Weighing the pros and cons of government subsidizing bike shares
It’s easy to forget that there was a time when Citi Bike wasn’t a ubiquitous presence on our streets. Last year, the network of Lyft-operated, blue-and-grey two-wheelers hit new heights, as riders set three daily and two monthly ridership records on the way to reaching 250 million all-time rides. Citi Bike has become a mainstay on our streets, and the soaring ridership isn’t showing any signs of slowing down.
The only thing rising faster than Citi Bike’s ridership numbers is its fees. On New Year’s Day in 2024, the e-bike fare was $0.17 per minute for members and $0.26 per minute for non-members. Three days later, the rate rose to $0.20 for members and $0.30 for non-members. Six months later, the fare jumped again to $0.24 for members and $0.36 for non-members. And this past January, the fee rose one last time to $0.25 for members and $0.38 for non-members, totaling at a nearly 50% price hike in just over a year. It’s a trend that advocates and planners have sought to reverse as part of a broader push to publicly fund Citi Bike. Those efforts have failed to gain traction in the City Council.
That changed last fall, when Brooklyn Councilmembers Chi Ossé and Lincoln Restler introduced legislation to cap Citi Bike fares for members at the cost of a subway fare: $2.90. The fare cap would apply to all rides on e-bikes under an hour (or two hours for conventional, non-pedal-assist bikes). Ossé and Restler hope the fare cap incentivizes drivers to switch from driving to using Citi Bike.
This marks the most concrete push to reduce the cost of Citi Bike with the help of public subsidies. The efforts mirror the free bus initiative that Queens Assemblyman and mayoral candidate Zohran Mamdani has advocated for. In October, I analyzed Mamdani’s plan (and fare-free transit writ large) and recommended against implementing it. With Citi Bike fare cuts, similar dynamics and viability questions are at play. However, some variables argue in favor of bringing down the price of bikeshare.
How we got here
What Ossé and Restler are proposing for Citi Bike is standard practice for American public transit agencies; fares typically comprise a fraction of the revenue agencies receive. The MTA, for example, only gets around a quarter of its revenue from fares — the rest comes from taxes, tolls and federal COVID aid. Los Angeles’ ratio is even lower, at 5%. These lower ratios are due to post-pandemic ridership drops; in 2019, the MTA’s farebox recovery ratio was 53%, one of eight transit agencies nationwide with recovery ratios over 50%. Still, transit agencies routinely get a lot of outside revenue support beyond their fares, whereas Citi Bike currently gets nothing. The full implementation of Intro 1039 would bring the bikeshare’s recovery ratio down to 60%, exceeding all but three American transit agencies’ pre-pandemic recovery ratios. This request would seem entirely reasonable if Citi Bike were a subway system.
But one doesn’t have to point to public transit subsidies as justification for a bikeshare subsidy; several North American cities already dedicate public subsidies to help fund their bikeshare networks, like Mexico City, Montreal, San Francisco, Washington D.C. and Boston. Typically, these cities used the money to fund operations rather than fare cuts. (Boston did allocate $550,000 for subsidized passes during MBTA closures in 2022). But there is plenty of precedent for using public funds to help pay for bikeshares. Nothing is preventing the City Council from dedicating subsidies to replacing fares.
To establish how much public money is needed, we must establish how much revenue we need to replace, which requires creating a new fare structure with the cap. For simplicity’s sake, I will round up to $3. Currently, Citi Bike caps rides across boroughs at the equivalent of a 20-minute fare ($5 plus tax), so we can use that interborough limit as a model for our cap. Setting the price at $3 for a 20-minute-or-longer ride translates to a $0.15 per minute fare for the first 20 minutes and then free fare beyond that. Therefore, a subsidy would have to replace 40% of the revenue for the first 20 minutes of a ride and the entire fare beyond that.
In 2024, Citi Bike raked in about $215 million in total revenue, $80 million of which came from e-bikes. In 2022, NYU Wagner’s Rudin Center estimated that members accounted for 79% of Citi Bike rides. That puts the approximate subsidy requirement at about $25.25 million annually. That estimate does not consider the 20% of rides that exceed 20 minutes, which must be entirely replaced from the 21st minute. However, there is also a higher e-bike fee that non-members must pay, decreasing members’ overall contribution and balancing out the cost of longer rides. Therefore, sticking around $25 million is reasonable.
Restler and Ossé would likely end up attempting to rally the City Council behind generating revenue through new taxes and fees. However, a funding source exists at the state level that could pay for the program with no extra impact on New York City taxpayers’ wallets. Last year, the New York State Energy Research and Development Authority pointed to the $3 billion Mass Transportation Operation Assistance fund as a revenue source for bikeshare systems. Their report used Albany’s network as an example, estimating that their bikeshare could receive $139,000 annually using the subsidy model for public transit agencies. The state would have to reclassify bikeshare as public transit, which isn’t guaranteed. Theoretically, if Citi Bike did get reclassified, Streetsblog estimated they could earn about $51 million annually using 2023 ridership figures, double what’s needed to fund the fare cap. Considering the system’s growth, that number could go even higher, unlocking the opportunities to pursue other expansions or improvements to the system.
However, the uncertainty of the fund’s availability necessitates other funding options. Restler and Ossé did not directly reference any funding sources in their promo video, but their motivations provide directions on where they could go. The council duo invoked a desire to encourage people to switch from driving to bikeshare, making car usage fees a natural funding source. Dynamic parking pricing models, allocating some speeding, parking and red light ticket revenue, as well as gas and vehicle weight taxes, could help pay for fare subsidies. More conventional tax hikes and additional enforcement revenue can also finance the bill. None of these proposals are glamorous, but they provide pathways to the required revenue.
Another revenue source? The bill itself. The savings from Mamdani’s free bus pilot led to a 30-40% increase in ridership on those routes. It stands to reason that similar price cuts on Citi Bike would also lead to ridership boosts. Unlike free buses, however, Citi Bike would still get fare revenue with a fare cap. Ridership growth would increase revenue for Citi Bike, demonstrating the key difference between a fare reduction and a fare removal: Even if the net fare loss is identical, any farebox revenue will make a fare reduction more financially feasible than a fare removal.
Pluses and minuses
Citi Bike’s increasing fees have become a growing financial strain on commuters, leading some riders to reconsider sticking with the bikeshare and deterring prospective riders from adopting it. The fare cap introduces a new incentive for people to adopt biking as a mode of transportation, with many environmental benefits. The foregone and reduced greenhouse gas emissions are immense, and e-bikes can be a viable choice to replace car trips. A more affordable Citi Bike means more people are biking instead of driving, thereby reducing traffic, emissions and pollution.
It also creates a safer experience for bikers and pedestrians. Increased biking results in a more prominent presence on the road, making drivers more aware of them and reinforcing their “safety in numbers.” Fare reductions and increased ridership would also help curtail reckless ridership. The current cost structure incentivizes riders to do whatever they can to reduce costs, like speeding, running red lights and riding the wrong way, contributing to increased pedestrian injuries. Reducing fares and introducing a fare time limit removes the financial incentives to these reckless habits, which, coupled with increased ridership leading to slower riding, could help create a safer pedestrian experience.
But Citi Bike’s fare cap is one of many needs competing for the same subsidies.
The reliability and longevity of e-bikes have deteriorated thanks to vandalism, improper use, and, most critically, ridership overperformance. The bikes have worn down three times faster than Lyft initially anticipated. Coupled with vandalism, the surging ridership has resulted in skyrocketing demands for repairs and battery swaps, straining the system’s workforce. Citi Bike’s workforce is already underequipped to handle existing demands. A fare cap could further increase those demands, and Citi Bike’s usability would continue declining without additional personnel assistance.
Then there’s the reach of Citi Bike. Advocates have long fought to get new docks deeper into the outer boroughs. However, even after the Citi Bike network expansion planned for this fall, 36% of New Yorkers will live more than five minutes away from a dock and won’t benefit from a fare cap. Far more people would enjoy the benefits of a system expansion, whereas a fare cap only benefits those within reach.
There are also external variables that can undermine the success of a fare cap. It is worth scrutinizing how many ridership gains would materialize from a price cut. Cost does influence people’s commuting preferences, but convenience and reliability are more influential factors. While Citi Bike is easy to use, imbalances in bike placement and its relative absence in the outer boroughs hamper its availability. The issues with breakdowns and operations also hurt its reliability, something that Comptroller Brad Lander found to be more prominent in the parts of the outer boroughs where Citi Bike is present.
Safety is another factor to consider. The Department of Transportation has failed to install the required 50 miles of bike lanes per year since the NYC Streets Plan bill passed in 2019, and the city’s disjointed bike lane network has deterred commuters from adopting micromobility, particularly women and seniors. Even if Citi Bike were free and in every corner of the city, the lack of bike infrastructure would still undercut its usage. Until DOT starts building bike lanes properly, these qualms will quell whatever ridership increases come from a price cut.
Should they go for it?
The social benefit of embracing micromobility is immense, and DOT should heavily encourage increased Citi Bike ridership, something that affordability helps to achieve. However, those other priorities must be addressed in order for the bill to succeed. The Mass Transportation Operation Assistance fund provides flexibility to address those priorities while funding the fare cap. Without that funding, it becomes more challenging. The different funding sources could generate sufficient revenue, but they could be watered down, and they aren’t guaranteed to pass. The operational priorities of network expansion and reliability must be dealt with. Suppose the secured funding packages aren’t sufficient to finance the bill completely. In that case, the Council should explore more modest price interventions, like only implementing a 20-minute temporal cap or a higher $4 fare cap.
Nevertheless, Citi Bike is here to stay, and it behooves our politicians to embrace its presence. A price cut should not overshadow the other measures needed to help bolster the bikeshare, but it is worth exploring, and the Council should consider pursuing it. Encouraging micromobility is a critical part of the city’s climate and transportation goals; making the system more affordable is one way to accomplish that.