The city will spend $5 million over the next five years and could lose $400,000 per year in parking meter revenue to bring a much-promised public bike rental system to Vancouver this summer.
Jerry Dobrovolny, the city’s general manager of engineering services, used Tuesday’s city council meeting to announce the deal with CycleHop Corp. Canada Inc., which promises to set up 150 stations with 1,500 bicycles.
“It’s been an eight-year journey,” said Dobrovolny, noting council first floated the idea for a bike rental system, or bike share, in 2008.
He said the agreement with CycleHop, which is based in Ottawa and operates the largest “smart bike” system in North America, was finalized Monday and will launch June 15. The deal involves French company Smoove, which will supply the bicycles for rent in downtown and in an area bounded by Arbutus Street, 16th Avenue and Main Street.
“I’m doing a happy dance today,” said Vision Vancouver Coun. Heather Deal, who pushed for the system.
The locations of the bike stations haven’t been finalized but Dobrovolny said they will not be placed in front of stores that already rent bicycles to the public.
The installation of the stations will mean a loss in parking meters, which will mean a loss in parking revenue. Staff’s initial research on implementing a bike rental system estimated the loss in revenue at $800,000 per year. Dobrovolny said CycleHop agreed to pay the city $400,000 per year to cover the loss of parking revenue. It will then be up to the city to absorb the rest of the loss, he said.
NPA Coun. George Affleck, who has long been concerned about the impact such a system would have on existing bike rental stores, asked Dobrovolny to reveal the extent of that loss.
“The actual amount of lost parking revenue is unknown at this point,” he replied. “It could be zero to $400,000... but until we identify all the station locations, we won’t have a final count on how many meter spaces that are affected.”
The agreement with CycleHop comes three years after the city signed a deal in April 2013 with Alta Bike Share of Portland to supply a bike rental system in Vancouver. But that deal collapsed because Alta’s preferred supplier of bikes, PBSC Solutions, filed a notice of intention to seek protection under the Bankruptcy and Insolvency Act related to its Montreal bike share system and mounting debt. Alta was then later acquired by another company in New York, which stalled the implementation of a system in Vancouver. The delays and business problems forced the city to scrap the deal last year.
The original agreement was to have Alta own, finance and operate the system and provide customer service. Alta also had to secure corporate sponsorship and donation contracts. Affleck referred to the problems of that agreement in further questioning Dobrovolny about how the city would be protected against any loss, if a similar scenario were to unfold.
CycleHop is responsible for the “business risk” associated with the agreement, said Dobrovolny, noting the city has negotiated several “safeguards” to provide varying levels of security throughout the five years of the contract.
Affleck: “Does that include us taking over this company, if it goes bankrupt?”
Dobrovolny: “That’s an option that’s available, it’s not an obligation. There’s a number of what-ifs that we could do. It could be assigned to a different operator, the city could take it on, we could go back out to tender again.”
Added Dobrovolny: “I’d like finish by saying we have every expectation that it’s going to be very successful. We plan for the worst and hope for the best.”
If successful, the bike system would expand west to Macdonald Street and east to Commercial Drive. The system will operate all year, 24 hours per day. Helmets will be provided with the bikes at no extra cost to the user.
The city was expected to hold a news conference Wednesday to reveal more information about how the system works and what it will cost to rent a bike.
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