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By Jorge Casuso
March 4, 2019 -- As it struggles to keep the Breeze Bike Share program from falling further in the red, the City Council Tuesday is expected to extend a commission-based agreement with the company that secured the program's sponsorship with Hulu.
Staff is recommending that The Superlative Group be compensated in the amount of $299,462 for fees it did not collect from Hulu's anticipated $3.6 million five-year contract, staff said in its report.
The amount represents the 20 percent commission the Ohio-based group would have accrued between the time its contract expired on June 30, 2018 and the remainder of Hulu's sponsorship, which runs through November 2020, staff said.
Staff also is recommending "one additional three-year renewal option."
"This would create an overlap period for extension or substitution of the sponsorship and allow the City to minimize any potential gaps in sponsorship revenues that continue to support the Breeze Bike Share system and the City’s mobility goals," staff wrote.
"Superlative’s services and the role of a sponsorship revenue will continue to be a crucial component of sustaining the Breeze Bike Share program."
Sponsorship will remain crucial to the future of Southern California's first municipal bike share program, which was officially launched with much fanfare in November 2015.
Despite securing a well-known sponsor in Hulu, the $10 million program -- which allows people to pay monthly or one-time fees to rent a bike -- the program initially drew fewer riders than expected (“Santa Monica Officials Release Early Bike-Share Ridership Numbers,” December 3, 2015).
In 2016, its first full year, Breeze recorded a loss of $9,116, spending $896,049 and bringing in $886,933, including $675,000 from Hulu, according to data povided by the City.
But the spike in ridership was quickly halted in 2018 with the advent of rental e-scooters and e-bikes, which became wildly popular in the beach city.
Last year, City officials said, ridership "dipped" to 212,000 total trips, 33 percent fewer than in 2017, "due to the introduction of additional shared mobility options."
The program once again went into the red, this time by $6,130, after spending $1,420,372, while generating $1,414,242.
Things have only grown worse this year. As of mid-February, the City had spent $456,403 and made $294,319, according to data provided by the City.
"While we expect to see thousands of trips taken this year, we also anticipate a decline in revenue given the number of shared mobility options now available," City officials said.
In its report for Tuesday's Council meeting, staff said it "anticipates continued changes in Breeze ridership."
But the changes will be "less dramatic than were seen in the last year due to (the Breeze's) cost competitiveness and unique membership options."
Staff said it is monitoring the "shared mobility systems," including Breeze, and will present a report to the Council by fall.
The report will include "changes to the business model that may be appropriate with recommendations to come back to Council in the future."
City officials remain positive about the program's benefits.
"Breeze public bike share continues to be the most affordable shared mobility device option," City officials said.
"Breeze is a top choice among locals and has a unique partnership with Community Corporation of Santa Monica offering bike share to low income residents."
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