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Ten Reasons Why the City of Toronto Should Put the Brakes on the Bixi Bailout

12/06/2013 05:47 EST | Updated 02/05/2014 05:59 EST

The City of Toronto has unveiled its 2014 budget, including a proposed 2.5 per cent property tax increase. Deputy Mayor Norm Kelly defended the budget and tax hike, saying there is "no gravy" left in the budget. He claims that all the fat has been trimmed from the city budget.

Then why are taxpayers bailing out a failed private company's bankrupt bike-sharing program?

On behalf of taxpayers who would rather see our money go to real transit strategies, the Canadian Taxpayers Federation says "let Bixi fail." We've compiled ten reasons for why the City of Toronto should put the brakes on the Bixi bikes bailout.

  1. Bixi was given a $4.5 million loan in 2011 back by the City of Toronto. At the time, city taxpayers were assured they were merely guaranteeing this loan for infrastructure costs. If we bailout Bixi, we'll assume the remainder of this debt, estimated to be at least $3.7 million.
  2. Bixi's audited financial statements have not been made available to the public, this despite its initial contract with the City of Toronto stating that audited financials were to be made public annually. Freedom of Information requests from the CTF for this information have been denied.
  3. According to confidential documents leaked to the Toronto Star, Bixi has run operating deficits since its inception in Toronto. The Star reported that the company lost $286,187 in 2011 and $118,879 in 2012. These figures do not even include loan repayment costs, meaning its deficits are actually much worse.
  4. The Toronto Transit Commission (TTC) has already rejected a bailout, saying that bicycle sharing does not fit into its mandate or transportation strategy for the city. In the summer of 2013, the commission voted not to give money to the struggling program.
  5. Montreal taxpayers have already had to bail out Bixi's parent company, the Public Bike System Company (PBSC), to the tune of $108 million. And the company is still insolvent! Vancouver taxpayers have also been on the hook for $1.9 million per year to subsidize Bixi's operation in that city.
  6. That is just the beginning of PBSC's problems. Its former partner, 8D Technologies, is suing Bixi's parent company in a $26 million lawsuit.
  7. PBSC was required to secure sponsorship totalling1.8 million for the first three years of operation in Toronto, or600,000 per year. City staff confirmed that as of October 1, 2013, they had not reached this target.
  8. Technology glitches have lead to huge problems for Bixi's ventures in other cities. New York City and Chicago were forced to delay their Bixi start dates, and Chattanooga's launch was "plagued with technical problems."
  9. Online reviews of Toronto's bike-sharing program are mostly negative. While many like the "idea of Bixi," they complain about how the system is operated. According to these reviews, there are often no bikes available at stations, or no open spots available to return bikes. People also warn that biking in Toronto is incredibly dangerous, thanks to the city's streetcars and their tracks, not to mention the often slippery and icy road conditions.
  10. People who choose to cycle on their commute to work already own bikes. As confirmed by most of the Bixi reviews online, by bailing out Bixi, we are subsidizing tourists -- a market already served by traditional bike-rental stores. Taxpayer-funded bike sharing systems will merely drive those folks out of business.