Divvy Bike program potential trouble -- supplier files bankruptcy

Date: 
01/21/2014
DivvyMaintenance

Divvy maintenance was on the job as weather improved

The great news about Chicago's shared bike program, Divvy, being very successful was dampened Mon., Jan. 20, by news from Canada about the Public Bike System Company filing for bankruptcy. 

Public Bike System Company (PBSC) known as Bixi is the supplier of bikes, docking stations, software and parts to Alta Bicycle Share Inc. (ABSI), which operates the Chicago Program as well as those in several other cities. 

According to a mid-December story in the Chicago Tribune, "Despite the work brought about by the changing seasons, the ambiance inside Divvy's 50,000-square-foot warehouse was almost sleepy last week: light blue bikes sat in dizzying rows, with a bent frame or flat tire here and there and a wall of yellow canisters filled with parts." The hope is that there are lots of parts in stock. 

From reports in Montreal's The Gazette, problems with fulfillment and financial accounting have been an issue for multiple years.

In August 2012, The Gazette in Montreal stated that Montreal provided PBSC with a bailout that could be $108 million. They also pointed out that, "PBSC has failed to live up to transparency promises before. In March, it said its 2011 financial statements would be made public in April. They have yet to be disclosed." 

On Mon., Jan. 20, Montreal's Mayor Denis Coderre was reported in The Gazette as saying that, "We will have Bixi in Montreal this summer." But they report, "Coderre was less definitive about whether Montrealers will have access to bike-sharing beyond 2014." 

Both New York and Chicago have withheld payments to Bixi. New York has withheld $3 million while Chicago has withheld $2.6 million. In addition to the millions that Bixi owes the City of Montreal and others, ABSI has placed an $11 million price tag on damages for software delays. 

Chicago Sun-Times's Fran Spielman reported, "Two years ago, the Emanuel administration delayed the launch of Chicago’s bike-sharing program as Inspector General Joe Ferguson continued to investigate a rival bidder’s claim that the bid process was greased for Alta, an Oregon company that once hired newly-departed Transportation Commissioner Gabe Klein as a consultant.

"At the time, problems with Alta’s newly-developed Bixi software to keep track of rented bikes and accept rider payments had also stalled the company’s 10,000-bike rental program in New York. 

"But, the Emanuel administration insisted then that neither complication played any role in the Chicago slowdown." 

Federal Congestion Mitigation and Air Quality Improvement (CMAQI) put up $18 million of the initial $27.5 million for the first 400 Divvy stations. Federal Transportation Investment Generating Economic Recovery funds put in $4 million and the remaining $5.5 million came from local dollars. 

In November, CMAQI announced there would be another $3 million grant for 75 more docking stations beyond the 400 planned. This will require a 20% local match. 

Another application has been submitted for $3 million to the Illinois Transportation Enhancement Program for an additional 75 stations taking the total count to 550. Evanston and Oak Park are to receive a total of 20 of the stations. 

What is the financial state of the Divvy program in Chicago? The first five months income of $2.5 million is encouraging but what are the annual costs?

What do the contracts look like for Chicago? Are they with Bixi, PBSC or ABSI and what recourse does the City have? 

Are the parts of the system proprietary? What happens if a new source must be found and what does that cost?

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