I was Right, Paul Krugman was Wrong, Citi Bike is a Disaster

Strong Winter Storm Bears Down On Northeastern US

Last year, I wrote “Bloomberg’s Banana Republic” which, among other things, predicted that Citi Bike, the bike sharing program, would be a disaster.

The history behind the program made it obvious.

Citibike was supposed to launch last summer, but the software developed by the Montreal parking authority didn’t work. In only two years, the Montreal taxpayer funded company and its bike share plan had managed to get into enough financial trouble to require a 108 million dollar bailout. But then the big contracts from Chicago and New York City arrived and in a fortuitous coincidence, the Chicago Department of Transportation intern who wrote up the proposal was given a top position in the company.

The article was attacked by everyone from Paul Krugman to Gawker to the New York Observer.

This year the company actually did file bankruptcy protection and now Citi Bike is desperately scrambling to survive while looking for a taxpayer bailout.

Leaders of Citi Bike are moving quickly to raise tens of millions of dollars to rescue the popular bike-share program as it loses money, according to people familiar with the matter.

Citi Bike’s bright blue bicycles have become a seemingly indispensable part of some city neighborhoods, but its managers don’t believe it can survive if it doesn’t become more appealing to tourists and expand to new neighborhoods, the people familiar with the matter said.

Citi Bike has been forced to contend with a number of costly issues, including damage to equipment during superstorm Sandy, software glitches and a difficult 2013-14 winter that discouraged ridership.

One issue is that Citi Bike has proved more popular than expected with annual users who generate comparatively little revenue. Some 99,000 people pay $95 a year plus tax to be able to use the bikes for 45 minutes at a time.

The potential for far greater revenue, however, is with short-term users. Many of those were expected to be tourists, and they haven’t used the bikes nearly as much as officials had anticipated, people familiar with the matter said.

This was a completely foreseeable problem. Did anyone really expect tourists to spend a lot of time cycling around the city? And New York City has a poor ratio of bad weather to good weather. Citi Bike appealed to a limited demographic which was willing to shell out money for long term use.

This isn’t a city for tourist biking. It’s risky and dangerous.

Citi Bike appealed to a limited number of people. Those people chose to hijack public spaces while insisting that it was really for everyone. Now they should pay the price in higher rental rates. Make the rates subsidized for tourists, but higher for annual users. Either they’ll stick with it or they won’t, in which case we can get rid of the eyesores.

Bill de Blasio, in his only correct decision so far and probably ever, has said that there won’t be a bailout.

Portland will face the same problem as New York.

An analysis by The Oregonian earlier this month showed Portland is counting heavily on tourists to keep the local bike-sharing system afloat when it launches.

Meanwhile here come the lawsuits.

A Citi Bike rider claims a horrific crash last year damaged a nerve in his brain, robbing him of his sense of taste and smell.

Ronald Corwin and his wife sued the city and Citi Bike’s private operator Thursday for $15 million over the Midtown accident.

“This has turned my life inside out,” Corwin, 73, said. “I do nothing now but go from one (medical) specialist to another trying to find some relief.”

The Westport, Conn., man, who works as an executive planner, says he flipped over the Citi Bike he was riding on Oct. 25 after his front wheel struck a low barrier that had been installed next to the bicycle docking station at E. 56th St. and Madison Ave.

He now suffers from traumatic nerve palsy, which has left him unable to taste and smell and his doctors believe it’s permanent, said Guy Smiley, his lawyer.

This is why you don’t advertise biking in the city being for everyone. The accident rate is high.

Top that off with allegations of mismanagement by Alta and the whole thing is imploding badly. It wouldn’t surprise me if all the little blue stations were gone within a year.

  • Tiberius

    This is where an example of enviromental agenda did not help at all and it just made the costs even more expensive.

  • Chad D

    Nice journalism. One accident equals a high accident rate? And it was an accident because the rider didn’t see a parking barrier, how is that the fault of the bikes? Do a bit of research next time.

    More people have been killed walking across the street than on a citibike since their introduction.

    • A Z

      I would think any accident rate that causes Citibike into bankruptcy would be too high.

      ” The last full set of DMV statistics from 2011 show 3,504 bicyclists were injured and 22 killed”

      http://brooklynpersonalinjurylawyerblog.com/tag/bicycle-accidents-new-york-city/

      I also expect that cyclist that don’t own their own bicycles to have a higher accident rate. See your actuary, if you want to argue.

      • Chad D

        Nice source! Is a blog from an ambulance chasing lawyer supposed to be credible?

        • Jakareh

          Okay, you win. Riding a bicycle through the congested streets of Manhattan is totally safe, even for unpracticed riders, because the shared bikes are vaguely socialist and environmentally friendly. You have a nice liberal brain.

          • Schmitty

            Not to mention when was the last time anyone went on vacation to bike around NY?

    • Daniel Greenfield

      I’m speaking of biking in NYC in general, particularly Manhattan

    • Schmitty

      I think their bigger issue is lack of money.

    • The March Hare

      Why should he have to list every accident that has occurred? Isn’t an example of what happens enough? I grew up riding a bicycle and have ridden in big city traffic in the Midwest. Bicycles in downtown streets pose a danger and put an undue burden on drivers having to look out for cyclists also. Cars don’t generally just pop up in front of you, but bicycles do. Biking in heavy city traffic is dangerous.

  • Abberline

    The Knish is right (I am a New Yorker by the way) – NYC (at least Manhattan) is not meant for bicycling in the streets.

    • Chad D

      Why? Because you say so?

      • Habbgun

        Yeah you’re right….congested streets full of traffic, pedestrians everywhere, trucks, buses and bicycle messengers fighting a poor lost tourist for space. Yeah sounds perfect. Are you in the hospitality industry???

    • Daniel Greenfield

      I know plenty of people who bike in Manhattan. Most of them have battle scars to show for it.

  • Habbgun

    Forget Citibank. There’s a lawyer named after a Muppet? Now that’s news.

  • pete

    bu bu but it just HAS to work because GOVT

    • ServosT

      But given enough taxpayer’s millions it will be a rousing success.

  • CaoMoo

    Yeah I want to bike around New York city and it’s crime free pristine beautiful empty streets in its wonderful tropical winters.