Bixi Montreal must prove worth in 2014

The long-troubled Bixi Montreal bike-share system has been granted one more year of operation to prove it can be viable. The system is already under bankruptcy protection, and the city of Montreal is serving as a financial backer, despite a lack of clarity over total liabilities if the system fails.

The Montreal Gazette reported that Bixi will return to the streets of Montreal on April 15, according to Mayor Denis Coderre. The bike sharing operation will be closely monitored and performance will be reviewed at the end of the year to determine a plan for Bixi’s future.

Montreal is providing more than $500,000 to serve as start-up money for the 2014 season. Much of that funding will be a loan to help buy new trucks and trailers for shuttling bikes around the city.

However, Montreal is on the hook for much more if Bixi fails, but just how much remains unclear.

According to Bixi, the number hovers around the $38 million mark, accounting for both the remainder of the loan still owed to the city, and the balance of a loan from the National Bank, on which Montreal is a guarantor.

City staff have produced two other numbers. The first suggested the total risk to the city was $31 million, while a second number released said the number was actually $40 million.

Two factors may help cut the losses to the City of Montreal should Bixi fail. The international arm of the company is up for sale. However, disagreements and lawsuits with client cities have made even the $4 million asking price unpalatable. Four offers have been made, but none have matched the terms asked by the city.

Montreal is also arranging to take ownership of the bikes and stations already in place to offset $11.9 million of what is owed to the city. But the value of this hardware is perhaps questionable if Bixi fails overall. New companies and tech would need to be brought in to make the system functional.

Bixi Montreal does boast 54,000 subscribers for the 2014 season. Mayor Coderre is hoping the new board of directors can help guide the system to success. The company is currently without a president or a chair.

“We will see how much it costs, how much revenue and expenses we have. And we will see after that what is the deficit,” said Suzanne Lareau, a director on the board, and chief executive of Vélo-Québec.