Despite Uber’s Misinformation Campaign, Divvy Expansion Deal Passes in Committee

Members of Transport Workers Union of America showed up in force to the hearing. Photo: John Greenfield
Members of Transport Workers Union of America showed up in force to the hearing. Photo: John Greenfield

Recently Uber and JUMP have shifted their propaganda machine into high gear in an effort to kill the city of Chicago’s proposed contract amendment with Divvy concessionaire Lyft.

The deal would grow Chicago’s publicly owned, docked bike-share system to 16,500 bikes, and expand it citywide, and have many financial perks for the city and social justice benefits for residents. The amendment would also make Lyft the Divvy sponsor, replacing Blue Cross Blue Shield of Illinois, and give the ride-hailing company the exclusive right to operate bike-share in Chicago for the remaining nine years of its Divvy contract.

Predictably, Lyft’s archrival Uber, which owns JUMP, a dockless bike-share company, objects to this state of affairs. They’ve been doing some hardcore lobbying to kill the deal, spending plenty of cash in the process.

They’re promoting the false narrative that the deal is a “no-bid contract”; in reality, the contract was bid out in 2012. They’re implying that the city is missing an opportunity to get $450 million in investments from Uber with no exclusivity–in truth Uber would spend only $200 million unless it was given a monopoly. And they’re protesting that the Lyft deal is unfair to the South and West Sides because Uber would provide bike sooner, deploying 20,000 cycles by this summer. The fact is, Uber currently only has a few thousand bikes spread across the entire country, so that’s an absurd timeline.

So far Uber and JUMP’s public relations blitz has included:

The full-page Sun-Times ad.
The full-page Sun-Times ad.

It’s also unclear why so many members of the clergy have taken a sudden interest in bike-share. A spokesperson for Jackson didn’t respond to a request for comment, and Uber and JUMP have not responded to multiple inquiries about the Lyft/Divvy deal.

However, all that money spent on propaganda didn’t seem to do Uber much good at today’s Committee on Pedestrian and Traffic Safety meeting at City Hall. After extensive testimony by city officials and Lyft personnel, as well as advocates for and opponents of the Divvy expansion deal, the aldermen on the committee voted unanimously to approve it.

The contract amendment goes before the full City Council for a final vote on Wednesday. Typically legislation that has been approved in committees gets rubber-stamped by the Council, but there’s many a slip between cup and lip, and who knows what other kinds of questionable PR strategies Uber will pull over the next two days.

During the hearing, Chicago Department of Transportation Commissioner Rebekah Scheinfeld detailed the benefits of the Lyft/Divvy deal for the committee members, in a room packed with attendees. She noted that reps for 26 community groups, academic institutions, and disability rights advocates have written letters of support for the contract amendment. The deal includes the creation of 200 jobs; job training programs for youth and ex-offenders; the expansion of the Divvy for Everyone (D4E) equity program; and the creation of an adaptive bike-share service for people with disabilities.

Scheinfeld noted that financial perks of the deal include the expansion and electrification of the system at no cost to the city; a guarantee of $77 million for the city in sponsorship and ad revenue over nine years; and a cut of any operations profits or ad revenue over $20 million. In addition, Chicago would be relieved of the burdens of paying for its share of any operations losses (currently about a $1 million annual liability for the city), and funding D4E, which costs about $350,000 a year.

The new electric-assist Divvy model.
The new electric-assist Divvy model.

Scheinfeld also stressed that the Lyft deal, as opposed to Uber’s proposal, would keep bike-share in public control. “The system will remain accountable to the city.” She argued that this will make it easier to ensure that the bikes are deployed in an equitable and orderly manner. Station placement “is something that we have done with extensive outreach to you and your colleagues,” she told the aldermen. Furthermore, she said, maintaining a publicly-owned system eliminates the risk of the operator of a privately-owned bikes pulling up stakes if its business model proves unprofitable.

6th Ward alderman Roderick Sawyer said he generally supported the contract amendment but had concerns about the exclusivity clause. Scheinfeld responded that when Divvy launched, “it was with the understanding that this would be the city’s bike-share system. We took a bet on this… and with the sweat equity of Chicagoans we have built this into a gold-standard system.” She added that without giving Lyft a monopoly, there would have been no incentive for the company to pay for all the new hardware (necessary because the federal transportation funds used to launch Divvy have dried up under Trump), or negotiate the financial and equity benefits of the deal.

28th Ward alderman Jason Ervin wondered if there might be any unintended consequences of the deal if it turns out that the city has underestimated the value of the franchise, or if technology changes in the coming years. Scheinfeld assured him that the city is getting a great deal compared to similar arrangements in other cities. “We are above-market here.” Ervin asked if there would be any cost if the city terminated the contract. Scheinfeld said there would be, but it wouldn’t be in the interest of the city to do that anyway, because it would have to refund some of the federal grant money used to purchase the current Divvy hardware.

18th Ward alderman Derrick Curtis asked when his district would be getting Divvy. “I have a beautiful bike path in the Dan Ryan Woods, but no bikes.” Lyft representative Caroline Samponaro told him that the plan was to install stations in his ward, and other parts of the Far South Side, this summer.

4th Ward alderman Sophia King questioned why the city is only requiring Lyft to spend 5 percent of its contract on POC- and women-owned Disadvantaged Business Enterprise subcontractors. Samponaro responded that Divvy spends most of its budget on equipment, which would be difficult to procure from local firms, and it has committed to employing a union workforce, which means that expenditure is removed from the DBE “bucket.” King and Committee chair 27th Ward alderman Walter Burnett said the situation needs to improve, and Scheinfeld suggested that Lyft provide regular updates on its efforts to work with more DBE firms.

During the public comment period, representatives of the Illinois Hispanic Chamber of Commerce, City Colleges of Chicago, DePaul’s Chaddick Institute, and the Active Transportation Alliance provided brief endorsements of the deal.

Tim Brown (checkered jacket) testifies before the committee. Photo: John Greenfield
Tim Brown (checkered jacket) testifies before the committee. Photo: John Greenfield

However, community advocate Tim Brown, who recently organized a City Hall press conference against the contract amendment featuring South and West Side community leaders, told the aldermen, “I’m in favor of the largest, most equitable agreement to be spread over Black and Brown neighborhoods,” referring to Uber’s pitch. “I’m asking that we throw everything in the pot.” Brown has said he is not being paid by Uber to speak out against the Lyft deal.

In response, Ervin questioned whether letting Uber and JUMP compete in Chicago would actually result in better service for communities of color. He noted that private companies “want to go where the money is,” i.e. more affluent neighborhoods.

Angelo Cucuzza from Transport Workers of America, which represents Divvy employees, said the deal would result in more union jobs with good benefits, whereas JUMP doesn’t use union labor. As a New Yorker, he added that the NYC model, where docked bike-share is used in the central city and dockless companies are allowed to operate in outlying neighborhoods, shows why it would be a bad idea for Chicago to split bike-share turf with Uber. He called the dockless bike-share situation in Staten Island and the Rockaways “absolute chaos.”

Alex Wilson and Anthony Cruz from the West Town Bikes education center, which has run youth jobs-training programs for Chicago, testified that expanding the program under the deal would be great for community development. Wilson noted that some West Town program participants, including Cruz, were high-school drop-outs who went on to get their GEDs and living-wage jobs at Divvy. “Now, instead of being a burden on society, they’re giving back to their community.” Cruz is currently the manager of West Town’s retail store, Ciclo Urbano.

Jeremy Glover from the Metropolitan Planning Council said it’s wise for Chicago to keep bike-share in public hands. He noted that last year St. Paul chose the dockless firm Lime as its bike-share provider over Nice Ride, which had operated a docked system there for years. However, it was recently announced that Lime is pulling its bikes out of the city after a mere eight months, leaving it with no bike-share system this summer. In February, Lime pulled its fleet from Rockford, Illinois, after less than a year, leaving that city without bike-share as well.

Notably no Uber or JUMP representatives testified at the hearing.

After the unanimous vote to move the legislation to the full Council, Lyft spokesperson Julie Wood told me that, unlike its competitor, her company hasn’t bought any advertising to promote their position, although they did reach out to community organizations to ask for their endorsements. “We haven’t felt the need to buy any advertising,” she said. “The support is pretty strong because we have a well-known system and [Motivate, the company that Lyft purchased last summer has] spent many years making connections in the community. If you’re seeing the list of who’s supporting the deal, you’ll see lots of groups who have knowledge of Divvy and have interacted with it for a long time.”

A CDOT fact sheet debunking Uber's claims.
A CDOT handout addressing Uber’s claims.

So does Wood believe Uber has been honest in the way it has been portraying the Divvy/Lyft expansion deal? “No,” she replied. “They put forward a bunch of things that were not accurate about both our proposal, and their quote-unquote proposal, but no one has the ability to see [Uber’s proposal.] We are in a contract with the city so we are being held to very high standards. These numbers are real and have the force of law behind them, and I’m not sure where their numbers are coming from.”

Here’s an updated list of community organizations and reps that have endorsed the Divvy/Lyft contract amendment.

  1. Garfield Park Community Council, Mike Tomas
  2. Quad Cities Development Corporation, Rhonda McFarland
  3. Active Transportation Alliance, Ron Burke
  4. Illinois Hispanic Chamber of Commerce, Jaime di Paulo
  5. Chaddick Institute, DePaul University, Joseph P. Schwieterman
  6. Urban Transportation Center, UIC College of Urban Planning and Public Affairs, Dr. P.S. Sriraj
  7. Chicago State University, Zaldwaynaka Scott
  8. Regional Transportation Authority, Leanne Redden
  9. Chicago Metropolitan Agency for Planning, Joe Szabo
  10. Metropolitan Planning Council, MarySue Barrett
  11. Safer Foundation, Victor Dickson
  12. Blackstone Bikes/Experimental Station, Connie Spreen
  13. West Town Bikes, Alex Wilson
  14. Chicago Cook Workforce Partnership, Karin Norington-Reaves
  15. Beverly Area Planning Association, Susan Flood
  16. Shared-Use Mobility Center, Sharon Feigon
  17. Shirley Ryan AbilityLab, Derek Daniels
  18. UCAN, Daisy Lynn Mertzel,
  19. Ron Singer, South Loop resident
  20. North Lawndale Employment Network, Ana Encarnacion
  21. Dare2tri, Keri Serota
  22. Eugene Field Park Advisory Council, Amy Kellogg
  23. Access Living, Marca Bristo
  24. The Chicago Lighthouse, Janet Szlyk
  25. Equip for Equality, Barry Taylor
  26. South Shore Chamber of Commerce, Tonya Trice
  • Eric B

    I think having multiple providers is a good thing and I dont see the benefits of blocking out competition. When there is competition and multiple providers the consumers win. Not super hard to understand…

  • planetshwoop

    No, not necessarily. It can really increase the complexity to have multiple vendors. If we link Divvy to Ventra, having multiple providers can be a problem. Same with ensuring compliance with hiring practices, system maintenance, etc.

  • Eric B

    Yes you are right having more vendors is more complex but that doesnt outweigh the benefits of having multiple companies competing to give better quality products and services. Compliance with hiring practices and system maintenance are important of course but not as as important as increased bike coverage and constant innovation that comes with competition.

    Having multiple ride share companies is probably much more complex for cities to regulate as well, but in the end competition has made both companies improve their product and services in a way that wouldn’t have happened if they were monopolies.

    To me the question is not whether the city is leaving money on the table by going with Lyft (as Uber argues) nor whether Uber is wrong in its criticism (which you argue), it comes down to whether competition is good in this scenario or not. And I really don’t see why a monopoly makes sense.

    You seem invested in your perspective so I wont try to convince you and we can respectfully disagree

  • We already have two different train systems.

  • Tooscrapps

    Without exclusivity, Divvy (Lyft) would not invest in much in the system and really work with the city and sister agencies on integration. As John and City believe, Uber’s pitch is full of empty promises and frankly, I’m loath to take them at their word. What happens if the City passes on Lyft, allows the open competition and both systems fail? Then the City really loses.

    The US already is littered with failed dockless bike schemes.

  • Jeremy

    There is limited street/sidewalk space for bike storage. Maintaining bike share with one service provider seems like a good idea so our public space isn’t burdened by excess machinery. I already emailed my alderman to vote for the Lyft/Motivate contract.

  • BinoyK

    I agree with your concern about litter on the streets but these dockless bike shares are a very new concept. I have this seen a video where cars were introduced to city streets back in the early 1900’s and it was chaos. You had pedestrians, horse carts and all sorts of chaos on the roads. But as time passed we planned & built the lanes, the streets and traffic signals to control the chaos. This is what needs to happen with dockless bikes also. Bikes are environmentally friendly & healthier and should be promoted in our cities. With proper regulation and oversight we can make these dockless bike shares also work.

  • BinoyK

    I am also on the same mindset as you but I think this is moot now since its passed committee and most likely will pass city council. Not much we can do to stop it now.
    I am also concerned that giving monopoly to Lyft/Divvy will not improve the system for the users. I am regular user of Divvy and I am seeing a lot of deterioration of the bikes and the docking stations. We have no way to report any specific problem with Divvy as far as I know. We can click on the maintenance switch on the dock but how does the technician know what is the exact problem with the bike. How is it being fixed?

  • BinoyK

    I have seen systems where private model would compete with a public model and that would usually improve both and gives customers options. The city doesn’t have to worry about managing complexity of a private company. Lyft/Motivate/Divvy can still stay as the city’s provider but why does it have to squelch competition. Does it mean that they are admitting their services cannot compete in an open market? I know I might be making it a simpler debate without considering all the factors. The argument I have heard for monopoly is that Lyft has no reason to invest in the docks and bikes if they are not given monopoly. Shouldn’t we discuss and question this more?

  • BinoyK

    I just hope this deal improves the system for the users.

  • Tooscrapps

    Me too. And I hope they maintain a good balance between traditional bikes and e-bikes.

  • Frank Kotter

    In all the most developed countries in the world, with the best transportation systems, a Monopoly per mode is standard without exception. Basket case countries allow competition in providing these transportation (and other public) services. This is not necessarily true with bike share as it is so new that these decisions are still being made but there is no example I am aware of where ‘the free market’ has improved bike share – rather the contrary.

  • rohmen

    I’d say Seattle maybe, as a Divvy-style public system run by Motivate pretty clearly failed, while dockless for-profit systems (at least last time I read anything) seemed to be performing better. I think each city needs to evaluate what works best for it, but I agree that there are few examples I’ve heard of where a public system was in place already and performing well, and adding for-profit dockless providers improved that city’s bike share performance.

  • rohmen

    “having multiple companies competing to give better quality products and services.”

    This always sounds great in a vacuum, but the for-profit providers out there haven’t been any better in terms of quality. In fact, in many cases, they’ve been substantially worse. That may change as consolidation happens in the market, and bigger players like Uber/Jump take over, but a “quality” bump isn’t guaranteed. It’s quite possible that you’d end up with more choices, but a crappier product experience overall.

  • BinoyK

    There hasn’t been many examples of public/private mode for shared docked/dockless bike, ebike & scooter because its a new mode compared to other modes we have available like bus, car, light rail or subway.
    I generally have a good feeling about this deal because I have seen other cities and Divvy is one of the best shared bicycle systems out there. I just don’t want this to end like our parking deal and am skeptical of monopolies in any sector.

  • Alex

    “It’s also unclear why so many members of the clergy have taken a sudden interest in bike-share.”
    I don’t think it’s a great mystery. Follow the money!

  • FlamingoFresh

    Chicago is still in it’s infancy of establishing bike share and the amount of space on the streets/in the city dedicated to bikes is a small percentage compared to everything else. I’m totally fine with the city doubling down on their investment and allowing this deal with Lyft. 1) This keeps the bike share program 100% government owned, 2) Allow for expansion to the south and west sides of Chicago creating a more equitable program, 3) Lasts only 9 more years and is essentially an expansion of the existing contract (no contracts broken).

    Going back to what I said, the limited amount of space for bicyclists should be used wisely and if we can get a cohesive system of bike share in the city, then that would only lead to more bicycle infrastructure being constructed to better suit the bike share network and its users. Following this deal the city can re assess exactly how they want the dynamics of the bike share system in regards to competing companies.

ALSO ON STREETSBLOG