Mayor Stephanie Rawlings-Blake’s hop on the popular “bikeshare” bandwagon has suffered an unexpected jolt with news of the bankruptcy of the program’s software and hardware maker.

Bike-share bigwig Bixi filed the Canadian equivalent of Chapter 11 protection on Monday, reporting that it owes creditors nearly $50 million, including at least $38 million to the city of Montreal, its home base.

Among other things, Bixi supplies the solar-powered kiosks, “smart” bicycles and software to Alta Bike Shares, which in turn is the sole-source contractor for the 250 bikes slated to carry tourists and residents around Baltimore’s waterfront and downtown.

After several false starts, the mayor was hoping to launch the system this May, following on the heels of Washington’s successful Capital Bikeshare and the less-than-acclaimed Citibike program in New York City.

Financial Feuds and Software Delays

Both the D.C. and New York systems are run by Portland-based Alta, with hardware and software provided by Bixi, a company that exploded on the scene five years ago with sleek modular “docking stations” and sophisticated software allowing day-trippers and year-around members alike to access bikes at one location and drop them them off elsewhere.

It turns out from court-related documents that Bixi and Alta had been feuding for awhile. Alta wants $11 million from Bixi because of program delays, while Bixi seeks $5.3 million in IOUs from Alta. Implementation of the software that keeps track of the rental bikes has become problematic in several cities.

For example, the New York system, now encompassing about 5,000 bikes at 330 stations, was delayed for months last year because of software issues. The roll out of an another 4,000 bikes at 270 more stations, which would substantially increase Citibike’s usefulness to city commuters, has yet to be announced.

High Tech but Money Losing

More broadly, there’s a big problem in the bikeshare world.

Despite their popularity among city planners and mayors – who consider the short-hop rental bikes an environmentally-friendly way to reduce traffic congestion and enhance tourism – suppliers and vendors have been unable to build a sustainable financial model outside of outright public subsidies.

Baltimore’s experience is indicative of the political and monetary hurdles.
____________________________________________________
THE BREW’S COVERAGE OF THE TRAVAILS OF CHARM CITY BIKESHARE:

• Sharing bikes to curb cars – Baltimore gets ready for “smart bikes” (3/28/11)
• City puts brakes on bikeshare program, citing costs (4/5/11)
• Baltimore bikeshare program revived, 300-bike network possible by next fall (11/9/11)
• Bikeshare program inches forward (5/8/13)
___________________________________________________

In early 2011, Mayor Rawlings-Blake pushed for the relatively-modest goal of installing 250 rental bikes at 25 stations.

She backed away when it became potential political fodder during the mayoral primary. (Why was the city sponsoring bikes for tourists when it was closing down rec centers for children was the argument.)

Negotiations Fail

After sweeping into office in November 2011, the mayor, through the Board of Estimates, gave B-cycle LLC exclusive rights to negotiate a bikeshare concession as long as it did not require a city subsidy. The idea was that the Denver-based company would run the program through sponsorships by local businesses and win grants from non-profits.

Negotiations ended with no agreement with B-cycle, but then came a $881,300 grant last May from the Maryland Department of Transportation as part of its Cycle Maryland initiative. The grant would pay for Phase 1 of “Charm City Bikeshare,” the name invented by boosters.

The city Department of Transportation thereupon entered into a sole-source agreement with Alta Bikes to get the program launched by this May.

No Comment from City

How the Bixi bankruptcy will impact the city’s plans is unclear.

DOT officials contacted by The Brew today have not yet responded to our questions. Nor has Alta, except for a notice on its website saying that its operations will not be affected by the Bixi bankruptcy.

Chris Merriam, executive director of Bikemore, a cycling advocacy group, cautioned that the city should carefully assess its options. “We greatly appreciate the mayor’s support, but we don’t want this program to be launched before it’s ready.”

Merriam said a major sticking point continues to be how to support the program without public funds. “I think Bikeshare needs to be considered a piece of public infrastructure, just like the [Charm City] Circulator.”

Meanwhile, the city of Montreal, which controls Bixi, hopes to greatly reduce the company’s debt and reopen a reorganized firm by this summer. But all of this will take some more public money, Montreal’s mayor concedes.