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Public-private funding for Hubway paying off

City in line for more profit in Year 4

Charlene Chow of Dorchester donned her helmet as she was departing from the Copley Square Hubway station.

Wendy Maeda/Globe Staff

Charlene Chow of Dorchester donned her helmet as she was departing from the Copley Square Hubway station.

For some bike-share programs in North America, it was a winter of discontent.

In January, Montreal’s bike-share program Bixi filed for bankruptcy. Then, last month, reports surfaced that the operators of New York’s Citi Bike had asked for tens of millions of dollars in aid from the City of New York.

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But in Boston last week, Hubway opened for its fourth season with a rosy financial prognosis, a fresh contract between the City of Boston and bike-share operators, an expectation that the system will continue turning a profit, and plans for 10 new stations.

“We’re in a very, very solid financial place,” said Nicole Freedman, director of the city’s Boston Bikes program. “We’re in a position to fund expansion.”

Some have attributed Hubway’s success to its more conservative choices — closing for winter and launching with a compact system that spread cautiously — as well as its dependence on both public and private money.

“Bike share systems in Boston, Denver, Chicago, Minneapolis, and Washington, D.C., all of which started relatively small and relied on public sector funds, were able to launch with success, iron out kinks, stabilize, and expand quickly,” said Mia Birk, Hubway Bike Share vice president.

Now, Boston will pay a lower rate for bike-share operations with a new contract that stands to allow the city to collect larger profits.

‘It was a very tough winter. . . . It gave us the opportunity to do exactly what we wanted to do with this pilot.’

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Previously Boston divided the costs of operating the system 50-50 with Alta Bicycle Share, the contractor that operates and maintains the system’s bikes, stations, software, and memberships. Boston uses public grant money, along with private sponsorships, to pay the city’s share without dipping into municipal coffers — and up until now, Alta and Boston have split the profits in half. It was a risk-sharing model favored by former mayor Thomas M. Menino, who was wary of placing the city on the hook if forays into bike share fell flat, Freedman said.

Now, Boston will pay Alta for the full operations cost, but in turn, the city will take all of the profits from membership fees and advertising — a sign that city officials are confident in the bike-share program’s continued profitability. And the city is getting Alta’s services at a new, lower rate: Boston will pay the company about $70 per bike dock per month for maintenance and operations, about a 30 percent reduction from previous operation rates, and well below the average price for other bike-share systems, such as the $111 rate paid by Capital Bikeshare in Washington, D.C.

The cities of Cambridge, Somerville, and Brookline — some of which use municipal dollars to help pay their share — are considering whether to switch to Boston’s funding model.

Hubway’s diversified funding approach has been championed by some as the most stable option.

In January, Bixi, the company that operated bike shares in Montreal and Toronto and also manufactures bike-share equipment, filed for bankruptcy protection. The City of Montreal, which is owed about $30 million from Bixi, has seized the company’s Montreal assets. The City of Toronto has taken over its own bike-share operations.

And New York’s Citi Bike — widely touted for being funded entirely through private sponsorships and membership fees — is now seeking tens of millions of dollars from the City of New York to maintain and expand operations, according to a report by the Wall Street Journal. Citi Bike, also operated by Alta, has proven popular with residents, but a faulty software system and sparse winter ridership incited financial concerns.

“As with any new industry, there are challenges,” Alta officials said in a statement, adding that the challenges are fixable “and we are working diligently to fix them.”

But some, such as Caroline Samponaro, senior director for campaigns and organizing at Transportation Alternatives, a New York City transit advocacy group, think that Citi Bike should adopt Hubway’s model, incorporating corporate sponsorships and public money.

Starting the system without public funding was necessary in a city where naysayers threatened to prevent the bike share from getting off the ground, she said. But, she continued, government funding is now necessary to ensure stations spread evenly across the city’s neighborhoods.

“It’s a new thing to think about bike share as a public transit system, but now that’s where we are, and it’s important to bring some amount of subsidy so our program can grow to a scale that’s equitable,” Samponaro said.

Encouraging an equitable distribution of bikes and stations is also a problem in Boston, where large swaths — East Boston, Dorchester, Roxbury, Mattapan, and Hyde Park — have few or no stations.

This year, Cambridge embarked on a pilot to test how the system would fare during the winter. Emily Stapleton, Hubway general manager, said ridership in Cambridge was 15 to 20 percent of regular season averages. And there were no Hubway crashes through the winter — a sign of success, said Cara Seiderman, Cambridge’s transportation program manager.

“It was a very tough winter, and counter to what you might expect, we were very happy about it,” Seiderman said. “It gave us the opportunity to do exactly what we wanted to do with this pilot, figuring out what happens when you have cold and difficult winter.”

Still, Cambridge officials have not decided whether year-round service will be permanent. Likewise, Freedman said a decision has not been made on whether Boston will experiment with an all-seasons operation. With fewer winter riders, she said, each ride becomes more expensive, and that is money that could also be used to expand the system into other neighborhoods. Instead of going year-round, she conjectured, the off-season could be shortened to just January and February.

“It really comes down to cost and benefit,” Freedman said. “And if we have a limited amount of money, how do we use that money?”

Martine Powers can be reached at martine.powers@globe.com. Follow her on Twitter @martinepowers.
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