City Council
Report
City Council Meeting: August 23, 2022
Agenda Item: 10.C
1 of 15
To: Mayor and City Council
From: Edward F King, Director, Mobility (DOT)
Subject: Introduction and First Reading of an Ordinance amending SMMC 3.22 and adding section 3.23 to allow shared mobility services to be provided under a contract agreement with the City
Recommended Action
Staff recommends that the City Council introduce for first reading the proposed ordinance to do the following:
1. Amend Section 3.22.090 of the Santa Monica Municipal Code to extend the term of the second Shared Mobility Device Pilot Program from March 30, 2023, to September 30, 2023; and
2. Create Section 3.23 of the Santa Monica Municipal Code to establish a contracting model for shared mobility device services.
Executive Summary
The City of Santa Monica has operated a shared mobility program since 2018. Since July 1, 2021, the City has been in the second pilot program with four companies (Lyft, Spin, Veo, and Wheels) who operate five distinct device types (Class 1 and 2 e-bikes, two-wheeled electric scooters, three-wheeled e-scooters, and sit-down e-scooters).
The second pilot program ends on March 30, 2023. Pursuant to Council’s direction on March 9, 2021, to transition shared mobility services to a contracting model, staff recommends Council adopt the attached ordinance that would take effect on October 1, 2023 and establish that shared mobility device services are only allowed to operate in Santa Monica when contracting with the City. The extension of the current pilot program will provide staff the time necessary to go through the procurement process The 2 of 15
ordinance would extend the second pilot program from its initial termination date on March 30, 2023 to September 30, 2023.
A contracting model is preferred because contracting provides a stronger foundation for cities and companies to work together toward improved outcomes such as affordability of service, improved device safety, and mitigation of bad rider behaviors. This stronger foundation is achieved through relationship-building, defined service level standards, and enhanced incentives, penalties, and fees.
The contracting model will:
• Incorporate a variation of the Administrative Regulations as comprehensive terms and conditions, Service Level Agreements (SLAs), and Key Performance Indicators (KPIs) within the contractual agreements with the selected operator(s). • Reduce the number of operators but maintain enough devices to meet rider demand.
• Improve reliability, affordability, and availability of shared mobility options while improving safety, sustainability, and administrative outcomes. • Seek to include multiple device types to meet an array of mobility needs. • Monitor technological modifications to shared mobility vehicles and integrate solutions to mitigate bad rider behavior such as improperly parked vehicles and sidewalk riding.
• Maintain open and productive partnerships between the City and the operator(s). • Generate cost recovery/revenue through innovative partnerships, sponsorships, and revenue sharing models to ensure that costs are recovered to oversee and manage the program.
This staff report requests authority to issue the Request for Proposals (RFP) to implement the contracted model and extend the second pilot program through September 30, 2023, to allow staff time to develop the contracting model, identify 3 of 15
members of the selection committee, complete a procurement process, negotiate with operators, coordinate a transition period, and launch service in October 2023 while maintaining continuity in shared mobility service.
The selection committee will select the recommended shared mobility device operator(s) for the contracting model through an RFP process scheduled for release in Fall 2022. Staff will then return to Council in Summer 2023 to recommend the contract award(s) with the selected operator(s).
Background
Since the 2015 launch of the City-owned Breeze Bike Share system and subsequent rollout of electric shared mobility devices in 2017, shared mobility device services have been a valued component of Santa Monica’s local transportation network. By promoting alternatives to car trips, the shared mobility industry has shifted from an era of disruption to one of integration within Santa Monica’s transportation network. Shared mobility services are ideal for Santa Monica because they provide flexibility, are usable year-round, provide first/last mile connections to the public transit network, and feel safe and reliable for many people to use on the 100+ mile bike network, much of which was installed in the last decade since City Council adopted the Bike Action Plan.
In September 2017, shared e-scooters were introduced by a private operator in Santa Monica. The new shared micromobility devices (e-scooters, e-bikes, etc.) provide loweremission mobility options for short trips around town. These devices aligned with City goals to reduce transportation emissions, mitigate congestion, and improve community members’ access to destinations.
On June 26, 2018 (Attachment A), Council approved the creation of a Shared Mobility Pilot Program to develop new area of policy, regulation, operation, and enforcement for shared mobility devices in Santa Monica. System performance improved during the first pilot program, which officially launched in September 2018. However, challenges remained in managing the public right-of-way (PROW), encouraging public safety, 4 of 15
adapting old regulations to new business types, and ensuring companies are accountable for public outcomes.
On March 9, 2021 (Attachment G), staff returned to Council to provide an update on the first pilot program and to recommend shifting from a permitted pilot program to a longerterm contract model that would strengthen the City’s partnership with operators. Council directed staff to implement a second Shared Mobility Pilot Program to allow time for COVID-19 related uncertainty to settle and shift to a contracted model on March 31, 2023.
Background Timeline
Date Description Attachment
September 2017 Bird Rides, Inc. e-scooter sharing launched in Santa Monica.
N/A
June 26, 2018 The City formally approved a Shared Mobility Device Pilot Program and associated fees to
develop a new area of policy, regulation,
operation, and enforcement for shared mobility
devices in the City.
A
August 28, 2018 The City approved a Shared Mobility public right of way (PROW) usage fee to fund the creation of
infrastructure to improve the safety for riders and
citywide streets.
B
September 17,
2018
The Shared Mobility Pilot Program launched with
Bird, Jump, Lime, and Lyft, all of whom were
selected through a competitive process.
N/A
November 12, 2019 Staff returned to Council to present pilot program outcomes. The program showed high ridership
and utilization, but challenges remained in rider
behavior, PROW management, and provider
regulation.
C
January 28, 2020 Council directed staff to create a second pilot program to build on the successes of the first and
better address challenges.
D
5 of 15
February 11, 2020 The City extended the term of the first pilot program, and the City subsequently released in
March 2020 a Request for Applications (RFA) for
the second pilot program.
E
May 12, 2020 Due to the COVID-19 pandemic, the second pilot program was postponed, and the first pilot
program was extended until April 30, 2021. The
Shared Mobility PROW fee was revised from $1
per device per day to $0.20 per trip.
F
November 2020 City-owned Breeze Bike Shared program
terminated, and Lyft launched e-bikes that were
originally permitted under the pilot program but
not initially deployed.
N/A
March 9, 2021 Council directed staff to implement a 21-month second Shared Mobility Device Pilot Program.
Then, following the second pilot program, shift
from a temporary permit model to a longer-term
contracting model for shared mobility services in
the City.
G
July 1, 2021 The City launched the second pilot program. N/A May 10, 2022 Staff released an Information Item providing an update on status of the second pilot program.
H
Discussion
The first and second pilot programs were developed to test shared e-scooters and ebikes operated by private companies, using a flexible approach that could be responsive to community needs and technological advancements within an evolving industry. Ridership of shared mobility devices was strong from the first month of the first pilot program, with a total of 3,050,000 trips in 2019. When the COVID-19 pandemic took hold in March 2020, travel throughout the City dramatically declined across all modes. In 2021, during the first six months of the second pilot program, movement in the City continued to be impacted by the pandemic, with shared mobility ridership remaining at only 26% of pre-pandemic levels.
Between July 1, 2021, and June 30, 2022, riders generated 849,916 trips, with a typical trip covering 1.46 miles in 10.1 minutes. While ridership growth has been slow to return to pre-pandemic levels, a core userbase continues to rely on these services for regular 6 of 15
transportation needs. According to a City-issued user survey conducted in January 2022, 43% of riders live in Santa Monica. These local riders make frequent use of shared mobility, with more than half (50.1%) of responding Santa Monica residents saying they use shared e-scooters and e-bikes once per week or more.
Figure 1: Shared Mobility trips by month for all providers, split across calendar years.
Source Mobility Data Specification (MDS) data collected through internal City data pipeline, Remix, and Ride Report.
Shifting to a Contracting Shared Mobility Device Services Model The first and second pilot programs demonstrated rapid adoption and ridership. Looking ahead, Santa Monica will continue to be impacted by private sector company volatility as the industry adapts to financial challenges. As ridership and rider revenue have slowed and financial viability has come under increased scrutiny, many shared mobility operators have had to downsize and/or change operational strategies, including decreasing staffing, service levels and withdrawing from some markets. These trends 7 of 15
are causing cities to consider adjustments to regulatory and partnership structures to ensure long-term reliable, consistent, available, and affordable service.
Multiple cities are shifting away from permitting models to contracts for shared mobility services. Portland, Oregon, and Denver, Colorado, both shifted from permitting models to contracts for shared mobility services. Following a second pilot program for electric scooters, Portland recently launched an RFP to solicit bids for up to two companies.
Currently, Denver has contracts with two companies who operate both e-scooters and e-bikes. Comparing Denver’s shared mobility ridership last quarter before their contracted model took effect – Q1 2021 – with the same quarter one year later, there is a 73% increase in daily rides. Denver communicated to staff that they have seen improvements in operation and service since switching to a contracting model.
Relative to the current permitting model, contracting provides a stronger foundation for cities and companies to work together toward contractually defined outcomes. The contract model focuses regulatory efforts in areas with clearly defined performance expectations and seeks to align them with reporting and enforcement processes. This approach narrows the focus on regulations, with emphasis on oversight and relationship-building with operators through continued development of technologybased tools for management and enforcement. Companies operating under contract have a longer-term commitment to operations than permitted entities, which enables them to prioritize long-term investment in the market. Examples include newer devices, innovative technologies (e.g., technologies to minimize sidewalk riding), transit integration opportunities, supplemental revenue options such as sponsorships, and diverse payment plans that will improve affordability for users.
Affordability for All Continues to be a Challenge
The City requires each permitted provider to offer low-income qualified rates that are easily accessible. The low-income programs each of the four current operators provide are based on requirements related to some combination of home zip code, participation in state or federal means-tested aid programs, and Santa Monica College (SMC) enrollment status. Incentives range from monthly memberships at a reduced price, 8 of 15
reduced or eliminated unlock fees, and per-minute trip costs ranging from $0.05 to $0.29 cents per minute. While these low-income programs offer meaningful affordability benefits for participants, they represent a small share of overall operations in Santa Monica. Based on complete reporting from current operators within Santa Monica, a total of 7,770 trips were taken between October 2021 and April 2022, representing about 2% of the 364,000 overall trips taken in that time.
Beyond the low-income rate offering, the four current operators offer similar payment plan options and charge a similar rate per trip. All four operators charge a $1 unlock fee and between $0.33 - $0.49 per minute of use, a substantial increase from rates charged at the end of the first pilot program ($0.23 - $0.30 per minute). While the second pilot program has delivered cost reduction for some shared mobility options, primarily for low-income riders and casual users, rates continue to be much higher than public transportation options, dominating the overall cost of a multi-modal transit/shared mobility trip. For example, BBB costs $1.10 per trip using the regional Transit Access Pass (TAP) or mobile ticketing ($1.25 cash fare) and Metro bus and rail lines cost $1.75 per trip. By comparison, a typical shared mobility trip that starts within 100 feet of the Downtown E (Expo) Line station lasts 9.5 minutes. Thus, a traveler who takes the train and then finishes their journey via shared an e-scooter or e-bike would pay $1.75 for the rail portion of their trip and as much as $5.66 for the shared mobility portion. In addition to presenting affordability issues, this mismatch of fees limits the role of shared mobility in linking users to transit and advancing the City's goal of multi-modal connectivity.
Reflecting the cost to ride, the current userbase skews wealthy. Based on the January 2022 bi-annual user survey, 47% of participants make more than $100,000 per year and 61% make $75,000 or more. The issue of affordability for users who make less than $100,000 is a barrier for habitual shared mobility use. When asked “What barriers prevent you from using e-scooters or e-bikes in Santa Monica?” 36% of survey respondents overall selected too expensive (the second most selected reason).
For low- and middle-income users, expense is even more of a barrier, with 42% of users who earn less than $100,000 and 47% of users earning less than $75,000 citing cost as 9 of 15
a barrier to entry. Under the current Shared Mobility Pilot Program permit structure, the City does not set rider rates or equity efforts and could not do so without a contract or other binding action. Under a contract model, the City seeks to ensure dependable quality service by negotiating contract terms pertaining to affordability, equity, community engagement, operational service levels, penalties, and contract termination.
Shared Mobility Contract Structure
Consistent with Council direction to pursue a contracted model for the next phase of shared mobility in Santa Monica, staff is preparing to solicit proposals to select and negotiate agreements with up to two vendors to provide shared mobility services under contract with the City. The contracted model will be structured as follows:
1. Contract Term: 3-year (beginning October 2023), with renewal options and final reporting at the end of each contract term.
2. Contract Authority: The proposed ordinance (Attachment I) defines basic program procedures including application and selection and authorizes staff to develop an RFP for soliciting bids from providers. Day-to-day oversight will be managed through negotiated contractual Service Level Agreements (SLAs).
3. New Device and Operations Selection Process: The City will launch a formal RFP selection process to identify no more than two operators with the best available devices to participate in the next iteration of the program. Devices could include e-bicycles, two-wheeled e-scooters, sit-down e-scooters, etc. Proposed devices would have to meet the City’s definition of device and comply with all federal and state laws. The selected operator(s) would begin operations on or after October 1, 2023. The City seeks operators with operational experience, a diversity of high-quality devices, tiered membership options, offer technologies/systems that reduce sidewalk riding and haphazard parking, and provide a commitment to reliable, equitable and affordable access. Provision of devices accessible to people with disabilities would be encouraged.
4. Scale of Program: The number of devices will be negotiated in the contract, adjusted to meet demand and drive ridership growth. Fleet caps could be adjusted based on demonstrated and sustained fleet utilization built into the 10 of 15
contract. Minimums and maximums of fleet counts will be determined in each neighborhood within the City of Santa Monica as defined in contract negotiations.
Operator Selection Priorities
Staff will structure the procurement selection criteria around clearly defined performance expectations with a focus on the outcome priorities described below. Staff will seek to optimize community benefits of the program, and Council direction will assist if/when financial challenges emerge, and tradeoffs need to be considered. To both streamline program administration and facilitate greater investment on the part of individual operators, the City will seek to procure the services of up to two operators.
Performance
Category
Points of Emphasis
Equitable, Affordable,
and Effective
Transportation
• Fare structures and membership options that provide
affordability for users at all income levels
• Easy access to devices throughout the City
• Operations that promote multi-modal connectivity
• Integrated connections with the City of Los Angeles and other regional partners
Safety and Order • Devices that make use of the best available technologies to keep riders and non-riders safe
• Operations and maintenance designed to keep streets
and sidewalks free and clear of parked devices
• Facility upkeep and road safety trainings for operator staff
Environmental
Sustainability
• Fleet operations and device lifecycles that minimize
greenhouse gas emissions and other environmental
harms
• Service levels designed to maximize the displacement of car trips and resulting emissions and congestion
Community Partnership • Active and thoughtful community outreach • Provision of secure data streams to the City for program administration, evaluation, and planning applications
• Corporate stability and the application of a sound and sustainable business model
11 of 15
Performance
Category
Points of Emphasis
System Maintenance • Shared Mobility Drop Zones/Bike Share Station maintenance
• Responsiveness to community concern and complaints
• System distribution/rebalancing
Organizational Stability • Comprehensive data sharing agreements • Information pertaining to revenue and growth projections The procurement will continue to seek improvements in device quality and advanced safety features/technologies that can help to drive safe operations, improve rider behaviors, and reduce occurrences of haphazard parking. Such technologies and operational measures may include geo-fencing prohibited zones, on-device modules that detect and deter sidewalk riding, parking incentives, built-in locking mechanisms, and in-app messaging.
Operator(s) will be required to provide the city with system data compatible with MDS and General Bikeshare Feed Specification (GBFS) data application program interfaces (API), along with monthly reporting. The final terms of contractual agreement(s) will be negotiated with the selected operator(s).
Cost Recovery and Sponsorship Options
Transportation services historically struggle to turn profit in the absence of federal, state, and/or local subsidy. For example, the City-owned Breeze Bike Share system was operated under a 5-year contract and was supported by user revenues, sponsorship revenue, and a small amount of City funds. Santa Monica, which currently finds itself at the top of the cost spectrum for shared mobility operators, will need to be flexible and creative to fully recover internal costs of program administration while enabling robust and useful shared mobility services.
As many shared mobility companies are withdrawing from cities due to financial strain, cities who want continued operations are adjusting fees and supporting alternative 12 of 15
revenue generation like sponsorships in exchange for increased service levels, reduced user fares, and expanded equity programs.
Through contract negotiations, the City will ensure full cost recovery for staff time and the associated software services needed to manage the program. Through the procurement process, the City will explore and negotiate a variety of strategies to balance the goals of affordability for users, long-term financial viability of operations, reliable/accessible service, and minimum cost recovery for administrating the program.
With a contract model, operators are better positioned to use sponsorships to offset costs of daily operations, fleet, and infrastructure maintenance. Staff will request details about sponsorship plans as part of applications submitted via the RFP process like the City’s agreement with Hulu, which helped generate revenue to cover Breeze Bike Share operational costs, membership programs for low-income users, and annual memberships. Per City guidelines, the City will approve contract terms which ensure that sponsorship aligns with the City’s Big Blue Bus advertising policy.
Through contract negotiations, sponsorship agreements could also include provisions for revenue sharing with the City of Santa Monica above agreed-upon revenue thresholds. Any sponsorship and/or revenue sharing terms will be coordinated with the Community Partnerships Program that was approved by Council on January 26, 2021.
Staffing Implications
The permitting, oversight, and enforcement required to ensure compliance with regulations of the first and second pilot programs has demanded considerable administrative and enforcement staff commitment consisting of a full-time program coordinator and a limited-term Code Enforcement officer. Following citywide restructuring in mid-2020, the Code Enforcement and Mobility divisions absorbed those duties among existing staff, at times to the detriment of other work efforts and priorities.
It is anticipated that a longer-term contractual partnership with fewer shared mobility companies will lighten administrative oversight and enforcement efforts required to 13 of 15
ensure that the selected shared mobility operator(s) maintain their service level obligations. The implementation of this model will uphold community expectations for public safety, access for all users, affordability, reliability, and data collection/analysis.
The full cost of service oversight and enforcement will be recovered through terms agreed upon as part of contract negotiations and/or revenue sharing. Staff will assess the staffing needs required to administer the program. Any personnel changes would align with the budget process.
In addition to shifting from permitted to contracting shared mobility operations, staff recommends amendments to the Municipal Code to extend the ongoing second Shared Mobility Pilot Program from March 30, 2023, to September 30, 2023. Should Council approve the pilot extension and direct staff to pursue a contracting model, over the next ten months staff would:
• Work with currently permitted operators (Lyft, Spin, Veo and Wheels) to ensure continuous shared mobility service through the remaining term of the second pilot program.
• Complete the scope of work for contractual shared mobility services. • Complete an RFP solicitation process to competitively select up to two operators, pursuant to the procurement process and return to Council at a later date with recommendation of award(s).
• Negotiate contract terms with selected operator(s).
• Return to Council for award of the contract(s) and authorization to execute the contract(s).
Environmental Impact Statement
CEQA applies only to projects that have the potential for causing a significant effect on the environment. A project is not subject to CEQA under CEQA Guidelines Section 15061(b)(3) “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” The proposed 14 of 15
ordinance to change regulation of shared mobility devices from a permit system to a contracted service model would not result in a physical environmental effect on the environment.
In addition, Section 15302 exempts Class 1 projects from CEQA, which include the “operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures [or] facilities, including streets, sidewalks, bicycle and pedestrian trails, and similar facilities.” The project consists of the regulation of shared mobility devices within the public right of way because it consists of alternate operation (and permitting) of public streets, sidewalks, and similar facilities that do not create additional automobile lanes. The shared mobility devices are required to be operated within existing public streets, would utilize existing shared mobility stations, and would not necessitate the construction of new vehicle travel lanes for operation.
Therefore, the project qualifies as a Class 1 exemption.
Furthermore, Section 15308 also provides an exemption for Class 8 projects, which include actions taken by regulatory agencies, as authorized by state or local ordinance, to assure the maintenance, restoration, enhancement, or protection of the environment where the regulatory process involves procedures for the protection of the environment.
The proposed ordinance is intended to regulate shared mobility devices for the protection of the environment, including people. Therefore, the proposed project does not have the potential for causing a significant effect on the environment and is categorically exempt from CEQA review under CEQA Guideline sections 15302 and 15308.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. The new program to be developed will provide for full cost recovery so that all costs to administer the program, as detailed in the Staffing Implications section, will be cost neutral and covered by revenues from the permanent program. Staff will return to Council as part of the biennial budget process if specific budget actions are required in the future.
15 of 15
Prepared by: Barbara Jacobson, Transportation Planning Associate Prepared By: Trevor Thomas, Transportation Planning Associate Approved Forwarded to Council
Attachments:
A. Staff Report 3126 - June 26, 2018 (Web Link)
B. Staff Report 3134 - August 28, 2018 (Web Link)
C. Staff Report 3615 - November 12, 2019 (Web Link)
D. Staff Report 3877- January 28, 2020 (Web Link)
E. Staff Report 4000 – February 11, 2020 (Web Link)
F. Staff Report 4089 - May 12, 2020 (Web Link)
G. Staff Report 4389 – March 9, 2021 (Web Link)
H. Shared Mobility Program Update July 2021-March 2022 Information Item – May 10, 2022 (Web Link)
I. 3.23 ContractingSharedMobilityOrdinance 8.23.2022 hvt J. Written Comment