There's only one way to understand the financial mess the Bixi bike-sharing network finds itself in: the city administration is having trouble seeing that building a great urban centre requires a leap of faith.
On Tuesday, April 23, the executive committee voted behind close doors to restructure the city's relationship with the non-profit, though the details are confidential and we won't get the full picture until much later.
But will City Hall overcome the prevailing culture that favours subsidizing all forms of established transport - except cycling? The attitude endures despite evidence that with a modest investment we could have an excellent bike network that would shrink transit subsidies, reduce greenhouse gas emissions and make residents healthier.
So here's the real economy of bike sharing: if Bixi received the same subsidy per rider as the TTC and were able to triple use to 15,000 from the present 4,743 through buying more bikes and expanding its service area, it would get $1.76 million per year for operating and around $3 million for capital.
And we would finally have a truly integrated, green transit system.
Instead, we're asking Bixi to do what few other modes of urban transport can do: get by on ticket sales/user fees plus sponsorships alone. Bixi's income comes from membership fees of $97 per year and occasional charges (for time exceeding the first free 30 minutes, for example) and sponsorship revenue.
Yet 55 per cent of all trips in Toronto, by all means of transport, are less than 7 kilometres long - perfect for cycling. To date, Bixi has done a good job signing up members, and today the service has more members per bike than most other cities, including Montreal.
While not all the financials have been released, we know the company claims "financial difficulties due to an unsupportable debt load and a seasonal cash flow shortage." When Bixi was approved in 2011, it was extended a $4.8 million loan guarantee and used $4.6 million of that to buy 1,000 bicycles and install 80 bike stations. Currently, the company owes $3.9 million. The fact that it's been able to pay off $600,000 and cover operating costs despite its small geographical footprint is amazing. So how can we help the company survive, for our own sake?
First, it needs more subscriptions. It can't succeed as a small, boutique system, and that's not what the city needs anyway. Bixi has almost 5,000 members now but needs to get to 8,000 minimum to cover half of operating costs as required in the current model. In order to achieve economies of scale and really become a transit force, it needs 15,000. A further loan guarantee is definitely necessary.
The sponsorship model has worked; Telus provides most of the $600,000 the program receives in ad revenue. But having only one sponsor, while administratively easy, is risky, since it depends on the generosity or advertising budget of one company.
It's worth noting that the original city staff report called for 3,000 bikes - three times the current number - and a larger service area (High Park to Broadview, as opposed to the present Bloor/Bathurst/Parliament parameters). That report also called for quick additional year-over-year expansion of the network. What was ultimately approved was 1,000 bikes at 80 stations, making Bixi too small to achieve proper economies of scale.
It's clear, looking at more successful networks in Montreal and Paris, that the service needs to expand quickly to succeed. Earlier input from the cycling community and studies suggests that extending it from Jane to Woodbine and north to Eglinton and increasing the density of stations would help make Bixi work more like a real alternative to other transport.
The system could then be justified as a real alternative and would warrant public subsidies. It might even make sense for it to be accessible using the Metropass. Along with car-sharing, taxis and public transit, Bixi could form part of what in Montreal is called the "transportation cocktail."
Such a large expansion would be expensive - likely another $30 to $35 million in capital funding, the cost of about eight new streetcars, or less than the cost of one major bridge rehabilitation. However, Toronto could then see results similar to those in Paris, where the constant presence of a large number of inexperienced cyclists has sensitized drivers.
It's evident that Bixi has the potential to dramatically enhance our transit mix and relieve pressure on streetcars, buses and subways, not to mention road congestion. But it's going to take commitment. Is Toronto up to the challenge?
Bikes 1,000 | Stations 80
Number of subscribers 4,743
Bikes 5,120 | Stations 411
London Barclays Cycle Hire
Bikes 9,200 | Stations 687
Paris Vélib bikes
Over 20,000 | Stations 1,800