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Time to Rethink a Backward Policy for Carsharing

The District Department of Transportation is offering up some of Zipcar's parking spots to new applicants. Photo by M.V. Jantzen.

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 gasreduce their carbon emissions by nearly 1 ton per yearwalk 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.

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  • Tina Slater

    Of course we should be promoting car sharing, not up-pricing it — duh! The benefits, as you’ve pointed out, are tremendous — reduced congestion, reduced use of precious street space, savings on emissions, etc. We really are pretty backward on all of this. And as you pointed out the $15 permit (and only for the first car) is SO underpriced. Please don’t tell me that people would move out of DC if they had to pay $50 a year (or more) for a permit. Don’t we want to be rewarding the “car sharing” concept for the greater good?

  • reader

    Wow, using Donald Shoup in support of a position that carshare parking should be free? That is some tortured logic right there.

    As it stands, free zipcar parking is a subsidy to a private corporation, while tag payers are paying income taxes and excise when they register their vehicles — citizenship has its benefits. Elimination of subsidies is important, particularly in times of budget restriction. This isn’t to say that annual tags are priced correctly – certainly they’re a steal [although using LA numbers as support is probably deeply flawed], as are curb cut rates, which are almost criminally low. But the answer to underpricing one public good is not to underprice another public good, as you suggest.

    In addition, you’re ignoring important differences here. Primarily, dedicated zipcar spots are not the same as on-street spots – they are reserved for a single user rather than open to any vehicle with a valid tag. As a result, a comparison of on-street parking tag rates and per-spot rental rates is an apples/oranges type of situation.

  • Will P

    Beginning October 1 2011 residents will pay $35/each for each residential parking permit. Your assertion that additional residential parking permits per household are “free” is incorrect. The point Tommy Wells was trying to make is that additional permits should cost more than the first. They are now $15 each and will be $35 each soon. Hertz and Zipcar are not non-profits like the program you mention in Philadelphia. Yes, they’re providing a service, but they’re also profiting on the use of the city’s public space therefore the city should be compensated based on the market value of the space (the proposed fees are much lower than Shoup’s value you cite in the post).