Lessons gleaned from differing experiences in Paris, Washington, Chicago, and New York City.
Following the establishment of successful bike-sharing systems in Paris; Washington, D.C.; Chicago; and hundreds of other cities worldwide, the much-talked-about Citi Bike system in New York City seems to be off to a wobbly start.
Issues range from rebalancing bike supplies at various locations based on very high demand to lower-than-expected use by tourists (they provide higher margins) and overall pricing being too low. In view of the fact that New York’s system appears to be similar in many respects to other large U.S. programs—down to the hardware, software, and vendors involved—what might be happening differently in the Big Apple?
Big-city bike-sharing systems are a relatively new concept. In 2007, the Velib bike-share system was launched in Paris as a partnership between the city and advertising company JCDecaux. Paris Mayor Betrand Delanoë had envisioned a large-scale shared-bike system to serve Parisians based on a smaller system he had seen in Lyon that debuted in 2005 and supported more than 20,000 trips per day in its first year. In July 2007, Delanoë launched Velib in Paris with more than 8,000 bikes. The city partnered with JCDecaux in exchange for the advertising rights to the majority of the city’s public-space assets, including bus shelters and billboards.
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The urban planning world immediately took notice. Whether viewed by a mayor, the head of a transportation department, or an employee of the local tourism bureau, Velib was a remarkable program, not just because of its plans to scale up to 20,000 bikes, but also because of how fast the system had been launched and the bold and unapologetic statement it made about how Parisians wanted people to make short trips. Paris had committed to more than 1,500 permanently placed, hard-wired stations in one of the most historic—and arguably most beautiful—cities in Europe.
Like anything new, Velib had its supporters and detractors, its learning curve for users and the operator, and its surprises. In Lyon, the bikeshare system had experienced very little theft or vandalism, so many people were surprised when during the first year in Paris, 3,000 bikes were stolen. That did not stop the Parisian system from doubling in size in its second year. By 2009, however, 80 percent of the Velib bikes had to be replaced because of vandalism or theft.
That could have killed the program, but JCDecaux and the government continued to expand the Velib system, bringing the numbers to more than 1,800 stations and 20,000 bikes. I was in Paris earlier this year, and Velib is baked into the landscape as if it had always been there. After three years of initial losses, the system is cash-positive from operations—JCDecaux has invested close to $200 million in exchange for the lucrative municipal advertising contract—and Velib has been extended to 29 towns on the edge of Paris. Vandalism and theft have fallen to a manageable level as the technology has gotten more secure and the fun of throwing a bike-share bike into the river as a socialist, anti-bourgeois “statement” has worn off.
In 2008, the Velib system inspired my former bosses, Adrian Fenty, then mayor of Washington, and then–city administrator Dan Tangherlini to launch a pilot bike-share system in the nation’s capital. Called SmartBike, it was based on the advertising model used in Paris. Clear Channel Communications, the losing bidder for advertising in Paris, won the District’s municipal marketing and street furniture contract and supplied the infrastructure and bikes for the initial ten-station system.
When I was named director of the District’s transportation department at the end of 2008, I wanted to expand the program by a factor of ten, but there were roadblocks. Clear Channel had been purchased by Bain Capital and lost all interest in the street furniture contracts and, by extension, the bike-sharing program. Also, the Paris experience probably did not help Washington’s cause because the contractor there was facing expenses much higher than expected.
An 18-month delay in expansion ended up being a blessing in disguise. Next-generation systems popping up in North America were much less intrusive to a city in terms of installation. They were movable; modular, allowing for expansion; and solar powered, freeing the system from the expense of utility wiring. These factors also significantly lowered the initial investment necessary to install a system.
The District partnered with Arlington County, Virginia, across the Potomac River and procured a system that, by European standards, was still fairly small at 100 initial stations and 1,000 bikes. This system would cost over $6 million, with the share for the District coming in at about $1.2 million. Instead of the advertising funding model prevalent at the time, the District and Arlington County would use federal Congestion Mitigation and Air Quality Improvement Program (CMAQ) funds to pay 80 percent of the capital cost. If this was not congestion mitigation, what was? We were surprised to receive only one bid for the system, but luckily it was from a supplier of a next-generation system and an independent operator that had significant planning experience as an offshoot of a West Coast–based consultancy.
That system became Capital Bikeshare, lauded as a model for American bike-sharing systems; I would like to think it is also an example of regional cooperation, financial sustainability, and true partnership among all stakeholders. It was launched in September 2010, only one year after conception, with 49 stations and 500 bikes. Over three months, it ramped up to the full 100-station capacity.
Like Velib in Paris, CaBI, as it is called by locals, opened to rave reviews as well as the typical challenges of any new system—including learning the necessary patterns for rebalancing bicycle supply during rollout. Since its launch, the system has grown to over 300 stations and now extends into the neighboring states Virginia and Maryland. In the District, the operations are self-sustaining from user fees alone. CaBi still does not have a naming sponsor or advertising, but that process is underway and when completed will make the system highly profitable. The operator is paid a fee for service by the District government and provides very good service. The system is beloved by residents and heavily used by visitors and tourists at $7-plus per day, which subsidizes the use by locals at the rate of 20 cents per day for unlimited 30-minute trips.
Following the successful experience in Washington, I had the opportunity last year in Chicago as transportation commissioner for Mayor Rahm Emanuel to try to replicate the success of Capital Bikeshare on an even larger scale.
The Chicago system was named Divvy, and we employed design and branding firm IDEO to dramatically raise the program’s profile. We followed the same basic financing formula, with federal funds covering 80 percent of the capital costs, and with the Chicago Transit Authority (CTA) even won a federal TIGER (Transportation Investment Generating Economic Recovery) grant to add more stations and bikes adjacent to CTA hubs before launch. But because Chicago is a much larger city than Washington, we started with 300 stations and ramped up operations over about 90 days, again with the aim of perfecting operations as much as possible during rollout. Also, the gradual rollout created a constant marketing drip as Chicagoans saw the stations being constructed day by day in locations across 32 square miles (83 sq km) and shared their reactions on Twitter and Facebook. The Chicago Department of Transportation team also negotiated a contract with the operator, Alta Bicycle Share, that went beyond the fee-for-service model used in Washington, specifying that the system had to be profitable from operations in order for the operator to realize profits.
At the same time as the Chicago system launch, New York’s Citi Bike system rolled out with the same hardware, software, and operating partner. On the continuum of public/private partnerships, this one was on the right of the spectrum, with all the capital investment and operations privately funded. New York City provided some space on sidewalks for the stations, charged Citi Bike for other space in the street, and helped with planning.
I liked the model for a host of reasons, including that cities would find it attractive from a financial standpoint. But I was always a little nervous because the first test of this no-/low-risk financial model was occurring in the largest city in North America. What I did not foresee was how much the relationship dynamic would be changed by this arrangement.
As I saw the vitriolic news stories roll out about how certain swaths of New Yorkers were responding to bike-share stations in front of their buildings, negative op-eds in the papers, and the response to software glitches, I wondered, is this really the same system we have in Chicago?
We had the normal startup glitches that any new transit system experiences—there were software problems as a result of a switch by the hardware supplier—but the reaction in New York was very different from that in Chicago. Through back channels I was hearing about a very tense relationship developing among the transportation department, the equipment provider, the operator, and other stakeholders. More recently, I have read op-eds by the local transportation advocacy organization criticizing the system as being inadequate, as well as all manner of off-the-record quotes from various players around the city speculating as to what could be better and why it isn’t.
There is an important lesson in all this, and it is not necessarily about the financial model, though in the New York City case I believe the model has created other dynamics regarding alignment in outcomes. This lesson is that the entire model should be built on the principle of sharing—meaning that the risks and the rewards, financial and otherwise, should be shared to ensure alignment of incentives and to produce the best possible service for the citizens. The success of the Washington and Chicago systems speaks to the collaborative relationship among all the players, including at the regional level through the metropolitan planning organization and adjacent counties and smaller cities. The funding mechanism also brought the players together by providing a consistent, reliable financial stream for expansion regionally and a fair chance for the operator to be profitable. In both cities, the public/private partnership is a fair and balanced relationship, albeit involving slightly different levels of risk and responsibility contractually.
In Paris—which among those outlined has a system most like that in New York City in financial terms—when vandalism threatened the viability of the system, the government coughed up $500 per stolen bike (up to $2 million per year) to help with replacement, even though it was not contractually obligated to do so. After three years of operating losses and complaints about maintenance, bike balancing, and vandalism, Velib became profitable in 2011. As a result, the city has launched a sister car-sharing service, Autolib, with the Bollore corporation as a partner. Autolib offers point-to-point electric car sharing throughout Paris. In just the first year, it has 4,000 charging stations, more than 2,000 cars, and more than 100,000 members.
As cities roll out new shared transportation services in a public/private partnership (PPP) model, it is important to remember that it is a partnership and that the cities and private companies are in the rowboat together. The PPP is definitely the model for the future, and these partnerships will fall on various points in the publicly funded/privately funded continuum. But they will only succeed to the degree that the partners embody the sharing spirit themselves so that the system works for all parties. If they paddle against each other, the end-user and taxpayer lose, and expansion and follow-on services that would have bettered the city and its environment may not be realized.
Gabe Klein, a ULI visiting fellow, was head of the Chicago and Washington, D.C., transportation departments. He helped build Zipcar as a vice president from 2002 through 2006 and regularly consults with cities and private companies on shared transport systems.
