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Citi Bike's Winter of Discontent

Financial problems plague the country's largest bike share system -- despite its popularity

Friday, March 21, 2014 - 04:35 PM

WNYC
It's been a long, cold winter for Citi Bike. (Kate Hinds/WNYC)

Thousands of New Yorkers ride Citi Bikes every day. But even though the bike share program acts as an extension of the city's public transportation system, it gets no public funding.

Back when the Bloomberg administration was setting up the bike share program, the idea was that the program's capital costs would be paid for through corporate sponsorship, and its annual operating costs would be covered by user fees and ad revenue. (Note: a 2009 Department of City Planning study recommended the opposite model — that the program launch as a "city-built program," then expand through corporate funding.)

Here's how then-mayor Mike Bloomberg described it back in May of 2012, when he announced that CitiBank would be spending $41 million dollars to sponsor the program.

"Now I know you're all wondering: how much is Citi Bike costing taxpayers? I'm glad you asked that question," he said.

"Citi Bike won't require any city or federal tax subsidy to operate the system," Bloomberg said, before pausing for dramatic effect. "I think that bears repeating. We are getting an entirely new transportation network without spending any taxpayer money. Who thought that that could be done?

It turns out that getting it done isn't so easy. The program has been plagued by bad luck, bad weather, and bad decision-making. Here's what happened.

First, faulty system software torpedoed bike share's initial launch, which had been planned for the summer of 2012. Then Sandy came, destroying millions of dollars worth of equipment. That delay translated into millions of dollars' worth of lost operating revenue — even as capital costs were rising. Then, when the program DID launch, the problems kept coming. Software glitches continued. One of Citi Bike's key vendors declared bankruptcy. The annual $95 dollar membership fee doesn't cover the program's higher-than-anticipated operating costs. And critics say the system isn't user-friendly for tourists, whose day- and week-long passes were meant to be more lucrative for Citi Bike than the annual membership.

"Before we talk about a price increase," said Paul Steely White, "we need to look at a fundamental restructuring of the way the system is managed."

White is the head of Transportation Alternatives. His group was instrumental in helping to bring bike share to the city. But on the Brian Lehrer Show Friday, he said it's time to come to terms with what he called the system's chronic problems.

"The cash crunch is really the result of mismanagement," he said. "We've been big supporters with the system...but the system is just not performing."

Polly Trottenberg, the city's transportation commissioner, agreed with that assessment. "We all know Citi Bike has been tremendously popular with New Yorkers," she said in a statement. "But there have been significant financial and operational issues, including redistribution of bikes to where the riders are, and technology issues resulting in malfunctioning stations and failed credit card transactions. We expect the system's operator, NYC Bike Share, to resolve these issues so the system can perform effectively and ultimately expand."

Mayor Bill de Blasio said Friday that the city is willing to help, if it can. "City budget money is not on the table," he said. "But we're open to other alternatives that might be helpful."

Translation: don't come to us with your hat in hand until you get your act together.

Trottenberg added: "Everything is on the table for Citi Bike, from improving operations to new sponsorships to additional financing."

Citi Bike's parent company, Portland-based Alta Bike Share, wouldn't respond to questions, such as whether it wanted to raise annual membership fees.

What it did say, in a written statement, is that it's seeking outside investors.

 

 

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Comments [11]

Sam from Newark

The problem is that it's too expensive. That's part of why it's not attractive to tourists. Ten dollars for one day is ridiculous. I was going to try it the other day; I needed to go uptown and I thought I'd try biking instead of the subway. But I knew I'd be coming back late and would take the subway home, so I only wanted to bike one way. I would have had to pay $10 for that trip instead of $2.50 for the subway, so even though it was a gorgeous day, I decided not to throw my money away. And I'm not a tourist, I know NY well and I'm an experienced biker. There's no way a tourist from Oklahoma is going to cough up 10 dollars for the privilege of taking their life in their hands in NYC traffic. Far from Bloomberg BRAGGING about committing no city funds to this important project, it is an outrage that the city does not see fit to invest in this intelligent answer to both traffic congestion and subway overcrowding - a bicycle trip should cost LESS than a subway trip!

Jul. 01 2014 03:05 PM
Bronx from NYC

Tal, Mayor Bloomberg never made a promise. He presented a new model of providing a public service.

De Blasio has not dismissed the idea of public spending. It's just not a priority at this time. Instead the City Council wants to investigate NYC Bike Share LLC which is more rational. I wouldn't give public dollars to a mismanaged company. If Alta dropped the ball, the DOT should take over.

jdb26354, I agree about raising the cost of an annual membership. A $20-50 increase would provide more revenue while maintaining most subscribers. Still the best deal around.

east village creek, the city shouldn't have to choose between bicycle racks or bicycle share. There is plenty of street space available.

Mark, bicycling in New York City is hardly dangerous (if that were the case, we would have expected bodies littered throughout the streets) and your gripe about advertising is shortsighted considering the benefits or proliferation of it across our entire society.

Chris M, I agree. Considering the high ridership and demand, bicycle share is here to stay in NYC. What's in dispute? Public funding and Alta's continued management.

HipHopSays, NYC Bike Share LLC anticipated lower ridership during the winter. What they didn't anticipate was Hurricane Sandy destroying a significant percentage of the bikes/docks and a record setting winter (snowfall totals and cold). Despite these factors, ridership was higher than expected on days when most snowfall accumulation had melted. Unfortunately, back to back snowstorms only extended time periods of heavy accumulations.

The public funding required for Citi Bike is a drop in the bucket compared to other forms of transportation. Bicycle share has definitely impacted travel patterns within its coverage area. It relieves other modes.

Mar. 24 2014 05:59 PM
HipHopSays from Fort Greene

Don't understand how a snowy-wet winter was not anticipated for with a northeast city such as NYC -- ie: now severe weather contingency plan to pull bikes to ensure fleet for high usage time like summer. I am a proponent of biking as an transportation alternative but honestly can't justify citibike getting public dollars when dollars for public transportation are a scarcity. Don't understand why citibike built its revenue on tourist renting a bike for the day/week....last time i went on vacation in a city i wasn't familiar with and high car traffic I wasn't looking to bike it -- and the last time I went on vacation was the 'dam in the Netherlands.

Mar. 24 2014 02:26 PM
Chris M from Brooklyn

Citi Bike is a public amenity and I have no issue with spending our transportation dollars, city state or federal, on it. In an attempt to appear prudent with spending, we hired a private company, attempted to make it a profit center instead of a public service. How much profit do we make on cross town buses?

Bike share is a modern city transportation amenity, but the for profit motive makes it too expensive for tourists, for those who want to make a single trip, and for those that would like to try it. Many just want to take a single spin, to test it out and then might then buy a day, week or yearly pass if they like it. So offer one ride passes and use deals to get people to use the system.

I

Mar. 24 2014 02:24 PM
east village creek from east village

Now that we have finally removed some car parking for bike parking how about removing all of the citibike docking stations and replacing them with conventional bike racks? bike parking along with bike lanes are the key to ridership. Separate private concessions like ride and roll could be set up for the tourists.

Mar. 24 2014 10:44 AM
Mark from Village

I would rather walk than pay to advertise for a global bank. Plus, most tourists are smart enough not to risk their lives biking around mid-town Manhattan on a Disney-esk sightseeing tour. Citi bikes demise can't come soon enough!

Mar. 24 2014 08:26 AM
jdb26354 from Greenwich Village

As a regular user of Citi Bike, I have no near-term financial incentive to say this, but the system should probably raise its rates for the annual membership. $95 is a really good deal, probably too good for the long-term health of the system. In addition, a higher rate would relieve - although not eliminate, of course - congestion. As to ripping off tourists with more profitable short-term passes, one problem with this plan is that tourists may not feel that comfortable riding a bike in the heavily trafficked parts of New York where Citi Bike is concentrated, especially because bike sharing is still relatively new to U.S. cities.

Mar. 23 2014 11:17 PM
Tal Barzilai from Pleasantville, NY

Bronx, both Bloomberg and JSK originally promised that no taxpayer dollars would be used for this. The only thing that de Blasio is doing is keeping it that way. However, he didn't say that he hated the program as a whole. If no private donors could be found, then it should just die out rather than be placed on life support by the public. I still don't get why the two men who lead the bike zealot websites such as Gorton [Streetsblog] and White [Transportation Alternatives] can't just donate to this. Then again, they probably like to talk the talk rather than walk the walk. Either way, I doubt that de Blasio will be a one term mayor just for disagreeing on giving funds for this.

Mar. 23 2014 10:25 PM
Bronx from NYC

Benoit Balz, that's a pretty lame conspiracy theory. Are bicycle share systems across the globe part of a massive plot to overthrow governments too?

Citi Bike's only purpose is transportation. Get over it.

Tal Barzilai, it was a good attempt at going completely private. Unfortunately, it might not work out that way. Public funding may be required to maintain the system. Considering the ridership numbers, demand, and the demographics which include affluent and politically active, I see a public bailout/takeover coming very soon (along with a major management shakeup).

As for community input. There was tons if it. Citi Bike was no secret.

Mar. 23 2014 07:22 PM
Benoit Balz from NYC

These chickens are coming home to roost and who's really surprised? This was a bad idea from the beginning, paid for with seed money not from Citibank, but the dreaded Goldman Sachs.

The program was about trying to find a PR opportunity for bailed-out banks, and people developed a serious resentment for the offensive corporate signage as well as the lack of neighborhood input. It's not nice to fool Mother Nature and it's not nice to walk out your door everyday and see yet another monument to socialism-for-the-rich, especially on landmarked blocks.

This was a Bloombergian boondoggle, and even people like Leticia James drank the kool-aid. The day is coming when this eyesore corporate garbage will be ripped out, and the taxpayer will foot the bill for the inevitable "write-down". But that day cannot come soon enough.

Mar. 23 2014 09:12 AM
Tal Barzilai from Pleasantville, NY

If this was said not to use any taxpayer dollars, then it shouldn't at all. Just wanting to turn to public funds will make everyone who originally gave this program the benefit of the doubt to possibly oppose it especially when the feel that there are more important areas their tax dollars should be going to. Meanwhile, I don't see why Paul Steely White or even Mark Gorton, both of them being known bike zealots, give funds to this seeing how rich they are, but they could be like Eva Moskowitz when it comes to paying for space for schools that are pretty much private. Let's not forget that there are lawsuits on some of the racks being placed with little to no input from the community that are still pending.

Mar. 21 2014 07:43 PM

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