Will Electric Bikes be Part of Miami Beach's Bike Share Program?

Susan Askew
Susan Askew

Will Electric Bikes be Part of Miami Beach's Bike Share Program?:

Controversy brewing over whether to extend current bike program or go out for competitive bid

Electric bikes are gaining in popularity but, so far, have not made it into Miami Beach's bike share program. That may change with a pilot program in the offing. This week, City Commissioners will discuss a program to test the bikes which, judging from discussions at the Committee level, may no longer be controversial.
What is generating debate is which company to pilot with, current bike sharing vendor Deco Bike (branded as Citibike) or another vendor selected via a competitive bid process. Also in the mix, a little dust being kicked up by a rep for one of the interested companies regarding the actual cost of Miami Beach’s bicycle sharing program.
The City Administration recommended a competitive solicitation “as the preferred option” when the item was considered earlier this month by the Neighborhood and Community Affairs Committee (NCAC). A memo to the Committee from City Manager Jimmy Morales said, “The Administration believes that issuing a competitive solicitation for a pilot program would be in the City’s best interest as it will allow several vendors offering innovative technologies to compete, thus enabling the City to select the technology that would be most suitable to our highly urbanized, pedestrian environment. Should the NCAC recommend this option, the Administration intends to present a competitive solicitation to the City Commission for approval at its October meeting.”
The Committee, however, recommended proceeding with Deco Bike as the current contract allows for new technologies to be used when they are introduced into the market. Committee members, concerned about additional docking stations to accommodate another company, preferred having Deco Bike swap out some of the traditional bikes for the e-bikes without any additional “street furniture”. None of them were in favor of dockless bicycles which they complained litter the streets in other cities.
Javier Correoso with Uber Technologies in Florida tried to reassure Committee members that recent “innovation and technological advancements” mean Uber can come up with a plan tailored to the City’s needs. “There is no one-size-fits-all policy for this new technology,” he said. Addressing concerns raised, Correoso said the technology exists to slow the e-bikes down, to make sure they are not used in certain areas such as on Lincoln Road, and to require the bikes be dropped off in designated areas.
He noted Uber’s experience in California indicates a correlation with a reduction in ridesharing traffic. “In San Francisco and Sacramento, we’ve seen a decrease in ridesharing trips by 10% during commute hours with users that are replacing those trips with electric bikes.”
Ralph Andrade, an attorney representing Ride On, a company based in Spain, said his client was recently awarded the Miami-Dade County contract for e-bikes and is “in process of deploying hundreds of stations and 2000 bikes.”
Also pointing to the technology available, Andrade said smart locks would allow the e-bikes to be attached to “wholly underutilized racks across the city” which he said number more than 700, eliminating the need for additional docking stations. And if bikes were left on the sidewalk? “Impound them. Fine them 200 bucks a pop.” That would force a company to “start cleaning up their act very quickly,” he said.
Deco Bike attorney Mickey Marrero pointed to the “over $500,000 to the City in revenue share last year” and emphasized a pilot with Deco Bike would guarantee “no new street furniture.” 
Responding to Andrade’s criticism that Deco Bike had not deployed e-bikes before and is only interested in a pilot to avoid competition, Marrero said, “We actually would love this work. We’ve actually been very cautious as I think you all have to a new technology that is a concern for residents, pedestrians and the city way of life. Our clients have been testing this for almost a year” with a provider “that has almost 800,000 bikes throughout the world… [we] have experience in the City and they have experience with electric bikes.”
Since the Neighborhoods Committee meeting, Andrade took issue with the claim that the City netted more than $500,000 from the program last year. In a letter to Morales shared with the Mayor and Commissioners, Andrade wrote, “As you know, the Administration recommended to the NCAC that the City issue a competitive solicitation for the pilot program, but the NCAC rejected the recommendation in favor of awarding a no-bid pilot program to Deco Bike. The NCAC’s action was based, in part, on the mistaken belief that the City nets $574,000 annually from Deco Bike. It does not. The confusion stems from the Committee Memorandum which states: ‘[f]or the fiscal year 2017/208, for example, the total amount of revenue provided to the City through the revenue share agreement with Citibike was approximately $574,000.'”
Andrade says that’s only part of the story as the City needs to take into account lost parking revenue as well. “Approximately 44 kiosks are located in on-street parking spaces resulting in the loss of 88 metered parking spaces,” he wrote in his letter. “In FY 17/18, the estimated parking meter revenue loss for the spaces was $374,000. For that same period, the City received approximately $547,000 in revenue share from Deco Bike. Thus, the ‘net’ revenue share received from Deco Bike in FY 17/18 is – at best – approximately $173,000. I emphasize ‘at best’ because this amount does not consider right-of-way permit fees that the City has exempted Deco Bike from or the use of residential parking spaces, sidewalks, walkways, parks, etc., for their 56 other kiosks.”
Andrade believes Deco Bike owes “at least $365,000 in annual permit fees” which the City has exempted it from. “The City has the right to exempt Deco Bike from permit fees, but all stakeholders, including the Commission and residents/taxpayers, have a right to know about the exemption and the actual financial benefit to the City, if any. To be clear, I am not suggesting any wrongdoing or that any information has been intentionally withheld. The administration of this agreement overlaps with various departments and this is simply a case where, until now, there has not been occasion to undertake a careful review of same.”
Andrade asked that all costs associated with the program be made available to the Commission as part of its agenda materials for the upcoming meeting. In the memo accompanying the item, Morales did note the loss of the on-street parking revenues and a net revenue of $172,733 but he did not address Andrade’s comments regarding lost permitting fees as City Attorney Raul Aguila, in an email to Andrade, said the contract with Deco Bike does not contemplate such payment. Andrade said it doesn’t exempt the fees either.
The program was established by the City Commission in 2009 and the original proposal by Deco Bike contemplated “up to 1,000 bicycles at approximately 60 stations throughout Miami Beach with the intention of expanding the system as needed to meet demand in the future,” according to a memo to Commissioners from then City Manager Jorge Gonzalez. Currently, Deco Bike has 1,000 bicycles at 100 docking stations throughout the City.
At the time the initial contract was considered, the City and Deco Bike agreed to a five-year contract with a five-year renewal option. It had ambitious revenue numbers with estimates of the City’s portion (including advertising) to be $3.64 million over five years. 
Deco Bike began operations in March of 2011. By July 2012, the Commission amended the contract as “it is clear that, without intervention by the City, either through contract term modification or an additional revenue source, this program will not achieve a return of capital or modest profit to the Concessionaire or recover the City’s foregone parking revenues over the long term,” according to the resolution approving the amendment. It also noted that Deco Bike’s financial statements indicated an operating loss of approximately $387,561 from January 1 to December 31, 2011. 
The contract amendment created a new ten-year fixed term, allowed for an increase in the per hour fee for rentals and for Deco Bike to recover its capital investments, estimated at $3.7 million after a projected annual profit of 3%. 
“The City’s objective is to provide a public amenity and recover the value of revenue lost from the parking spaces where the DecoBike stations are located through the City’s revenue share of the contract. There are approximately 90 parking spaces that generate approximately $3,000 per year each or an expected $2,700,000 over the term of the contract (without rate increases),” according to a memo from Gonzalez regarding the contract amendment.
According to the pro formas presented at the time, the cumulative City earnings over the ten-year period were expected to be $2,882,589. Deco Bike was expected to generate $4,859,845 which included a return of capital of $3,745,315 and a profit of $1,114,530.
When Deco Bike signed a five-year sponsorship agreement with Citibank in 2014 to brand the bikes as Citibikes, a second amendment to the Deco Bike contract with Miami Beach indicated the City was expected to receive a share of the advertising revenue totaling $697,749. Deco Bike’s net after the City’s share of the advertising revenue is $4,798,176. 
The 2019 Proposed E-bike Pilot
City Manager Morales wrote in his memo for this week’s Commission meeting, “Over the past several months, City staff has met with both Citibike [Deco Bike] and Ride On representatives to gauge their interest in a joint electric-assisted bicycle pilot initiative using existing Citibike docking stations in order to minimize or avoid the addition of new stations and potentially other infrastructure in the City’s right-of-way. Unfortunately, the two vendors have not been able to reach a joint venture arrangement.”
Morales noted that the Administration now recommends the Commission accept the recommendation of the Neighborhoods Committee and authorize negotiations with Deco Bike to conduct an e-bike pilot program. He added that the County’s contract with Ride On “allows for the provision of electric-assisted bicycles on County-owned facilities (such as transit stations, courts, libraries, etc.) and County rights-of-way. While there are only a couple of County-owned facilities in Miami Beach, there are a few roadways in the City which are under the jurisdiction of Miami-Dade County (i.e. Venetian Causeway, Dade Boulevard, Pine Tree Drive, La Gorce Drive, and 23 Street).” As a result, Morales wrote, Ride On’s e-bikes can be deployed immediately on those roadways.
Update October 17, 2019:  The item was deferred by Commissioners who asked for further information on the economics of the current program.

Photo: Shutterstock.com

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