Bike-sharing is a neat amenity but it’s not working in Seattle. It also reeks of inside dealing and special-interest favors.
Seattle’s struggling with a homeless crisis it can’t afford to solve. Police are stretched so thin, residents are hiring private police.
City Hall can’t afford to fix all the cracked roads, provide sidewalks everywhere or replace creaky bridges.
Nor can it maintain parks, operate libraries or house the indigent without begging for more levies.
Yet miraculously, Seattle found cash to bail out Pronto, a failed, barely used bike-rental venture that needs $1.4 million in March and a $5 million infusion in 2017. Operating costs will approach $2 million a year — forever — but might be partly covered if ad sales and ridership trends reverse.
Bike-sharing is a neat amenity, but it’s not working in Seattle. It’s too costly for a city that claims it can’t afford the basics. A bailout would undermine the credibility of city leaders, especially since Pronto reeks of insider dealing.
Getting straight answers about the bailout is tricky. Analysis of Pronto is being done by Mayor Ed Murray’s transportation department, which is stacked with bike-share advocates and led by a guy who used to work for the company operating Pronto. They propose buying Pronto from its current owner, a nonprofit defaulting on a loan.
The $1.4 million purchase price doesn’t sound like much, but it’s just a down payment, committing Seattle to costly upgrades and operating costs if ridership and advertising do not take off.
Where was this money last fall when Murray said he couldn’t afford $7 million for safe walking routes for schoolchildren unless voters approved a huge transportation levy?
The department’s bike czar, Nicole Freedman,told O’Brien’s sustainability committee that Pronto is failing for several reasons: administrative costs plus overly optimistic projections about ridership and advertising sales.
Yet Freedman’s proposal for Pronto left out administrative costs the city would incur and is wildly optimistic.
O’Brien told her administrative costs must be included, but nobody asked about the cost of losing scores of downtown parking spaces to Pronto.
Freedman — the national bike-sharing association president — said ridership will increase three- to fivefold if Pronto doubles in size. She also expects advertising to increase 70 percent.
Seattle received a $1 million federal grant to support Pronto. It won’t need to be repaid if Seattle gives the bikes to another city, she said.
O’Brien requested more specifics, but staffers said they can’t prepare a full business plan until after the city proceeds and gets vendor bids. But O’Brien is still supportive.
Freedman promised to bring supporting data from cities with successful bike-sharing programs. What about the data showing how it’s worked in Seattle?
It’s odd to say Seattle would run Pronto. Actually it would hire a private operator, paying an estimated $1.2 million in 2017 and $1.8 million in 2018. Operations include hauling bikes around in vans — after riders make one-way trips. This overhead, and operator profit, makes for expensive rides.
In Washington, D.C., where bike-sharing is seen as a success despite labor complaints, operating costs ranged from $4 to $18 per trip, averaging $8.18, according to a 2012 report. Trips averaged about a mile.
Operating costs in Seattle averaged at least $13 apiece.
It sounds like a great business, but leading vendors struggled until rich investors bailed them out.
More troubling is the revolving door between those companies and city transportation departments.
Scott Kubly, Seattle’s transportation chief, was previously president of the dominant bike-share company and Pronto’s operator, Alta Bicycle Share. Earlier, he worked for Chicago and D.C. when they hired Alta.
In Chicago, Alta bid $8 million higher than competitors but won anyway, securing a 15-year contract worth $65 million. An ethics complaint said city staff members were cozy with the company.
Gabe Klein, Chicago’s transportation chief and Kubly’s boss at the time, left and began advising Alta. He also worked with Kubly in D.C.
Another Alta client was Boston, where Freedman was bike czar until Kubly hired her in Seattle.
In late 2014, Alta’s bike-share business was sold to a New York company called Motivate.
Alta still runs a consultancy, which Seattle hired to update its bike plan and to design the Broadway bicycle track.
Alta started in Portland, where the city’s former transportation chief went on to consult with Alta as they hashed out a contract. She previously worked with Kubly and Klein in Chicago and D.C.
Klein is now a partner in a firm investing in transportation ventures. Last year it took a stake in Zagster, a Boston startup selling bike-share programs to corporate campuses.
Now Zagster is selling city bike-share programs as well. What are the chances Zagster will pursue the contract in Seattle?