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Posted at 03:16 PM ET, 08/16/2011

Zipcar and fair prices for public spaces


Zipcar is about to have some competition. (Flickr user Andrew Currie/CC BY 2.0 )

For years now, Zipcar had the local car-sharing industry pretty much to itself, turning it from a curiosity into a crucial service relied on by a significant and rising number of city residents not interested in owning cars of their own.

But as the appeal and profitability of car-sharing grows, the more appealing it has become to potential Zipcar competitors — it merged with its only previous D.C. competitor, Flexcar, in 2007 — and the more unfair it seems for the city to treat Zipcar as a monopoly.

So earlier this year, the city announced it would hold an auction for use of the more than 80 on-street parking spaces currently reserved for use by Zipcar. The benefits were twofold: The car-sharing market would open up, and the District would get paid a market rate for use of its public space.

But Zipcar is ticked. Where it once had 86 spaces for its use, it now, after the auction, says it will have only about a dozen on-street spaces.

That’s prompted John Williams, a Seattle public relations consultant working with Zipcar, to get in touch with local reporters to take issue with the way the city transportation department handled things. (TBD’s John Hendel covered the issue Friday.)

Williams says that Zipcar has no problem with competition, but it is upset with the auction process, which essentially handed individual spots to the highest bidder (which, of course, is the way auctions tend to work). Zipcar would have preferred a “more strategic approach” in which its experience in the business and its existing large customer base were taken into account.

And, Williams is not shy to point out, the auction could very well mean higher costs for its users.

Good points in there. Zipcar turned car-sharing into a viable business in this town, and right now, everyone who wants a shared car wants a Zipcar — arguments both for maintaining Zipcar’s broad presence on city streets.

But, there are a lot of buts. Zipcar uses public space as a part of its business, and city taxpayers are typically entitled to compensation for that (prior to the auction, it paid $200 per space per year). Any use of the public environment for private use — think sidewalk cafes, street festivals, mobile storage units, even those steel plates laid on city streets — someone usually has to pay.

That said, there are different ways the city could handle this kind of business, which is in an early, entrepreneurial stage. Is an individual parking space auction the best way? Or should the city solicit a limited number of car-sharing franchises?

John Lisle of the District transportation department said an announcement on how much money the parking space auction raised is forthcoming, along with a fuller accounting of who won which spaces.

“The city was not being compensated at all for these spaces for a long time,” he said. “If the market supports a higher return for the District for its public space, I think that’s a win for the city and the taxpayers. We’re not trying to stifle anybody.”

In any case, the loss of on-street spaces doesn’t appear that it’s going to set back Zipcar significantly. The 80-odd curbside spaces make up only about 10 percent of Zipcar’s D.C. parking inventory, Williams said, and the company is working to find nearby replacements in off-street settings for the spaces it looks to be losing. It still has a massive head start over any of its competitors.

Williams suggests that the other companies — said to include Daimler, Enterprise and Hertz — might have overpaid for many of their on-street spaces and thus might have trouble making their businesses work. Maybe so, but the sooner that the industry can work fair-market prices for public space into its business model, the better it is for everyone.

By  |  03:16 PM ET, 08/16/2011

 
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