The impending bankruptcy of Montreal-based bike-sharing company Bixi has one Vancouver city councillor questioning the City of Vancouver's plans for a multi-million-dollar bike-sharing program.
Yesterday it was announced that the company that owns Bixi owes $50 million to various creditors, including the City of Montreal and the company is headed for bankruptcy.
In July, Vancouver's city council approved a $6-million plan to install 25 solar-powered docking stations for 250 bikes in the city's downtown core by spring 2014. The program will be operated by Alta Bicycle Share Inc., but will depend on bicycles and infrastructure supplied by Bixi.
NPA councillor George Affleck says with the bankruptcy filing, it's time the City of Vancouver gave up its plans to launch a bike share program.
"Should the city get involved in an industry that has no examples of success anywhere in the world?" said Affleck.
"I am not sure why Vision is so obsessed with this that they can't let it go. We have to move on. Now is not the time for bike sharing. We need to be careful of the taxpayer dollars and move on from there."
But Vision Vancouver Councillor Heather Deal points out while no contracts have been signed, there are no plans yet to shelve the idea.
"We're going to be touch with Alta and find out what's going on as we move forward. We're hoping that another bike producer can be found," said Deal.
Local company to the rescue?
One of the companies hoping to get another shot at running Vancouver's bike share program is SandVault Group, which lost its original bid to Alta and Bixi.
The Richmond-based company helped design Tulsa's bike share operation several years ago, then the first of its kind in North America. It also designed a profitable bike share program in Miami and is shipping a prototype to Philadelphia for a bid.
SandVault president Rick Murray says the company has already designed a "made-in-Vancouver" bike share solution.
"The primary thing is that we deliver a product at a much lower price and as far as the nature of the products, they are in fact very similar," says Murray.
Murray says he has been in contact with Alta, but no agreement has been made.
Vancouver's plan calls for an additional $500,000 every year to expand the program with a long-term goal of 125 docking stations for 1,500 bikes throughout the city.
It is not the first time the company that owns Bixi — the Public Bike System Company, known in French as the Société de vélos en libre-service (SVLS) — has been in financial trouble.
The Quebec-born bike-sharing service has lost millions of dollars since hitting Montreal streets in 2008. In 2011 Montreal approved a $108-million bailout package for the operation.
Despite Bixi's financial problems, Montreal Mayor Denis Coderre says he believes the service can be viable.
“If Bixi can be saved, it’s through the Bankruptcy and Insolvency Act," Coderre said.
The company's cash-flow problems began when it tried to develop new proprietary technology for international clients.
Persistent delays and problems with the technology prompted many clients to withhold payments — Chicago and New York refused to pay out $5.6 million to Bixi because of the prolonged snags in the development of each city's bike-sharing service.