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Thursday, June 6, 2013

Alta Bike Share is Suing its Insurer Over Hurricane Sandy Losses

Posted by Dirk VanderHart on Thu, Jun 6, 2013 at 6:16 PM

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  • www.citibikenyc.com

By the time Hurricane Sandy's massive arms swiped at New York City in October, Portland-based Alta Bicycle Share had already seen difficulty in the Big Apple. Software bugs had delayed the company's roll out of the massive Citi Bike system from summer 2012 to the following March, inspiring, as it will in New York, grousing.

But a lawsuit filed Wednesday in Multnomah County Circuit Court shows Alta's troubles were just beginning. Flooding from Sandy swept the Brooklyn Navy Yard, where the company was storing much of the equipment it planned to roll out the following spring. Docking stations, bikes and sundry electrical components were damaged or lost.

In total, the company took an $11 million hit to nearly $20 million in assets it had amassed for the New York system, according to the suit, causing further delay. But Alta says its insurance company refused to fully satisfy a claim for damages. Now it's suing a Portland-based insurance broker, and the New Hampshire company the broker represents.

According to the suit, Hanover Insurance Company, through local agents at Portland firm USI Northwest, agreed to insure the New York bike-share system for up to $40 million. But following the storm and flooding, Hanover paid out just $5 million, refusing to cover full damages. The suit claims Hanover owes another $6 million, and accuses USI of negligence.

Reached this evening, Alta President Mia Birk downplayed the lawsuit.

"This is not that big of a deal, honestly," she said. "This is just the business world."

Alta lawyer John Ostrander declined comment, saying he wasn't authorized to speak about the lawsuit. Karen Barry, a senior account manager at USI who, documents indicate, worked on Alta's policy, referred questions elsewhere in the company. No one answered at USI's main number.

Portlanders have good reason to root for Alta's health. It's a local company, and Birk is the city's former bike program manager. Alta's also the entity Portland—like Chicago, San Francisco and Seattle, recently—tapped to launch bike share here.

But the company has seen some negative press, of late—not just the whining NIMBYism of New Yorkers, either. Most recently, Alta faced accusations it owes laborers in Washington, DC, back pay and benefits.

In Portland, Alta's still trying to isolate millions in corporate sponsorship money to purchase, install and operate a 750-bike system for five years. Upon selecting Alta to run the city's bike share in September, the Portland Bureau of Transportation announced a system would be up and running by spring 2013. But with no fat cat sponsors emerging, the city pushed back the system by a year.

Birk said this evening no firm deals have been reached.

"I'm really hopeful I'll be able to tell you something soon," she said.

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