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Financial troubles could put BIXI Toronto in jeopardy

Posted by Chris Bateman / April 16, 2013

toronto bixiThings aren't looking too good for Toronto's BIXI bikes. A city report released today says the program is experiencing financial difficulties related to the repayment of a loan to buy its bicycles, bike stands, and other equipment.

Though the city says the scheme has been "very successful," attracting 4,630 paid subscribers and more than 1.3 million bicycle trips since 2010, the parent company PBSC Urban Solutions seems to be struggling to generate income during cold winter months.

When it started, the City of Toronto provided a 10-year, $4.8 million term loan to BIXI for the purchase of equipment. As of December 31, the balance of the loan was $3.9 million. The report says the troubles are related to an "unsupportable debt load" and a "seasonal cash flow shortage."

A confidential attachment to the report details ways the city could alter its arrangement with BIXI to best protect its assets in the event the company is unable to repay its debt.

The Montreal-based company is currently in the process of selling its New York City, Melbourne, and Boston contracts as part of an agreement with the city and Quebec government. The City of Montreal loaned BIXI $37 million in 2011 and extended $71 million more in loan guarantees and credit lines.

It's not clear at this stage whether the problems are serious enough for BIXI to close its Toronto operations. A representative for the company said more financial data will be available later and that there is no information on a possible closure. In a scrum, Councillor Denzil Minnan-Wong said it's his understanding the company wants to quit Toronto.

The details of the financial restructuring will be made public before the April 23 meeting of the executive committee. A staff report is due June 19 on the status of BIXI in Toronto.

Should the city try to support its BIXI bikes or should the parent company sort out its own problems related to the original deal?

Chris Bateman is a staff writer at blogTO. Follow him on Twitter at @chrisbateman.

Image: Martinho/blogTO Flickr pool.

Discussion

38 Comments

Sarah / April 16, 2013 at 02:26 pm
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I LOVE Bixi!! My bike was stolen last November and Bixi has saved my sanity. It is so convenient and I don't have to worry about having ANOTHER bike stolen. I know Toronto seems to hate cyclists, but I hope they do something to make sure this service sticks around.
John Labatt / April 16, 2013 at 02:28 pm
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The streets of Toronto are not the safest place to ride a bike. I do like this program but its way too expensive. Too many people are jammed in such a small area. Why cant such a program be run by volunteers. Would make it a whole lot cheaper and be run by people who kinda know bikes and such.
Angeline / April 16, 2013 at 02:28 pm
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It would be a shame to lose this program right after Layton expressed his desire for it to expand beyond its current borders. I own my own bicycle and still use BIXI service from time to time!
asdfsd / April 16, 2013 at 02:31 pm
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maybe Bixi should consider expanding west? where a large proportion of TO's biking population lives. And also consider expanding to places that are in need of better public transit (like Liberty Village, and the Queen and Dufferin area).
Comrade / April 16, 2013 at 02:36 pm
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Perhaps if BIXI wants to back out of Toronto. The city should simply appropriate the debt and run it as a public service.
KJM / April 16, 2013 at 02:38 pm
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I'm not surprised. After a year of no bikes where I wanted to pick one up, no spaces where I wanted to drop one of and several encounters with entirely disinterested and apathetic customer service reps, I did not renew my membership. There was zero follow up.
stefano milano / April 16, 2013 at 02:38 pm
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if the city had properly supported bikeshare none of this would be an issue.
we don't need bourgeois bike rental: bring back bikeshare!!!
anon / April 16, 2013 at 02:40 pm
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i will renew my annual bixi membership if they expand west
I / April 16, 2013 at 02:45 pm
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Nooooo.... I use BIXI literally every day (even in the winter!) because it is SO much more convenient than the TTC where I live.... Please don't leave Toronto BIXI!!
Philipp Piskov / April 16, 2013 at 02:59 pm
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This would be the single greatest tragedy to the bike culture in Toronto :(
I love this service! It only enhances the urban enjoyability of downtown. Public bicycles are always a plus for any city. Just the simple fact that people know that at any time I can go and rent bicycles. Im pretty sure everybody knows about BIXI anyways. Many cities don't have such a public bicycle renting system in place, which leads me to say I wouldn't want to see this service eliminated.
Bob / April 16, 2013 at 03:12 pm
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The setup stunk from the beginning. High prices and limited stations.
Obviously management forgot about analytics. Adding or subtracting bikes and bike stands at locations, moving locations. This could easily be rectified in 12 months with a simple Android/Iphone/BB app used to gather the required information.Or tap into Google's traffic information technology.
This isn't "big data" a la facebook. Simple queries on a small amount of data....act fast and save a service that could thrive(In the Country's biggest City).
Steven / April 16, 2013 at 03:18 pm
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LOVE BIXI! Have used it since it came to the city. Some more subscription options would be great, open up to more users. Raise rates a bit. I don't think the city should be on the hook for this, we want them to build bike lanes, not bikes!
Alberto Respezzo / April 16, 2013 at 03:20 pm
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We need a wider Bixi-like service, whether it's Bixi or not. Wasn't there a competitor that bid against them when this all started? Maybe they can fill the void if the Bixi company is going under.

I'd use it if the service area stretched from Roncesvalles to the Don River and up to Bloor, as it should. I realize that would take a big chunk of dough, but in a city this big a bike network doesn't make much sense if it doesn't cover a lot of territory immediately.
Jer / April 16, 2013 at 03:25 pm
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I am a big fan of the "idea" of Bixi but not a big fan of the company Bixi. They don't listen to users on Facebook, they don't seem interested in expanding the system (people keep asking how they can help to get it expanded and their answer is "the city needs to approve any expansion" but people want to help out in a variety of ways and they don't seem to care.

I never cycled in Toronto before Bixi came along. I live in the suburbs and find it a great way to get around when I am in Toronto. I hope it sticks around but I wouldn't mind the ownership changing.
left leaning councillor / April 16, 2013 at 03:36 pm
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An inefficient service that no one uses that owes $4 million to the city is insolvent? There is only one solution to that problem: lend them another $5 million! God Rob Ford is a moron.
CaligulaJones / April 16, 2013 at 03:49 pm
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I don't know what's funnier: the "seasonal cash flow shortage" which, for some reason, was missing from whatever 10-year old's financial plan this was.

Or the "ok, it failed because ITS TOO SMALL" crowd, who now want more money.
W. K. Lis / April 16, 2013 at 04:34 pm
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The demise of BIXI would make the Fords very happy. Less bicycles.
Mark / April 16, 2013 at 05:07 pm
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What's that? An unprofitable service that is losing millions? Bail them out! That's the Ontario way!
Matthew Fabb replying to a comment from CaligulaJones / April 16, 2013 at 05:44 pm
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If say a Taxi service decided to work the downtown core and refused to take people no further west than Bathurst and no futher north and Bloor street, then would have limits to how many people used them.

So it could be an issue that the limits is causing many people not to use them. The rollout of BIXI ended up being a fraction (3rd?) of the size that was originally planned.

That said it's hard to say without more of a breakdown of how much money BIXI Toronto has been bringing in and how much the operation costs. That it could be an issue of not getting enough people riding during the winter to make a profit, or not to full enough capacity during the other months. It's all just guess work with details.
Matthew Fabb / April 16, 2013 at 06:35 pm
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Previous articles on BIXI mentioned that around 6,000 subscribers would be the break-even point. This article mentions it is at 4,630 paid subscribers. So it was at just 1370 subscribers away from breaking even according to that previous estimate.
George Bell / April 16, 2013 at 06:48 pm
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I don't get it, they paid off 900,000 of a 10 year 4.8 million dollar loan in 2 years...that sounds about right to me...what was the interest on the loan? I can't believe it was more than 5%....
Lew Ashby / April 16, 2013 at 06:50 pm
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This is a shame. I quite like Bixi. Not a shock though. Toronto's climate is not suitable for a program that must have 12 months of bike rental income to survive. Someone did some bad business planning when they applied for that loan (or maybe they didn't - it's guaranteed by us taxpayers, so no risk?) Only BlogTO bicycle activist crew and three or four other die hards will endure icy streets and -30 wind chills for the privilege of cycling to their destination on a sunny February morning. Toronto is only suitable for bicycling 8 months of the year. We need to stop fantasizing that we're like Amsterdam and build some freakin' subways.
hamish wilson / April 16, 2013 at 07:48 pm
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Uh, subways cost billions, and if they're not in the right place, it gets worse.
BIXI is a good starting point, and yes, if it had been put in the way that it was first planned, it would be a better thing.
That includes being a quicker way around downtown for some not-urban folks, in most conditions too.
BTW cars are subsidized, one old stat from Vancouver said $2700 per car per year....
Alexander / April 16, 2013 at 08:48 pm
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I'm shocked! Shocked I say! Torontonians don't want to ride expensive bikes in the 6 months a year the weather stinks? Noooo, how could anyone have predicted that February would be a bad month for bike riding?

I mean, seriously, I was sitting here thinking "Take a poor weather city, streets that 99% of people aren't comfortable riding bikes on AND make it really expensive" surefire winner...in fact, I am starting up a bike share in Death Valley next and then on to Siberia!
latte drinking voter replying to a comment from Alexander / April 16, 2013 at 08:55 pm
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Alexander you sound like the kind of politician we need more of in this city / province. Please run so I can vote for you. You have great ideas!
MS / April 16, 2013 at 09:29 pm
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We need to rethink what BIXI is. It is not a get-a-round town for tourists. BIXI is a form of public transit. The TTC should take over BIXI and incorporate it into its core service. This is environmental, inexpensive compared to new vehicles and helps relieve overcrowding on most routes. Its true, spending money on public transit costs real money and generating revenue to cover those costs is important. But at the end of the day, this small investment pays back handsomely.
iSkyscraper / April 16, 2013 at 09:31 pm
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One has to wonder if City Hall isn't rather suddenly worried about their Bixi loan (despite Bixi's successes in many other cities) in order to undermine the system and get it ended. Rob Ford is the mayor, after all.

And one has to wonder if Bixi isn't rather suddenly preferring not to be in Toronto. They have a 3,000 bike system in Chicago and a 10,000 bike system in New York to launch, their DC, Minneapolis and Boston systems are all growing (they were all once smaller than Toronto but are all now larger) and they would probably rather be where they are wanted. Rob Ford is the mayor, after all.

Even issues of Fordism aside, the fact that Toronto is the most expensive bikeshare system cannot have helped matters.

It's all rather sad.
ccwestcliff / April 16, 2013 at 10:07 pm
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I live in Toronto for a bit more than a year now and since then I am subscribed to Bixi and use it five days a week to commute to work in Downtown Toronto.
I love the city and its people but the way that biking and bikers are treated is just appaling! Toronto is - and under the current mayor will remain - a "drive everywhere with your car" city and I don't see the council or mayor to support Bixi, given the aforementioned attitude.
I would miss Bixi dearly!
secyw / April 16, 2013 at 11:06 pm
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It would be sad to see the program disappear especially since there are infrastructure plans in the talks about expanding bikes lanes and all.
Pedro / April 17, 2013 at 01:13 am
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I've been waiting to get a membership for years for BIXI to expand west a few blocks. It's very likely that there are thousands more potential customers in waiting like me.

BIXI was supposed to have expanded in 2012 were they not? It wasn't approved. Rob Ford's administration is killing BIXI by neglect - no doubt his plan all along.
Keith / April 17, 2013 at 03:04 am
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Which is it? Is it that the city is providing a guarantee for a (now) 4 million dollar loan, or that the city itself has actually loaned the money to Bixi? There seems to be two different sides to this story.
Tyler / April 17, 2013 at 07:27 am
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This is a great system. If you only use bixi in lieu of a cab once a month you've actually saved money under the yearly subscription plan. Never mind the cost of bike maintainance and theft.
GRAARG / April 17, 2013 at 11:37 am
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BIXI is a pit to poor money into. Which is not to say we should kill it but for those who say, we need it bigger and it will break even… it will not.

For those saying, if only we had more stations like Montreal…. “In 2011, Montreal was forced to give Bixi a $108-million bailout package, including a $71-million loan guarantee and $37-million loan” – Toronto Star.

As per a comment I made on a different thread – imagine what you could do with $108m if your goal was to advance cycling. How many bike paths could you build? To give you a comparison, if I had $108,000,000 and bought $200 bikes…. I could buy 540,000 bikes. What would do more for cycling in Montreal – BIXI or giving 540,000 bikes to needy people?

Yeah, I know it was a guarantee that Montreal gave BIXI and not actual cash but since BIXI Toronto can’t repay its loan and PBSC (the parent company of all BIXIs and owned by the City of Montreal) is desperately trying to unload their local (money losing) operations in NYC, London, etc – what do you think the chances of Montreal colleting 100% of that loan are?

BIXI is a good service. But scaling it up will just mean it will lose more money faster. Better to keep is small and manageable because any bigger and it will lose even more money and certainly be killed off.
Adam / April 17, 2013 at 12:33 pm
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BIXI is a fantastic concept and practice that would be a lot more successful if this city's bike infrastructure wasn't stuck in the 1950's along with our joke of a mayor and his dimwit brother.
Josh / April 17, 2013 at 12:45 pm
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I truly believe that if Bixi only expanded their territory, it could (and would) be as successful as Montreal. Plain. Simple.
BIXI will work, just needs more time and money / April 17, 2013 at 05:10 pm
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Give it a year and Biki will not only be in the black, but will be thriving to the point where they can expand to the natural boundaries of Roncey to the Don, Bloor to the Lake.

And if it doesn't? The new mayor can re-instate that vehcile registration tax and put it directly toward s BIXI and bike lanes. Seriously, when was the last time something came out of City Hall that would be such a "WIN-WIN-WIN."???
Tanya / April 21, 2013 at 11:31 pm
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Bixi is a private company and should not be getting money from the city. If people love Bixi so much they should allow Bixi to raise the prices/fees to the point where it is profitable OR they should be fundraising to raise the funds they require.

Should the city give $4.8 Million to Beck Taxi to buy new cars and keep them on the road?

I'd rather have cycling and fitness encouraged in the city by giving a rebate to residents that buy a bike from a local bike shop anywhere in the GTA, not just funding the Bixi zone.

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