As rental car company Hertz eyes competing with Zipcar in the Washington, D.C. market with its new carsharing service called Hertz on Demand, the District Department of Transportation (DDOT) opportunistically decided to require a public bidding for 86 existing, on-street carsharing spaces across the District. Market rates will be about $200-$400 per month, translating to an extra $1-$2 per hour for members, once Zipcar passes along the costs, according to my experience running PhillyCarShare, a large nonprofit carsharing organization in Philadelphia, Penn.

I’m disappointed that DDOT is planning to levy parking fees on carsharing organizations. This is bad policy.

The worst part is that car owners will continue to park on-street virtually for free. Annual tags will still cost $15 per household, with the second car parking totally free. Why should carsharing members pay market rates for on-street parking, while car owners get a subsidy? It’s totally backward policy.

Carsharing should be treated as a public good, even more than the on-street parking that it occupies. Each shared vehicle replaces about 14 private cars, according to comprehensive national research by the University of California, Berkeley. Plus, after joining, members drive about 44 percent fewer miles, according to the average result of ten North American impact studies. Other research shows that carsharing members consume less gas, reduce their carbon emissions by nearly 1 ton per year, walk and bike more, and spend more dollars locally.

DDOT, rather than levy a 20 percent tax on carsharing members whose behavior benefits the neighborhood, should keep carsharing affordable and instead tax private car use – the main source of congestion and many environmental problems. DDOT could raise the same revenue with a painless $2 annual fee for all residential parking tags. Or it could simply charge $100 annually for each household’s second car. Or implement smart meters, which vary prices based on real-time demand, ensuring that around 15 percent of commercial on-street parking spaces remain available. In downtown Redwood City, Calif., smart meters generate $1 million of additional revenue each year for safer, cleaner sidewalks.

In fact, Donald Shoup, in his seminal book, “The High Cost of Free Parking,” estimates the market value of on-street spaces in central Los Angeles at $31,000 each – more valuable than the vehicles parked in them. Subsidizing car ownership with free parking distorts the market, encouraging more people to own and drive cars.

Imagine the huge demand for more sustainable forms of urban transportation, if DDOT charged fair market rates for every on-street space. The revenue could fund bike lanes, bus rapid transit (BRT), metrorail service upgrades, attractive pedestrian spaces – and even carsharing.

As Shoup says, everyone pays for free parking – except the driver. Now in D.C., sadly, even carsharing members will.

As for DDOT’s invitation for bids: Interested companies have until July 6 at 2:00 p.m. to submit their proposals.

Update, 7/6/11: A previous version of this post misidentified Enterprise as the rental car company that offers the Hertz on Demand carsharing service. The correct company is Hertz.