easy thing to come across $5 million or $8 million per boat,” he said. “It’s a big ‘ask.’”

Councillor Pam McConnell, whose ward includes the islands, questioned why ferries are managed by the parks department and not seen as an essential transportation service.

She said the city’s attitude toward the ferries operation, treating it as an “add-on sidebar,” has resulted in a service unable to meet demand. McConnell called the Transport Canada restrictions a wake-up call.

“This kind of neglect is shameful,” she said. “I have been yelling about this at council forever and it just falls on deaf ears . . . council and councillors have taken this service for granted. They have not invested in it.”

Rafik Jaffer, a 63-year-old marine coordinator who has worked on Toronto’s ferry docks for 24 years, agreed that long queues have been an issue for years. The recent capacity clampdown, coupled with rising downtown population and a growing demand, has put the situation in near-crisis mode, he said.

In 2011, the fleet could transport 3,453 passengers at a time. Now it’s limited to 2,892 passengers — not nearly enough, according to Jaffer.

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“We are on the forefront here … we see it,” he said, noting the deluge of complaints over ferry wait times directed at operators. “And I understand their grievances.”

White hopes to have enough money eventually to standardize the fleet, with three sister passenger ferries and one vehicle ferry — enough to meet demand.

“This little operation should really be the crown jewel of the City of Toronto,” he said. “It has to happen.”