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As City Moves Closer To Exclusive Deal With Lyft To Run Divvy, South And West Siders (And Uber) Fight Back

Uber, which owns electric bike-sharing firm Jump, wants the agreement changed to a non-exclusive pact to allow it to offer 20,000 dockless bicycles and 2,000 scooters in all 50 wards as soon as this summer.

A Divvy bike dock.
Alisa Hauser/Block Club Chicago
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DOWNTOWN — Aldermen will get their first detailed look at Mayor Rahm Emanuel’s plan to ink an exclusive deal with Lyft to operate the city’s Divvy bicycle-sharing system on Thursday — as Uber pushes a plan to offer dockless bicycles and scooters.

The City Council’s Committee on Pedestrian and Traffic Safety will hold a subject matter hearing at 11 a.m. on Emanuel’s proposal (O2019-1434O2019-1611) that calls for Lyft to make a $50 million capital investment to modernize and expand the Divvy system to all 50 wards by 2021, adding 10,500 bikes and 175 stations. 

As a result, the expanded system would have a total of approximately 16,500 bikes, 800 stations and 200 more jobs.

Lyft owns Motivate, the company that operates the Divvy bike-sharing system. 

The new bicycles would be electric, with “pedal-assist” technology and the ability to be locked to a standard bicycle rack or a Divvy docking station.

The deal will speed the expansion of the bike-sharing program — now clustered Downtown and on the North Side — to the South and West sides, Emanuel said in a statement.

The proposal gives the City Council an “opportunity to create a modernized system that creates increasing annual revenues for the city while ensuring all 50 wards have access to bike sharing,” Emanuel said.

The proposal — which must be approved by the City Council — calls for Lyft to pay the city $77 million during the nine-year term of the agreement to be used exclusively for transportation projects. In return, Lyft would bank all revenues from the bicycle-sharing system up to $20 million annually, with the city getting 5 percent after that threshold is met.

Divvy, which launched in 2013, has lost as much as $700,000 a year, according to city data.

The city owns the Divvy bicycles and docking stations.

Chicago taxpayers would also receive $1.5 million a year in minimum guaranteed revenue from advertising and promotions under Emanuel’s plan.

The proposal would give Lyft the right to raise bike-sharing rates by as much as 10 percent annually — with larger hikes subject to the approval of the Chicago Department of Transportation, but not the City Council.

But Uber — which owns electric bicycle-sharing firm Jump — wants the agreement changed to a non-exclusive pact to allow it to offer 20,000 dockless bicycles and 2,000 scooters in all 50 wards as soon as this summer.

During the summer and fall of 2018, Jump ran a 300-bicycle dockless pilot program on the South Side that company officials considered successful.

Jump would operate alongside Divvy. In return for being named the city’s exclusive dockless bicycle share provider, Jump would invest $450 million in Chicago, including a $60 million “community investment” and $30 million “infrastructure investment,” according to its proposal. In addition, Jump would add 500 jobs.

Mirroring systems in San Francisco and Washington DC, Jump would accept cash, and offer low-income residents unlimited rides for $5 per month.

“Jump offered a $450 million dollar investment that would have made Jump the dockless provider while Divvy could continue to expand and operate their docked program,” said Robert Kellman, a spokesman for Uber and Jump. “Chicagoans are best served when all companies that want to invest in our city are given the opportunity to do so.”

If the city contracts with Jump to provide a dockless bicycle-sharing system — but allows other companies to do so as well — the investment would be $200 million, according to its proposal.

Chicago Department of Transportation spokesman Mike Claffey said Uber’s proposal “would completely trash the existing bike share system instead of the Lyft partnership, which would build upon the beloved Divvy program.”

“Uber continues to peddle falsehoods, but the simple fact is that the proposed partnership with Lyft is the only workable proposal that ensures city control of the system and achieves our goal of a bike share program that reaches every part of the city,” Claffey said in a statement.

South and West Side community and business leaders held a news conference at City Hall Wednesday to call on aldermen to put the brakes on the mayor’s proposal, and likened the potential deal to the much-loathed parking meter privatization.

Community organizer Jedidiah Brown, who ran unsuccessfully against Ald. Greg Mitchell (7th), said Chicago should learn from its mistakes.

“We don’t want history to repeat itself,” Brown said. “We are not against Divvy having a deal. We are asking Divvy to remove the exclusive language from that deal. We want to meet with the leaders of Lyft and we want them to agree to remove that exclusive language.”

Emanuel has rejected comparisons between his bicycle-sharing proposal and the deal inked by former Mayor Richard M. Daley, noting that the deal is only for nine years — not 75 — and will fund transportation improvements and speed service expansion to the South and West sides.

Donna Hampton Smith, the president of the Washington Park Chamber of Commerce, said Emanuel’s proposal should be delayed until a new mayor and City Council are sworn in.

The city should not “choose a plan that delivers fewer bikes and fewer locations with fewer jobs at a slower pace,” Smith said.

Tim Jones, who organized the news conference, said the group was not being paid for by Uber or Jump, but came together to speak out after growing concerns that the proposal would continue to short-change the South and West sides.

“I think the message from today’s event rings loud and clear: The city could have chosen both investments and expanded Jump alongside Divvy,” Kellman said. “Instead, the city left a $450 million investment from Jump off the table that would have had a demonstrable impact on communities that lack access to public transportation while creating 500 jobs on the South and West Sides.”

In response to a request from the The Daily Line, city officials released letters of support from 10 community organizations, including the Active Transportation Alliance, the Metropolitan Planning Council, the Chicago Metropolitan Agency for Planning and the Regional Transportation Alliance.

Despite the mayor’s support, it is not certain that the City Council will approve the deal before he leaves office. A new mayor and City Council will be sworn in May 20.

Ald. Anthony Beale (9th), who has been a fierce critic of ride-hailing services, said the mayor “took the path of least resistance” by sending the proposal to the Pedestrian and Traffic Safety Committee chaired by Ald. Walter Burnett Jr. (27th), a close ally of Emanuel.

Beale is the chairman of the Transportation and Public Way committee, which usually has jurisdiction over programs like the Divvy bicycle-sharing program.

Beale said he had concerns about expanding the Divvy system, which the alderman said did a “disservice to this city” by focusing on affluent areas.

“They redlined the South and the West sides,” Beale said, referring to the practice of banks that declined to issue mortgages in predominantly Black areas of Chicago.

Beale said he would ask Lyft to make a “commitment to equity” both in terms of rolling out the new bicycle stations and making investments in infrastructure improvements on the South and West sides.

During the dockless bicycle-sharing program, Beale repeatedly criticized it as “substandard,” and on Wednesday said it had been a disaster. 

Beale said he has a better relationship with Lyft than with Uber, and he said he is “comfortable” with the ride-hailing firm.

The City Council’s Education Committee will also meet at 11 a.m. Thursday to consider the appointment (A2019-25) of Peggy A. Davis to the City Colleges of Chicago Board of Trustees.

Davis is chief officer of programs and strategic integration for The Chicago Community Trust.