NYC Mayor de Blasio Hails Lyft’s Purchase of Citi Bike Operator but Deal Raises Serious Questions of Insider Influence
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Competition among new sustainable transportation companies is on the rise in cities across the country – with all signs pointing upward.
Firms provide daily mobility options to commuters in places like Washington, D.C. — for people who like to pedal to work. Now, even electric scooters have become a favorite mode of transportation for many. This is in addition to the tens of millions of Americans who still opt for public transportation like trains and buses.
Residents in some of America’s cities, however, still do not have widespread access to new mobility options. And because of that, questions are being raised about municipal transportation contracts.
New York City Mayor Bill de Blasio just announced that Lyft’s $250 million acquisition of Motivate, the company that has operated Citi Bike, received final approval from the city. Lyft will invest $100 million so that Citi Bike can triple in size to nearly 40,000 docked bicycles and expand by 35 square miles over five years, more than doubling the size of the current service area.
The de Blasio administration’s press release goes on to say that Lyft will also “immediately invest to restore the existing system to its required fleet level of 12,000 bikes within 90 days of the acquisition (i.e. the end of February).”
But that admission by the mayor raises questions. The 12,000-bike level was supposed to have been met last December when City Hall extended the exclusive contract between New York City’s Department of Transportation (DOT) and Motivate by a decade.
According to research provided by Checks and Balances Project (C&BP), an investigative watchdog blog, the exclusive contract – and the now-finalized Lyft acquisition – may have been made to benefit wealthy New York investors whose stakes in Motivate were being threatened by the urban mobility revolution.
“What is City Hall hiding from New York taxpayers about this monopoly contract?” asked the Project’s Executive Director Scott Peterson.
A chronology of a lucrative insider deal
At the center of this deal appears to be NYC Deputy Mayor Alicia Glen. Five year ago, while working for Goldman Sachs, Glen arranged for a $42 million initial loan to a company called Alta Bicycle Share to grow the NYC bike sharing program that Alta operated in partnership with DOT. While at Goldman, Glen spoke publicly about how the company expected to make a return on its investment in “projects” like Citi Bike/Alta in the “high single digits.”
The following year, in 2014, Glen joined the de Blasio administration as Deputy Mayor where she oversees and coordinates the operations of DOT. Then, in October of that same year, a group of wealthy New York investors bought Alta. Three months later, they changed the company’s name to Motivate and installed new leadership.
Beginning in China, a mobility revolution of e-bikes and e-scooters spreads worldwide. Users appear to like the freedom these new transportation options provide and the ability to go the last mile to their destination. Last September, we covered the rise of e-bikes.
But in December 2017, DOT Commissioner Polly Trottenberg, who reports up to Deputy Mayor Glen, extended a monopoly contract with Motivate for 10 years, virtually locking out mobility competitors. Motivate’s territory includes the most lucrative areas of Manhattan, Brooklyn, Queens, and Jersey City.
Eight months later in July, 2018, Lyft announces it will buy Motivate for a widely reported $250 million. It is unclear who all the shareholders of Motivate are, but it appears that Motivate is backed by several, well-connected business executives and former NYC government officials, including former Deputy Mayor Dan Doctoroff. Among other publicly known investors are Related Companies CEO Jeff Blau and Niki Leondakis, former CEO of Equinox. According to Peterson, C&BP requests for public records from DOT related to this deal have been denied until May 2019.
CleanTechnica has reached out to Motivate asking for information on investors and percentages of ownership and details about the deal. Despite repeated requests, the company has refused to respond to our written questions over email. We will update readers if they do.
Last month, New York City Council Member Justin Brannan, who heads the City’s Contracts Committee, wrote an op-ed in the NY Daily News questioning Citi Bike’s effectiveness and outlining the consequences of the contract for his constituents. He criticized the absence of a competitive process that led to the de Blasio administration extending the exclusive contract with Motivate for a decade. The long-term extension has resulted in less transportation options for Brannan’s constituents, which is compounded by the fact that the areas he serves are already considered “transit deserts” due to their limited subway stations and bus stops.
A few studies support the claim made by some in the mobility industry that even with the announcement to expand Citi Bike to 40,000 docked bikes in the next five years, that will still not be nearly enough to address the mobility needs of New Yorkers.
Citi Bike has also been under pressure as of late for operations and maintenance issues, including bike availability levels well below the program’s requirement. The contract between DOT and Motivate states it can be extended for two five-year periods (until 2029) if there’s a Citi Bike “Program Fleet of 12,000 Bicycles.” There are financial damages that Motivate would need to pay for not maintaining the 12,000-fleet benchmark, according to the terms of their contract with DOT.
A DOT spokesperson would only say, “The first and second five-year extensions were automatic for achieving program expansion milestones of 10,000 and 12,000 bicycles installed, respectively. The first extension to the contract is dated November 2, 2016 and the second extension, for the 12,000 bicycle threshold, is dated December 21, 2017.
Please note as a part of the contract, Motivate is allowed to drop the fleet by 50 percent as of November 15, 2018.”
However, there are strong indications of a fleet decline well before November 15th. In late September, there were 7,166 bikes in service, according to data from Motivate itself as reported in Streetsblog NYC. At that time, independent data from Oliver O’Brien at University College London, who has been tracking New York City’s bike share program since its inception in 2013, showed that only 72% of the 12,000-fleet was available for riders to use. As of about 1:00am EST today, there were only 10,479 total bikes available based on figures from both Mr. O’Brien and Citi Bike’s Station map.
CleanTechnica has reached out to DOT and Deputy Mayor Glen’s office for actual historical data to verify these figures, as well as answers on why the city gave Motivate an exclusive contract and who was involved in the decision. Neither responded to these inquiries at the time of publication.
Despite Mayor de Blasio’s glowing announcement, the fact remains that Lyft has been given a monopoly in New York City until 2029. Some of the details that ultimately led to the expansion remain murky.
Peterson is skeptical.
“The deal appears to have been pushed through to save the bacon of a group of wealthy New Yorkers, whose investments were jeopardized from a revolution in dockless scooters and e-bikes,” says Peterson. “What is City Hall hiding from New York taxpayers about the wealthy insiders who may have benefitted from a monopoly contract?”
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