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
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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.
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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Kate Hinds
Kate Hinds is an Associate Producer for WNYC News. She also reports for WNYC and Transportation Nation, a public radio reporting project that combines the work of multiple newsrooms to provide coverage of how we build, rebuild and get around the nation.
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