TX: 'We don't have a choice': BCycle's bike share system shutting down in two months

Sept. 18, 2023
Houston Bike Share's leadership said that their BCycle bike share system must shut down "in the face of a major cash crunch," even after cost-cutting measures like suspending stations and increasing prices.

Sep. 16—Houstonians who rely on BCycle's bike share service will soon be out of luck as the nonprofit agency behind the operation said it is shutting down in two months.

Houston Bike Share's leadership said that their BCycle bike share system must shut down "in the face of a major cash crunch," even after cost-cutting measures like suspending stations and increasing prices.

"As directors of a nonprofit, we don't have a choice," board vice chair James Llamas said Saturday. "We can't run out of money."

Llamas and Neeraj Tandon, chair of the Houston Bike Share board of directors, broke the news Friday in an op-ed published in the Houston Chronicle. "This breaks our hearts," they wrote

Upon launching in Houston in 2012, the bike share consisted of three stations downtown. Former Mayor Annise Parker helped launch the system by giving Houston Bike Share a grant, and advocacy organization, BikeHouston, also offered assistance, Tandon and Llamas said.

The initial five years brought rapid expansion, including 40 stations in downtown and surrounding neighborhoods. Revenue from park and bayou stations, advertising sponsorships and a "lean operation" put the nonprofit in a strong place financially, the organization said. The agency used revenue and sponsorships to operate the day-to-day, while grants and donations funded expansion efforts. By 2022, the group touted itself as the largest nonprofit bike-share organization in the country.

"We envisioned a Houston where everyone has access to a bike for work, play and transportation," Tandon and Llamas said in the op-ed.

Growth, but at a cost

The group developed a strategic plan in 2018 to grapple with the economics of the system. Each station costs $21 a day to maintain, but the group argued that bike usage offsets the costs of road use, traffic, crashes, pollution, preventative health and poverty. Owning a car today costs more than $32 a day — or $12,000 a year — compared to bike share costing less than 50 cents to use at launch, the group said.

Expansion came fast with a $4 million federal Transportation Improvement Program grant and the addition of equipment from Denver's defunct BCycle system.

The organization continued to make equity an emphasis for the bike share as 36% of stations were in low-to-moderate income neighborhoods. The bike share also launched GoPass to serve low-income riders.

Additionally, first-and-last-mile connections to METRO were also established with 59% of stations connecting to a METRO bus stop or rail station.

"We hoped to rebrand our system in exchange for financial support," the nonprofit said. "... But though we retained a top-notch business marketing firm, we never found a title sponsor."

Lack of funding

Financial struggles began during the COVID-19 pandemic as annual ridership peaked at 300,000 trips, causing operating costs to increase, Tandon and Llamas said. By 2022, the bike share was operating over 150 stations and providing 250,000 annual rides. As demand increased, sponsorships became fewer and the system's aging bikes and stations required more upkeep.

As demand rose, revenue lagged. In 2021, the nonprofit took in $2 million — down about $700,000 from the year before — and expenses outstripped revenue by $328,251, according to nonprofit tax forms and its annual budget. By 2022, revenue was down again, to about $1.7 million.

User revenue covers about 60% of operating costs and smaller sponsorships cover about 24%, leaving a significant gap for funding, Llamas told the Chronicle. "Last year we had a deficit of $100,000," he said.

The bike share "sounded the alarm" last October and convened its largest partners (the City of Houston, Harris County, and METRO) to figure out a financial strategy. The METRO board initially agreed on a partnership that would give the bike share interim funding to keep operations running but later decided to propose its own "much smaller" bike share system, according to the nonprofit.

The METRO board is expected to discuss BCycle and bike share systems at a Thursday meeting.

"We think it makes a whole lot of sense for public bike share to be run as public transit," Llamas said. "That's been our goal the last several years, to really make it a public service and a public utility."

The nonprofit said over the past year it also approached corporations and philanthropic groups, but most of them have not responded.

The group's leadership said rental fees alone can't support a "robust bike share system here," and instead requires ongoing government funding. They compared it to how taxpayers help fund mass transit in cities.

The bike share has honored the city's request to keep its BCycle equipment in the field, the organization said. If given proper funding, the equipment can easily be brought back into use.

"We have 150 (stations) on the ground right now and kind of throwing all of that away seems impractical and unwise," Llamas said. "... I'm hopeful that a solution can be devised to continue taking advantage of that investment."

Llamas said that last October they warned staff they'd likely need to shut down by the end of the year. He's grateful they made it an additional nine months.

"Once we can no longer pay our staff there's nothing else we can do," he said. "So we're trying to wind it down in a responsible way that respects the contributions that the staff have made, especially over the last year working under really challenging financial constraints."


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