Reporting on pedestrian life in the D.C. area

Zipcar and DDOT's tense impasse over D.C.'s $300,000 curbside parking spaces

November 8, 2011 - 01:46 PM
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A Zipcar lot in the District. (Photo: flickr/tvol)

 In the last decade, Washington, D.C. officially committed itself to car-sharing. Zipcar and Flexcar kicked off the market in 2001, and by 2005, the District Department of Transportation realized it needed to help these companies along to reduce congestion, parking problems, and help foster a transportation culture that didn't rely on personal automobiles.

DDOT worked with Advisory Neighborhood Commissions and the two D.C. car-sharing companies in 2005 to identify and select curbside parking spaces for the exclusive use of car-sharing, both for education and strategic-placement purposes. The first phase began in October of '05 with 48 spaces, which increased to 86 spaces by March of 2006, evenly split between Zipcar and Flexcar. The District was careful to divide these spaces among its various wards. Zipcar absorbed Flexcar in 2007 and then enjoyed all 86 spaces for free. But the District realized it could and should charge for the spaces. A bidding war broke out in the middle of this year as DDOT finally started charging serious money, and of the 84 spaces allotted to what will now be a market of Zipcar, Hertz OnDemand, and Daimler Car2Go car-sharing services, Zipcar, now with around 60,000 members, only received 14 spaces and lost access to the rest on October 1, 2011.

The total price of all 84 curbside parking spaces, once offered free, then for $200 a month per space starting in fall of 2010 (which would have annually cost Zipcar around $200,000), rang up after the bidding war at a minimum of $292,800, according to documents obtained through a Freedom of Information Act request I submitted this fall.

But Zipcar and the D.C. government, partners for more than half a decade, suffered a rift when discussing how to properly expand the District's car-sharing services to other companies. The discussion on how to do this was well under way in late 2010, before DDOT director and former Zipcar executive Gabe Klein left his post, and the central friction concerned different philosophies for how a car-sharing market should expand and how to price the prized public spaces. Should a city help out the company strategically established and entrenched or should it simply award its public spaces to the highest bidder?

The District ultimately opted for the latter approach, and Zipcar was not happy.

Chocolate strawberries
(Photo: flickr/wonderdawg777)

On September 10, 2010, Zipcar D.C.'s general manager Ellice Perez e-mailed DDOT officials, including the department's progressive transportation head Scott Kubly, to affirm Zipcar's desire to help DDOT expand car-sharing here: "Zipcar understands DDOT's need not to pick winners," she wrote, "when talking about qualified car sharing services and have proposed a framework that factors in membership size, demand, and future entrants." Yet that September 2010 Zipcar proposal states that, despite the 350+ private spaces Zipcar possessed in the District, "a reduction of the existing 86 spaces by any amount would significantly impact the current and new members who look to use them." In August, Perez had told DDOT's Anna McLaughlin that she was concerned about the lack of "discussion or consultation" on charging $200 a month per space (which, she added, would cost more than $200,000 a year) and said it was "atypical" of a half-decade-long relationship; McLaughlin replied that leadership had finalized all decisions. Even $200 a month per space, Zipcar then said, was "cost prohibitive."

Should the District have been charging so much and opening to competitors in the fashion it was? Zipcar didn't believe it was appropriate and worried about how the District evaluated potential car-sharing companies who had an interest in coming to D.C. As Perez emphasized in an October 5, 2010 follow-up e-mail, "any solution has to account for the past and current status of the service on the ground and Zipcar's efforts as a partner of the District." D.C. had begun to worry Zipcar. The District's proposal "hardly seems equitable," she noted and insisted that Zipcar's framework was "not playing favorites." What DDOT would do, Perez cautioned, "in fact, sends a chilling message to any innovative enterprise who partners with the City." Perez notes that Zipcar has returned $3.5 million to the District in sales, use, and income tax revenue. She tallied off the various ways Zipcar helped D.C. residents as well as the $4 million in marketing that the company had extended (although as our sole car-sharing option, Zipcar would benefit from that as much as anyone). Perez told DDOT that Zipcar would "relinquish" 10 spots as their discussion of how to move forward evolved. The tension reflects the narrative I understood during my reporting this past summer and into the fall but extended back further and deeper than I expected.

These e-mails from a year ago, exchanged in the fall of 2010, continued to reveal tension between DDOT officials and Zipcar. In additional exchanges during those months, Max Brown, founding partner of communications firm 360jmg, echoed Perez in saying to all parties involved that DDOT's method was "not fair or equitable to Zipcar" and wrote that "Neil [Albert, D.C.'s deputy mayor under Adrian Fenty] and Gabe [Klein] need to talk. I believe there is some internal District disconnect on the issue."  Max wanted the coming mayoral administration to have the chance to weigh in. On October 14, he e-mailed Kubly, Perez,and other parties to say that "Neil [Albert] has informed me that he has talked with Gabe [Klein] and has put this on hold." DDOT had already begun leaning toward the strategy of auctioning off the city's curbside parking spaces to the highest bidder — the strategy that ultimately sold the spaces for a minimum of nearly $300,000 and with an average cost per space of at least $3,485 a year.

 By the time July of 2011 arrived, Zipcar bid, although the company had expressed reluctance at the high prices the city proposed charging for the spaces. DDOT explained the pricing was appropriate because car-sharing was now an "established mode in D.C." and "these are for-profit companies." In her July 21 letter to contracting officer Jerry Carter, Perez reiterates the sense of "disappointment" and frustration: the spaces in all Wards, she says, "are between 25% to 100% higher than the average commercial parking spaces" and Perez said this stands in contrast to other big metropolitan areas. Perez declares that the bidding and allocation "runs counter to the policy objectives the city has embraced" and that it will "raise the cost for car sharing companies and customers, effectively punishing them." Perez notes how car-sharing customers could suffer as a result and have decreased access to reliable and well-distributed car-sharing spaces. Her fears here run counter to the calming message she communicated to her local Zipsters later this past summer. Zipcar rushed to reassure members when news of the bidding and loss of spaces broke and said, candidly enough, that these 70+ lost spaces represent "less than 10% of our fleet," as a Zipcar PR representative told me then. The company planned to immediately hunt for private parking alternatives.

Perez took a subtle dig at DDOT publicly in late August, encouraging members to, "if you have concerns, please feel free to email Terry Bellamy, Director at DDOT at terry.bellamy@dc.gov or call 202.673.6813." At least one person did e-mail Bellamy, I've learned, "writing to see if the D.C. government is providing information and transparency" about what transpired throughout the summer and fall. I've interviewed one Zipster who was frustrated by the loss of curbside parking spaces in Tenleytown last month; the Zipster described looking for a vehicle for an hour. Perez and I spoke on the phone at the time and she assured me that these shifts in parking spaces are seasonal, natural, and that this shift in spaces just happens to be greater than most — but given the onset of cold weather and decreased Zipcar use, she says it couldn't have come at "a more perfect time." Although Perez acknowledged that replacing the lost spaces with private alternatives was hard work, her description of the process sounded (understandably enough) far more cheerful than when she warned of the "significant negative implications" of DDOT's actions in her letter to the contracting officer on July 21.

The District and Zipcar will, inevitably, have to keep working together. But these exchanges and the 2011 bidding war for the six-year-old curbside parking spaces created a new tension — and raise serious questions about how a city should cultivate its car-sharing culture. With its 60,000 members in the D.C. metro area, Zipcar is king but we also now have Hertz and Car2Go bringing their services. Real significance enters the picture when we examine the city's policies and the underlying questions of how a civic government can and should encourage this mode of transportation. The new competition and interest in car-sharing throughout the global transportation world ensure that these topics will not go away in the coming years, as populations grow, congestion worsens, and society seeks a way to remedy its traffic woes. Car-sharing is at the heart of where we're going. Why exactly did the friendliness and understanding that Zipcar and the District shared for the past decade fall apart? How did the public spaces help Zipcar's dramatic growth? Was the bidding fair? Do more car-sharing competitors truly ensure a better city-wide car-sharing service?

As Scott Kubly told me in early July before he left DDOT, "Cars are not necessarily the aspirational purchase they once were." True enough. But despite Zipcar's success and new companies moving into D.C., American cities and car-sharing companies will need to find a better and smoother way to work together than this. The District set aside its dozens of curbside parking spaces as a gift and an investment, initially, and our sole car-sharing company began to apparently see it as a right, in large part thanks to what Perez once termed "sweat equity." This gift and investment became a rather monstrous point of contention once its value began to rise, both literally and to countless individuals and other car-sharing companies eyeing the D.C. market. What we have here in the District is a qualified car-sharing success, as evolving policies led to palpable strain.

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