Emanuel might have left money and bikes on the table by choosing Lyft
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Mayor Rahm Emanuel might have left money and bicycles on the side of the road when he chose Lyft to become the exclusive partner and operator of Chicago’s bike sharing program, records show.
Uber owns the dockless bike-sharing company Jump that ran a 300-bike pilot program on the South Side last year. The company offered the city 20,000 bikes in all 50 wards by May, according to a proposal shared with the Chicago Sun-Times.
Under the Lyft proposal, the city would get 16,500 bikes docked at 800 stations, up from 6,000 bikes at 600 stations currently. But the citywide expansion would not be completed until 2021.
The partnership between Uber and Jump also offered to make a five-year, $200 million capital investment in citywide infrastructure — including expanded charging stations, bike racks and bike lanes — if Divvy and other dockless companies were allowed to operate alongside Uber and Jump.
If Uber and Jump had been designated as the exclusive bike-sharing operator — in a similar arrangement with Lyft — then the capital investment would have been $450 million over five years.
Uber and Jump also planned to integrate with the CTA and offer discount fares for rides that begin and end at CTA stations.
Lyft owns Motivate, the company that operates the Divvy bike-sharing system.
Their proposed revenue-sharing agreement with the city would allow the bike sharing program that now excludes one-third of Chicago to go citywide, but not until 2021.
In exchange for a $50 million investment in new bikes, stations and hardware, Lyft would become the exclusive sponsor and operator of the system that now loses up to $700,000 a year.
The city would get $77 million over nine years earmarked exclusively for transportation projects. But Lyft would receive all bike-sharing revenues up to $20 million annually. The city gets 5 percent of everything over that.
Chicago taxpayers would also receive $1.5 million a year in minimum guaranteed revenue from advertising and promotions.
Lyft would be free to raise bike-sharing rates, but only up to 10 percent per year. Anything above that must be approved by the Chicago Department of Transportation. City Council approval is required for the contract, but not for future fare hikes, under the deal.
Uber and Jump never got a chance to talk turkey with the city about revenue sharing. But the partnership claims that, with more and better bikes and a quicker citywide expansion, it could easily have topped the competitor’s offer.
“We are disappointed that the City wasn’t responsive to a proposal that promised to provide hundreds of millions of dollars in investment on the South and West sides, create 500 jobs, and bring bike share service to all 50 wards in the first half of 2019.” Robert Eckardt, General Manager, JUMP Chicago, was quoted as saying in a statement.
Transportation Commissioner Rebekah Scheinfeld flatly denied that the city spurned a better and, potentially more lucrative proposal by choosing Lyft.
Scheinfeld argued that Divvy is a “great bike share system that is well-loved” and that it was important to “maintain city ownership” of that system.
The city owns the equipment, having purchased it over time, largely through federal and state grants and contributions from city coffers.
“It is a strong foundation. Our limits have been the capital needed to continue to expand the footprint of the system. This is solving that financial need. But it builds and grows on a very successful system,” Scheinfeld said.
“The proposal Uber made ignores the Divvy system and is not addressing the strong foundation that we have with this city-owned asset. We think having a dockless system citywide in addition to a Divvy system citywide would create unnecessary redundancy and more impact to the public way. A docked system creates the order that we want and need in especially-congested areas like the downtown.”
Adding to that potential clutter, Scheinfeld said, was the fact that the Uber-Jump proposal also included scooters. There is “significant risk to that in terms of the public,” she said.
“We have a very strong system in Divvy and we need to build on that strong operation as opposed to flooding the streets with thousands of dockless bikes that would be redundant with the Divvy bike share system and risk confusion for the public and disorder in the public way.”
For years, Emanuel has been accused of tilting the regulatory playing field in favor of ride hailing companies to benefit Uber, whose investors include his brother.
Now, Uber and Jump are accusing the retiring mayor of doing just the opposite.
Asked why the city never talked revenue with Uber and Jump, Scheinfeld said, “We have an existing contract with Motivate, which has been acquired by Lyft. We were not in a public procurement process.”