Nonprofits

Bike Sharing Crashes in Canada


Toronto

Photograph by Richard Lautens/Toronto Star via Getty Images

Toronto

When New York City rolled out its bike-sharing system in May 2013, one reason that criticism never gained much traction was that the program was said to cost taxpayers nothing. As many as 10,000 bicycles and 600 stations—“All of this without using any taxpayer money!” crowed Vikram Pandit, then the chief executive of Citigroup, which paid $41 million to have the system’s bikes and docking stations painted in its trademark blue. Opponents could carp that bike sharing was crunchy, socialist, and/or vaguely French, but they couldn’t claim it was a bad use of city funds.

Now some news out of Canada bodes poorly for urban transportation utopians. Public Bike Sharing Co., known as Bixi, the company that designed the sturdy bikes and nifty solar-powered docking stations used in New York and more than a dozen other cities around the world, was forced into bankruptcy protection in Montreal, where it also administers the local sharing program. The nonprofit has debt of nearly C$50 million (about $43 million).

Bixi’s financial troubles have persisted for years; Montreal gave it a C$108 million bailout in 2011. Part of its shortfall is a result of the New York and Chicago program operators withholding payments of C$5.6 million because of problems with the software that runs the bike docking stations.

Bixi acts as a supplier to Alta Bicycle Share, which administers New York’s Citi Bike and similar programs in Chicago, Boston, and elsewhere. Alta said on its website yesterday that its systems “are up and running and ABS will ensure that they continue to operate without interruption.” It’s not clear, though, what Bixi’s troubles mean for Citi Bike’s scheduled move into new areas. “Given our plans to expand current systems and launch new systems this year, we’re in constant communication with both PBSC as well as its suppliers to ensure we can do so successfully,” Alta’s statement reads.

“Alta has reassured us that they have appropriate plans in place, and we are confident Citi Bike operations will not be negatively impacted for users,” Citigroup spokesman Andrew Brent says in an e-mail. In other words, the program is safe for now.

Citi Bike is operated by Alta subsidiary NYC Bike Share LLC. “We are committed to providing a top-quality bike share system in New York City and look forward to expanding as soon as we have funding to do so,” spokesperson Dani Simons says via email. “We do not expect yesterday’s news out of Montreal to affect our ability to do either.”

Alta Bicycle Share did not respond to requests for comment. New York City Department of Transportation spokesman Nick Mosquera says via e-mail: “On expansion, we have said since the beginning that we wished to expand to additional portions of the city as soon as possible, but that any such expansion beyond the previously announced service areas will require additional sponsorship funding. DOT and the operator continue to look into potential opportunities.”

Citigroup can’t be happy that the word “bankruptcy” is anywhere near the pride and joy of its marketing department. The bank—which knows a thing or two about bailouts—reaped a good-vibes publicity bonanza last spring and summer, as New Yorkers took the first of 6.3 million rides.

(This post was updated to add comment from NYC Bike Share.)

Summers_190
Nick Summers covers Wall Street and finance for Bloomberg Businessweek. Twitter: @nicksummers.

Race, Class, and the Future of Ferguson
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus