The city is taking over Toronto’s popular but financially troubled public bike system.
As part of a deal announced on Wednesday afternoon, the Toronto Parking Authority will assume control of the Bixi program next spring. The agreement ensures the faltering cycling endeavour will survive for the foreseeable future at no anticipated cost to the city.
At a press conference at City Hall, public works chair Councillor Denzil Minnan-Wong said the program “came very close” to dying earlier this year, but negotiations this fall yielded the deal to rescue what he considers “an important piece of public transit.”
“Bixi has been responsible for more than 1.8 million successful trips since its inception three years ago, trips that otherwise would have added to our already busy roads,” said Minnan-Wong, who brokered the deal. “I expect and hope that the bike share program becomes an even more important part of the city’s transportation network.”
By some measures, Bixi Toronto, a subsidiary of Montreal-based Public Bike System Company, has been highly successful, signing up over 4,000 paying members since it launched in 2011. But it has struggled to repay the $4.5-million loan it took out to pay for the initial capital costs of the bikes and stations. The company was almost pulling in enough revenue to cover its roughly $1.4 million annual operating costs, but failed to pay down its debt. If it had defaulted it would have cost the city millions because council guaranteed the starter loan as part of the initial deal.
To rescue the program, Minnan-Wong concocted a novel plan using money from the city’s street furniture contract. The city had previously contracted Bell Canada (formerly Astral Media) to build 20 outdoor public toilets. Only two of the expensive commodes have been built however, and in exchange for cancelling orders for 11 more, Bell agreed to give $5 million to the bike share program.
The money was enough to buy the bikes, stations, and other infrastructure from Bixi, and set aside some funds to maintain and expand the system.
But while the bike share program is sticking around, its name is not. The TPA is hoping to strike a lucrative sponsorship deal to supplement revenue from memberships and user fees, which only cover about half of operating costs. The sponsor would buy the right to rebrand the bike system.
“We don’t mention Bixi anymore,” joked Minnan-Wong. “It’s the ‘public bike share system’ until some sponsor comes up with a very large cheque.”
The TPA is also in talks to bring on an experienced bike share company to manage the program’s day-to-day operations. A rumoured frontrunner is Alta Bicycle Share, the company that runs cycle programs in Melbourne, Australia and seven U.S. cities including New York, Chicago, and Boston.
The change in Bixi’s ownership likely won’t see an increase to the current $97 membership fee, at least not yet. TPA president Lorne Persiko said the goal will be to break even and, just as the Green P does with its parking business, keep rates low. Transportation services staff say that Bixi is about $100,000 to $200,000 short of breaking even on annual costs.
“Obviously if we can make more money, we will, but at an affordable price,” Persiko said. “We’re not going to gouge the public.”
Even before the city took over, the system is set to get slightly bigger in 2014. A plan is in place to add 22 bike stations to the existing 80 next year, using funds for the 2015 Pan Am Games. Beyond that Minnan-Wong is eyeing a “modest expansion.”
Aside from the reserve created with the Bell funding, transportation services staff say that new stations can be paid for through the anticipated sponsorship deal and Section 37 money, which developers give to the city in exchange for amendments to zoning laws.
Jared Kolb, executive director of Cycle Toronto, says the system needs to get bigger to succeed.
“It’s time to expand,” he said. “It’s around the periphery where the highest demand for the system is… So there’s certainly pent up demand.”
Observers have speculated as to how many members the program would have to sign up to cover operating costs, with estimates ranging as high as 6,000, according to Kolb.
Stephen Buckley, the general manager for transportation services, would not say how many new stations could be installed, or where they could go, or how many new members he hopes to attract.
“We believe that a thoughtful, controlled expansion will benefit the system but we’re not ready at this point to commit to a size,” he said. “First thing is we’re going to get our legs under us with the operations.”
