Jan. 22 (Bloomberg) -- When New York City rolled out its bike-sharing system in May 2013, one of the reasons 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 “without using any taxpayer money!” crowed Vikram Pandit, then the chief executive of Citigroup Inc., 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 System Co., 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, known as Bixi, has debt of nearly C$50 million ($46 million).
Bixi’s financial troubles have persisted for years; Montreal gave it a C$108 million bailout in 2011. Part of Bixi’s shortfall is a result of 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 Inc., which administers New York’s Citi Bike and similar programs in Chicago, Boston and elsewhere. Alta said on its website Jan. 20 that its systems “are up and running and ABS will ensure that they continue to operate without interruption.”
Citigroup said its program is safe.
“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,” Andrew Brent, a bank spokesman, said in an e-mail.
It’s not clear, though, what Bixi’s troubles mean for Citi Bike’s scheduled move into new areas of New York city. 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,” Dani Simons, a spokeswoman for NYC Bike Share, said via e-mail. NYC Bike Share does not expect the “news out of Montreal to affect our ability to do either,” Simons said. Alta Bicycle Share did not respond to requests for comment.
“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,” Nick Mosquera, a spokesman for New York City Department of Transportation, said by e-mail. “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.
--Editors: Eric Gelman, Jacqueline Thorpe