RIP Lime bikes—another case study in Seattle City Council regulatory incompetence

The contradictions within the Seattle City Council never cease to amaze. Most councilors lead us to believe that they loathe large corporations and monopolies in particular, yet their unending appetite for revenue has resulted in Uber, a giant compared to Ofo and Lime, having a monopoly on bike shares. Greed apparently trumps their hatred for corporations.

This outcome was entirely predictable and what I feared when I wrote a provocative post on Nextdoor in July 2018 entitled “RIP Ofo”. In it I wrote:

I will not miss the yellow urban litter on the streets. And I hope that the city comes up with better regulations for the companies that remain. Although with our current city leadership, I won’t hold my breath.

A couple of neighbors replied that as a city we let hundreds of thousands of private cars park on public property and asked why we shouldn’t let a few thousand bikes essentially do the same.

I responded:

Happy to clarify. I don’t mind the bikes on the streets at all. The issue I have with them is the way they’ve:

1. Cluttered up our sidewalks, forcing cyclists and parents with strollers to navigate around them

2. Been left at bus stops, blocking access to the buses

3. Blocked paths and other areas of our parks.

I could go on.

That’s the “litter” I’m referring to. I would note the term “urban litter” was first coined to describe the blight of these same sort of bikes in Dallas by the local press there. Naturally the users are part of this problem, not just the operators, but the two go hand in hand. I love the innovation behind these companies, but there’s clearly an issue with the way these schemes have been implemented and it seems to me there’s regulatory failure involved. While there are clearly benefits to these bike share programs, these schemes have also imposed significant costs on the community (per my examples above) and it’s on our government to figure out how to solve this, as I suggested in my original post.

One neighbor offered a useful idea to overcome one of my concerns:

[S]tripe and protect areas for bike parking within 20 feet (or whatever the limit is) of any intersection – those areas where vehicles shouldn’t be parked to maintain sight-lines for safety.

My response:

I love innovation and we should embrace the change that comes with it. But like the two previous bike share schemes that cost city taxpayers millions upon millions of dollars, I think our city leadership is bungling this one. I’m not seeing any of the creative thinking you’re demonstrating coming out of them.

One of the ironies of these private schemes that the council is embracing is that these bikes have become a de facto license to ignore the city’s helmet law. With no way for riders to rent a helmet, well in excess of 80% of riders enjoy the freedom that almost all other US citizens enjoy and ride without them. The only “enforcement” of the law that the city has required is for the operators to mention it in the app when you rent a bike. Of course, the council is in a corner on this one – they’ve had to choose between a bike scheme and their law. Bikes won and made a mockery of their law.

I wasn’t a fan of the bikeshare programs initially, but I’ve changed my mind even though I haven’t used any of the services. I see a lot of people get utility out of it, and it takes a few cars off the road reducing traffic and parking problems. Yes, some of the bikes are irresponsibly placed, but I think we’d all agree that the nuisance is nothing compared to other problems in the city. The programs have been more successful than anticipated. 22% of the country’s dockless shared bikes are in Seattle. This is a business that will continue to grow. Also, Ofo is leaving because Seattle passed new regulation that increases permit costs. Limebike seems to be sticking around.

As I mentioned, I’ve got no issues with bikeshare schemes in general – there’s clearly a demand for them. My issue is with how poorly the city is regulating them, resulting in the nuisance you acknowledge. I’m glad it’s only been a minor nuisance for you, but spare a thought for your neighbors with wheelchairs, little kids trying to learn how to ride a bike, parents with babies in strollers and the like, all of whom are repeatedly inconvenienced by these “irresponsibly placed” bicycles. For those who care about waste and the environment, here’s an eye-opener from China (where Ofo originated from) and their bike schemes — a BBC report on “China’s huge bike graveyards“.

A new commenter responded:

I have a kid so I deal with the stroller and learning-to-bike situation on a daily basis. I’d say shared bikes are about as annoying as misplaced trash/compost bins blocking driveways, random discarded beer bottles, and badly/illegally parked cars. Objectively, speeding cars are the biggest threat in our neighborhood to the folks that you mentioned. The problem is that the nuisance is also the system’s greatest strength. The docked bikes that the city tried a few years ago was a failure because of the limited docking locations. The free for all we have now makes the bike system more usable (against my initial expectations).

My final reply won theI totally agree that the strength of these schemes is the flexibility that was absent in the failed ones. And in case it’s been lost in this thread, I don’t oppose them in principle, but I do want to get the right policy settings in place so that the schemes succeed in a way that is good for the community as well as the businesses operating them.

The distinguishing feature of the other annoyances you list vs. the bike annoyances is that the parties responsible for them are dispersed, whereas with bikes they are concentrated in a handful of companies.

From a policy perspective, this makes a big difference and gives us more options for addressing these nuisances, or what in economic terms we refer to as externalities. These multinational corporations (e.g. Ofo) have been extracting large benefits from Seattle and while many citizens have similarly benefited, the companies have also imposed real costs (in the form of these externalities) on our communities.

For non-economists on this thread, classic economic texts often give the example of a factory periodically belching out a certain amount of soot and smoke (or noise etc.), i.e. imposing an externality on its neighbors. The factory creates a lot of jobs for the city and produces products that it enjoys as well. Rather than shut the factory down, policy makers could consider charging the factory for the externalities and use that revenue to compensate the factory’s neighbors who bear the brunt of these costs. In that way the net benefits to the community from the factory are greater than the costs. In the context of bike shares, what some folks on this thread are saying is, “yeah, sure there are nuisances, but we should just live with them because the bikeshare scheme is great.”

Ordinarily I seldom hear people in Seattle side with multinationals when they’re imposing costs on our communities, especially costs on our most vulnerable citizens such as the disabled, children and mothers. But stranger things have happened here. It seems to me that there are ways to address these externalities. Lee had some good ideas earlier. Surely penalties could be designed to properly incent these corporations to better police the users of their bikes. No doubt there are other potential solutions and innovations that could be applied to this very real problem.

The Seattle Times reported yesterday that the blind and disabled community, who have been particularly inconvenienced by these bikes, successfully inserted an amendment to the new bikeshare legislation preventing SDOT from spending revenue from bikeshare companies until they have a plan for enforcing bike parking rules. I applaud their efforts to lobby for this amendment. My hope is that SDOT develops a solid plan that gets the right balance of incentives in place and improves upon the current state of affairs. But as I said at the outset, I’m skeptical given recent city performance.

On a related note, I’m also concerned that the council has set the permit fees for the companies too high – competition breeds innovation and keeps prices low. We could end up with a monopoly or oligopoly situation here, where one or two corporations dominate the market and reduce consumer choice. $250K is one of the highest annual fees in the country, so I fear they may have screwed that up too.

A year and a half later, my concerns were realized. RIP Lime bikes.