DecoBike will likely compete with local businesses that rent bicycles, such as Fritz’s Skate Bike and Surf, located at 1620 Washington. Photos by Angie Hargot

Cycling Competition

Bicycle-Sharing Program in Miami Beach Gets the Green Light, but is it Unfair to Local Businesses?

By Lee Molloy

In July 2007 the city of Paris launched a bicycle-sharing program that put more than 10,000 communal bikes into service at 750 stations around the city. The program is known as Vélib, a contraction of the French words for bicycle (Vélo) and freedom (Liberté). Two years later, the program has grown to more than 20,000 bicycles and 1,450 stations, making it the world’s largest program of its kind.

Vélib, however, is not without problems. With other cities such as London and New York considering setting up their own similar systems, the world’s press has kept an eye on Vélib’s success. More than 7,500 of the original bikes have “disappeared,” and a further 11,600 have been vandalized, the BBC reported in February.

The thefts and damage are so bad that a representative for the programs operator, JCDecaux, the second largest outside advertising company in the world, says that the company can’t afford to keep running without changing their business model.

On July 15 the Miami Beach City Commission gave the green light to a similar, although much smaller, bike-sharing program.

Local businessman Ricardo Pierdant, owner of Deco Bike, LLC, beat out two other bidders in January to win the concession contract. Since then, DecoBike has coughed up another $700,000 in capital to modify both the quality and aesthetic design of the bicycle and kiosk stations as instructed by the commission.

A working prototype of the bike was wheeled onto the commission floor — and just like the Pink Floyd song, it had “a basket, a bell that rings, and things to make it look good.”

Seemingly unable to resist the bikes charm, city officials inspected the bike, kicked the tires and rang the bell.

Commissioner Jonah Wolfson was suitably impressed. “That is really cool,” he said.

DecoBike plans to station a total of 900 bikes that can be returned to any of roughly 50 kiosks in South Beach, 20 to 25 around Middle Beach and between 15 and 20 in North Beach, for a total of 85 kiosks throughout the city. The kiosks are designed to hold between 8 and 16 bicycles each and are slated to become operational by May 2010.

The kiosks will also utilize 50 ground level parking spaces throughout the city, resulting in an annual revenue loss of roughly $75,000, Parking Department records show.

Although the rate may go as high as $6.95 per hour, the bikes will initially rent for $4 per hour (there’s a discount for weekly or monthly subscriptions) and the city receives 12 percent of the gross revenue. However, that means DecoBike will have to do 428 rentals per day for the city to break even on the lost parking revenue. Those figures don’t account for the city’s 25 percent cut of any advertising revenue raised from renting out space on the bike baskets.

DecoBike’s revenue projections, including advertising income, show the city making more than $381,000 per year for the first five years of business. To achieve that goal, each bike in their fleet of 900 would have to average more than two rides per day.

“I think your projections are ambitious,” Commissioner Saul Gross told DecoBike representatives during the commission meeting, before adding, “I wish you all the luck, and I hope that you can make it work.”

Mitch Wentworth, the owner of Fritz’s Skate, Bike and Surf at 1620 Washington Ave., has been in business on South Beach for two decades, and isn’t at all convinced that the bike-sharing project is fiscally viable.

“Anyone that has anything to do with the bike business does not see how this will work,” Wentworth told The Lead. “Why is someone going to take a bike for $4, when they can take an air-conditioned taxi cab for $5?”

Wentworth thinks there will be an initial “pop” due to the novelty of a new service, but thinks it will soon wear off. “They rent out the bikes, but they don’t rent helmets or locks,” he said.

Florida law requires a person under 16 to wear a safety helmet when riding a bicylce, so a kid must either bring a helmet with them when they want to use the service, or go and buy one first.

“Who’s going to pay a $4 rental and then buy a $30 helmet?” Wentworth said.

Furthermore, the DecoBikes do not come with a lock, leaving it vulnerable to thieves. If an unsuspecting tourist went into a store to buy a bottle of water they would be unable to secure the bike unless they had previously purchased a lock. If the bike is stolen renters will lose the $350 credit card deposit required to rent the bike. Before approval, the commission added in the condition that DecoBike would prominently display warnings about the potential for theft.

“I don’t know how bad Paris is for bike theft,” Wentworth said, “but South Beach is one of the worst in the United States.”

Joel Vargas, general manager of bicycle rental store Bike and Roll at 210 Tenth St., asserted that the commission is not concerned about the small businesses of South Beach.

At $4 per hour, DecoBike is “offering tourists the opportunity to rent a bike for half the price I charge my customers coming in the door,” Vargas told the commission. “This was supposed to be a bicycle transportation system, now it has become competition for the smaller bike shops on the Beach.”

Commissioner Victor Diaz agreed with Vargas’ perspective.

“I see the same thing you see,” Diaz told the small business owners. “I see an excessive concentration [of kiosks planned] in South Beach.”

According to Diaz, the initial purpose of the bike-sharing plan was to bring more mobility to the citizens of Miami Beach, allowing people to ride around their neighborhoods and between parts of the city — not to become a service mainly for tourists.

“We have no business competing with private enterprise,” Diaz said. The proposal “has morphed from a mobility plan.” Ultimately, Diaz’ was the lone vote against approving the program.

Commissioner Ed Tobin, however, explained that the commission was not happy with the fact that the program would compete with local companies.

“We were sort of hoping that you would do this,” Tobin said. “If you had decided that this was a good business model, you would have had this contract.”

Wentworth told The Lead that he “had a friend come to me originally and want to do something like this,” he said, but “knowing what the bike rental market is like I said, ‘I don’t see it.’”

Although he wishes them well, Wentworth’s outlook for DecoBike’s survival is bleak. “They’ll default, walk away and we’ll all have less business in the meantime,” he said.

The City of Miami Beach required Deco Bike, LLC to put down a $100,000 bond so that, in the event that the business goes under, there will be money in place to dismantle the kiosks and repair the parking spots. Commissioners remain concerned that if DecoBike fails, it will create a disincentive for future bike sharing projects.

“I don’t understand their business model. It’s not my money, and I wouldn’t go into this business,” Gross said. Although he added that the prospect of moving towards greener transportation modes was worth allowing the company to give it a shot, “If something looks too good to be true it generally is,” he said.

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