Minutes:
The Director of Development submitted for the Committees consideration the undernoted report:
“1 Relevant Background Information
1.1 The development of a Public Bike Share scheme is identified as a partnership project in Belfast City Council’s Investment Programme 2012-2015.
The Invitation to Tender for the Belfast Public Bike Share Scheme was advertised on the 4th November 2013 and the procurement was divided into two Lots:
· Lot 1 - Design, Supply, Maintain and Operate the Public Bike Share scheme; and
· Lot 2 - Sponsorship of the Public Bike Share scheme.
1.2 The tender return for the two lots was the 16th December 2013 and 3 returns were received for Lot 1 and 1 return for Lot 2
1.3 The SP&R Committee on the 21st March 2014 agreed to adopt the following recommendations:
· agree to proceed to awarding the contract for Lot 1 of the Public Bike Share scheme, subject to the additional resources required for the capital construction being secured from DRD to allow the project to be implemented by March 2015 (NB additional resources were secured);
· note the continuation of negotiations for the sponsorship with interested parties with a view to securing the optimal outcome and further approve the award of a sponsorship to the party(ies) who offer(s) the most economically advantageous sponsorship proposals; and
· support the provision of revenue funding from corporate budgets to meet the initial running cost deficits associated with the operation and maintenance of the Bike Share Scheme on the basis there would be no resultant burden on the rate.
1.4 The Council secured £1.1 million funding from DRD Active Travel fund, which is estimated to cover the capital cost of Phase 1 of the scheme of up to 300 bikes and 30 docking stations. The contract for LOT 1 (Design, Build, Operate and maintain) was awarded to NSL in April 2015.
1.5 Sponsorship
Communication activity has been carried out over the last number of months with interested parties for the sponsorship / branding of the Public Bike Share scheme. No further substantive offer has yet been received although two companies have requested additional time to consider the proposal.
1.6 It should be noted that the finalisation of the design for the bikes and docking stations for the scheme is scheduled for September 2014, after this point there could be increased costs arising from delays to the contract. A decision is therefore required on the way forward in relation to the sponsorship/ branding of the scheme
1.7 The purpose of this report is to suggest a recommended approach to be considered by elected members for the award of sponsorship for the Public Bike Share scheme.
1.8 Income through Subscription and Usage charges
Income will be generated through subscription and usage charges and the scale of income generated will depend on the level of fee charged and the number of users who subscribe or use the service. The contract has stated that the Council will set the level of charges however it should be noted that Active Travel funding bid requires that the Public Bike Share subscription charges would be affordable to encourage accessibility and usage.
It is recommended that elected members consider and agree a proposal for the level of charges for subscription and usage of the Belfast Public Bike Share scheme.
2 Key Issues
2.1 Sponsorship
Sponsorship is being sought to contribute to the operational and maintenance cost of the scheme based on a three year contract. One return was received during the tender process and they placed the value at £100,000 for annual sponsorship. In addition they also stated that there will be activation work carried out by the company which would increase the value of their contribution.
2.2 The return also contained stipulations which requested first refusal to sponsor the scheme on the same or better terms from when the initial contract ends (3 years) on a rolling basis and exclusivity of being associated with the scheme.
2.3 Advice from Legal Services has stated that a sponsor can be appointed outside of the formal tender procurement procedure as the Council is not buying a service or product. The tender process was, however, carried out for Lot 2 Sponsorship to ensure value for money and transparency.
2.4 It is proposed that Committee accept the offer of £100,000 for the sponsorship/ branding of the Belfast Public Bike Share scheme with the contract being for the 3-year period without the right of first refusal as outlined in the original tender documentation. This will allow the Council the option to accept a more financially attractive deal after 3 years should that opportunity arise.
2.5 In the case that this offer is not accepted by the potential sponsor, it is suggested that the bikes are designed in a neutral colour and the Council continue actively to engage with those parties who have expressed an interest in sponsoring the scheme but where budgets have not been secured at this point in time.
Income
2.6 The scale of income generated will depend on the level of fee charged and the number of users who subscribe or use the service. The Outline Business Case for the Public Bike Share scheme recommends a low cost subscription rate with an annual subscription charge of £20. The projected operational income based on a £20 has been circulated for the information of the Members.
It is proposed to set the annual subscription charge at £20 per annum and to set the casual usage charge (3 days) at £5. The first half hour will be free and a small incremental fee will be charged for usage over half hour for the subscribers. This is similar to other schemes and encourages short trips and a high turnover of bikes.
3 Resource Implications
3.1 The projected operational costs have been circulated. A small deficit is projected for Years 1 and 2 and this will be met from corporate non recurrent funding and will therefore have no burden on the rate. Thereafter the scheme will deliver a modest surplus.
4 Equality and Good Relations Considerations
4.1 None.
5 Recommendations
5.1 It is proposed that Committee:
· Accept the offer of £100,000 for the sponsorship/branding of the Belfast Public Bike Share scheme. The contract to be offered for 3 years only as outlined in the original tender documentation. In the case that the offer is not accepted by the potential sponsor, it is suggested that the Council continue to actively engage with the interested parties.
· Agree to an annual subscription charge of £20 and a casual usage of £5 for a 3-day period.”
The Committee adopted the recommendations.
Supporting documents: