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B-Cycle lack of understanding

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B-Cycle lack of understanding

Postby jjoyce » Thu Nov 01, 2012 1:44 pm

In response to Dave Cieslewicz's recent column criticizing aspects of Paul Soglin's proposed city budget, several have attempted to illustrate the difference the two mayorships using the B-Cycle deal.

Cieslewicz was going to pay Trek $100,000 for the program and Soglin negotiated that down to $1 and that's enough for them, some have said.

It's unclear whether they know or don't know that the renegotiation also gave up any opportunity for the city to bring in revenue from the deal. In other words, had Madison paid $100,000 to operate the program, it could have also shared in the revenue. The $1 deal means no revenue. Trek gets all the money.

I have no idea how much the program will bring in this year. Maybe it's less than $100,000. Maybe it's a lot less and the city is going to come out way ahead. The point is that it wasn't as simple as dropping the price. It was a different deal altogether. Maybe a better one. Maybe not.
Last edited by jjoyce on Thu Nov 01, 2012 1:51 pm, edited 1 time in total.
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Re: B-Cycle lack of understanding

Postby Stebben84 » Thu Nov 01, 2012 1:50 pm

I had posed this question for Stu to ask the mayor. Unfortunately I haven't had a chance to see if it was asked. From my observation the B-Cycle has been a huge success. They are everywhere. It seems like a new one was popping up every 2 weeks. I can fathom a program being an unsuccessful money maker yet still adding more and more racks. I'd be curious to know how much Trek is pulling in. I personally think Soglin dropped the ball on this one.
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Re: B-Cycle lack of understanding

Postby Henry Vilas » Thu Nov 01, 2012 1:54 pm

When does the city's contract with Trek expire, so that it can be renegotiated?
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Re: B-Cycle lack of understanding

Postby rabble » Thu Nov 01, 2012 1:59 pm

I think it's great that they seem to be doing well and fervently hope they keep it up.

But times is hard. I agree with Soglin on this one. It was too much of a risk for a city with a tight belt.

So, we're not sharing in the profits. We also didn't share the risk. We couldn't afford to.

Glad they were able to do it without us, happy to see them making money, but the city is reaping a whole lot of benefits without spending a dime. To me it seems like a pretty good deal all around.
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Re: B-Cycle lack of understanding

Postby lukpac » Thu Nov 01, 2012 2:05 pm

jjoyce wrote:Cieslewicz was going to pay Trek $100,000 for the program and Soglin negotiated that down to $1 and that's enough for them, some have said.

It's unclear whether they know or don't know that the renegotiation also gave up any opportunity for the city to bring in revenue from the deal. In other words, had Madison paid $100,000 to operate the program, it could have also shared in the revenue. The $1 deal means no revenue. Trek gets all the money.


That wasn't known from the start? I could have sworn that when the $1 deal was made it was pointed out that the city wouldn't be sharing the revenue.
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Re: B-Cycle lack of understanding

Postby lukpac » Thu Nov 01, 2012 2:09 pm

http://www.thedailypage.com/daily/artic ... icle=33299

B-cycle deal back on in Madison
City will get bike-sharing system for a buck a year
Joe Tarr on Tuesday 04/26/2011 4:18 pm
[...]
The program, B-cycle, was approved under former Mayor Dave Cieslewicz, but Mayor Paul Soglin voiced concerns about the cost when he took office last week because of the economy and state revenue cuts. The original deal called for Trek to spend about $1 million on the bikes and infrastructure, while the city would kick in $100,000 a year for three years for maintenance. Profits would be shared.

In a press release today, the city announced the program was back on, with Trek agreeing to cover all the maintenance costs, but with a five-year contract instead of three. Trek will be allowed to keep all profits.


http://www.cityofmadison.com/news/view.cfm?news_id=2627

Trek, sensitive to the City's current financial difficulties, has agreed to modify the contract so that the cost to the City will be $1 per year rather than the original $100,000. In return, the City, recognizing the significant capital contribution by Trek, will agree to extend the contract from the originally proposed three years to five. In addition, the City will not share in any profits generated during this contract period. The parties, by mutual agreement, can renew the contract in 2016.
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Re: B-Cycle lack of understanding

Postby Stebben84 » Thu Nov 01, 2012 2:15 pm

lukpac wrote:That wasn't known from the start?


I think JJ was pointing out that SOME people didn't know this. There are a lot of people out there who read bullet points and don't take in the full story.
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Re: B-Cycle lack of understanding

Postby lukpac » Thu Nov 01, 2012 2:21 pm

Stebben84 wrote:I think JJ was pointing out that SOME people didn't know this. There are a lot of people out there who read bullet points and don't take in the full story.


Ah, ok...the people saying Soglin made a great deal that is. Got it.
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Re: B-Cycle lack of understanding

Postby rabble » Thu Nov 01, 2012 2:53 pm

I knew it and I still think it was the right thing to do.
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Re: B-Cycle lack of understanding

Postby jjoyce » Thu Nov 01, 2012 3:10 pm

Exactly. I've heard from people this week who seem to think that the program was going to cost $100k under Cieslewicz and Soglin came in there and got it lowered to $1. Not exactly.

It's a good argument to have and the truth is that Trek didn't think the program would be immediately profitable. I see them all the time, but it takes quite a few rentals to get to a profit, especially when you're splitting revenue.

I think we'll start seeing more advertising on the bikes after they have some metrics to pass around. In the twin cities, they had companies sponsor the kiosks.

I think the mayor's office is missing someone who can be innovative on the revenue side. They're planning all these cuts to recreational services in a town that's pretty recreational. Why not create more and easier ways to rent equipment? Wingra Boathouse is great, but it's a private contractor. Why not have some city boat houses on the bigger lakes for canoes and stuff?

I know, I know... liability, right?

In Edina (again, I know) there's a natural grass mini-golf course that's amazing. They also maintain this really great bowling lawn and rent out bocce and croquet sets.

I mean, when in hipster town, do as the hipsters do, right?
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Re: B-Cycle lack of understanding

Postby ArturoBandini » Thu Nov 01, 2012 3:15 pm

Stebben84 wrote:From my observation the B-Cycle has been a huge success. They are everywhere. It seems like a new one was popping up every 2 weeks. I can fathom a program being an unsuccessful money maker yet still adding more and more racks. I'd be curious to know how much Trek is pulling in.
You mean, "cannot fathom", right? And if so, I think you should keep fathoming, because the number of stations installed is by no means a reliable indicator of profits for a system that has only been operational for a short time. A better indicator would be the number of B-cycles out on the streets. Which, in my observation, is "some" but not "many". I wish Trek and B-cycle good luck in their efforts, but I'm not confident that it will ever turn into a self-sufficient revenue generator.
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Re: B-Cycle lack of understanding

Postby Stebben84 » Thu Nov 01, 2012 4:17 pm

ArturoBandini wrote:You mean, "cannot fathom", right?


I gotta start proof reading more.

ArturoBandini wrote:Which, in my observation, is "some" but not "many"


I'm on campus and I see them all the time. I'm not sure what accounts for "many" so I guess I'm more optimistic.
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Re: B-Cycle lack of understanding

Postby Stebben84 » Fri Dec 28, 2012 1:57 pm

The report notes customers took 63,325 trips and rode B-cycle's shiny red bikes 94,402 miles in 2012, up from 18,051 trips and 36,618 miles in its inaugural 2011 season.


http://www.thedailypage.com/daily/artic ... icle=38597

That's a pretty huge increase for one year.

ArturoBandini wrote:I wish Trek and B-cycle good luck in their efforts, but I'm not confident that it will ever turn into a self-sufficient revenue generator.


The system saw its annual memberships explode, from 475 to 2,150


Looking at this in terms of a successful business venture, I'd say they nailed it.
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Re: B-Cycle lack of understanding

Postby Detritus » Fri Dec 28, 2012 2:06 pm

I don't know about anyone else, but UW staff got a deal on rentals--something like $25 to rent for the year. For a lot of us that makes good sense, especially if we have to drive in from a long ways away: we can use the bikes to get around on a daily basis without worrying about either getting the bike down and back every day, or leaving it somewhere on campus every night. I'll bet that boosted usage numbers somewhat.
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Re: B-Cycle lack of understanding

Postby Stebben84 » Fri Dec 28, 2012 2:11 pm

Detritus wrote:don't know about anyone else, but UW staff got a deal on rentals--something like $25 to rent for the year.


Huh? That's the first I heard about it. Looked it up and it was actually $20 per year. That's a pretty huge savings. I'm sure that boosted numbers.
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