Council approves $108-million in loans to finance Bixi expansion
MONTREAL - A $108-million loan package for the Bixi rent-a-bike program was passed by a 35 to 25 vote of city council Tuesday afternoon.
The private, non-profit company behind Bixi, Public Bike System Co., will receive a straight $37 million loan to cover its local deficit, and the city will act as guarantor for another $71 million in loans to help Bixi expand further around the world.
The company defended the loan, calling it a temporary measure to help with large start-up costs. The Montreal division of system, which is currently used by 40,000 members, is expected to break even at 50,000, said Bixi officials.
Even if the company does not reach that level in Montreal Mayor Gérald Tremblay said the company can always count of city hall to help as it tries to get off the ground.
"We will continue to support Bixi," Tremblay said, "because it's important for Montreal."
Bixi head defends company
The head of the Bixi bike-rental system, which is being offered in three Canadian cities, insists the company is not threatened despite liquidity problems that led to the layoffs of nine of the company's 70 employees recently.
Roger Plamondon says Public Bike System Co. is cash-strapped and its suppliers are waiting to get paid.
"Bixi is simply asking for somebody to guarantee the loans," Plamondon said. "We will then refund the loans and we will make it so that Montrealers will have a system that will cost them nothing."
The bike-sharing service was first set up in Montreal in 2009. It began operating in Toronto earlier this month and is scheduled to start rolling in Ottawa on Wednesday.
"It's still a start-up company," Tremblay said. "I mean it has (had) great success, but we seem to think Bixi has been running for 10 years."
Plamondon pointed out that Toronto and London, England, guaranteed similar loans to set up the Bixi system in their respective cities.
Opposition not pleased
The opposition leaders at city hall, however, don't feel it is the city's role to prop Bixi up financially, especially since Auditor General Jacques Bergeron has not yet presented his analysis of the company's finances.
"It's not the job for city hall to become a bank to support an enterprise," said Louise Harel of Vision Montreal, which presented emergency motions Monday to have the vote delayed to next month when the auditor general's report on Bixi will be complete, but they were defeated by Tremblay's councilors.
Then Tuesday, Tremblay used his Union Montreal party's majority on council to get the loan bylaw passed.
"They have a majority," lamented Projet Montreal Leader Richard Bergeron, "and they use it for that kind of decision, a bad decision."
Tremblay, however, likened Bixi to another public agency the city is trying to promote in an effort to get cars off the road.
"Bixi will always have a deficit," Tremblay said. "It's like public transit because the more people use it, the higher the deficit will be."
Plamondon had to submit to about 90 minutes of questioning from council members and then additional questions from the media on Tuesday.
Out of that, it was revealed that Plamondon hired his wife at one point to do some customer relations work, though he defended the decision by saying his wife has experience in the field and was paid an annual salary of $17,000 for her two years of service in that role.
Tremblay loses his cool
The issue had created a tussle at City Hall, where the beginning of Monday's council session was quite acrimonious. Tremblay at one point told the council speaker that Project Montreal leader Richard Bergeron was "showing his stupidity" in response to a question he asked about why the Bixi bikes are so expensive.
Tremblay vehemently defended the Bixi program and said the financial troubles are a perfectly normal part of the company's growth.
"The Bixi dossier is a big success story," Tremblay told council. "It's a company that is facing challenges as it grows, just like any other small business. But it's a big success recognized on an international scale by all the large cities that want a Bixi system. We should be proud."
Tremblay then went on to say that Bergeron endorsed the Bixi program so strongly when it was first introduced that he said he would be willing to accept a deficit in the first few years because it encouraged active transport.
"He can't have it both ways," Tremblay told council.