Will Expanding Citi Bike Require Taxpayer Funding?

At the end of its second season, Citi Bike is at a crossroads. Although New York City’s public bike share has been able to financially sustain itself, it’s concentrated primarily in wealthier neighborhoods, and there’s pressure to do more. New legislation suggests that there are serious concerns about Citi Bike’s profitability as it continues to expand.

This November, Mayor Bill de Blasio signed into law a bill that will require Citi Bike to open its books to the public starting in January. Whatever the numbers reveal, it could foment pressure to change the way Citi Bike is operated. The new law coincides with a push from lawmakers offering to partially subsidize Citi Bike with taxpayer money, which is currently funded solely by private funds like sponsorship and membership fees.

“I think subsidies shouldn’t be such a bad word,” says Colin Hughes, of the Institute for Transportation & Development Policy, a Washington, D.C.-based think tank. Hughes “Bike share is probably the most financially sustainable mode on the market right now.”

Hughes argues that a larger Citi Bike network would actually decrease the tax burdens on other public transportation modes. And given Citi Bike’s limited negative externalities—as far as upkeep and infrastructural impact—Citi Bike would be comparatively inexpensive.

“The real product, whether it’s a bus or a bike, is the mobility itself. The question is how to provide mobility cheaply, and bike share has proven to be the cheapest option to provide mobility,” Hughes says.

At the forefront of this push is Ydanis Rodriguez, chairman of the City Council’s transportation committee, who cosponsored the bill requiring transparency from Citi Bike. Rodriguez has suggested the use of public funds to expedite expansion of Citi Bike’s existing network. Rodriguez represents the northern portion of Manhattan, where Citi Bike has yet to move past 86th Street.

Rodriguez won’t indicate exactly how much he’s willing to spend on Citi Bike—which is also still mute on how much it costs to actually operate—and says it’s still just an idea.

“It was proposed and passed to ensure that if the program were unable to continue, the city had enough forewarning to step in if necessary,” says the councilmember.

Citi Bike currently releases monthly performance reports, in which its revenues are listed. Operating costs and where that revenue is allocated are not. To give some perspective, Citi Bike cost $50 million to initially launch. It’s original network is on pace to double by 2017, with a continued eye towards expansion.

Motivate, the company that operates Citi Bike, is also the parent company of public bike shares in Washington, Boston, Chicago, Toronto, San Francisco, Columbus, Chattanooga, and Melbourne, Australia. Citi Bike is unique because it is the only such program in the country that is entirely funded privately.

Because of this, Citi Bike isn’t tied to the equity needs of the city, but rather its own need to make a profit.

If Citi Bike were to receive taxpayer money, it would fall under the same scrutiny as the city’s existing subsidized public transportation modalities; it would transform from a recreational utility to a public good. Former Mayor Michael Bloomberg frequently touted Citi Bike’s zero cost, and current mayor Bill de Blasio has repeatedly rejected the idea of subsidization.

Capital Bikeshare, Motivate’s program in Washington, has run entirely on public funds since its inception six years ago, and finds itself at a similar turning point with expansion.

In October, the District Department of Transportation released a development plan exploring different possibilities for expansion. Though Capital Bikeshare, aims to make a profit, it’s always run at a deficit, and the system expects that trend to continue as the system grows. The more glaring difference between Capital Bikeshare and Citi Bike is that the former actually exists in low-income neighborhoods, most pointedly in Anacostia, and covers a greater area in relation to its city’s population.

“It’s just not possible for a dispersed a bike share system to be self-supporting,” says Charles Komanoff, an economist and the former director of Transportation Alternatives, a transportation advocacy organization. Were it to expand, “Citi Bike has to be partially subsidized because the modes with which it’s competing are even more subsidized,” he says.

The MTA recovers 73 percent of the cost of a single subway ride through fares, the remainder of which is covered by subsidies, according to the National Transit Database. It’s less than half that for buses. In comparison, Capital Bikeshare has a cost recovery rate of 79 percent.

“If all modes were paid for at full cost, bicycling would be used much more, simply because the price of a bike ride would go up much less,” Komanoff says. He suggests that the city perform a cost benefit analysis on Citi Bike, and believes that its indirect benefits—access to transit, increased efficiency, decreased pollution—are a net positive for the city.

Citi Bike is in the midst of a rapid expansion, with the promise of 700 stations and 12,000 bikes by 2017. It’s impossible to know precisely how this will affect Citi Bike’s operating costs, except to say that they’ll increase.

In 2013, Citi Bike’s future was not as promising. The initial launch was hindered by a series of seemingly divine mishaps; first, the disorder of Hurricane Sandy, followed then by a particularly harsh and unaccommodating winter. Malfunctioning software at docking stations created additional complications. After a change in ownership, updated software and bicycles, and a newly unionized workforce, 2015 has been an incredibly successful year for Citi Bike.

But expansion presents it’s own challenges, particularly with revenue. Although Citi Bike has moved deeper into Brooklyn, and has announced plans to venture into Harlem, usership in these areas is less dense, and the requirement of a credit card to use Citi Bike can be prohibitive to low-income New Yorkers, many of whom reside in the outer boroughs.

“There are no plans in place to use city money to expand the bike-share network. However, if city money will help to ensure that this service is distributed equitably across the city, we are certainly open to this idea,” says Dani Simons, a spokesperson for Citi Bike.

Citi Bike understands that moves like this aren’t profitable, which is why they’ve been reticent to announce any additional expansion plans. And public officials, like Rodriguez, understand this and are doing whatever it will take to get the bikes permanently in their neighborhood.

“We continue to support New Yorkers from across the five boroughs choosing safer and more efficient means of traversing our great city and we hope Bike Share NYC will be a part of that vision for decades to come,” says Simons.

Until then, the conflict between a desire for equity—to make transportation more accessible to all residents—and the necessity to be self-sustaining will only continue hinder Citi Bike’s growth. Come January, we’ll see how willing New Yorkers are to make this a truly citywide bike share program a reality—if they’ll foot the bill.