Top

blog

Stories

 

DecoBike Is Booming, but Taxpayers Are Getting Stiffed

Categories: Bike Blog

DecoBikeRow.jpg
Michael E. Miller
Deco Bike has boomed on the Beach since its launch in March 2011.
DecoBike is booming. The Miami Beach bike-share program now boasts around 100 kiosks with 1,000 bikes. Locals and tourists used the company's cruisers more than 1.5 million times last year, earning DecoBike roughly $3 million. By most measures, it is the most successful bike-share program in the nation.

DecoBike's deal hasn't worked out nearly as well for Miami Beach, however. Last year the city made only $190,000 off the arrangement -- less than half the lowest estimates -- thanks to a quiet capitulation by commissioners.

But it gets worse across the bay. In Miami -- where DecoBike is set to expand in September -- commissioners quietly inked a deal with even less guaranteed payback for taxpayers.

See also: DecoBike is Coming to Miami (Pending Commission Approval)

New Times was a naysayer when it came to DecoBike's arrival in Miami Beach. We argued that the bikes were too expensive, would mostly benefit tourists, would cost locals their parking spots, and would quickly be vandalized.

We were wrong on some points. According to DecoBike, 70 percent of trips are made by members (the other 30 percent are local nonmembers and tourists). And although DecoBike remains pricier ($180 for a yearly membership) than its counterparts in New York ($95, longer rides allowed) and D.C. ($75), there are clearly lots of people willing to pay.

We were right about the vandalism. Last year, 143 bikes were stolen and 137 were heavily damaged or vandalized.

But our biggest worry about DecoBikes was that it was a bad deal for the City of Miami Beach. Here's what we wrote when the bike-share program debuted in March 2011:

DecoBike projects the city will make between $1.9 to 3.4 million over five years from the project. Not bad. But the city's share doesn't account for the lost parking revenue. Nor does it consider the pain of being woken up at 7 a.m. all winter long while DecoBike installed the kiosks.

DecoBike, on the other hand, will make anywhere from $836,000 to a whopping $9.6 million over that same time period, depending on the program's success.

FrancescaFrigoDecoBike.jpg
Michael E. Miller
DecoBike busted out Playboy Playmate Francesca Frigo for its unveiling in March 2011.
We hate to say we told you so, but the numbers are even worse than we expected.

When DecoBike sold the city on the program, the lowest projected yearly revenue for Miami Beach was $380,920.

According to figures provided by the city, last year Miami Beach actually made only $190,205 -- half of the worst-case scenario. Considering that DecoBike now has 10 percent more bikes and kiosks than originally anticipated, the city should be making more -- not less -- than envisioned.

So what happened? Politics.

Under the original deal signed in July 2009, DecoBike agreed to give the city 25 percent of advertising revenue as well as a slice of "gross revenue": 12 percent of revenue up to $3 million and 15 percent of everything beyond. The only catch was that DecoBike had a one-year "grace period" in which it didn't have to pay the city anything beyond a $100,000 down payment (for parking spots). That should have been March 2011 to March 2012.

But last December, in a move unreported until now, city officials amended the concession agreement. Under the new deal -- passed by the prior commission but signed December 16 by city clerk Rafael Granado and new mayor Philip Levine -- the city would get 25 percent of ads on bike baskets but only 12 percent on kiosks.

The real change, however, was that the city agreed to limit the amount of revenue DecoBike would have to share.

Incredibly, the change was retroactive. DecoBike wouldn't be required to share any of the first $1.5 million in revenue earned from October 2012 to September 2013.

Instead of owing the city $388,687 (the revenue owed for 2012-13 under the original agreement), DecoBike now owed only $190,205.

In other words, the unpublicized changes to the concession agreement instantly cost the city $198,483.

Under the revised agreement, DecoBike also gets a similar break for the next five years. The amount of exempted revenue decreases by $250,000 each year so that DecoBike won't have to share any of the first $1.25 million for 2013-14, $1 million for 2014-15, $750,000 for 2015-15, and so on. The first year DecoBike will pay anything close to what it originally agreed will be 2019.

Over the course of six years, the backroom deal will cost the city at least $630,000.

DecoBike did not return Riptide's requests for comment on the new deal, but city documents show the company claimed it would make a "modest profit" unless Miami Beach cut it a better deal.


Sponsor Content

My Voice Nation Help
32 comments
Figuren9ne
Figuren9ne

The benefits extend beyond the bottom line. Someone commuting on a Decobike is one less car in traffic. One less car in a parking spot. Sure the racks take up parking spots. But if that rack occupies one or two spots, and all the bikes on the rack are checked out, those represent additional parking spots in the city that are now available that before may have been filled by that persons car. 


The use of bikes lowers pollution, noise, traffic congestion, etc. Bikes cause less damage to roads. Cycling promotes health so less money has to be spent on health care. There are lots of savings and benefits to the city and the residents besides the numbers you're focusing on. This is also a relatively new program which has tons of future promise. Instead of tearing it down, focus on building it up and expanding it to as many areas as possible. 

jmspecs
jmspecs

I dont get this article.  You are against a bike program because the city isn't making money off of it?


Anthonyvop1
Anthonyvop1 topcommenter

I am sorry but I am not a Knee-Jerk, Regulate, Tax and Spend Liberal but why does the City of Miami Beach deserve anything from a private company?


The fact that people think that a bicycle rental company has to be regulated is pretty sad.

CTJohn
CTJohn

Decobike service in Miami Beach has dropped precipitously over the past year.  The docks do not record returns, and if you're not careful, Decobike slips overage charges onto your credit card statement - it happened 3 times to me in a 2 month period.  The employees in the office say it's because of the installation in Miami, and they're short staffed.  How many tourists are getting ripped off with overcharges and don't even realize it?

keithjam
keithjam

You know you can buy a bike for their yearly fee.  These things are such a ripoff.  You're basically paying for all the bikes that get stolen and vandalized, plus the owners Bentley and the government kickbacks. 

DrumRollPlease
DrumRollPlease

Miami Beach is so dangerous that they want to regulate Segways due to all the accidents and today...Miami Beach Police set up a perimeter Thursday after a driver tried to run over a Miami Beach bicycle officer.  Guess the city is really trying hard to cover up all these issues because their Twitter account is void of updates. 

mdefil23
mdefil23

In my opinion Decobike has been the greatest success in Miami Beach  in the last several years. It's extremely popular with residents and the tourists love it. I also have been dying for the expansion into Miami. I can't believe how long it's been delayed. The company doesn't do the best job with communicating or using social media. There were a lot of issues with the bike kiosks in 2013 but they seemed to work out most of the issues. Even if the city was losing money on this it would be worth the cost. It's a great asset. Not many other places have such a luxury.

DrumRollPlease
DrumRollPlease

Is Miami Beach a fraudulent city that changed the advertising rules for residential neighborhoods to accommodate a private bike rental company?   Chapter 82 Public Property, any changes to the city code because of a private company?  Isn't this really an advertising deal using green transportation as a ploy to get tourists to fill local hospitals and provide job security for the police and EMT union employees? 

The city spends money on parking garages and encourages people to drive, why the conflict of interest? Why hasn't the resident who published the increase in pedestrian accidents not quoted for this story (50% increase).  


Can we get a statement from the police department saying our roads are safe for bicyclists? 



  

George Hoover
George Hoover

I don't know what the problem is they said they were going to open in Miami by the end of last year here it is the fifth month of this year & they still don't have a deco bike station over on the mainland. So we here on the beach are basically stuck, we can't deco bike across the causeway to get into the good stuff Wynwood Midtown downtown Brickell design district. They make so much money why not open up already over in the shitty of Miami, oh yeah that's right it is the 'shitty' of Miami replete with full of shit politicians! does the name Sarnoff ring a bell?

Christine King
Christine King

I think Deco bike is a good program that needs to be improved. Rates are high for short term rentals, they really need a weekly pass, currently there are only monthly options. The biggest issues I found when using it for people visiting are the following: Bikes are parked but show unavailable for various reasons. A friend said he tested this and found that when you try to use the discounted cards the bikes may show unavailable, but same bikes become available when you try to retrieve by paying the higher fee! if true this is a scam. Also parking the bike can be impossible especially near Lincoln Road on a weekend because the racks are full, so you end up searching for parking for a long time and have to park far away from where you are actually going. Rotating bikes more often would help or fixing the slots that are not open for parking faster.

tacony
tacony

What? This article makes no sense. Miami Beach makes money off bike share. Most cities PAY to subsidize bike share. It's a success and this article makes it sound like a failure. 

ChrisMB
ChrisMB

Washington DC's program cost tax payers more than $10 million and in contrast Decobike actually generates a profit for Miami Beach. As a resident, I think that is awesome especially since Decobike is a public transportation program, which all normally lose money and need to be subsidized by govt. Glad to see millions of uses on the program, it is really effective at moving people around the city without costing tax payers anything (and actually making them money). Seems like Miami beach's deal is the best in the US based on all other programs losing money every year.

Brian Nugent
Brian Nugent

So governments give massive sums of cash to sports teams but want a cut from a little bike rental? Good grief.

Sal Macaraig
Sal Macaraig

^ what Craig said. It's not a money-making scheme, it's a transportation option.This isn't Marlins Park. The only way to move forward is to create options for people other than driving cars. Is the author against Baylink too?

Craig Chester
Craig Chester

This article is way off the mark. The point of bike sharing is NOT for city governments to make money off of. The point of bike sharing is to provide transportation options for people. Decobike was the first, and currently 1 of 2 bike share networks (out of 40 in USA) to NOT be subsidized by taxpayers at all. It's the ONLY bike share in USA to return profits back to it's city. This in itself is remarkable and unique and should be lauded instead of derided. The idea that taxpayers are getting 'stiffed' because they think Decobike is not paying Miami Beach enough of their profits is ridiculous. In most places, it's the taxpayers helping FUND the bike share network!

cpchester
cpchester topcommenter

Are you serious with this article? In most cities, the taxpayers help pay for the their bike sharing networks because of the transportation options it provides. Taxpayers are getting 'stiffed' on roads, bridges, busses, and trains too by this logic. In fact, DecoBike is only the 2nd bike share in the entire USA to NOT be subsidized by taxpayers (NYC's CitiBike is the other) The fact that Decobike even returns ANY money to the city is unique in itself and should be lauded instead of derided! 

Howard Green Montaque
Howard Green Montaque

I bet some city official got some of that money in their pockets... Why steal a DecoBike??? So obvious.

Fullerene
Fullerene

@Anthonyvop1 Their racks on on public streets, and they are occupying city parking space that would otherwise generate revenue for the city.


How much free use of public resources do you think a private company deserves?

Henry
Henry

@keithjam  You seem to not fully understand the benefits of bike sharing programs and have not had the benefit of living where one exists.  It allows you to go places without driving or having to chain your bike somewhere and dealing with getting it home.  If I want to go somewhere on the beach not within walking distance I have the option of paying a cab about 7 - 15 bucks or taking a decobike for 5 bucks.  Its a nice option.   

The bikes that get vandalized are not my problem and I am not personally paying to replace them.  I pay the rate that has not changed since its inception.  

DrumRollPlease
DrumRollPlease

Anybody has a link to the contract please post it or host it. 

Anthonyvop1
Anthonyvop1 topcommenter

@Fullerene @Anthonyvop1So let them pay rent. What could that be worth?  $300-500 a month?

Better yet let them rent storefronts instead.

keithjam
keithjam

@Henry @keithjam  How is it sharing?  I pay for the service.  Sharing is free.  It is a rental service.

Anthonyvop1
Anthonyvop1 topcommenter

@cpchester @Anthonyvop1@monicaacevedo 

When the government gives assistance to one business(The one with only on-street parking) at the expense of other businesses(Ones that have their own parking and pay taxes.) that is called CRONYISM!!!

cpchester
cpchester topcommenter

@Anthonyvop1 @monicaacevedo  Charging for parking is to help business owners by encouraging turnover. The value of on-street parking turns into a negative if the same vehicles are parked in front of a business all day or week. 

Anthonyvop1
Anthonyvop1 topcommenter

@monicaacevedo @Anthonyvop1 

Now subtract how much it cost the taxpayer for the government to maintain and collect the parking tax.


trust me.....it is a loss.

DrumRollPlease
DrumRollPlease

@Anthonyvop1 @monicaacevedo

Residential neighborhoods require parking permits otherwise residents would have have no place to park. The city should not have contracted this as an advertising deal, but one which the city collect a set fee per user.  The city is notorious for getting into and keeping bad contracts.  The city has a very large legal team and pays at presidential level salaries.  It is almost impossible that all their contracts stink.  Unless the city attorney and other officials are idiots.  Are they idiots or are they corrupt?  That's the question the New Times cannot write about.  They have to skirt the issue. 

Anthonyvop1
Anthonyvop1 topcommenter

@monicaacevedo  

How did you come up with that value of $15K a year per parking space?

It is the government.  Once you factor in maintenance, Security and parking enforcement I bet they are losing money.

They shouldn't be charging for parking anyway

swinghigh
swinghigh

@Anthonyvop1 @Fullerene Not $300-500 a month, more like $3M a year.

.

The 100 bike stations remove 200 parking spaces. Each space worth $15k/yr so that's $3,000,000 a year lost revenue for 200 metered parking spaces.

Most sinister is that Deco Bike claimed to be losing money in order to convince commissioners to allow cheesey advertising on machines and bikes.

swinghigh
swinghigh

@keithjam @Henry If we really care about benefits of biking then the first 30 minutes should be absolutely free and only charge when time goes beyond 30 minutes (just like they do in London).

Henry
Henry

@keithjam @Henry  It is called bike sharing because you use a bike once, return it, and use another bike next time, etc. etc.  It is similar to a rental service, but it is known throughout the world as a bike sharing program.  They have them in major cities throughout the world and people love them.  

Now Trending

Miami Concert Tickets

Around The Web

From the Vault

 

Loading...