Divvy Is No Cautionary Tale — It’s a Model for Other Bike-Share Systems

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City officials unveil Bublr bikes at a ceremony in Milwaukee’s Red Arrow Park last week. Photo: city of Milwaukee

Yesterday, the Tribune ran an opinion piece slamming the Divvy funding model, written by Diana Sroka Rickert from the Illinois Policy Institute, a conservative think tank. Rickert argued that Milwaukee’s brand-new Bublr bike-share system, named after the local term for a water fountain, used a superior method because much of the funding came from private donors, largely corporate sponsors.

Rickert claims it was foolish of Chicago to launch Divvy solely with public money. She quotes Milwaukee developer and Bublr sponsor Gary Grunau as implying that Chicago’s method of lining up funding was fiscally irresponsible. “Milwaukee is a little more conservative… which is probably explained in the fact that Illinois and Chicago have a much more unstable financial picture,” he said.

The problem with Rickert’s thesis is that she’s making an apple-to-oranges comparison. The total startup cost for the first 475 Divvy stations and 4,750 bikes was $31.25 million, according to Divvy general manager Elliot Greenberger. $25 million came from federal grants, while local funds are covering the remaining $6.25 million.

Meanwhile, Midwest BikeShare, the nonprofit that runs Bublr, has raised about $3 million in public funds, plus roughly $1 million in private donations, which should pay for installing about 60 stations and 600 bikes, according to launch director Kevin Hardman. MWBS needs to raise another $3 million privately in the next two to three years to pay for operations for these stations, Hardman said. The system launched last week with ten stations and 100 bikes.

Obviously, it’s easier to cover the start-up cost of a small system than one that’s nearly eight times as big. To reach the same 1:3 ratio of private-to-public funding as Bublr, the city of Chicago would have had to raise almost $8 million in private donations prior to launching.

And Chicago did eventually snag a $12.5 million sponsorship deal for Divvy with Blue Cross Blue Shield of Illinois, about a year after the system launched. By that time, bike-share was already a proven success here, and the sponsor got an immediate payoff by getting its logo plastered on every Divvy bike and rebalancing van.

Rickert also writes that systems in Denver and Minnesota have a “better business model” because they’re run by nonprofits and were launched with private funding. Again these are much smaller systems than Chicago’s. Denver B-cycle has only 84 stations and 700 bikes, while the Twin Cities’ Nice Ride has 170 stations and 1,550 cycles.

The only comparably sized systems to Divvy in the United States are Washington’s Capital Bikeshare, with about 300 stations and 2,500 bikes, and NYC’s Citi Bike, with about 300 stations and 6,000 bikes. D.C. paid for its system with public funds like Chicago, while NYC landed a $41 million, six-year sponsorship from Citibank to fund its launch.

Each method has its advantages and drawbacks. In NYC, where the expectation has been set that the system won’t be subsidized, expanding the system has been difficult, while the DC region was able to grow CaBi after the initial launch phase. (Both are now struggling with the same supplier issues that have delayed Chicago’s expansion.) What’s more, if you want a more equitable system that covers parts of your city outside the densest areas, you’ll probably need to subsidize it at some point.

Rickert also points out that Divvy posted a $148,000 operating loss in its first year, 90 percent of which was shouldered by the city of Chicago rather than concessionaire Alta Bicycle Share. As Streetsblog commenter Carl Giometti responded, this actually represents “an incredible bargain” once you factor in how much use the system is getting.

With 2.3 million rides taken since Divvy launched in June 2013, a conservative estimate of the Divvy subsidy comes out to ten cents per trip. It’s safe to say this is much smaller than the per-trip subsidy for the CTA, and a truly negligible amount when compared to the hundreds of millions of public dollars spent on regional road-building boondoggles.

For his part, Bublr’s Hardman told me he views Divvy as a role model:

We saw the story yesterday and want to stress that we have nothing but respect and excitement for what is happening in Chicago. The Divvy brand was very much the standard by which we hoped to reach with Bublr. The size and scale of the Divvy network is exactly what is needed to make bike share a public transportation asset. Within the last year, dozens and dozens of people have said “I was in Chicago and saw bike-share bikes everywhere….” This exposure and consumer education has very much paved the way for our work.

  • For what it’s worth, Minneapolis’ system is also funded in part with funds it received from a massive multi-billion dollar lawsuit settlement against tobacco companies.

  • Velocipedian

    Add to the bottom line Divvy’s hidden economic benefits of decreased road wear, reduced costs in accidents (in both injury and property damage), and increased health and productivity.

  • JKM13

    In other words, the city operated one of the largest bike sharing programs in the world, for less than the cost of OEMC’s clothing allocation ($154,226), the transportation/expense budget for the Department of Buildings ($155,000), or stationary for Revenue Services ($195,000).

    Let alone the $25,000,000 spent on snow removal alone on our roads last winter.

    Way to get em where it hurts, Tribune.

  • Meanwhile, the Illinois Policy continues to ignore Peotone and Illiana which will cost the city, state and federal government far more than Divvy ever will.

    Their reason? “We don’t cover transportation topics.”

    Then proceeded to request myself, or Steve Vance, write the article for their site talking about those topics.

  • Mcass777

    Why do the comments (at least the first 4 here) diss the article but ignore the point that perhaps the subsidy could have been spent somewhere else, like in a school, building a bike trail, making more pbl’s, or improving access to the lake front trail.
    Is it troubling that the system lost $148k, that NY can’t expand because the system is not subsidized or that maybe these systems are flawed if itheycannot be subsidized?
    Why compare this system’s funding to modes of transportation you loathe? Why not change or adjust the model to make it self suffuficient? Be a model to separate the system from those modes of transportation that do not work and stop the me too funding concept

  • Rob Rion

    Sounds more like continued selective reporting from the Illinois Policy Institute and the Chicago Tribune. The Tribune has had it out for Divvy since day one for some strange reason. They had a pro-Petone and Illiana piece the other day.

  • Kevin M

    RE: “Why compare this system’s funding to modes of transportation you loathe?”

    Forget about the emotional judgement (“loathe”); what is wrong with comparing the subsidies of one mode of transportation to another?

  • The reason why you compare bike shares to other modes of transit is to point out the double standard used when evaluating a system’s performance. Auto-oriented infrastructure is given a pass when discussing its financial performance but all other modes must break even? That’s a slanted comparison especially when the more difficult to quantify detrimental effects of an auto dependent transportation system are factored in.

  • Can we sue the Koch’s for their sw side petcoke piles to fund Divvy?

  • Pat

    Think how many more schools we could be building with Circle rebuilding money, maybe not for the city, but for the state as a whole. Grants and federal funds are often earmarked for certain projects. The city’s $6.25M was an investment to qualify for federal grants.

    If investing that money in our schools would free up that kind of federal money (maybe it does, I really don’t know), I’m with you in finding that money in the budget.

  • Let’s not accept the premise of this “think”-tank piece either — public transportation needs public funding, and there is nothing wrong with that.

  • Not to mention the benefits to tourism, one of Chicago’s primary economic engines.

  • Mcass777

    So keep up with the same ol’ same ol’? This is a radical, life changing activity/mode of transportation/fun/clean way to go. It is different so change the status quo. just my 2 cents to BE a life and system change motivator. If it makes money or breaks even less crap will get in the way.

  • Alex Oconnor

    A conservative hack hacking away at the Chicago boogey-man. Shocking.

    Funny that their alleged arch-angel Milton was a prominent member of the Chicago school the primary promoter of their alleged economic model.

    History, evidence and modern american conservatism are immiscible.

  • Alex Oconnor

    We’d be happy to once we judge auto infrastructure and regulations on the same scale. Instead of the ubiquitous and inescapable subsidization it receives by every single person in this country.

  • Alex Oconnor

    I am sure it has nothing to do with their connections to construction interests in this state; as sure as I am that their ardent defense of auto transportation construction projects and their disdain for alternatives also has nothing to do with their incestous relationship with construction interests in this state.

    It all free-market….yadda yadda

  • Alex Oconnor

    Hear! Hear!

    Jail time would be good too.

  • Mcass777

    We do bike on those roads too

  • JKM13

    The point is abuntantly clear. $148,000 is not even a drop in the bucket of the city budget.

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