Financial problems plague Bixi Toronto

Toronto city hall is getting nervous about “financial difficulties” at Bixi Toronto, which is hobbled by an “unsupportable debt load and a seasonal cash-flow shortage.”

In a document made public Tuesday, Toronto said that to “protect its financial interests,” city hall may “restructure” its relationship with the Public Bike System Co.

PBSC is the private company, controlled by the city of Montreal, that created Bixi for Montreal and went on to sell bike-sharing systems around the world.

Montreal taxpayers would not be on the hook if Bixi Toronto fails. The city of Toronto guaranteed the $4.5-million loan used to launch Bixi Toronto — an offshoot of the PBSC — in May 2011.

Details of the proposed restructuring remain secret until after they are discussed at a Toronto executive committee meeting next week.

One option Toronto may consider is investing in an expansion of the system to help it attract more members and achieve economies of scale.

Bixi Toronto features 1,000 bikes, concentrated in the city’s downtown core.

By now, the system was expected to have been expanded to 3,000 bikes, allowing it to reach other neighbourhoods and attract more bike commuters, PBSC chief executive Michel Philibert said in an interview.

Bixi Toronto has 4,630 members. With 1,000 bikes, it will be impossible to grow beyond 5,000 members during the high season in the summer, Philibert said.

He said Montreal could be a model for Toronto. Montreal has 5,120 bikes spread across many neighbourhoods. It has 37,000 members and last summer reached 50,000.

Philibert said the PBSC does not know what options Toronto’s executive commit- tee will consider next week.

On Tuesday, one Toronto city councillor suggested Bixi Toronto may close.

Philibert said the PBSC doesn’t “want to close Bixi Toronto.” He said the system will definitely remain in place this year, but did not answer directly when asked if its longer-term future is viable with 1,000 bikes.

The PBSC had financial difficulties as it sold systems around the world, and Montreal’s auditor general and the Quebec government have said Montreal overstepped its powers by getting involved in a commercial enterprise.

Montreal has put the PBSC’s international business up for sale, including contracts with New York City, Boston and Melbourne, Australia. The sell-off will not include Montreal, Toronto, Ottawa or London, England.

The Gazette has reported that Procycle, a bike-maker based in Quebec’s Beauce region, is expected to buy the international operations, and the Société de transport de Montréal is expected to take over the Montreal network and other Canadian systems.

This year, for the first time since Bixi launched in 2009, Montreal is investing directly in the system in order to meet growing demand.

Last month, Mayor Michael Applebaum said the city will spend $2.4 million to buy 100 bikes and to add 1,750 bike docks. In addition, the city will contribute $245,000 in operating funds this year.

For years, the city had said bike-sharing would pay for itself, with no subsidy from taxpayers. International sales had been expected to finance Bixi Montreal, apart from a $37-million city loan that Bixi is repaying, with interest.

That loan was given to the PBSC in 2011 when the firm was out of operating cash and on the brink of collapse.