Tomorrow on Tuesday, March 1, the City Council’s Transportation Committee is scheduled to vote on legislation to purchase the Pronto bike sharing program. The Transportation Committee is chaired by Councilmember Mike O’Brien; the Vice Chair is Rob Johnson, and Kshama Sawant is a member. I’m the alternate.

Last year, the Council set aside $5 million to expand the bike sharing system, but required that SDOT provide an implementation plan and financial analysis and bring both back to the Council before a final allocation of the funding. The Council wanted to insure that the plan to expand the program was sound before making this substantial investment.

The decision before the Council has been altered from an expansion of the current program, Pronto, because that program is now insolvent, despite a public investment of $305,000. The Legislation would instead release $1.4 million of the $5 million to purchase the bike-share system from Pronto, convert it to full public ownership, and pay off Pronto’s $1.275 million loan from Key Bank. SDOT further proposes a Request for Proposals (RFP) later this year to expand bike sharing, which could result in an expansion of Pronto, or an entirely different bike share system.

I believe bike sharing can be a productive part of Seattle’s transportation network. However, I believe we would be best served by a privately owned and operated system, in the same way as Car2Go, the successful car-sharing program, is privately owned and operated in Seattle. Cities such as New York City, San Francisco, and Miami Beach each have wholly privately-owned bike share systems.

I also believe it’s important to view this proposal in the broader context of city transportation. We asked City voters to approve a $930 million levy last year, representing roughly 25% of the SDOT budget because we can’t properly maintain and expand our current transportation infrastructure. We have an obligation to spend our transportation funds wisely. We refer often to our regressive tax structure; don’t we have an obligation to use the funding we have to tend to the funding backlog we already have for our basic transportation infrastructure so that we don’t have to ask the voters for so much?

For these reasons, I am sponsoring amendments at the Transportation Committee to:

Deny SDOT the authority to spend $1.4 million to purchase Pronto;

Reserve $1 million to repay the a grant from the Federal Transportation Administration (FTA) to Seattle, in the event Seattle is unable to transfer the equipment to another city seeking to develop a bike-sharing program (note that even with SDOT’s proposal, this $1 million would need to be repaid to the FTA if the City decides to accept a proposal through the RFP to scrap the current fleet of bicycles in favor of – for instance – an electric fleet or a Portland-style fleet of bikes that are not parked at designated docking stations);

State Council’s intent to spend the remaining $4 million in transportation funding in a future budget action to support other bicycle and pedestrian projects, thereby supporting the implementation of the Pedestrian and Bicycle Master Plans; and

Amend the recitals to note that bike share models vary from wholly publicly-owned to wholly privately-owned as in New York, San Francisco, and Miami Beach; state the Council’s support for a wholly privately-owned bike share model, which would not require use of public funds; and note the FTA grant would need to be repaid unless the City is able to transfer the grant assets to another jurisdiction.

SDOT noted there are a number of bike sharing models during their February 19 presentation (slide 8) before the Transportation Committee. A Council Central Staff memo noted the City could still pursue an RFP for a new Bike Share system, even if Pronto dissolves and halts service in March. While some say this might make success less likely, it’s also worth keeping in mind that Motivate, the operator contracted to operate the Pronto system, could have an advantage in any RFP process with a system already in place, while other bidders would have to start from scratch. Motivate currently operates the privately operated network in San Francisco.

The real issue appears to be this: should the public own bike sharing? In practice, if Seattle purchases Pronto, it will become a part of our transportation network, which could result in additional ongoing costs. SDOT projects it would pay for itself, in part through sponsorships, though it’s worth noting sponsorship projections for the South Lake Union streetcar fell well below original projections and Pronto’s business model failed due to being undercapitalized and realizing less sponsorship revenue than needed; sponsorships will also likely be needed for Waterfront re-development, and any potential Center City Streetcar. It’s worth asking whether there is a limit to how much overall sponsorship funding Seattle can realistically attain.

A final note: while a publicly-owned system isn’t my preferred outcome, I recognize many do support that. However, I wonder if the legislation before us is the best deal available to Seattle for a publicly owned system. If these amendments pass, or the Council votes no on the legislation, the parties involved would face different bargaining positions: Pronto would face insolvency at the end of March, and a shutdown of operations; Key Bank would face the prospect of $1.275 million not being repaid; and Motivate could lose their potential advantage of having a system already in place during an RFP process. This could dramatically reduce the cost to the public to acquire the bankrupted company’s assets.

It’s possible that scenario could result in a different proposal for public ownership than the one before us now, which could result in a better deal for Seattle. And, as noted in the Central Staff memo, Council saying “no” to purchasing Pronto does not limit SDOT’s ability to proceed with an RFP for a different bike-share system, using any or all of the potential ownership models.

Posted: February 29th, 2016 under Councilmember Herbold, Transportation

Tags: Pronto, SDOT

