This from todays' Montreal Gazette:
No matter what happens to Toronto’s deficit-ridden Bixi bicycle sharing service, Montreal taxpayers will not be on the hook for the $3.9 million it has already accrued in debt, Michel Philibert, a Bixi executive said Thursday.
The Bixi bike program, funded and created by the city of Montreal, has been something of a flop in Canada’s largest city with only about 4,600 subscribers to the service as of April — compared to 50,000 in Montreal. But Toronto city councillors say that the program hasn’t been given a chance to succeed and council is looking at ways to save its floundering version of Bixi.
In April, Toronto officials admitted Bixi Toronto Inc, the company that runs the city’s Bixi program, owed $1 million to suppliers and was not making enough money to pay off its debt. The city of Toronto backed a $4.5-million bank loan to bring the program to the city in May 2011. As a result, its taxpayers will be responsible for covering the debt, which now stands at $3.9 million, if the company folds.
Bixi Toronto is an offshoot of the Public Bike System Co., a private company controlled by the City of Montreal that created Bixi and sold the system to cities worldwide, making Montreal liable for its operating losses.
But despite Montreal’s financial stake in the program, Philibert told The Gazette that Toronto will ultimately foot the bill should their bike network shutter its doors.
“Bixi did fund the loan that got us started in Toronto but that loan was guaranteed by Toronto,” said Philibert, interim head of operations at Bixi. “Right now we’re in discussions with Toronto and it’s going very well, there’s no panic or anything like that.”
The news may come as something of a relief to Montreal city hall, which loaned Bixi $108 million in 2011 to cover the expenses it accrued during an international expansion that saw the service take root in New York City, Boston, Melbourne and London among other cities.
Réal Ménard, the Montreal councillor responsible for transport, said taxpayers should not be forced to cover the losses of a Toronto program running a deficit.
If Bixi Toronto is on the verge of going under, there are three possible scenarios, according to Ménard:
The city of Toronto takes over responsibility for the program and its debts, an option Bixi Montreal is pushing for;
A private third-party firm takes over the program in Toronto, which Ménard classified as unlikely;
Bixi goes under and Montreal ends the program, assuming a small, unknown amount of transfer costs, although Ménard said it would likely be in the realm of $30,000 to $100,000. As of Thursday, Ménard said he thought this was the most likely outcome.
He did not know if the city would inherit Toronto’s 1,000 bicycles, valued at about $1,000 each. It’s also unclear what the labour costs of dismantling Toronto’s stations would be.
However, it appears Toronto’s city council is working toward having a municipal agency such as the parking authority or transit corporation take it over. Some councillors have suggested money earmarked for an expensive and to date unsuccessful public toilet program be used instead to cover Bixi’s deficit.
“It would be a real shame to lose the program because it’s popular and this city doesn’t exactly have a stellar reputation when it comes to bicycle access,” said Toronto Danforth councillor Paula Fletcher. “We’re trying to find the sweet spot here where we can save the system, create a better bicycle lane network downtown and even expand Bixi. It’s going to take a financial surgeon but we have lots of surgeons here.”
Embattled Toronto Mayor Rob Ford famously compared bike lanes to “swimming with sharks” during a speech he made while sitting as a councillor in 2010. At the time, Ford advocated the lanes be ripped out and replaced with more parking spaces and road infrastructure.
Since being elected mayor, Ford hasn’t had a change of heart in regards to expanding the city’s cycling infrastructure. In fact, Ford actually limited Toronto’s implementation of Bixi, cancelling a deal that would have seen 3,000 bikes rolled out across Canada’s largest city, opting instead to limit the service to 1,000 bicycles. The initial plan would have made Bixi much more profitable, according to Ménard.
Toronto city councillors said the issue would only be resolved in the fall. Montreal has to give the Toronto owners three months’ notice if it plans to sever ties.
The PBSC’s international arm and its contracts were on the verge of being sold in June, Ménard said, but the deal fell through over contractual disagreements he said the city is still hoping to iron out. The deadline for the sales contract was at the end of June.
The Gazette has reported that Procycle, a bike-maker based in Quebec’s Beauce region, was expected to buy the international operations, and the Société de transport de Montréal is expected to take over the Montreal network and other Canadian systems.
Although the PBSC earned about $50 million in 2012 it posted an overall deficit of just under $3 million. Philibert says new and audited financial data will be made public shortly.
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http://www.montrealgazette.com/news...st+exec+says/8617653/story.html#ixzz2YAuwaB6O