Tremblay defends Bixi loan bailout
Published Wednesday, May 18, 2011 9:35PM EDT
Montreal Mayor Gerald Tremblay stopped by the CTV Montreal studio Wednesday to discuss the firestorm surrounding his administration's decision to prop up the company behind the Bixi rent-a-bike system with a $108 million loan package.
Tremblay repeated many of the points he's been making the past few days on how the rapid expansion of the Public Bike System Co. has led to cash flow problems because the company's budget is unable to meet the enormous demand for the bikes.
"It's a growth challenge the company has," Tremblay told CTV Montreal news anchor Todd van der Heyden. "It started very small, we conceived a product here, we have patents and suddenly the world wanted to buy them. So we had to finance that."
Tremblay admits the $37 million direct loan to Bixi for its Montreal operating deficit represents a risk to the city. He said the loan will be paid back at a rate of $250,000 a month.
Public Bike System Co. chairman Roger Plamondon and Tremblay have both said the loan will be repaid with interest, but that is assuming the company is around long enough to complete the payment schedule.
That would take 12 years and four months simply to reach the $37 million loan amount without interest.
The remaining $71 million in loan guarantees are meant to cover the company's international expansion. Tremblay says $60 million of that provides the funds to pay suppliers to fill orders from other cities, and once those cities pay for their orders, that money can be paid back.
Orders keep coming in
Tremblay said a contract with New York City for 10,000 bikes is in the works and the contract with London, England for 6,000 bikes has proved to be inadequate and they are asking for more.
The Bixi system was recently introduced in Toronto and Ottawa, and there are talks underway with Vancouver and San Francisco, Tremblay said.
On the local level, Tremblay says promoting Bixi is important for Montreal even though just 40,000 of the city's residents currently use it.
"I think active modes of transportation are important, just like public transit," he said, noting the city has 500 kilometres of bike paths, a number that will jump to 800 kilometres.
"If we want to be a green city," Tremblay added, "we have to promote cycling."
Plamondon sends memo to members
Tremblay's appearance came on the same day Plamondon sent out a memo to Bixi members in an effort to clear up some of the rhetoric that's been thrown around over the past few days.
He repeated many of the points Tremblay brought up, except two nuggets emerged in the memo.
Firstly, after Tremblay was questioned in council by Projet Montreal Leader Richard Bergeron regarding the cost of a single Bixi bike – with Bergeron calculating that it cost more than $7,000 – Plamondon's memo reveals that Montreal's version of the bike costs "basically the same" as the bike being used in Barcelona.
Plamondon's memo says the Barcelona bike costs 600 euros, which amounts to about $830 according to Wednesday rate of exchange.
Also, Plamondon says the company has 50 employees and that it has created more than 400 jobs at suppliers "everywhere in the region for the manufacturing of the diverse components of the system."
"Our business plan is clear," Plamondon writes in closing. "It has been presented publically. We remain in line with the business plan and once again count on respecting these objectives again this year. The plan outlines clearly that the system will cost nothing to Montrealers. This is our commitment."