As expected, a deal with the investment firm REQX Ventures, created by Equinox Gym and its parent Related Companies, will likely keep Citi Bike afloat. Capital New York reports that the deal is close to being finalized, but city officials have been "moving slowly to seal it." Under the deal, REQX would buy a 51 percent share of Alta Bicycle Share, giving the firm control of Citi Bike and Alta-run bike shares in eight other cities.
Citi Bike has exceeded cost expectations by about $9 million because of faulty software and damage from Hurricane Sandy, and it's been reported that the program needs "tens of millions of dollars" to keep operating. Under the proposed deal, REQX would be able to raise membership ratescurrently $95 for a year, $9.95 for a day passwithout city approval. The firm would use this revenue to replace faulty software, which has caused the bulk of issues for the program. During Citi Bike's early days, 10 percent of the 330 stations failed, credit cards were rejected, and solar-powered docking stations didn't work. It doesn't help that the company that made the equipment and software filed for bankruptcy.
According to Capital, the key focus of the proposed restructuring would be to stabilize Citi Bike's finances. Once that happens, plans to expand would be considered. When Citi Bike was originally proposed, the program was to have 10,000 bikes at 600 stations in Manhattan, Queens, and Brooklyn, but because of early complications, the rollout was scaled back to just 5,000 bikes at 330 stations. Expansion has been repeatedly talked about, but it looks like that's being pushed to the back burner until the program can actually make some money.
· Deal takes shape to bolster Citi Bike [Capital]
· Citi Bike Program May Be Getting Bailed Out By Related [Curbed]
· All Citi Bike coverage [Curbed]