May 11, 2006
Flexcar Getting Stiffed?
Updated May 11: PDOT has released their evaluation report (PDF, 72K) of Flexcar's "Pilot" use of on-street parking.
We've had a number of posts here about Flexcar, the carsharing program that has been operating here in Portland for several years (disclaimer, I'm a member, and a happy one).
Until now, Flexcar has enjoyed free use of on-street parking spaces under what PDOT considered a pilot program (not quite free - Flexcar pays the administrative costs of signage, etc. for the spaces).
PDOT has been trying to figure out what to do about this on a permanent basis. They took a run at a policy last year, but decided to leave the 'pilot' in place for another year. The imminent entry of Zipcar (another carsharing company) into the Portland market has apparently motivated PDOT to get going again. PDOT is now seeking feedback on a policy draft. There are several key features to this draft that I'm having trouble with:
- Only allows two carsharing companies to have access to on-street spaces
- Caps companies at 50 spaces each in metered zones (unmetered spaces are not capped)
- Seeks full recovery of foregone meter revenue at spaces in metered zones
First, I don't know why we would limit this to two companies. I think we need the opportunity for the innovation that other companies might offer. For example, I know a company that is working on the idea of a sharing program based on neighborhood electric vehicles (NEVs). I would hate to think this innovation was locked out because we already had two companies running programs with more traditional vehicles.
Capping spaces in metered zones is self-defeating. These are the zones that have the most intensity of activity and therefore the most opportunity for carsharing. And they are the zones that can benefit most. One study shows that a carsharing vehicle avoids many (up to 15) individually owned vehicles. Also, we are likely to see more metered zones in Portland, as Commissioner Adams pushes neighborhood business districts to look at metering. If we ever get consensus on a parking plan in NW Portland, I think Flexcar would instantly be over its limit.
And full cost recovery ignores the collective benefits of these programs. Sure, they're private for-profit companies. But carsharing members are less likely to own (and drive) private autos and generally make more use of transit. And as I said before, in areas of constrained parking supply like NW Portland, they help reduce demand for on-street spaces.
Of course, Flexcar is not lying down. Their member newsletter suggests a number of talking points to use with the City:
- Flexcar is pleased with the City's favorable evaluation of the reserved, on-street parking program for shared cars and other transit options.
- However, there are problems with the proposed new parking fees and with putting a cap on the number of metered spaces that may be used for transit options.
- The average cost for Flexcars existing spaces would be about $65 per month in the first year and $130 per month in the second year.
- What this means for Flexcar members:
- Loss of convenience. Higher on-street parking costs for Flexcar will result in fewer vehicles being placed in high-demand locations. There would also likely be a shift away from on-street spaces to parking garages, where they are available.
- Higher costs for car-sharers. Flexcar members could face an hourly surcharge to use cars located at on-street parking spots, to cover the cost of the new fees. If cars are moved to parking garages, this new expense would also raise car-sharers rates.
I understand PDOT's dilemma. They don't want multiple companies oversupplying the market to the point that they chew up too many spaces and don't get enough use. They also have legitimate concerns about losing meter revenue, one of PDOT's few sources of operating revenue.
But I have a better idea for a policy to balance the benefits and costs. First eliminate the caps and change the pricing structure to reward efficiency. Pick an optimum utilization target (12 hours per day?) and for cars in spaces that hit the target, keep cost recovery at the administrative recovery level. For vehicles with less utilization, have a sliding scale of cost recovery, with minimally utilized vehicles paying 100% meter revenue recovery.
This encourages the companies to serve their customers efficiently, and punishes over-supply, while still allowing underwriting the public benefits where they are delivered well.
Who has other ideas?
May 4, 2006 7:50 AM
I agree that messing with how many companies get spaces is probably not a good idea. I think the smarter approach is for PDOT to make the decision on where in public lots sharecars will have flat-fee access. Cap that number to preserve total parking spots, and then auction or allocate the spots yearly based on some kind of sales/efficiency/sustainability metric. That way there can be as many companies as the market can support, and they compete fairly for the same scarce resources. If you're a smaller company maybe you gain points for all zero emission vehicles, or because your cars get more hours/24 use. Whatever. But bottom line is PDOT needs to choose spaces, set a monthly rent on each, and then fairly dole them out in a systematically accountable way.
Portland is on the hook to maximize the sharing concept IMO; they use flexcar for city fleet services. I've been curious to know how the program is working since they switched from an inhouse fleet. I should check into that.
May 4, 2006 9:18 AM
Where this goes is important. If there is a market for 2 car share companies it is only a matter of time before Hertz and Avis enter the field, and they will demand a huge parking footprint.
May 4, 2006 10:32 AM
Chris Smith Says:
Actually, in Europe what has happened is that the car rental companies have partnered with the carsharing companies. So when you make a reservation, you get a side-by-side comparison of the cost of each, and you can pick the one that is more convenient or cost-effective.
I suspect the business models are different enough that the car rental companies may not plunge into this themselves.
May 4, 2006 12:48 PM
I would recommend going a different direction. Rather than penalizing car-sharing companies for trying to reduce the number of un-used vehicles on the street, PDOT should seek to enact policies to further assist with this goal.
1. Examine areas (like NW Portland and the Hawthorne district) where metering could be expanded, potentially in conjunction with a permitted-parking system for residents. This would raise greater revenue per neighborhood, offsetting the loss by "giving away" spaces to carshare vehicles.
2. Have more or less variable rates on meters -- raise meter rates to the point where, excluding the car-sharing spaces, between 1 in 8 and 1 in 20 spaces generally tend to be free. This will not only bring in additional revenue, but it will ensure that there will be a space for somebody willing to pay for it.
3. Dedicate a portion of these additional meter revenues to streetscape and other improvements (trolleys, anybody?) in the neighborhoods where they are collected.
4. Explore options for making electronic meter payment options more widespread -- smart cards, in-car payment systems, meters that accept both credit cards and smart cards (which could be vended either at the meter or in nearby stores), etc.
5. Explore options for vendors to "validate" on-street parking for their patrons, if they choose to.
I think all of these are more progressive than what I've seen proposed by PDOT thus far.
May 4, 2006 7:57 PM
Chris Smith Says:
Local Flexcar GM Bill Scott seems to have mis-posted this on another thread, so I'm copying it here:
Thanks for your post, Chris. The problem with your suggestion is that it would discourage the car sharing provider from trying any new location, since they rarely get to full utilization immediately. One idea that came from a City staffer would be to impose the fee, but have the City provide offsetting credits at locations to which it wants to attract car sharing because of congestion and high competition for parking. But, really, the car sharing provider has no incentive to put a car out there that isn't going to get used anyway. So the real problem is lost meter revenue. And we think the right question is whether the public benefits from placement of car sharing vehicles provide a good return on the foregone meter revenues, compared to the other ways the City uses these revenues.
May 4, 2006 8:00 PM
Chris Smith Says:
Bill, I think we're in agreement that revenue recovery is the wrong model.
Framing this another way, the public right-of-ways is a 'commons'. If the commons is used in a way that generates common benefits (as I believe carsharing does), it seems very reasonable for the City to not discourage that use by charging for it.
But what I'm looking for (and perhaps the City is as well) is to make sure we avoid a 'tragedy of the commons' where so many carsharing companies try to exploit the free commons that we have oversupply and therefore don't achieve the common benefits. What mechanisms would you suggest to avoid this risk?
May 4, 2006 8:26 PM
Next we need those bike-shares, too.
May 5, 2006 6:34 AM
Ross Williams Says:
I think it would be helpful to think through how much "common benefit" there is from Flexcar. I say that as someone who joined and then never used the service. We had one vehicle that usually was sitting in front of the house while we used our bikes to get to work and transit for longer trips. The need for a second vehicle never occurred.
I understand the value to people who need a second car or don't own a vehicle at all. But its just not clear to me that there are any fewer autos on the road because of Flexcar. So what are the common benefits?
May 5, 2006 7:25 AM
Chris Smith Says:
Ross, here's the TRB study (PDF, 10M). I haven't ready more than the executive summary, but it does say that 20% of carsharing members use it to replace a second car, which works out to 5 fewer private vehicles for each carsharing vehicle.
I also think it lets people own smaller cars. In our family we have 3 drivers (plus one learners permit) and have managed to stay at two cars, both of which are reasonably fuel efficient. Occassionaly we need something larger. We can get a Honda Element, pickup or van from Flexcar.
May 5, 2006 10:08 AM
Ross Williams Says:
I don't doubt the value of the Flexcar to its users, which is what I see the second car replacement being. The question is the public benefits and it seems that those would come mostly from reduced use of autos. Here is what the TRB report says on page 121:
"In general, the empirical evidence on changes in travel behavior is less definitive compared to that concerning vehicle ownership impacts."
Essentially it is not clear whether car sharing induces more trips using an auto than it eliminates (page 122):
"many studies show no statistically significant
change. However, those that do suggest that car-sharing does lead to reduced vehicle travel, although the magnitude of the change varies considerably.
The key variable is often the relative proportion of members who gave up a vehicle – who will usually drive less as a result – and members who gain access to a car, who will account for most of the induced travel."
The value of the actual public benefits of car sharing are not all that clear. I think it is important to identify what they are when you are talking about public subsidy. It may be that the subsidies need to be tied to enhancing the public benefits - for instance low vehicle emissions or high mileage - as opposed to the marketplace. While they have a great product, Flexcar is, afterall, a private company trying to make a profit for its shareholders.
May 5, 2006 10:43 AM
Chris Smith Says:
Ross, I would argue that the reduction in vehicle ownership alone is worth the subsidy. The real estate we take up parking cars is a huge cost both to society and to individuals.
In my neighborhood where off-street parking is often non-existant and on-street parking is scarce, it's a huge win.
May 5, 2006 9:21 PM
I think we're giving short shrift to the value of parking spaces as draws from outside the city. Flexcar may reduce congestion in the overall sense that fewer cars are needed by people within the city. But no one not living in the flexcar area will use those cars, and they'll be looking to park somewhere downtown, preferably on the street. If the flexcar users had cars, many of them would be on residential streets where parking is not a premium. Everywhere downtown, that flexcar space is taking away a space for someone from Beaverton to park at--reducing the likelihood they will come back.
Obviously it's more macro than that, but you see my point. There are no doubt benefits from having fewer cars plying the streets, but having ample storage space for vehicles that are in between, uh, plys, is just as important. As such, I think charging companies a premium to occupy those spaces is more than fair.
May 6, 2006 3:19 PM
I would argue just the opposite. IF a flexcar in a close-in neighborhood, or even in NW, used a flexcar to eliminate the need to keep an auto, or reduce it for a household from 2 cars in a family to 1, then that would in turn free up parking in the neighborhood for tourists from out of town to be able to park.
Obviously, downtown is different because it's all metered parking, and residents cannot park on the street with yearly passes.
However, there are also quite a few parking garages - and new ones under construction (underground garages) for all the new towers that will be built. So I don't think it will have much effect to remove street parking, since I think most people just park in the garages anyway.
May 11, 2006 12:45 AM
How does a PDOT report on the impact of Flexcar fail to mention that the City itself is a major customer of their services, and how that should affect their evaluation?
May 11, 2006 2:01 AM
Kari Chisholm Says:
Pick an optimum utilization target (12 hours per day?) and for cars in spaces that hit the target, keep cost recovery at the administrative recovery level. For vehicles with less utilization, have a sliding scale of cost recovery, with minimally utilized vehicles paying 100% meter revenue recovery.
Question -- how would you measure how many hours a day the car is in the space?
May 11, 2006 2:17 AM
We've been talking about the claims that flexcar takes a certain number of cars off the street, but are there any studies on this? I think that would be a key factor in a decision.
May 11, 2006 6:45 AM
Chris Smith Says:
Responding to the last set of questions:
- The evaluation report is from January 2005, which I believe is prior to PDOT switching their fleet to Flexcar.
- Flexcar can track the vehicle utilization through their billing system. At the moment, the average use is about 4.5 hours per day (according to the report).
- The Transportation Research Board report on carsharing (basis for avoidance of car ownership numbers) is at http://trb.org/news/blurb_detail.asp?id=5634
May 11, 2006 8:36 AM
Steve Schopp Says:
"""I would argue that the reduction in vehicle ownership alone is worth the subsidy."""
Let be get this straight. Flexcar can't work without a subsidy for members?
And all one need do is subjectively imagine the "subsidy is worth it".
Only 20% of members claim they forego a second car, but perhaps fewer would actually obtain a second car without Flexcar.
Parking isn't cheap, so how does the math work?
Suppose the subsidy actually makes the true cost not a realistic plus.
The public benefit IMO is nonexistent.
So why the free parking or any subsidy?
Merit needs to be derived from more than the fact that some of the members like it.
On a side note: Does ODOT pay for the parking or is it just lost parking revenue for the city?
May 11, 2006 9:25 AM
Bill Hooker Says:
I don't doubt the value of the Flexcar to its users
I do. Just to add another dimension to the discussion, here's a disgruntled ex-user. My wife and I don't own a car, as a matter of deliberate choice. We tried Flexcar, but found that not only was it prohibitively expensive for any but the briefest of trips, the bloody cars don't work. That is, the access card system dies (leaving you locked out) if the inside temperature gets too high, which it routinely does if the car is parked in the sun. Flexcar made it abundantly clear to us that they were aware of this problem and had no intention of doing anything about it. These days we simply save up our "car chores" a bit longer and rent a car for a whole weekend for less than it would cost to use a Flexcar for half a day.
May 11, 2006 9:25 AM
Pete Forsyth Says:
I have been a Flexcar member since before it was Flexcar. (I think my member number is 165.) I was a heavy user at first, but haven't used it in nearly a year. (Rates have literally tripled since the beginning, and they adopted an arcane billing system that penalizes you if you mis-predict your usage in a given month.)
Like Ross, I question the amount of pubic benefit derived from Flexcar. But without a scientific study, that's kind of a moot discussion. (I'm not sure why we keep calling it "sharing" when it's really nothing more than short-term rental company. There's no equity involved.)
The PDOT report does not qualify as a scientific study. It talks of overall reduction in parking, but fails to note that parking in high-density areas is a different issue. It relies heavily on voluntary self-reporting of various data. It also makes little effort to compare "apples to apples" in car ownership cost analysis. I'm no expert in data analysis, but this report doesn't look very thorough.
Basing a subsidy on lightweight data analysis does not seem like a good way to make public policy.
Does anybody remember the early marketing for car sharing in Portland? The company was supposed to become self-sustaining when they hit a certain critical mass. Then why have their rates continued to rise, and why do they continue to ask for our tax dollars?
May 11, 2006 9:29 AM
Chris Smith Says:
To answer Steve's question, the 'subsidy' we're talking about is simply lost revenue that PDOT would have received from the spaces if they were available for other parkers to pay for at meters.
PDOT would not claim their study is scientific research, they have already told me they think the sample size is far too small. The TRB report is more scientific, but it's still early days for carsharing, and a lot more needs to be understood.
My point of view is that this is a direction for people rearranging their personal mobility that has a lot of potential for good, and I don't want to see it's development and innovation stifled by piling on a lot of fees early on.
May 11, 2006 12:41 PM
Hmmm...I'm a current Flexcar user (don't own an automobile myself) and I'm actually pretty happy with the service. The billing system may have been arcane before - but now I can select my monthly plan during the month itself (up to and including the last day, so can adjust as necessary.)
And I've not had any issues with getting locked out of the car with the new keycard system they've just implemented.
(I swear, no one's asked me to come in and shill for Flexcar...!)
Are there less expensive options? Perhaps - but I'm lucky enough to have a Flexcar location a block and a half from my house, with three more within short mass transit range. And when I absolutely need a car on short notice for just a couple of hours, the convenience can't be beat.
Finally, here's another intangible benefit I've not yet heard mentioned - since I started using Flexcar, I've been able to patronize local merchants more (as opposed to buying from big box vendors, national corps, or doing online shopping.) So more of my dollars (limited though they are) stay here in PDX, supporting PDX businesses.
May 12, 2006 5:08 AM
Michael Wilson Says:
Last time I looked there were a number of parking lots around town. Flexcar, or any other service should be able to rent space from them on a long time basis and give up the free space from the city. They certainly don't need the spot they have in front of New Seasons at the Seven Corners store at Division and even though the city doesn't have a meter there, or didn't the last time I looked, they should be off the street, or pay for the designated space.
The owner of Flexcar, Steve Case is the name I recall, has a bundle of bucks and doesn't need help from Portland. He's of AOL fame.
May 12, 2006 6:09 AM
Ross Williams Says:
I think both Chris and Mike have a point. In Northwest Portland a flexcar shared by multiple families may free up valuable parking for other users. It may make sense to "create" more parking by providing a single free spot to flexcar.
On the other hand, in many neighborhoods Flexcar may be using a valuable parking spot in a crowded commercial area, while "creating" parking in residential areas where there is already enough parking for residents or where residents simply can't park on the street most of the day, like downtown.
I think flexcar is a good idea and one that ought to be encouraged. Getting local government agencies to make use of car-sharing, whether flexcar or another company, is one way to do that. But we ought to be careful not to assume there are public benefits and consider each situation.
May 12, 2006 7:03 AM
Chris Smith Says:
Michael, I would point out the Flexcar does have a number of off-street locations in Portland, and I don't think they pay rent on most of them. The owners of those locations see a benefit in having a vehicle available there. I'm just suggesting that the City of Portland should recognize the same benefit.
May 13, 2006 3:51 PM
Steve Gutmann Says:
Wow, this is a great discussion! First of all, I work for Flexcar, so I'm obviously biased. Here are a few more nuggets to consider:
1) Flexcar's previous vehicle access system did, in fact, overheat and malfunction in the hot sun sometimes. We replaced it a few weeks ago, and so far at least, the new one if performing really, really well. We've had almost no technical problems since the changeover. The new system has several other advantages that I won't go into.
2) It's true that the hourly rates have increased since the old Carsharing Portland days, but there's no longer a $10/month membership fee, and the old $0.40/mile mileage charge went away. It's also true that CSP was on its last legs, mostly because it didn't charge anywhere close enough to recover its costs, when Flexcar purchased it. And finally, a higher hourly charge discourages people from holding onto a car all day without actually using it. At $9/hour, people bundle their errands and return the cars, thus allowing more people to use the same vehicle.
3) The research done by the TRB is worth reading. It's also worth trying Flexcar, if you're skeptical or if you haven't used it in a few years. If you don't have a car now, you will undoubtedly drive somewhat more, but nowhere near as much as if you own a car, because at $9 an hour, you'll have a strong incentive to drive more judiciously than if you own a car.
4) Portland isn't unique in providing free on-street spaces to carsharing companies. DC and Arlington do, and many other cities are actively considering it.
5) The TRB report -- which may not be "scientific," but it's the most comprehensive study that has been done on the topic -- calculated that every carshare vehicle put into service results in 14.9 fewer cars on the road. This is largely due to the fact that Flexcar members can ride transit, bicycles or walk to work downtown EVERY day, even if they will be needing a car for workday errands, meetings or appointments. So they sell the car that normally sits at home, which is either a second car, or their only one.
6) Flexcar did an informal survey of our members a few years back, and a majority of respondents who regularly used the service said that they had either avoided buying a new car, or sold a car since joining. AAA estimates that it costs about $8000 to own a comparable car, so this keeps a lot of money circulating in the community.
May 24, 2006 10:06 AM
Dave Brook Says:
Here are my comments to the city's proposed policy (a bit long-winded I know):
I think the evaluation criteria described in the City's report fairly represent the issues that need to be considered in making a determination about providing on-street parking in the future. And the report does a good job of presenting the benefits that carsharing provides. If the report is lacking, it is in the perspective of comparing benefits of other on-street parking users - taxis, trucks, public transit, and, in fact, private automobile users (for shopping, overnight storage of cars etc.)
I would suggest that the benefits of carsharing are generally proportional to the utilization of the vehicle (hours per day it is used) and this, in turn, is generally related to the density of people around each space. Since the unit pricing of carsharing is unlikely to encourage "overuse" of carsharing, the more a carsharing vehicle is used will likely be the result of more people, using it. Hence, parking spaces in dense areas of Northwest Portland, tending to be the areas with parking meters, probably result in greater overall public benefit than those in less dense surrounding neighborhoods. Given the significant costs of vehicles to the carsharing company, if a vehicle location meets the carsharing company's economic viability threshhold, I'm sure it would more than meet whatever test of public benefit the city might demand of it.
Attempting to assess the cost-benefit of a public resource is an imprecise art, at best. If the city wishes to more precisely quantify and allocate the cost-benefit of on-street parking spaces, it should include all on-street parking users in the analysis - truck loading zones, taxi stands, private users, bus stops, etc. And having done the study, it should be prepared to allocate the costs to all users equitably. The PSU Urban Studies program or Todd Litmann of the Victoria Transport Policy Institute would be excellent 3rd party choices to do such a study.
If carsharing does deliver a public benefit then placing a cap of 50 spaces in meter zones per carsharing company seems not only arbitrary but counterproductive. Why limit a public good? If there are competing interests, then a more formal mechanism should be developed to evaluate the relative benefits of these competing interests. As mentioned above, I believe that if the vehicles are being used sufficiently to satisfy the carsharing company, they are likely to be delivering the public good the city desires.
While I understand that the city is facing serious budget shortfalls, trying to recoup a small amount from a service that delivers a public benefit seems shortsighted. Prof. Donald Shoup, the guru of urban parking, has argued that if few parking spaces are available much of the time then the solution is to raise parking rates - a much more equitable source of revenue.
Some objections to providing on-street parking for carsharing have been offered:
• On-street parking benefits a for-profit company - While there is a long history of governments contracting with non-profit organizations to deliver services, there is also a well-established precedent of public-private partnerships in a variety of areas where the partnership produces a greater social benefit than would have occurred without the partnership. Carsharing is certainly one of those areas. In fact, CarSharing Portland was the outgrowth of such a public-private partnership - involving PDOT, DEQ and my company. To the flip the premise around: over the years the conservative think-tanks have proposed to privatize public transit agencies; if such were the case, it would seem to me unlikely, as well as counterproductive, that the city would want to change its policy on allocating bus stops free use of the curbs.
• On-street parking benefits only one company - If the company is delivering a public benefit, why should this matter? If the company is making an "excessive" profit at the public's expense, then it is likely that other companies will enter the marketplace. And, in fact, this is likely to happen, as Zipcar, the other national carsharing company, has identified Portland as one of its expansion targets.
• Carsharing vehicles are only used by a small number of people each day - Normally, we think that the more a parking space is occupied, the more benefit it's providing, but, although counterintuitive, the success of a carsharing parking space should be measured by how much of the time the space is empty and the car is in use by members.
• Business/government fleet carsharing usage may not provide the same benefits as carsharing use by individuals - It's true that there's little or no formal evaluation of the societal benefit of carsharing serving as business and government fleets. However, the benefits appear similar: companies/governments do not have to own vehicles but share existing ones, resulting in fewer parking spaces being used overall, providing encouragement for employees not to drive to work, newer low-emission vehicles, fewer cold starts, etc. A formal quantification of these benefits would be a welcome addition to our knowledge about carsharing.
So, here are my suggestions:
1) I believe the social benefits of carsharing are well-demonstrated and that attempts to recover lost meter revenue from carsharing are counterproductive and should be avoided. The policy proposes to "tax" the thing we want, not the thing we don't want!
2) If the goal is to keep the program revenue neutral, charging an administrative fee for setting up a new carsharing space is reasonable, since the carsharing company would have these expenses in an off-street space, as well. Other users of specially-designated on-street spaces, such as trucks, taxis, buses, should also be expected to pay similar fees.
3) The logic of capping the number of metered spaces available for carsharing at 50 each for 2 companies is not apparent. If the carsharing spaces are providing a public benefit, why limit the number of spaces? And if gas prices continue to climb, it is not at all out of the question that a third carsharing company, perhaps a non-profit or cooperative, might open up in the future so why limit the cap to 2 companies.
4) Occasional evaluation of the benefits of providing the on-street parking for all users is a worthwhile exercise. It might be performed once every 5 to 10 years as mobility patterns change.