CITYWIDE— In a city like Santa Monica that has strict advertising laws, sustaining a bikeshare system without significant public funding could be a challenge.

With $2 million in time-sensitive grants, a bikeshare program is nearly inevitable, but no city has built one without either subsidizing the cost or soliciting sponsorship.

Bikeshares allow riders to check-out bikes from one station and drop them off at any other station in the city. Users can pay hourly, daily, monthly or annual fees to use the service. Santa Monica is proposing to stock up to 350 bikes at 35 stations in the city.

City Council gave officials the go-ahead to look into sponsorships and advertising, which, according to a city staff report, is how most bikeshares in the country derive funding. The use of advertising on bike stations would require council to amend the municipal code, which prohibits off premises signage, according to City Attorney Marsha Jones Moutrie.

One councilman, Bob Holbrook, voted against the recommendation to look into sponsorship, saying he wasn’t ready to “sell Santa Monica.”

For-profit bike shares relying solely on user fees have traditionally struggled, according to a report by city staff.

Decobike, in Miami, initially proposed a user fee business model, but since its launch in 2011 the company has asked the city to allow advertisements on bike stations.

Arlington, Va., maintains 286 bikes at 41 stations within Washington, D.C.’s Capital Bike system. Santa Monica’s proposed bikeshare is a similar size and is planned to link with a larger Los Angeles area bikeshare program.

Additionally, Arlington, like Santa Monica, has restrictions on advertising in public spaces. Only 5 percent of Arlington’s bikeshare costs are recouped through sponsorship, which is low compared to most cities. Almost 60 percent of the cost is made up through users fees and the rest, more than $225,000 annually, is covered by local government.

“It has become, already, a regular part of our transportation infrastructure,” said Chris Hamilton, Arlington’s commuter chief. “It’s to our competitive advantage to have another option for people to get around without a car. We’re competing for business and for people who want to live in a fun, hip, prosperous place.”

Boulder, Colo.’s B-cycle system is funded largely through sponsorships, with companies paying $10,000 per year to advertise on a station, $2,000 to advertise on 10 bikes, and $1,000 to advertise on bike baskets.

Initially, sponsors and user fees covered the cost of the system, but B-cycle lost three station sponsors and was forced to ask local government to cover the difference, according to the staff report.

Boulder is now looking for a naming sponsor, like Citibank’s Citi Bike in New York City.

Locally, Bike Nation just ended a privately funded pilot program in Anaheim that had been running since January, said Anaheim media relations representative Ruth Ruiz. The program provided 25 bikes at three stations throughout the city.

Bike Nation decided to pull out of the pilot program, Ruiz said.

“Bike Nation, I believe, felt they needed to have an effective advertising element to their program, and that’s a question you can ask them,” Ruiz said.

Calls to Bike Nation were not returned.

In Anaheim, riders could pay a $6 daily fee or $75 for an annual pass.

Santa Monica Bike Center Manager Ron Durgin said the bikeshare would be a positive for the city.

“We’re thrilled that the city is considering the option of bikeshare, within the city and the region as a whole,” Durgin said. “We think it’ll be a great asset for us. I think that Santa Monica has an important role here in the region to get this thing started.”

He said that the bikeshare has a chance to exceed expectations like the Bike Center did.

“If we reflect back to the Bike Center, when it was proposed, I think that budget expectations were maybe half of what was actually delivered,” he said. “Bicycling is actually taking off as good business. And I think that bikeshare will achieve the same goals.”

Tom Moran, whose owned Sea Mist Rentals for 35 years, said the Bike Center did not hurt his business and isn’t worried about bikeshares.

Moran has followed bikeshares since they first started introducing them in other cities years ago and isn’t afraid that it will cannibalize business.

He pointed to his rates: $7 an hour, and $18 for a daily fee.

“I don’t know how popular it’s going to be,” he said. “Especially with tourists. I don’t know if they’re going to go out and find one of these things.”

dave@www.smdp.com