The false promise of ride hailing as a pro-city transportation mode

=====
Reprinted from Monday with new date because of the addition of the experience with parking in San Diego.  I meant to write about it, but I forgot.  It's very interesting.
======

Except for one thing, measurable impact on demand for parking as reported by Ace Parking of San Diego, there really isn't anything new here, as I have written many times about these issues already.  But it's nice to sum it up.  The SD item is the new #1, and the other points have been renumbered.

1.  The San Diego Union-Tribune reports ("Ace Parking says Uber, Lyft have cut parking business up to 50% in some venues") on analysis by Ace Parking, the major private parking firm operating in San Diego, a company that is also active in other markets including DC, of the impact of ride hailing services on their parking business.  From the article:

In a September email buried deep in an environmental report, Ace Parking CEO John Baumgardner laid out the ugly truth facing the parking business. At San Diego hotels serviced by Ace Parking, overnight parking has declined 5 percent to 10 percent. At restaurant valet stands, business is down 25 percent.

And, most dramatically, nightclub valets are seeing a 50 percent drop off.

Homegrown Ace Parking — one of the largest parking companies in North America and also a fixture in San Diego’s political and business scene — is feeling the impact from Uber and Lyft, the wildly popular ride-sharing services that allow people to leave their cars at home.

For consumers, the bright side may be lower parking prices. In downtown San Diego, city planners are looking at the decline as they update parking guidelines — which could lead to changes in how much future parking is built.

Will parking companies go away? “Is this an existential threat to my business model? Or, is there a way to pivot and continue to provide a necessary service?” said Keith Jones, the third-generation managing partner of the Ace Parking empire, in a recent interview.

Jones likes to talk about “journey management.”

“Ace is hyper-focused on integrating new technology within our parking operations so we help consumers and cars,” he said. “We are pushing the parking and transportation industry to be connected in a way that makes parking smart.”

I like the point about shifting to "journey management."

2.  Most people driving ride hailing vehicles make less than minimum wage according to an MIT study ("MIT study reveals sad reality for majority of Uber, Lyft drivers: Median income far below minimum wage," WCVB-TV). From the article:

Drivers make a median hourly profit of $3.37 before taxes, the study found.

The report said that drivers incur a median cost of $0.30 per mile and that nearly a third of drivers incur expenses exceeding their revenue. At tax time, the standard mileage deduction could mean that there is untaxed revenue in the billions of dollars for these drivers.

-- The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes, MIT Center for Energy and Environmental Policy Research

NOTE THAT UBER DISPUTED THIS STUDY AND THE RESEARCHER RE-RAN THE NUMBERS. NOW HE SAYS THE FIGURE IS $8.55 HOUR WHILE UBER'S NUMBER IS $13.05.  See "Uber drivers per hour profit revised in disputed MIT study," San Jose Mercury News.

This shouldn't be a surprise.  Taxi driving is mostly resorted to by people with limited options.  Having to pay a good chunk of your earnings off the top to the software firms that run the service reduces margins.

Interesting, GM's Maven car sharing program is offering a high cost e-vehicle rental for people offering ride hailing services ("Maven Gig, GM’s car-sharing service for Uber and Lyft drivers, comes to Austin: Just in time for SXSW," GM Verge blog), after Uber made the decision to get out of the rental business because it was a money loser. From the article:

Someone who’s interested in driving for any of these on-demand services, but doesn’t own a vehicle, can rent an electric Chevy Bolt through Maven Gig starting at $229-a-week. The weekly price includes insurance, maintenance, and electric vehicle charging. There is no membership fee.

Maven first launched its gig worker product in 2016 in San Diego and San Francisco. Since then, it has been introduced in Los Angeles, Boston, Phoenix, Washington, DC, Baltimore, and Detroit. Maven says its customers have logged 170 million miles driving for various on-demand apps.

What’s different here is how closely Maven says it will be working with the city of Austin to ensure there’s an adequate electric car-charging infrastructure in place for drivers to use this service.

3.  Ride hailing reduces the use of transit. ("Ride-hailing is pulling people off public transit and clogging up roads," Technology Review). From the article:

A study by the Boston-based Metropolitan Area Planning Council found 42 percent of trips taken via ride-hailing services in Boston would have been completed on public transit had the option not been available. Another 12 percent of people would have walked or biked. Plus, most people use ride-hailers end-to-end, rather than mixing the service with other modes of transport.

4.  Ride hailing use is induced by venture capital subsidies which makes the cost of a ride less than actual cost ("You're not paying enough for Uber," Boston Globe). From the article:

A new study of 944 Boston-area passengers by the Metropolitan Area Planning Council shows that ride-hailing apps are adding to vehicular traffic; people are using them for lots of trips that they otherwise would have made by transit or bike.

This isn’t just happening because Uber and Lyft offer efficient service. It’s because the fares that customers pay don’t come close to covering the ride-hailing companies’ costs — much less the external costs to society of drawing more passenger cars into an already congested road network. ... In 2015, according to one transportation consultant, Uber passengers were paying only 41 percent of the cost of each ride.

5.  Ride hailing is a form of "inducing demand" and therefore increases congestion ("Studies are increasingly clear: Uber, Lyft congest cities," Associated Press).

6.  Chicago has instituted a fee per trip on ride hailing, which they use to fund sustainable mobility improvements ("Emanuel says Uber, Lyft fee hikes will pay for better transit cameras," Chicago Tribune; "Emanuel claims ride-hailing industry costing Chicago taxpayers $40 million per year," Chicago Sun-Times).

This seems like a reasonable mitigation measure.

7.  Transit consultant Jarrett Walker argues that there is less than meets the eye with microtransit ("Microtarnsit: What I think we know," Human Transit blog). The key point is the cost of labor to run a vehicle, and the ratio of passengers to drivers. The fewer the passengers, the more costly the service. He makes the point as I have that microtransit isn't new, in terms of either being an on demand service or contracting it out, and having an app doesn't make scalar changes to the mode.

David Aragon, an operation manager and one of the drivers for Free Ride Everywhere Downtown (FRED) waits at a local apartment building for his next pick up in the downtown area. (Nelvin C. Cepeda / San Diego Union-Tribune).


... speaking of San Diego, I do think there is a place for microtransit along the lines of the FRED e-shuttle operating in the Downtown ("Revisiting stories: FRED Downtown shuttle in San Diego," 2017) and supporting "park once, visit many places" consumption within the district.

8.  Meanwhile Uber takes aim at medical transportation ("Uber, Lyft try solving one of medicine's biggest problems: getting people to medical appointments," Chicago Tribune).

Again, not much new, and typical of firms aiming to make a good deal of money from government contracting (like Electronic Data Systems, the firm founded by H. Ross Perot, which had preponderate amount of business from state governments for IT systems).

Moving the pieces on the Growth Machine chess board or an anti-art move by DC's mayor?

Franklin School, DC.

There is a bunch of remonstration about how DC's new Mayor, Muriel Bowser, has blocked a number of previous development deals inked by the previous administration ("Bowser team puts hold on five projects awarded by Gray," Washington Business Journal),  the latest cancellation  ("Franklin School competition reopened as D.C. formally cancels museum bid," WBJ) being of a project to end the multi-decades languishing of the Franklin School.

That proposal was to reopen the building as the Institute of Contemporary Expression, to showcase the work of contemporary artists in a city that has limited venues to display such work because of how the national museums (National Gallery of Art, the Smithsonian American Art Museum, National Portrait Gallery, and the Hirshorn Museum) and the smaller local museums (Phillips Gallery, etc.) are set up to work.

Washington Post cultural critic Philip Kennicott argues in "Mayor Muriel E. Bowser's killing of DC cultural project shows only money matters," that the decision to start over is out of a desire for the city to make more money from the project.

At first I was a little skeptical of the ICE concept, but I think it's worth considering, and an even stronger case could be made for such an institution and city support if the city had a comprehensive cultural programming and facilities plan.

(An interesting take on the Guggenheim Museum Bilbao suggests that contemporary arts museums tend to have the best return on investment in terms of tourism, compared to other cultural institutions.  See "Art for Whose Sake? Modern Art Museums and their Role in Transforming Societies: The Case of the Guggenheim Bilbao," Journal of Museum and Conservation Studies.)

I don't think that wanting to make more money from the site is the real issue, although that might be a consequence of the decision (probably not, because the building's monetary value is constrained in many ways).

I believe that what is going on with the decisions to review or restart the bid process for these properties has to do not with trying to get more money from the developers, but has to do more with a changing of the guard, and the opportunity the new administration has to favor a different set of developers than those that had been the favorites of previous administrations--Eastbanc got a bunch of hot sites during the Fenty and Gray Administrations.

Eastbanc, the Georgetown-based firm shepherding this project, also is the lead on the Hine redevelopment project in Capitol Hill which has many neighbors up in arms but as Mayor Bowser said in a recent community meeting is too far along to stop according to the Capitol Hill Corner blog. This is a way for the city to slap Eastbanc, which may be slightly satisfying to Capitol Hill residents.

I argue that these actions are merely an example of the newly even more empowered members of the Growth Machine flexing their muscles and favoring their supporters.  Or as The Who sang in the song "Won't get fooled again," "meet the new boss, same as the old boss."  The end results, the actions are the same, but the actors and maybe the terms have changed a little bit.

Regarding the Growth Machine see:

-- A superb lesson in DC "growth machine" politics
-- That damn Growth Machine: developers, incentives, givebacks, accountability

A lesson from the Franklin School about community benefits agreements and proffers

Ironically, the Franklin School is a great example of a previous failure to adequately leverage DC government owned properties when development opportunities come along.  Many years ago, the adjacent office building (shown to the left in the photo above) was built with zoning bonuses and as part of the agreement, the developers paid to fix the facade of the Franklin School.

The exterior was fixed, but not the interior, which continued to moulder, and was further abused when it served as a homeless shelter.

An event in Hurlbutt Memorial Hall, Sumner Museum and Archives.

By contrast, leasing the old playground of the Sumner School for a new for profit office building not only generated money for the school system, but as part of the deal, the developer agreed to renovate the Sumner School building, which is now home of the DCPS archives and museum, and also to maintain this building for the 99-year life of the lease (given how DC Government tends to minimally maintain buildings, this is a huge win for the city).

So the school system got money from the lease, gets money from the ground lease year after year, and got a renewed cultural facility serving the school system and the city, and free maintenance of that building for 99 years.

Which type of deal, for Franklin School or for Sumner School, was better for the city?

Granted, the city didn't have the same amount of leverage concerning Franklin School.  But as I've argued about the community benefits agreement negotiation process, if we had consensus priorities set in advance for the various areas of the city, we could better direct proffers in ways that have significant long term and structural change value for the various districts and neighborhoods of the city.

Focusing proffers towards fixing Franklin School and rehabilitating downtown parks (albeit owned by the National Park Service which creates other problems) would have had significant long term value Downtown, instead of the patchwork of benefits that have been received.

Uber, taxi regulation, UPS and FedEx and the unlevel playing field

In some of the discussions ("Cheh would limit regulation for Uber and taxi apps" from Greater Greater Washington) that have arisen over the Uber car service ("Uber Closes Yellow Taxi Cab Service In New York City" from Forbes), especially in view of pro-Uber legislation before the DC City Council, I am troubled by at least four things.

1.  Uber and pro-sharing forces claim that regulating such services somehow is a destruction of all that is good from the use of shared resources. See "Now New York City is giving Uber a hard time" from the Washington Post and "Will Regulations Kill The Sharing Economy?" from TechCrunch.

Uber is a mobile-app based car service that claims it is an application of the principle of collaborative consumption (see the excellent book What's Mine is Yours: The Rise of Collaborative Consumption).

Carsharing or car sharing (in the UK known as car clubs) is a model of car rental where people rent cars for short periods of time, often by the hour. They are attractive to customers who make only occasional use of a vehicle, as well as others who would like occasional access to a vehicle of a different type than they use day-to-day.

Typically, users are "members" of such services, each car supports the use by multiple households, thereby supporting car-lite living, and reducing the demand for car storage in the public space, and encouraging sustainable transportation practices.

Uber is not carsharing.

Uber is a system that allows greater utilization of "car service" vehicles by providing an application so that they can operate as reservation-based taxi-like services some of the time, when they aren't already booked.

The Uber app provides a way to monetize slack resources, and often, provides better service than what taxis normally provide, for a higher price, but the provision of the service doesn't necessarily contribute to broader sustainable transportation goals and objectives, just as High Occupancy Toll lanes may encourage single occupancy vehicle use rather than discourage it.  (See the Resources for the Future Paper Are HOT Lanes a Hot Deal? The Potential Consequences of Converting HOV to HOT Lanes in Virginia.)

2.  So of course it bothers me that services such as Uber are being promoted without adequate consideration of the transportation planning implications of the service.

3.  As importantly, Uber wants the benefits of being able to sell its services, such as selling services on an auction basis (e.g., "Surge Pricing: One NYC Uber User Paid $219 For 7-Mile Ride" from the Gothamist) with none of the requirements that must normally be met by transportation services acting as common carriers, including a standard and public pricing system and provision of service to all potential users without discrimination.

Definition of common carrier from the Free Dictionary:

An individual or business that advertises to the public that it is available for hire to transport people or property in exchange for a fee.

A common carrier is legally bound to carry all passengers or freight as long as there is enough space, the fee is paid, and no reasonable grounds to refuse to do so exist. A common carrier that unjustifiably refuses to carry a particular person or cargo may be sued for damages.

The states regulate common carriers engaged in business within their borders. When interstate or foreign transportation is involved, the federal government, by virtue of the Commerce Clause of the Constitution, regulates the activities of such carriers. A common carrier may establish reasonable regulations for the efficient operation and maintenance of its business.


4.  Uber is seeking through legislation the creation of an uneven playing field.  Claiming the need for such a system "to support innovation and creativity" is subterfuge.

It occurs to me that the desire of Uber to be treated differently from taxi services is no different than the competitive advantages that FedEx enjoys over UPS because FedEx is regulated as an airline while UPS is regulated as a common carrier and therefore subject to the requirements of the National Labor Relations Act.  Therefore, UPS workers are represented by unions and FedEx's aren't, giving FedEx various cost advantages over UPS.  See "FedEx and UPS Clash Over Legislation" from the Wall Street Journal.

Interestingly, UPS's campaign for the two companies to be treated equally under the same set of regulatory rules is not seen as a question of fairness, but as one of unfairness (e.g., "A Special Delivery for UPS That Could Change FedEx Overnight" from the Heritage Foundation) no doubt because FedEx spreads a lot of funding around and conservative organizations don't want to be seen as helping foster union membership.
----
That being said, plenty needs to be done to improve taxi services and their competitiveness and availability.  Uber is not it.  (Just like the creation of charter schools doesn't necessarily improve the provision of education in traditional public schools.)