On July 16, 2009, the City entered into an agreement with Deco Bike, LLC (“Deco Bike” or “Concessionaire”) in response to RFP 44-07/08 for the delivery and operation of a self-service bicycle rental fleet for public use to be stationed in the public right-of-way. The agreement required the Concessionaire to implement a program which enabled the public to self-rent bicycles from any number of locations and return them to another location, on a 24-hour, 365-day per year basis. 

Acquisition of bicycles and equipment, operation of a rental bike program and staffing expenses required an extended initial capital investment by Deco Bike. It became evident early on that without intervention by the City, either through a contract term modification or additional revenue source, the program would not achieve a return of capital or modest profit to the Concessionaire, or allow the recovery of the City’s forgone parking revenues. Given the nature of program revenue, which is generated in small portions through bike rentals, a long-term contract was necessary to allow  Deco Bike time to recuperate its investment and generate profit.

On July 18, 2012, the Mayor and City Commission adopted Resolution No. 2012-27975, approving Amendment No. 1 to the Agreement, extending the term of the Agreement for an additional ten (10) years, through September 30, 2023, increasing the operational maximum to 1,100 bicycles, approving certain advertising and sponsorships, and providing for a revenue sharing provision by increasing the exemption from City revenue share from $1,000,000 to $1,500,000 during the first year of the new term, declining at a rate of $250,000 per year to $0 in year seven (7) of the revised term.  The Amendment also included a Windfall Provision, which provided for the opportunity to recover the waived revenues.

Thereafter, Deco Bike was able to secure a title name sponsorship agreement with Citibank, to operate the program under the “Citi Bike” name (the “Citi Bike Sponsorship Agreement”).  On May 12, 2015, the City and Deco Bike, executed Amendment No. 2 to the Agreement, approving the sponsorship with Citibank to assist Deco Bike in generating revenues for its operations and providing for the sharing with the City of the advertising revenues generated from the Citibank Sponsorship Agreement, as part of the Bicycle Basket Sponsorship Program and the Kiosk Advertising Program, and including naming rights. These types of sponsorships are not common, and bicycle-sharing programs are typically subsidized by governmental agencies to provide additional transportation options for residents. 

On December 11, 2019, the Mayor and City Commission adopted Resolution No. 2019-31105, authorizing the City Manager to negotiate an amendment to the Agreement between the City and Deco Bike for the provision of a docked electric-assisted bicycle sharing pilot program ("Pilot Program"), subject to the City Commission's approval of the final amendment. Due to the COVID-19 pandemic, bike service was interrupted. Later, on June 23, 2021, the Mayor and City Commission adopted Resolution No. 2021-31743, approving Amendment No. 3 to the Agreement, with said amendment approving the implementation, management and operation of a one-year Pilot Program for the operation of up to 100 docked electric assisted bicycles Citywide within the existing Concession Areas.

As the Deco Bike Agreement was set to expire on September 30, 2023, on May 17, 2023, the Mayor and City Commission approved Resolution No. 2023-32905, approving Amendment No. 4 to the Agreement; said amendment extending the Agreement on a month-to-month basis, for a period not to exceed fourteen (14) months, or until such time as the City Commission awards a contract pursuant to a new competitive solicitation for the City’s bicycle sharing program, whichever is earlier. As directed by the Resolution, the Administration is finalizing an Invitation to Negotiate for the services.

At the September 13, 2023 City Commission meeting, Vice-Mayor Richardson sponsored a referral item (C4 P) to the Finance and Economic Resiliency Committee (“FERC”) to discuss the status of the current Deco Bike contract, including contract period, plans for renewal, plans for a Request for Proposal (RFP), contract revenue and other related matters. 

At the September 22, 2023 FERC meeting, Deco Bike requested a five (5)-year extension to their contract, based on various factors that include the financial success of the program, benefits to the City, and the value of the Citibank sponsorship. The Committee proposed a change to the financial terms to include a minimum guarantee and a public benefit to provide residents an incentive to use the program.  Deco Bike agreed to these terms, which were to be finalized with the Administration.  The Committee unanimously recommended the five (5)-year extension, which would begin on January 1, 2025, after the current month-to-month extension expires.  Since the current agreement will expire without any available renewal terms, a new agreement would need to be approved, subject to the approval of a bid waiver by the City Commission via a 5/7^ths vote. 

Based upon the recommendation of the Committee and the City Administration, City staff and Deco Bike have negotiated the essential terms of a new five-year agreement, as more particularly set forth in the Term Sheet attached hereto as Exhibit “1”; said terms including  the addition of an annual Minimum Guarantee payment, in the amount of $380,000, while maintaining the existing monthly Concession Fee payment equal to 12% of the gross sales receipts under $3 million and 15% of the gross sales receipts equaling $3 million or more for a given contract year.

Under the proposed Term Sheet, Deco Bike will continue to provide a membership option for residents of $20 per month for a standard monthly membership plan that provides for unlimited 30-minute rentals. A three-month minimum commitment is required to ensure tourists do not use this discounted plan, which equates to approximately $0.67 per day. Deco Bike will also continue to offer a deluxe monthly plan that provides unlimited 1-hour rentals for an extra $5 per month. Additionally, Deco Bike has an ongoing employee rental plan at $99 annually with unlimited 30-minute trips. 

In addition to the established membership plans, in connection with this new agreement, Deco Bike will provide three (3) 30-minute free rides per month for Miami Beach residents who are not Citi Bike members, or one (1) free month for every twelve months of membership for established customers of the Program (“Monthly Incentive Program”) in order to incentivize use of bicycles as a transportation alternative. Deco Bike will cover the cost of the Monthly Incentive Program up to the total amount of $35,000 and the City will cover the cost exceeding $35,000 over the term of the new agreement.

Under the new agreement, Deco Bike will continue to operate initially with 1,100 bicycles, of which 100 will be docked electric-assisted bikes (“e-bikes”); however, the City Manager will have the authority to increase the number of e-bikes to a number that is up to 200, thereby increasing the total number of bicycles in the fleet to up to 1,200.

Deco Bike has demonstrated that it is a capable and responsive operator.  Over the years, Deco Bike has proven to be a good partner to the City by providing a reliable bicycle service that may be used for leisure, exercise and transportation needs of the community.

The Deco Bike contract provided revenues to the City of $279,457 in FY 2012. In FY 2022, revenues rose to $687,061, including advertising revenue from the Citibank sponsorship. FY 2023 revenue included approximately $700,000 from concession and sponsorship fees. The new agreement is anticipated to generate a similar revenue stream of approximately $700,000 in concession and sponsorship fees on an annual basis. 

Concession Fees: Concessionaire shall pay the City Concession Fees equal to the greater of (1) the Annual Minimum Guarantee payment (MG), in the amount of $380,000; or (2) the annual Percentage of gross sales receipts (PG) payments (paid monthly) of an amount equal to: 12% (PG) from the operation of the Concession Areas, based on Concessionaire's gross sales receipts less than $3 million during a given contract year, and 15% PG, based on Concessionaire's gross sales receipts equal to or greater than $3 million during a given contract year (not including the sponsorship payments pursuant to the Citi Bike Sponsorship Agreement).

Minimum Guarantee (MG): In the event that the total PG payments to the City for a given contract year was less than the MG, Concessionaire shall pay to the City the difference between the monthly PG payments received for the contract year and the MG amount, due and payable at the end of the contract year. In the event that the total monthly PG payments received by the City for a given contract year were equal to or more than the MG amount, Concessionaire shall be deemed to have met it's MG obligations and no additional Concession Fee payments would be due to the City.

Sponsorship Program with Citibank: In addition to Concession Fees, Deco Bike agrees to pay sponsorship fees to the City, pursuant to the sponsorship agreement between Concessionaire and Citibank ("Citi Bike Sponsorship Agreement"), which contemplates a bicycle share program with both the City of Miami and the City of Miami Beach. The City's portion of the sponsorship payments is based on the following categories and percentage of shared advertising revenues: 12.5% naming rights; 25% from the Bicycle Basket Sponsorship Program and 12% from the Kiosk Advertising.  Based on a total sponsorship base amount of $1,173,999.84 for calendar year 2023, the City will receive a total of $197,173.28 in sponsorship payments in 2023; and based upon the sponsorship base amount of $1,198,500.00 for calendar year 2024, the City will receive a total of $201,288.08 in sponsorship payments in 2024. Currently, 1/12^th of the sponsorship payments is due and payable by Concessionaire to the City fifteen (15) days following the end of each calendar month during each Contract Year throughout the term. The Citi Bike Sponsorship Agreement, a copy of which is attached hereto as Exhibit “2”, will expire on December 31, 2024.  Any extension of the current Citi Bike Sponsorship Agreement shall not require separate approval by the City; however, any changes to the material terms of the Citi Bike Sponsorship Agreement, such as the amount of the sponsorship payments, or any new sponsorship agreement shall require the prior written approval of the City Commission.

Public Benefit/City Contribution: In addition to the membership plans offered under the current Agreement, Deco Bike will provide three (3) 30-minute free rides per month for Miami Beach residents who are not Citi Bike members, or one (1) free month for every twelve months of membership for established customers of the Program (“Monthly Incentive Program”) in order to incentivize use of bicycles as a transportation alternative. Over the term of the new agreement, Deco Bike will cover the cost of the Monthly Incentive Program up to the total amount of $35,000 and the City will cover the cost exceeding $35,000.

Financial Summary:  The Deco Bike contract provided revenues to the City of $279,457.00 in FY 2012. In FY 2022, revenues rose to $687,061.00, including advertising revenue from the Citibank sponsorship. FY 2023 revenue included approximately $700,000.00 from concession and sponsorship fees. The new agreement is anticipated to generate a similar revenue stream on an annual basis. 

Based upon the longstanding and satisfactory performance record of Deco Bike, including their ability to operate the program profitably, without the financial assistance of the City but instead generating revenue for the City, the City Manager recommends accepting the recommendation of the FERC, at its September 22, 2023 meeting, and waiving, by 5/7^ths vote, the formal competitive bidding requirement in Section 2-367(e) of the City Code, finding such waiver to be in the best interest of the City, and authorizing the City Manager to negotiate and execute a new concession agreement with Deco Bike, LLC, for the implementation, management, and operation of a self-service bicycle sharing program, for a term of five (5) years, commencing on January 1, 2025 and expiring on December 31, 2029, based upon the essential terms set forth in the term sheet attached hereto as Exhibit “1”; and further approving the terms of the sponsorship agreement between Deco Bike and Citibank, attached hereto as Exhibit “2”, authorizing the operation of the program under the title sponsored name of “Citi Bike”.