January 31, 2014

Keep Bike Shares Self-Supporting

With more than 2,000 users in its first few months of operation, the Kansas City bike share program has had a lot of success getting people to ride bikes in downtown Kansas City. A bike share is a service that allows people to rent bikes for short periods. These bikes are rented from and must be returned to “stations” dispersed throughout the city. However, many bike share programs are having a difficult time finding the money to stay in business. Kansas City and other Missouri cities should resist those urging the use of public money to support bike shares. The evidence shows that bike shares serve highly educated elites who can pay their own way.

The Kansas City B-Cycle program launched in 2012 as a non-profit bike share service. Sponsors include the city and county as well as banks, insurance companies, and other private businesses. Bike rentals cost $7 for a day pass or $65 for a year pass. B-Cycle is also using Kickstarter campaigns, which draw micro-donations from interested individuals, to fund new stations throughout the city. This type of voluntary funding supports downtown transportation without forcing those who do not use the system to pay.

However, all is not well for bike sharing programs. Public Bike System Co., which operates many bike share systems in the U.S., recently went bankrupt. The problem for many bike share programs is that rental fees from users do not cover operating costs, meaning sponsors need to cover part of the operating expenses and all the capital investment of the services. Sponsor support can be transient, and as bike shares expand to include less profitable stations, bike share services quickly lose solvency. Enter the urban transit boosters (such as the National League of Cities), who claim dubiously large congestion and livability benefits from bike share programs. They support city and state funding for, and capital investment in, bike share programs.

However, like many transportation projects, subsidizing a bike share program most likely benefits the wealthy and educated. A survey of riders using Capital Bikeshare in Washington D.C., found that 95 percent of users held a college degree (56 percent had a masters or doctorate). As for income, 80 percent made more than $50,000 per year and 45 percent earned more than $100,000 per year. For perspective, per capita personal income in the district is about $45,000 and less than half of all residents have college degrees. Clearly, bike share users do not need city-subsidized bike rentals. Furthermore, from data collected in Kansas City, we know that most riders use the bikes on the weekends in the downtown core. In short, a city-supported bike share uses public dollars to support the weekend excursions of highly educated, upper-middle class residents.

The Kansas City bike share service has achieved its initial success primarily as a user- and sponsor-supported venture. But Kansas City residents should be wary, lest the city begin subsidizing the recreation of the wealthy at the expense of everyone else.

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