Divvy costing taxpayers big...

... according to this item from the Illinois Policy Institute:

http://illinoispolicy.org/blog/blog.asp?ArticleSource=6230

I have real basis on which to form an opinion. I have yet to try Divvy (I have plenty of my own bikes) and don't live in Chicago. A friend at work passed the link along.

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Permalink Reply by Anne Alt on October 4, 2013 at 1:40pm

+1

Daniel G said:

Conservative group hates liberal shit. Especially hates it when liberal shit gets public support in a place liberals live.

News at nine. It's a fucking ruse. Make a weak economic argument for getting rid of things you hated anyway. What's left? The things you like.

h' 1.0 said:

Is there some requirement that the lowest bidder has to be chosen?

Divvy is doing a fantastic job and their program is successful, in a city where bike share's success was anything but guaranteed. It's a bit late to be arguing that we should have gone with a cheaper bid so some other company could have shat the bed, gone home, and left us with nothing.

Republicans believe that all money is borrowed and the 3 trillion the US takes in in taxes just gets dumped in a hole and lit on fire. What actually happens is that money gets spent on important and unimportant things. People whose pet projects didn't get funded become conservative and shut the entire government down.

Permalink Reply by Drewbacca on October 4, 2013 at 5:23pm

That's really the only thing that stuck out to me... if true, I'd love to see the annual budget and how that number is arrived at. It's definitely not a value I can believe without seeing the source.

Tom Dworzanski said:

From the article:

  • Five-year cost is $17,105.26 per bike

Seventeen f'n thousand dollars per bike. It's not about quality with that kind of money involved. The quality of operating steel bike sharing was maxed out many many thousands of dollars ago. In fact, it was probably maxed out by Bike Chicago many thousands under their bid as well.

 

Permalink Reply by Duppie on October 4, 2013 at 5:42pm

This.

It's one thing thing to look at the cost, but you have to look at the benefit as well. IPI makes no attempt at quantifying the benfits.

Anne Alt said:

Ha!  My first thought on that line was: "what about the benefits of improving transportation to/within neighborhood business districts? How about the potential increase in sales/jobs/tax revenue if businesses near Divvy stations see more revenue?"

Tank-Ridin' Ryan said:

My favorite line from the article: "For every taxpayer dollar spent on bike share programs, that dollar cannot be spent elsewhere in the local economy."

Really?  Well, for every taxpayer dollar spent on item X, that dollar cannot be spent for item Y in the local economy.

The solution is obvious here: stop spending taxpayer dollars on anything.

Permalink Reply by Duppie on October 4, 2013 at 5:46pm

That is not the cost of the bikes itself. The majority of Divvy's operating costs are in rebalancing. Spread out over the number of bikes, that number may well be correct.

12 trucks. Two shifts a day. 5 years. You do the math.

Drewbacca said:

That's really the only thing that stuck out to me... if true, I'd love to see the annual budget and how that number is arrived at. It's definitely not a value I can believe without seeing the source.

Tom Dworzanski said:

From the article:

  • Five-year cost is $17,105.26 per bike

Seventeen f'n thousand dollars per bike. It's not about quality with that kind of money involved. The quality of operating steel bike sharing was maxed out many many thousands of dollars ago. In fact, it was probably maxed out by Bike Chicago many thousands under their bid as well.

 

Permalink Reply by Michael Hulburt on October 4, 2013 at 5:52pm
It seems like that number is the $65 million divided by 3800 bikes. Obviously, the bikes aren't the only thing that has to be paid for to get the program running and to maintain it—ental stations, payment software, the bikes, bike and station maintenance, the blue vans that redistribute the bikes, and their drivers, to name a few.

Also, since when does a government-supported project have to turn a profit? Isn't the goal of Divvy to increase bicycling in Chicago, and therefore, the myriad benefits that go along with decreased pollution, healthier people, and safety in numbers with more bikes on the road? (And the positive feedback loop of more cycling infrastructure furthering all the other benefits.) If Alta never turns a profit but ends up doing all that, I'm sure I wouldn't be the only person happy to see my tax dollars at work. So far it seems that Divvy is doing just that and will likely continue to grow.
Permalink Reply by bk (aka: Dr. Mambohead) on October 4, 2013 at 6:02pm
y'know...

you give a soldier a free gun?

pretty soon they want a free uniform...

then?

they're in one of 150 countries....

with their socialized medicine
and their gov't food hand-outs....
Permalink Reply by bk (aka: Dr. Mambohead) on October 4, 2013 at 6:09pm
y'know?...

you give these homeowners a free sidewalk?...

pretty soon they want fresh water to their houses.... and then?

oh!! oh!!!! sewage is nasty! please have a socialist utopia deal with my dooty! i need government intervention!

lurking socialism is everywhere, comrades
Permalink Reply by Davo on October 4, 2013 at 7:07pm

Permalink Reply by Bez on October 4, 2013 at 8:52pm

These 2 posts fit together perfectly, and illustrate a major issue with the way taxes are presented to the people.

Anti-tax folks, currently mostly represented by Republicans masquerading as Libertarians, have the mistaken idea that the taxes that the government collects are "theirs".  While public spending should be transparent, none of that money belongs to anyone except the government from the moment it is taken.  Think of it as a fee for being able to use clean air, water, etc while you work.  It's called contribution to the public good and is a much longer conversation than is needed here.

Exacerbating the issue, think tanks such as this specifically hire high level private business professionals to treat everything as if it exists in the "free-market" (which, incidentally, they do not actually believe in nor want).  As such, they issue plenty of press releases talking about how things are running at a deficit or are not profitable.  Since the average person has little understanding of the underlying issues, the soundbites get passed around and rhetoric gains traction.  In reality, all businesses run at a deficit for a percentage of each operating year, hence why many companies shift their fiscal calendar around to represent profitability.  Public, or tax supported, businesses run at a near constant deficit by design.  It's a balancing act, as they need to run at just enough deficit to keep from having to shut down or taking more in taxes.

*note - this only applies to businesses such as Divvy, not services/departments such as the EPA.

Daniel G said:

Conservative group hates liberal shit. Especially hates it when liberal shit gets public support in a place liberals live.

...

[Ultra-conservatives] believe that all money is borrowed and the 3 trillion the US takes in in taxes just gets dumped in a hole and lit on fire. What actually happens is that money gets spent on important and unimportant things. People whose pet projects didn't get funded become conservative and shut the entire government down.


Michael Hulburt said:

Also, since when does a government-supported project have to turn a profit? Isn't the goal of Divvy to increase bicycling in Chicago, and therefore, the myriad benefits that go along with decreased pollution, healthier people, and safety in numbers with more bikes on the road? (And the positive feedback loop of more cycling infrastructure furthering all the other benefits.) If Alta never turns a profit but ends up doing all that, I'm sure I wouldn't be the only person happy to see my tax dollars at work. So far it seems that Divvy is doing just that and will likely continue to grow.
Permalink Reply by Bez on October 4, 2013 at 8:54pm

Uh oh, someone mentioned the word socialism (erroneously)!

Quick, to the torch-and-pitchfork dispensary!  

bk (aka: Dr. Mambohead) said:

y'know?...

you give these homeowners a free sidewalk?...

pretty soon they want fresh water to their houses.... and then?

oh!! oh!!!! sewage is nasty! please have a socialist utopia deal with my dooty! i need government intervention!

lurking socialism is everywhere, comrades
Permalink Reply by Anne Alt on October 5, 2013 at 12:42am

That's pretty much how I'm feeling about it.

Michael Hulburt said:


Also, since when does a government-supported project have to turn a profit? Isn't the goal of Divvy to increase bicycling in Chicago, and therefore, the myriad benefits that go along with decreased pollution, healthier people, and safety in numbers with more bikes on the road? (And the positive feedback loop of more cycling infrastructure furthering all the other benefits.) If Alta never turns a profit but ends up doing all that, I'm sure I wouldn't be the only person happy to see my tax dollars at work. So far it seems that Divvy is doing just that and will likely continue to grow.
Permalink Reply by Reboot Oxnard on October 5, 2013 at 2:16am

Of course the award was crooked. This is Chicago, the contracts here are always crooked; it's just how the City does business. We all understand this and pretending otherwise doesn't make it stink less. But, so what? In the long run, Divvy will cost more than it should but that extra money is the cost of getting things done in Chicago and crying about it won't accomplish anything except mean you can't get a garbage can or a permit to finish your basement, right?

So, how much will Divvy actually cost? Because revenues will be used to offset costs, it's impossible to say precisely how much the City will end up paying but that doesn't mean that the gross costs aren't known. From the contract, here are the first year numbers:

  • $17,027,714 for the purchase of 3000 bikes and 301 stations
  • $2,454,755 for start up services and costs, including initial marketing, a website and a warehouse
  • $1,588,700 for installation and service
  • $7,837,356 for first-year operations and maintenance

Most of the detailed charges are redacted in the contract posted online. You aren't allowed to see what the City is being charged per bike (or per tire, as in maintenance) but each additional station will cost $5,200. If you do the math, it's possible to figure out the rough costs per bike, however:

  • To buy each bike: ($17,027,714 - ($5200 x 301)) / 3000 = $5154 per bike.
  • Annual operations and service costs: $7,837,356 / 3000 =  $2612 per bike, per year.
  • Total system cost over five years: $18,214 per bike

Yoikes! For those craptastic tanks bikes? Somebody is getting rich.

It's a five year contract, so the annual operations and maintenance costs will probably increase significantly as the bikes are bludgeoned into submission by the hoped for thousands of users.

Divvy is a good thing but it's an expensive thing. Very expensive. Let's also hope that it's popular so the users pay for it, not the taxpayers.

Chicago Divvy Contract

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