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Upcycle, at 117 George St, provides a free lending service that allows people to pedal out on old machines.
As well, it has an "upcycle demonstration site'', showing people what they can do with items destined for landfill.
Upcycle is the second project in a series designed to bring life to dormant city spaces.
Urban Dream Brokerage was brought to Dunedin last year by Wellington not-for-profit Letting Space, which developed a project in Wellington introducing art, music and literature projects in underused CBD sites.
The Dunedin City Council allocated $50,000 of funding, with Dunedin fashion designer Tamsin Cooper taken on as a "broker'' to communicate with building owners and artists to put the project into action.
The latest project is run by Jodie Robertson and John Parker.
Mr Parker said many saw older-style bikes as art or decoration pieces, but he liked the idea of them being used.
"Hopefully, we'll see these bikes on the streets, and people can enjoy them.''
The pair had been thinking about a bike library for some time.
"The Urban Dream Brokerage fitted nicely with what we were doing.''
Ms Roberston said the library ran a sideline in wicker baskets and blankets, available so lenders could cycle to the botanic garden, for instance, for a picnic.
The bikes had been bought at dump shops and online, so the project had been at some cost to the pair, but the library had been added to by donations of bikes.
Mr Parker said he had help restoring the bikes from do-it-yourself bicycle workshop the Crooked Spoke, and the Valley Community Workspace.
Ms Cooper said there were more projects in the pipeline, but she was keen to encourage more people to submit proposals for this year.
Borrowers would need some proof of identity to access the bicycles.
Urban Dream Brokerage would have a February 10 public meeting at the Dunedin Fringe Festival offices in George St to encourage more people to get involved.