Today, The Wall Street Journal reports that Citi Bike is in need of funds, due in part to a “number of costly issues, including damage to equipment during superstorm Sandy, software glitches and a difficult 2013-14 winter that discouraged ridership.”

Unlike most other U.S. bike sharing systems, Citi Bike is entirely privately funded with sponsorships from Citi Bank ($41 million) and Mastercard ($6.5 million), along with financing from Goldman Sachs. This limited funding pool means that any other funding needs fall on riders. Raising user fees to cover costs — which is similar to raising fares for transit systems — increases the user’s burden, is not a sustainable source of revenue and, of course, makes it even more difficult for low- and middle-income riders to access the system.

TSTC took a look at three other programs – Washington D.C.’s Capital Bike Share, Boston’s Hubway and the Twin Cities’ Nice Ride – to see how these programs raise funds for capital and operating expenses and what New York City can learn from how these systems are funded. And while farebox recovery rates for each system tend to be high (according to most recent figures available: Capital Bikeshare generated 97 percent; Hubway, 88 percent; and Nice Ride, 62 percent), funding comes from numerous sources.

Public-Private Partnerships

Capital Bike Share and Hubway, which are both public-private partnerships, receive capital and operating funds from a combination of federal and state grants, local contributions and corporate sponsors (in addition to user fees). Hubway received capital and operating funds for the first three years of operation through federal CMAQ and FTA grants, and a contribution from the Boston Public Health Commission, on top of corporate sponsorships and user fees. Capital Bike Share similarly receives CMAQ funding, as well as state, county and city contributions. Their latest system expansion (20 new stations and 200 bikes in Montgomery County, Maryland) was funded by a federal grant from the National Capital Region Transportation Planning Board. Hubway and Capital Bikeshare both receive funding from local universities and hospitals as well.

Non-Profit Organizations

Nice Ride receives operating and capital funding from local and federal grants, private foundations, and for-profit companies. According to the organization’s 2012 Annual Report and 2013 Mid-Season Update, Blue Cross and Blue Shield of Minnesota and Bike Walk Twin Cities (funded through the Federal Highway Administration) comprise 71 percent of the organization’s 2010-2013 expansion funds. From 2010 to 2012 (the report lacks complete operating expenses and funding data for 2013), contributions from station sponsors, which include local institutions, businesses, private firms, corporations, co-ops and the City of Minneapolis Public Works/ABS Ramps and MPLS Parking, accounted for 40 percent of the system’s operating costs during this period.

The Case for Public Funding

ITDP’s The Bike-Share Planning Guide makes the case that bike share programs should be thought of as part of a greater public transportation system and should be funded as such:

Government funding for capital costs and operations makes sense in light of the fact that bike-share is part of the larger public transport network, and when all internal and external costs and benefits are considered, it is probable that bike-share will have a lower per person cost than any other public transport option.

Other public transportation systems in New York City receive federal, state and city funding. New York City’s East River Ferries received $9.3 million over three years from the City, despite having a daily ridership a fraction of Citi Bike’s. And, as the charts below make clear, the MTA’s buses, subways and rail also receives a combination of funds to pay for operating and capital costs.

Sources of Operating Funds Expended (from the National Transit Database, 2012)

Sources of Capital Funds Expended (from NTD Database, 2012)

With over 5 million trips in the first eight months, a recent survey that shows 91 percent of Citi Bikers would like to see the system expand, and calls from outer boroughs to bring Citi Bike to their neighborhoods, it’s clear that New York City loves its bike share. It’s also clear that if Citi Bike is to meet this demand, the financial burden for expansion cannot fall solely on its riders. Regardless of the source, a broadened funding base is key for Citi Bike to expand into transit-starved neighborhoods while keeping bike share affordable.