It’s easy to understand how bike sharing services like Decobike can help reduce congestion, improve air quality and be a fun way to get around town. But data is beginning to reveal that bike sharing provides a significant economic boost to local economies as well.

Lately, the Miami News Times has been on a kick insisting that Miami Beach officials wound up in a rotten deal with Decobike - and taxpayers are getting shafted as a result. The premise of the recent stories is despite an agreement between Decobike and Miami Beach to pay a portion of their profits back to the city government as an ‘operating fee’ of sorts for using public land, Decobike does not share enough of their profits under a revised agreement, especially given the service’s wildly high ridership numbers.

For a few reasons, I did not agree with the premise that Miami Beach taxpayers are getting screwed - even if the revenue sharing figures are less than originally negotiated. Most bike sharing systems around the country operate as a taxpayer-funded service, viewed as a component of a city’s transit network. Decobike however, is privately-operated and funded at no cost to taxpayers aside from the use of public space the kiosks occupy within the city, including 86 formerly metered parking spaces. These spaces are estimated to bring in $258,000 worth of parking revenue each year, while Decobike only shared about $190,000 of their revenue with Miami Beach. That suggests a ‘net loss’ of $67,795 for Miami Beach under the revised agreement, for which taxpayers are on the hook for.

On the surface, it might seem like a bad deal - except for one key point. It completely ignores the observed and proven economic impacts of bike sharing beyond the simple balance sheet.

“The city expected to make money off the service, But that was only half the argument in bringing DecoBike to Miami Beach. The other half — the promise that the city would make money on the deal — has fallen by the wayside.” (DecoBike Currently Costs Miami Beach Money, But City Is on Pace To Break Even)

The New Times argument misses the forest for the trees here. The fact is, Decobike’s sky-high ridership numbers suggest the city is already making plenty of money from the service indirectly – but to understand that requires a deeper level of study than just looking at forgone parking revenues.

Minneapolis NiceRide members spent an additional $150,000 in the city's local economy.

Minneapolis NiceRide members spent an additional $150,000 in the city’s local economy.

Data is beginning to emerge from around the country that bike sharing services have a not-so-insignificant boost on their local economies. While this data isn’t so readily available for Miami Beach, studies from around the world can inform us what popular bike sharing systems do for their cities. A few examples:

  • Respondents to a Capital Bikeshare (DC) study found that nearly two-thirds of respondents would not have made their trips without the bikeshare program because it was too far to walk, bringing in customers who would have otherwise stayed away (2011-2012 Capital Bikeshare Member Survey).
  • A recent study in Melbourne found that bike parking spaces are better at generating revenue than car parking spaces. In part, this is simply because bicycles take up so little space, and parking can provide more opportunities for paying customers to park right at a business’s front door.
  • Minneapolis bike share members spent an extra $150,000 at nearby businesses over the course of one season. A University of Minnesota study found that users of NiceRide in the Twin Cities make more trips to nearby businesses than before bike share was available. Bike share users especially frequent restaurants, coffee shops, bars, nightclubs, and grocery stores.(Catalyst July 2012: Nice Ride spurs spending near stations).
  • One million rides in [DC’s] first year have accrued nearly 890,000 miles. At 39 cents per potential vehicle miles prevented, Capital Bikeshare gave DC taxpayers a maximum net savings of almost $350,000 in its first year.

And regarding the metered street parking spaces, many cities around the country are voluntarily removing some metered-on street parking spaces in favor of bicycle parking because of the positive impact it has on local business - which is the original intent of metered parking in the first place. (Think: Parking for 12 customers in the same space as 1) It is entirely possible that Decobike kiosks generate more tax revenue than a metered parking space, and could be measured by a survey of tax receipts from businesses with kiosks nearby to see the change in sales tax revenue from before vs. after Decobike.

Cites turn more car parking into bike parking because it's good for local business.

Cites turn more metered car parking into bike parking because it’s better for local business.

Facts like these suggest that fiscal profitability should be welcomed, but as a side-benefit. The number one metric in determining bikeshare success for a city should be ridership, e.g. vehicle miles prevented. And by that measure, Decobike is off the charts.

Now, if you want to make an argument for who is getting screwed, there are other places to look first. You could start with the Decobike riders, who pay the highest user fees of any bicycle sharing service in the USA. An annual membership for the service is would run $180 for a Miami Beach resident (even though memberships are only available in 3-month increments). In comparison, annual memberships in other cities are a comparative bargain:

Miami Beach: $180
NYC: $95
San Francisco Bay Area: $88
Boston: $85
Denver: $80
Chicago: $75
Washington, DC: $75
Minneapolis: $65
Fort Lauderdale: $45

(It’s important to remember Decobike and Citibike in New York City do not receive taxpayer funding which helps keep user fees down in other cities.)

Decobike could also make an argument that they are in fact getting screwed. As the New Times mentions, they only brought in $40,200 from advertising. This is because until recently, the city of Miami Beach tightly restricted how and where advertisements could be displayed, mainly limiting ads to a small basket on the front of the bicycles and forbidding them on the station kiosks themselves. I can imagine this limited their revenue generating potential for a while.

I understand Miami Beach expects to make some money off Decobike given its popularity and how the original deal was negotiated. But suggesting taxpayers are getting ‘stiffed’ while not recognizing the hosts of economic benefits is missing the forest for the trees and fails to recognize the long-term economic advantage of the service to local government, residents, visitors and businesses.

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2 Responses to Bikesharing is good for taxpayers and the local economy

  1. Juliana says:

    Excellent analysis. The Deco bike system should be subsidized by the city government. And it is better to privatize this service not allow the city government to run the system.

    One concern: I do not believe we need to be further assaulted by unwanted advertising. The Deco Bike kiosks sitting on public streets should not become mini billboards.


  2. John Hopkins says:

    Unlike Juliana, I’m not bothered by the advertising. If ads help make the service sustainable it is a win-win.


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