Citi Bike Is Drowning In Debt, But It's Too Big to Fail
New York is going to have to cave to its 'no public funds' rule to keep the program going.
You don't hold a ceremony like this and then shut down the system a year later. Image: New York City Department of Transporation
New York City’s massive bikesharing program is drowning in debt and new mayor Bill DeBlasio isn’t willing to budge on a bailout—what the hell happens now?
The Citi Bike program was launched to much fanfare last May, but a series of technical problems, a horrible winter, and maintenance fees has left it needing “tens of millions of dollars” to keep operating, according to the Wall Street Journal. What happens when you spend an extreme amount of money and public goodwill launching the world’s largest shared commuting experiment and it goes belly-up, financially speaking, less than a year later? We’re about to find out.
I am a huge, huge proponent of bikeshare programs—before I moved to New York, I used Washington DC’s Capital Bikeshare multiple times a day, and in my eyes, it beats the hell out of having your own bike. Nothing worse than biking to happy hour and having to leave your bike at the bar (or biking home drunk for some), going on a date and trying to shove a bike in a cab, biking to work and getting stuck in a rainstorm after. Bikeshare eliminates all that drama, it eliminates maintenance fees and flat tire nonsense, and you don’t have to worry about them getting stolen. They’re wonderful.
Lots of people in New York think so, too. So far, roughly 99,000 people have signed up for a Citi Bike annual membership, or about 6 percent of Manhattan. Quick side note: It’s dumb to pretend like Citi Bike has anything resembling a coherent Brooklyn, Bronx, or Queens plan, because they clearly don’t. If it did, they wouldn't have put 10 random stations in a few-block radius in Williamsburg with no obvious connecting stations.
Image: New York City Department of Transportation
What I'm saying is, popularity-wise, Citi Bike has been anything but a failure. In its first year, DC signed up 18,000 annual members, or about 3 percent of its population, and DC is a city with an oft-broken Metro system that leaves huge swaths of the city unserviced. Capital Bikeshare is thriving and Citi Bike is, by the sound of some news articles, on the brink of collapse, despite the fact that it's been about doubly as popular as Capital Bikeshare was in its first year. What gives?
Government money, that’s what. Capital Bikeshare has received at least $16 million in government subsidies, Citi Bike has got nothin'. City governments all around the country are pumping money into bikesharing, mainly because people seem to love them, and it’s way cheaper than building a subway. In Minneapolis, for instance, they don’t ever plan on breaking even. That, apparently, is not an option in New York. Former mayor Mike Bloomberg promised no public funds would be spent on Citi Bike, a promise that DeBlasio so far is sticking to. That's a promise the city isn't going to be able to keep.
The thing about bikeshare programs is that a city can't half ass them if they want them to survive. Before Capital Bikeshare, DC had Smartbikes, a pathetic 10-station, 120 bike "system" that launched in 2008 and that nobody used because it was useless. It went defunct in 2011 and was replaced with Capital Bikeshare's initial 49 stations and 400 bikes, a system that has since expanded to 300 stations and nearly 3,000 bikes. Launching a huge system ain't cheap, as New York is quickly learning. But at least it didn't make the same mistake DC did with SmartBike.
While Capital Bikeshare has been operating at at least break even for about two years now, New York is an entirely different animal. All of Capital Bikeshare docks are solar powered. In Manhattan, skyscrapers get in the way of solar panels and cause glitches and force roving repairmen to manually recharge stations. Bikeshares notoriously need “rebalancing,” that thing that happens when you have a ton of people going from one place to another, say during rush hour twice a day. In DC, manually trucking out dozens of bikes from downtown back to residential areas isn’t ideal, but it’s doable. Take a system that’s already more than double the size, add Manhattan traffic, and you’ve got a whole new ballgame. Throw in the horrific winter the city just went through, which completely tanked the most profitable daily and weekly membership market, and it’s easy to see why the program is hemorrhaging money.
Nobody rents bikes when it's freezing outside. And it's been freezing all winter. Graph: Citi Bike
All this is to say that it’s wildly unrealistic to expect an ambitious new public transportation program (and let’s face it, Citi Bike is a public transportation program, even if it was privately financed) to break even within a year. Yes, it's in trouble, and it's definitely not good news that its parent company, Alta Bicycle Share, is in massive debt. But Citi Bike has been incorporated into the city now, and people like it. Yes, it’s one huge ad campaign for Citi Bank, and it could get other corporate sponsors. But it’s absurd to think that a city that gives more than a billion dollars a year to the MTA (and a couple million to underutilized ferries) is going to let a program like Citi Bike fail after less than a year.
The end game to this particular snafu is clear. DeBlasio is not going to let Citi Bike go anywhere, nor should he let it, not right before the weather gets warm again. Maybe some benefactor or corporate sponsor will step up and help Citi Bike temporarily balance its budget. But if they don’t, DeBlasio is going to have to cave on this whole no-public-funds thing. Citi Bike, for the time being, is too big to fail.