The Seattle Council Passed Bad Bike-Share Policy and You Won’t Believe What Happened Next

Actually, you probably will: Seattle’s bike share program got worse. But, it got worse in an interesting way, as the city council struggles to coordinate its actions across different policy areas.

The city passed an ordinance this summer making the Bike Share program permanent (it was pilot before then). Earlier, I wrote about how the structure of the permanent program is bad for the mobility of Seattle’s citizens, but the Council is also scoring some transit-wide own-goals in the process.

The City Council has always had a contentious relationship with the TNC companies — Uber and Lyft — pressuring them on wages, unionization, and taxes over the years. And now that they both own bike and scooter share programs, the fights are no longer about cars or bikes, but about mobility.

Big Fees Squeeze Small Companies

The City Council priced the licenses for the bike share program $250,000/year for the right to deploy 5,000 bikes. At last year’s usage rates (0.8 rides/day and $1/ride), the city just taxed you about 16% to use a bike, for a total tax rate over 25%! The city is requiring the bike share companies to spread the bikes out to more distant areas of the city going forwards, meaning usage rates will be lower and the effective tax rate will be even higher. Cycling makes us healthier and reduces both traffic and transit crowding, so taxing it at exorbinate rates is already pretty silly.

But the $250,000 price of admission does something else: it squeezes out small players. Ofo and Spin, members of the city’s inital pilot, both announced they’re leaving the Seattle market and cited the massive price hike as a cause. Ofo has been pulling back across the country, so that’s not a huge surprise, but Spin is an interesting case because unlike their rivals who have all raised more than $100 million, Spin only raised $8M, a pittance by comparison. Spin by comparison, is a small company, and having to fork out $250,000 as table stakes was obviously too rich for their blood, especially if they plans to deploy less than the maximum number of bikes (spin deployed fewer than 3,000 bikes during the pilot). The City Council’s erected a huge barrier to entry, squeezing out the smaller players.

Unsurprisingly, two companies have applied to fill the void: Uber and Lyft. Both have bike share subsidiaries and tens of billions of dollars in venture capital. They’re the only ones wealthy enough to take a $250k flier on a bike program. The city squeezed out two independent bike share companies and replaced them with two transportations behemoths with whom they have a contentious relationship.

Fear of Innovation Hurts Everyone

The other big action the City took was to completely ban electric scooters. This makes no sense whatsoever, especially when paired with an oppressive tax. But in addition to being worse for customers, it also cuts off a route for new entrants and new competition.

Scooters are overwhelmingly better for both citizens and businesses in other cities; cutting them out of Seattle cuts out another route for new, independent businesses from gaining a foothold in the cutthroat transportation business. Bird is the biggest company that cannot operate in Seattle, but there are many others in the scooter game. Instead, the council further entrenched Uber and Lyft, big companies that can afford to lose money on bikes while waiting for the city to come to their senses, all but guaranteeing citizens won’t see real competition in their mobility options.

Why Have Leverage When You Can…Not?

With the city fighting Uber and Lyft on nearly every other front, it’s genuinely weird that the council would enact policy that only strengthens their hands by given them more control over citizens’ mobility. In any negotiation leverage is key, the city should be lining up as many other options as possible to drive Uber and Lyft to the bargaining table. Instead, they’re clearing the field and ensuring both companies will dominate Seattle. Maybe that’s ok, but if half their strategy is to clear the field for Uber and Lyft, and the other half is to negotiate hard, it’s anyone’s guess which party will win, but citizens of Seattle will almost certainly lose.

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