CITY HALL — City Council moved a step closer to launching the first significant bikeshare system in the region Tuesday night.

Council voted unanimously to have city officials negotiate a $5.6 million contract with CycleHop for the purchase, installation, and operation of 500 bikes and 65 to 75 stations throughout the city and beyond. Contract extensions could bring the total cost to $10.4 million over an 8-year period.

Bikeshares allow riders to check-out bikes from one station and drop them off at any other station in the city.

As it’s currently proposed, riders could pay $2 for every 20 minutes of use or buy memberships ranging from $15 to $25 per month. These fees will come before council again before they are finalized, city planners said.

The price tag was a concern for several public speakers but the plan, as highlighted by Councilmember Ted Winterer, is for the system to actually generate revenue for City Hall through users fees and a corporate sponsor that would pay between $250,000 and $500,000 annually.

Last year, when the bikeshare plan came before council in an earlier iteration, some members said they’d be open to amending Municipal Code to allow corporate sponsorships to appear on the stationary kiosks around the city.

The current financial calculations show that it won’t be necessary, city planners said, and instead corporate sponsorship would appear only on the bikes themselves. They’d follow advertising guidelines similar to those followed by the Big Blue Bus.

During the public input portion of the meeting, former Mayor Michael Feinstein told council that, while he supports bikeshare and CycleHop, he opposes this corporate sponsorship model, which forces residents and tourists to become moving advertisements. Others said they’d be more supportive of the sponsorships if they were from local businesses.

City officials have also been sitting on about $2 million worth of bikeshare grants that expire soon.

Metro had asked city officials not to move forward; they are currently working on a model for a regional bikeshare system and they want Santa Monica’s system to integrate easily with theirs. With the grants moving closer to expiration, council decided it couldn’t wait any longer.

Some residents expressed concerns that a sample station map, released with the bikeshare plan (and featured in this post), was too focused on Downtown and tourists. Winterer made the point that it’s only a preliminary map and that residents will have an opportunity to weigh in on the locations.

Winterer also asked about CycleHop’s history. The company has yet to actually launch a bikeshare system and their proposed systems are delayed in at least four cities.

“We are taking a little bit of a leap of faith with both the bicycles and the operator who don’t have an enormous track record,” Winterer said.

Lucy Dyke, deputy director for Special Projects, explained that many of the current employees of CycleHop have longer track records than the company itself, having worked on other systems in the past.

“The experience in some other places with some of the operators that have the most experience has not been entirely successful,” she said.

She described a major bikeshare company that has faced bankruptcy and has struggled to order replacement parts for the bikes. This is likely a reference to Alta Bike Share, which operates New York City’s Citi Bike and Washington, D.C.’s Capital Bikeshare. The company was purchased last month.

“It was unclear that there was an entirely non-risky choice,” Dyke said.

Councilmember Terry O’Day also addressed the delays.

“We want to make sure that we have a committed partner here and that we’re working very closely to make the program a success,” he said. “I think the way the contract is structured gives us more control than the perhaps what other cities have seen.”

Santa Monica, under the proposed contract, will take the lead on finding corporate sponsorship and will set pricing for riders. In the delayed cities, taxpayers have not laid out any cash. CycleHop was simply given the right to add their kiosks in public right-of-ways. In those cities, the company was tasked with finding its own corporate sponsorships and creating its own business plan.

City officials say they hope to have the bikeshare up and running before the launch of the incoming Expo Light Rail in early 2016.

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