Tuesday night, Montreal’s city council voted on whether to financially back Bixi to the tune of $108 million. The Public Bike Service Co. (société de vélo libre service) a non-profit that manages Bixi, threatened to take the bikes off the street on Thursday May 20th and resign if the city did not intervene. The directors of the non-profit organization could have become personally liable some costs.
The “bailout” consists of a $37-million loan to cover Bixi deficit, incurred during the first 2 years of service, which includes the concept, design, patent, and manufacture of the bikes and stations. They will have 12 years to repay this loan with 2% interest. According to the Bixi webswite, their business plan predicted that operating costs could be covered once they reach 50,000 members and through sponsorship. They currently have 40,000 members.
Furthermore, $71 million would guarantee loans required to export BIXI internationally. The Public Bike Service must put forward money to manufacture of the bikes for export before receiving the full payments.
The vote divided along party lines with Tremblay’s Union Montréal in favour of the bailout (35 votes) and the two opposition parties against (25 votes).
Union Montréal underlined that BIXI is iconic success of Montreal, and that the system leads to the creation of 450 jobs (50 to run the program in Montreal and 400 tied to the design and manufacture).
“(BIXI is) the jewel of Montreal, of Quebec, known internationally now,” said executive committee chair, Michael Applebaum (quoted in The Gazette). “And because of its success, it needs more financing…under our administration, we will ensure that Bixi will continue to be a success story, for Montreal and internationally.”
Vision Montréal argued that the city’s coffers aren’t a bank and that the Public Bike Service should have gone elsewhere to finance it’s essor.
“La Ville n’a pas à se transformer en banquier. Pour l’exportation, il y a des organismes comme la Banque de développement du Canada, le ministère du Développement économique ou Investissement Québec. Ce n’est pas aux contribuables montréalais de payer ça,” Louise Harel was quoted as saying in Rue Frontenac.
Projet Montréal, conversely, believes that the city should finance BIXI as a public service rather than leaving the management an arm’s length, non-profit organization.
“Qu’on fasse de #BIXI et la SVLS un véritable service municipal public & transparent et que cesse le mirage de sa profitabilité,” tweeted Projet Montréal leader, Richard Bergeron last night. “Le problème réside dans la transparence que n’ont pas ces OBNL créées par le maire,” he added.
The Auditor General is supposed to release a report on the organization next month. Both opposition parties deplored that the issue went to vote before the complete information was available. In the meantime, Bixi’s website attempts to clear up the facts (or their version of them) here.
What does the Spacing Montreal think… Would Bixi have survived the week intact under our guard? Feel free to justify your vote in the comments section below if you so desire. Survey’s open until Saturday May 21st.
THE POLL IS NOW CLOSED: Results here.
If the vote was for or against 101 million dollar bailout, I would vote against. However, I could be okay with the 37 million dollar loan. I support BIXI in Montreal but it is NOT Montreal’s job to provide loans to a company for international services. Especially in a place with terrible roads and poor animal services… everyone uses the roads, drivers, bikers, and rollerbladers… they need to be a priority.
I think Louise Harel might be right here – why is it the up to the city to put in money for expansion, shouldn’t Public Bike have turned to the BDC, a normal bank, or an outside investor for expansion capital?
If the city *is* going to lend them money, shouldn’t they do it at a more profitable interest rate? 2% is less than inflation, and less than the Bank of Canada’s prime rate. This seems like another money-making opportunity that the city passed on, (like those recent real estate deals).
A 2% probably represents a loss of money, but less than a million or two.
Who owns bixi and its assets, anyway?
as long it is a municipal service, a 2%-loan is just another subvention (to the existing ones). it is entirely ok for such a service to have to be subventioned as long it is reasonable compared with the resulting benefits (long-term, and not necessarily material or impacting municipal finances, such as health through prevention by cycling, by reducing pollution, less destruction of roads by less cars, thus enabling better quality of life for people in montreal, making montreal more attractive, and so on).
however bixi seems to go more a non-sustainable, very corporate way, illustrated by the following: expansion required to finance operating costs, non-transparent financial statements (a lot of spin is given, we do not know how much their executives are paid). if it were justifiable, there would be no need to hide anything. we have a right to transparency where our money is spent.
this contains the danger that the costs (and risks from expansion) are socialized (municipal taxes) while profits are privatized. with the current level of corruption at the city it can be safely said that there are fat executive paychecks and sub-contractors taking their cut.
those in charge have learned from the financial crisis that whatever happens, they can still continue to enrich themselves from consumers and from the public coffers. partly this is our (the citizens) fault, since we are letting that happen. i guess there is a limit for that though.
If BIXI is such a “success story,” “a jewel of montreal,” etc then why do they need bailing out?
If they needed different start up funding then they should have thought of that at the startup, if they want to export the model then they should look for a partner or have already thought of that in their business plan.
If they are having a hard time then ask for a buyout or indirect support (promotion to get the numbers up to 50K from 40K, defferred tax relief, a partnership) but not money handouts loan or not.
Mabybe they should ask the City to be their partner and then when it makes a bunch of money the citizens of montreal will benefit and money will flow back in to pay for things that we need here? But bailout? guaranteed loans? I and everyone else wants that too.The city would laugh at me. My business would skyrocket with 50K injection of “infastructure investment” from the city (as opposed to 108 million!; 216 times that) and so would many other businesses; but that isnt how it works and governement doesnt or shouldnt do that….it should be the same for Bixi.
This is why we do so badly on the international stage: we cant make a financial success of things without government bailout (go ask daddy syndrom); millions of companies start up all over the world and make a success of it….why not us? why not BIXI?
i am sure they have lots of help, free access to locations, promotion etc from the city already; if they cant make a go of it then lets support companies that CAN do it.
BIXI is using emotional blackmail.
@ANT6N Apparently Bixi, (aka Public Bike), is a privately-held non-profit. I don’t know who actually owns it, but if it’s privately held I’m guessing that the city doesn’t own it. If the city does own Bixi then it makes sense that the owners would be putting in some extra money to help it expand – this happens all the time in other companies.
Does that ‘Bailout’ price include a new Route 91 streetcar to Lachine??:):):)
In response to Patrick’s comment, Bixi pays the city for the spots they occupy on the streets (the amount those spots would have generated if parking meters were active).
So far, Bixi’s current middle managers have saturated the bikes with corporate logos, fired a few workers, and threatened to kill the program if they don’t get the government money they demand. This jewel is turning into a bit of a blood diamond. Does every useful innovation and environmental amenity have to be choked to death by our mercenary business-driven “culture?”
It seems a bit strange for the Public Bike Svc. to go to the city, but at the same time, Montreal is saving roughly $100 per person per year who chooses not to drive a car in town. It’s hard to measure the exact effects, but the city is definitely benefiting as well.