Rob Pitingolo - Greater Greater Washington

Clarendon Whole Foods pays customers to drive

Thu, 26 Jul 2012 14:10:00 EDT

Earlier this month, the Clarendon Whole Foods kicked off a new weekly food and wine event. If you drive and park in the Pottery Barn garage across the street, you get a $1 discount on the $5 cost. Anyone else, including those who walk, bike or take transit to the store, pays full price.

Photo by asmythie on Flickr.

At first, I thought the discount was designed to offset customers' cost of parking in the Pottery Barn garage. But, it turns out, Whole Foods already subsidizes that cost, validating for up to 2 hours in the garage.

With the discount, Whole Foods effectively pays people to drive to their store. As a company ostensibly committed to sustainability, they should figure out a way to reward people who don't bring their cars at all.

I was puzzled by this peculiar incentive and asked the store about the rationale via Twitter. Whole Foods sent this explanation:

Our parking lot is well known for being crazy. Trying to encourage people who drive to use the garage.

I reached out to the management at the Whole Foods store in Clarendon via email for additional comment and explanation, but did not receive a response.

No doubt, Whole Foods is smart to encourage customers to park somewhere other than the store's small and crowded parking lot. The store has a limited supply of a valuable resource, parking spaces, and wants them to turn over as quickly as possible.

Unfortunately, this discount policy specifically incentivizes and rewards driving and parking. This type of incentive is out of character for a company that espouses environmental sustainability as one of its values and has a "Green Mission Report" that praises employees who use public transportation and bicycles to get to work.

Besides, if keeping store-owned spaces available is the goal, Whole Foods could accomplish this far more effectively by encouraging people not to drive at all. Once a customer has driven to the store, they may still choose the convenience of the closer lot to the $1 discount and the more cumbersome garage.

If Whole Foods gives people a reason to leave the car behind altogether, these customers are guaranteed not to take up space in the coveted parking lot. What's more, given the cost of subsidizing customers parking in a garage, Whole Foods could probably save a bundle as well.

Clarendon is a textbook example of a walkable, bikeable, and transit-accessible neighborhood. Nonetheless, parking, especially for grocery stores, has historically been a topic that has touched a nerve in the neighborhood.

Whole Foods could charge a small fee to park, thereby encouraging customers to use their parking lot sparingly. This idea is likely a non-starter, as many businesses are terrified of losing customers to stores where they don't have to pay for parking.

Whole Foods could also extend their discount to customers who arrive by any means without a car. This is a logistical challenge, since it's very difficult to prove that a customer walked to the store, or if they use a SmarTrip card to arrive by Metro, rather than having parked on the street or even in the store's own lot. Producing a ticket to prove that they parked across the street, on the other hand, is easy.

Still, Whole Foods could at least level the playing field. When customers come in, Whole Foods could give them two options: a free parking validation or a $1 discount on the Wine:30 price. This approach would require Whole Foods to control access in or out of their own lot, but given the major issues they have, perhaps its time to consider this anyway.

With better controlled access, the store could still provide free parking to any driving customers, encourage people to park in the larger garage, and reward those who don't drive, all at the same time. For instance, at checkout, a customer could choose between a lot validation, a garage validation and a 1% discount, or no parking validation and a 2% discount.

Ultimately, Whole Foods needs to find a better way to decrease congestion in their parking lot without incentivizing driving and parking. For the Clarendon neighborhood, fewer driving customers mean less traffic and a stronger, safer, walkable urban fabric.

The store, meanwhile, would better adhere to Whole Foods' espoused corporate values and become a better community member. In a walkable, transit-rich neighborhood, it's time for Whole Foods to stop paying its customers to drive.

56 comments

Dedicated parking not optimal for Clarendon Trader Joe's (Sep 22, 2010)
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DC USA garage to offer daily and monthly parking (Feb 3, 2010)
Underpriced Metro parking doesn't justify more parking (Sep 9, 2010)

We are the... 50%? stories misinterpret median incomes

Thu, 16 Feb 2012 10:43:00 EDT

by David Alpert and Rob Pitingolo

The 5-month old news that the Washington region has 10 of the 15 "wealthiest" US counties got another round of press, DCist notes, after a MainStreet.com article subtitled, "Where the 1% lives." But juxtaposing "the 1%" and any statistic of median income flunks basic statistics.

This is not what we're talking about. Image by wallyg on Flickr.

The median household income is the income for the household which is exactly in the middle: half of the other households make more, half make less. The MainStreet article could far better have borne the title, "Where the 50% lives."

Median income tells you almost nothing about where the 1% lives. If a town has 10 households making $1 million a year and 100 making $20,000 a year, the median is $20,000. It doesn't matter if one of the rich 10 starts making $5 million instead.

Medians also don't consider desperately poor households, unless a place is so poor that half of its households are in poverty. When the news broke that the DC area has the highest median income of any metropolitan area, most of the news coverage about how DC is insulated from the economic downturn ignored that fact that there's serious unemployment and poverty in much of the region.

The unemployment rate might be lower than the national average, for sure, and far lower than in some parts of the country, but that's little comfort to the people without jobs.

Much of the disparity goes hand in hand with a higher cost of living. The national median household income in 2010 was $50,046, and the median in the DC region $84,623. But real estate prices are significantly higher here and have been climbing as well. For the 4th quarter of 2011, the median single-family home sales price was $325,400 and the median condo sales price $230,000, according to the National Association of Realtors. Nationally, the average house price was $166,200 and the average condo price $165,100.

Thanks in part to the higher housing costs and limits on the quantity of housing in walkable areas with good transit access, many professionals share housing in the DC region. When Rob lived in a group house in Arlington, the household income was about $160,000. That sounds like a lot on paper, and it's definitely above the area median, but 3 entry-level professionals and a grad student shared that income, and none considered themselves individually wealthy. On the other hand, a husband/wife household with no kids and a $160,000 combined income might feel a lot wealthier.

If these statistics aren't about the super-rich 1%, who is the median? To figure this out, Rob analyzed 2007-2009 American Community Survey microdata for people in households making within 5% of the median income (or in the range of $80,538-$89,014). There are 197,831 people living in such households, which represents a bit less than 4% of the total metro area population.

The average age in this median household income cohort is 43 years. 48% are non-Hispanic white, 26% non-Hispanic black, 13% Hispanic, and 10% non-Hispanic Asian. 21% work for the government, 66% work outside the government, and 13% are not working, out of the labor force or fall into another category. 69% live in owner-occupied homes, while 31% reside in rented homes.

It's great that the economy in the Washington region is doing well, at least for many people, and that median incomes are high, even if that means housing is expensive too. But reporters, when you write about these income statistics, please leave the references to fancy dinners and pictures of houses with gilded gates out of it.

18 comments

A demographic portrait of the District: 2008 (Oct 5, 2009)
Taxes lowest for DC residents and car-free Virginians (Feb 22, 2011)
Cities are more than just poverty (Dec 19, 2007)
Expand the sales tax to selected services instead of raising rates (Aug 24, 2009)
Make sure you get counted for the 2010 Census (Jan 15, 2010)

In fringe suburbs, has economics trumped the appeal of new?

Tue, 03 Jan 2012 14:17:00 EDT

by Rob Pitingolo

The recession and the burst of the housing bubble have stopped development in many fringe suburbs. With many urban neighborhoods on the rise, some suggest that fringe suburbs are on the decline. Has simple economics surpassed the appeal of "new" in the hinterlands?

Photo by Mark Strozier on Flickr.

There's been a lot of chatter around the blogosphere about Christopher Leinberger's New York Times op-ed that I think really hits the nail on the head when it comes to the issue of what's ahead for fringe suburbs.

Basically, the hypothesis presented is that fringe suburbs are headed downward, and I think this piece of evidence is really the most damning:

Many drivable-fringe house prices are now below replacement value, meaning the land under the house has no value and the sticks and bricks are worth less than they would cost to replace. This means there is no financial incentive to maintain the house; the next dollar invested will not be recouped upon resale. Many of these houses will be converted to rentals, which are rarely as well maintained as owner-occupied housing. Add the fact that the houses were built with cheap materials and methods to begin with, and you see why many fringe suburbs are turning into slums, with abandoned housing and rising crime.

Leinberger goes on and cites several examples of urban neighborhoods that have transformed from slum to hip in recent history: Capitol Hill in Seattle; Virginia Highland in Atlanta; German Village in Columbus, Ohio; and Logan Circle in Washington.

I don't know much about Capitol Hill or Virginia Highland, but I do know something about Logan Circle and German Village. One very important (and I think non-trivial) quality that they share is that they both have a high quality, durable housing stock that has held up very well, given its age, all things considered.

When I think about what made cookie cutter houses in suburbs appealing to people, in addition to the square footage and the yards and the school systems, I really suspect that one of the things that people were drawn to was the absolute "newness" of everything. People love having new stuff—new appliances, new counter tops, new floors. When stuff is brand new, it's almost guaranteed to be in style. When it's brand new, it's not in need of immediate repair. There's a lot to like about brand new.

The problem though, as Leinberger notes, is that fringe suburbs were literally built on the cheap. They may have looked nice initially, but the drywall they used to throw up houses in Prince William County is not the same as the brick they used to build rowhouses in Dupont Circle. At the time, the appliances they put into new suburban homes might have been nicer than what was in old urban houses, but appliances can easily be replaced, structures can't.

Around DC, a lot of old rowhouses have gone through the process of renovation—some have gone through many renovations since originally being built. The interiors have been gutted, redesigned and rebuilt, but the physical structure is generally the same. These houses were built to last, I can only imagine what a cookie-cutter house on the suburban fringe might look like in 100 years. The rowhouses in DC that have been re-built look beautiful, easily as nice as what got built in the suburbs during the boom.

At one point, the suburbs looked so much "nicer" because that's where the building was—that's where stuff was brand new. That's not necessarily true anymore. Now, some of the newest, shiniest stuff is right in the heart of the city.

I was reminded of this when I saw this article in the Plain Dealer last month. The author makes the case that there's more demand for housing in downtown Cleveland than the market can keep up with. A lot of folks will use this as evidence of a downtown renaissance, I think it says that people are no longer afraid to live downtown (something that was true in Cleveland for many years) but I also suspect it has something to do with the quality of downtown housing.

While it seems true that downtown Cleveland is doing well, many other urban Cleveland neighborhoods are not doing well at all. The apartments and condos popping up downtown are all brand new, beautifully renovated spaces. The houses in Cleveland's urban neighborhoods, on the other hand, are much lower quality. Compared to Washington's rowhouses, they're downright terrible. I suspect that many of Cleveland's houses are also below replacement value. The only hope is to knock them down, and that's exactly what's happening.

When I studied home prices in Cleveland a few years ago (pdf), I found that while downtown was in fact the neighborhood in the city with the highest prices, there was nevertheless a positive relationship between home price and the distance from the city center. In other words, the farther from downtown you went, the higher the price of homes. It was "drive til you qualify" in reverse.

I think the future of suburbs as Leinberger imagines them is going to look like some of Cleveland's neighborhoods today - Hough, Mount Pleasant, Cudell—places with generally poor housing stock that isn't worth fixing up. Places where crime is frustratingly high, where most of the housing that isn't vacant is renter-occupied, and where few are willing to make any investment.

Wayne Senville, Planning Commissioners Journal.

Is it true to say that millennials and baby boomers have a taste for urban living? I think there is good evidence to support that theory, but it's clearly the case that they don't want to live just anywhere in the city. Nobody wants to live in a slum, and the type of homes that people want has to meet at least a certain threshold of quality.

In high-cost cities, like DC, that's not so hard to pull off. A $200,000 rowhouse rehab might be well worth the cost when you can turn around and sell the house for half a million or more. A similar job simply doesn't make any financial sense in a city like Cleveland. In fact, the Plain Dealer article above specifically says that developers aren't building in downtown Cleveland without government incentives because the rents are too low to support the kind of investment they need to make.

I think the more realistic assessment of suburbs and cities is that some suburbs will see a precipitous decline, some urban neighborhoods will experience a renaissance, and the degree to which each happens will be highly dependent on local market conditions. In other words, it will happen, but it won't be as clear cut as the magazine articles might lead you to believe.

Crossposted on Extraordinary Observations.

236 comments

GGW discusses: The focus on Anacostia (Feb 21, 2011)
More walkable urbanism is good for everyone (Jul 2, 2010)
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Is "the rent too damn high" for some DC businesses?

Fri, 30 Sep 2011 10:23:00 EDT

by Rob Pitingolo

In the coming weeks and months, a handful of businesses along 14th Street NW will close their doors. The retail corridor appears to be booming, but high commercial rents make it difficult for low margin businesses to compete.

Photo by ElvertBarnes on Flickr.

This Saturday, Mid City Caffe on 14th Street will serve its last latte. Citing insufficient sales and a less-than-ideal second floor location above Miss Pixie's, the coffee shop opted not to pursue a lease extension; instead, they will simply close for good.

Perhaps more noteworthy than the closing of the shop itself is the fact that the Mid City brand will not live on. Ownership is not seeking new retail space.

Jeffrey Lamoureux, the shop's general manager, says that decision is driven by the challenging business climate along the 14th Street corridor: "If we were to relocate and hope to capitalize on the customer base and brand identity we've developed since 2009 we would have to find some place within a few blocks, where an affordable rent would be extremely hard to come by."

Earlier in the month word spread that Miss Pixies is in the market for new retail space. It's reported that the building's landlord wants to quadruple the rent for the storefront at 1626 14th Street NW. Jeffrey Lamoureux says that's a problem for businesses like his, where "high commercial rents make places like Mid City, low-volume neighborhood-centric spaces, untenable."

Mid City did have a loyal customer base. The shop was often busy, popular among coffee lovers, and on the surface, appeared to be successful. That's not to say there wasn't enough demand for Mid City Caffe, or that the shop wouldn't be filled with customers if it re-opened nearby, but it does suggest there isn't enough demand to justify the cost of running such a business on 14th Street.

High rents directly impact businesses by raising the average total cost. Barista wages and coffee prices likely don't waver much from city to city, but the amount a coffee shop pays to its landlord every month can and does vary greatly.

The result is that coffee shops in high-rent neighborhoods, for example, face a challenge that coffee shops in low-rent cities and neighborhoods don't: They have to pay handsomely for the privilege of simply being able to open their doors.

In order to make it work, businesses either need to sell high-margin goods and services, or do brisk volume on low-margin items. Coffee is the kind of business where strong volume is key.

That's the strategy at Peregrine Espresso. The successful Capitol Hill coffee brand opened its second location earlier this summer, exactly one block north of Mid City Caffe. Even so, there are notable differences between the Peregrine and Mid City.

Peregrine owner Ryan Jensen says that his shop caters to a different type of customer. "When we found our space up there, we realized that we really didn't have the space to accommodate a sea of telecommuters," he says, "so we thought it best to keep the chairs turning over so that the space doesn't get too stagnant."

With less than 600 square feet of space and enough seats for only about a dozen customers, Peregrine is banking on strong take-out business. They don't have wi-fi and aren't trying to lure customers looking for a place to hunker down for hours.

Jensen acknowledges that high rents make doing business on 14th Street a challenge. "If you only want to serve coffee (not lunch, dinner, or alcohol) and aren't necessarily interested in being a music venue, it becomes very difficult to sell enough cups of coffee to cover high rent," he says, "particularly in a neighborhood that doesn't have the same type of daily pedestrian traffic that you might find closer to downtown or in Penn Quarter.

Peregrine chose its micro-sized storefront in part because, even though the rent is high on a per-square foot basis, the monthly payments aren't astronomical. They also benefited by securing a long-term lease in July 2010, before some of the new developments nearby had broken ground. While small annual rent increases are expected, Peregrine is at less risk of the price shock that Mid City and Miss Pixies are currently experiencing.

High rents impact more than just individual businesses. Topher Matthews recently questioned the future of DC's "third places". In neighborhoods with high rents, the primary concern of any business is covering its costs. No matter what role it plays in the community, if it can't pay its bills, it won't be around for long.

39 comments

High rents, prohibitive zoning doom Wheaton's Dejabel Cafe (Feb 15, 2010)
What to do with Arlington's vacant retail space (Aug 25, 2010)
The Temporium: An experiment in urbanism (Mar 4, 2011)
How to encourage retail? (Mar 26, 2008)
How can 14th Street thrive between Target and Walmart? (Feb 2, 2011)

Housing is more than supply and demand

Wed, 21 Sep 2011 10:07:00 EDT

by Rob Pitingolo

In his Kindle book The Gated City, Ryan Avent argues that the limitations governments place on cities through zoning and other policies are holding back the nation's economic growth.

Photo by M.V. Jantzen on Flickr.

Avent is a very smart writer on urban economics, who I interviewed in 2009. The book is very good, and I recommend it to anyone reading this post.

There are two points that I wish would have gotten fleshed out more in the book, and in discussions of housing markets more generally. The first is whether adding more density will, by the laws of supply and demand, make housing more affordable.

This is a recurring argument among writers like Ryan Avent, Matt Yglesias, and Ed Glaeser. They say that the housing market suffers from a supply/demand imbalance. There isn't enough supply, and that's the reason why so many neighborhoods in so many cities are unaffordable. If only we could boost the supply of housing to meet the demand, we could bring down, or at least stabilize, rents.

This idea rests, first and foremost, on the assumption that housing is a commodity. Consider a different commodity market—wheat. If wheat prices are very high, one way to bring them down is to boost production and flood the market with more wheat. This works because wheat actually is a commodity. Every unit of wheat is more or less the same as every other unit, so the price is whatever price the market dictates.

Housing is different. There are many unique types and styles of housing, some of which are more desirable than others. When demand for housing rises in a neighborhood, rents will rise, regardless of the type or quality of the housing. A neighborhood might have century-old rowhouses, 1970s apartments, and brand new luxury buildings. If demand is rising in that neighborhood, rents for all types of these units will rise.

But what if a neighborhood doesn't have any vacant land sitting around waiting to be developed? How do you increase the supply of housing when there's no place to build new housing? Basically, you have to knock something down and replace it with higher density housing.

Let's imagine that a developer is proposing to level some not-so-great '60s-style townhouses in an urban neighborhood. In their place, the developer is going to build a multi-level apartment complex with a gym, pool on the roof, and ground-floor retail. Perhaps the developer is going to knock down 10 low-quality units and replace them with 50 high-quality units, for a net-gain of 40 housing units.

Even though the number of housing units in the neighborhood goes up, it's virtually guaranteed that the market rents for those new units are going to be higher than the rents for the old units. So the folks who might have been able to afford one of the '60s-style townhouses no longer can afford a luxury-apartment in the neighborhood.

From a developer's perspective, this is a no-brainier. The biggest cost in constructing housing is building the structure itself. The cost of making the units look cosmetically luxurious is marginal, but the price that people will pay for a "luxury unit" makes it more than worth it for developers.

For this reason, it's understandable why some people oppose development, and it's not so simple as sitting them down and saying, "Don't you get it? There's not enough supply to meet the demand in your neighborhood, and that's what's driving your rents up! Once we increase the supply of housing, everyone will be better off."

The truth is that increasing the supply of housing units in a single neighborhood might not have its desired neighborhood-level supply/demand effect, because housing isn't necessarily a commodity. But city-wide, and metro area-wide, it might actually accomplish something.

Unless a developer is going to replace 10 low-quality units with 50 low-quality units, there's going to be a change in the structure of the neighborhood housing market that's different from the impact on the metro area housing market.

Avent argues in The Gated City that homeowners often engage in NIMBYism because they are conservative, risk-averse, and are cautious out of fear that the project might fail. But it goes a bit beyond that. Renters often engage in the same behavior, not because of fear it will fail, but because they're afraid the same project might actually succeed.

81 comments

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Affordable housing clashes with the suburban mindset in Wheaton/Kensington (Dec 1, 2008)
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Keep inclusionary zoning housing affordable (Sep 22, 2010)
Delay scuttles affordable housing at 14th and U (Jul 28, 2008)

Adding places to station names creates unnecessary transfers

Fri, 16 Sep 2011 10:09:00 EDT

by Rob Pitingolo

Several neighborhoods and organizations have proposed renaming Metro stations to make a single destination easy to find. But each of these can bring the unintended consequence of making the whole system more confusing to navigate.

Photo by Mr. T in DC on Flickr.

At first glance, renaming "Navy Yard" to "Navy Yard-Ballpark" seems like a fine idea, since it is the station that most fans use to get to games.

However, many arrive by exiting at Capitol South and walking down New Jersey Avenue. In fact, for anyone coming in on the Orange or Blue lines, Capitol South is often a better place to exit the system.

Similarly, there are other destinations that people often make unnecessary transfers to reach. Adding "Ballpark" to the Navy Yard station name may seem harmless at first, but what it does is to announce that it is the one and only station to get to the ballpark.

Metro's out-of-scale map means that riders are especially susceptible to sloppily-named stations. People don't realize, for example, how close Dupont Circle is to Farragut West, or how close Metro Center is to Gallery Place, so they often wind up making unnecessary transfers. How many tourists have transferred to a Blue or Orange Line train so that they could use the "Smithsonian" station, when numerous other stations would have gotten them to the National Mall?

Kurt Raschke notes that in New York City, there are five subway stations called "23rd Street" rather than the neighborhoods that contain them. There's a good reason for this. These stations are very close together, so if you're traveling anywhere in the vicinity of 23rd Street, you might as well take whatever subway line you're closest to, exit at the respective 23rd Street station, and walk to your final destination.

If, on the other hand, each of those five stations were named after a unique neighborhood, someone traveling to Chelsea might think they need to make an unnecessary transfer so they can eventually arrive at the "Chelsea" station, even though the "Flatiron District" station and the "Gramercy Park" stations might get them there with less hassle.

My own house is about a quarter mile from the U Street station, and a little more than half a mile from the Dupont Circle station. Depending on where I'm going, it might make more sense to walk a greater distance, and get on a Red line train, rather than the shorter distance to Green or Yellow.

Anyone who's familiar with the Metro system knows these little tricks, but someone who's not might naively take a less convenient route. It might be because the out-of-scale map makes it difficult for them to conceptualize where they are, or, in light of station naming, because they don't realize there is more than a single station that will get them where they need to go. And isn't it those people who these new station names are supposed to help?

Cross-posted at Extraordinary Observations.

24 comments

"Navy Yard-W" is worst of new station name proposals (Sep 14, 2011)
WMATA considering policies for shorter station names (May 23, 2011)
Metro aiming to start "Yellow and Orange Line service increase" in June 2012, without new color (Mar 7, 2011)
Metro will shorten station names using subtitles (Jul 7, 2011)
Get station names back to short and sweet (May 7, 2010)

Competition won't drastically alter the car-sharing market

Wed, 24 Aug 2011 14:31:00 EDT

by Rob Pitingolo

Recent news that Zipcar is losing some of its coveted on-street spaces in DC has sparked discussion about how new competition might impact the region's car-sharing network. Economic theory suggests that the impact on prices and service might not be as large as some hope.

Photo by M.V. Jantzen on Flickr.

Zipcar currently enjoys monopoly status in DC. Since acquiring Flexcar in 2007, Zipcar has been the only car sharing game in town. Consumers tend to think poorly of businesses that operate as monopolies, even if such firms can take advantage of efficiencies and pass the benefits down to customers. The prospect of three new competitors is welcome news to those who believe competition will benefit all concerned.

The car sharing market will soon morph into an oligopoly: an industry dominated by a handful of businesses and has high barriers to entry. In the case of car sharing, the high capital costs of vehicles and technological infrastructure make it very difficult for all but a few firms to enter the market.

Oligopolies share an important characteristic with monopolies: firms price goods and services not based simply on supply and demand, but in the way that maximizes their revenue, while taking into consideration how their competitors behave. Oligopoly industries are notorious difficult to understand, and game theory scholars have stepped into help explain why these firms behave the way they do.

In a perfectly competitive market, competition among firms brings down prices. In an oligopoly, this is also true to an extent. Consider the case of a well-known oligopoly: airlines. The air travel industry is dominated by a small number of firms and barriers to entry are extremely high. Even so, "fare wars" occasionally drive prices down and yield great deals for consumers.

Car sharing is unlike air travel in one key way: customers are screened for safe driving records, and must be a member of a given company to use its cars. In the case of Zipcar, a potential customer must submit an application that shows that they have a driver's license and have committed no serious infractions behind the wheel. If a potential customer lacks either of these, he or she is ineligible for the service.

Imagine if airlines operated similarly: Before booking a trip, you would have to buy a membership with the airline. You'd only be able to buy fares from those companies where you held a membership. Airlines would still compete for business on price, but in different ways. "Fare wars" would be a much less likely occurance.

In that sense, the market for car-sharing is more like the cell phone industry. Consumers are allowed to sign up with as many wireless carriers as they please; but most pick just one and stick with it. Rates are a major selling point, as are features like service coverage and available phones.

Even with monopoly status in many cities, and the perception of success, Zipcar is not a profitable company. In it's ten-year history, the firm has never turned a profit. Until recently, the District indirectly subsidized the company by offering choice parking spaces at below-market rates.

Arguably, Zipcar was able to pass those savings on to their customers. And with monopoly status, it became a one-stop shop for anyone looking to have access to a shared car. If, instead, the region's 800-some shared cars had been split among four companies, a customer holding a membership with only one service would have access to only a fraction of the total number of cars.

Still, competition will likely mean more total shared cars in the region, which is good from an urbanist perspective. It should benefit the consumer by forcing the industry, including Zipcar, to offer attractive rates and quality service. Just don't expect it to drive down rates significantly or drastically alter the market in the immediate future.

20 comments

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DDOT releases TDM recommendations for new development (Feb 17, 2009)

Auto-free car renters juggle complicated insurance options

Thu, 11 Aug 2011 15:06:00 EDT

by Rob Pitingolo

Urbanites in DC and elsewhere frequently utilize rental cars as an alternative to owning their own vehicles. However, without an auto insurance policy, some renters may be putting themselves at more risk than they realize.

Photo by Roger Penguino on Flickr.

In Washington, roughly a third of households don't have access to a vehicle, but plenty of these people still drive, if only occasionally. Car sharing services like Zipcar are great for quick trips and errands, while traditional rental cars from companies like Enterprise and Hertz often work better for weekend getaways and out-of-town trips.

While Zipcar is designed with non-car owners in mind, the traditional rental car system is set up for people who already own cars, and by extension, carry auto insurance. For those who don't, the insurance options available can be expensive and difficult to understand.

Auto insurance is typically divided into two basic risk categories: collision/damage and liability. Collision coverage usually takes care of damage to or theft of the car; whereas liability insurance covers the damage to another person, their vehicle, and their property, in the event of an incident.

Of the two, liability is the much bigger risk.

Collision risk is essentially capped at the value of the car a person is renting. If they wreck a rental car, without insurance, they're on the hook for paying for that vehicle.

That's an expensive proposition, but it's relatively small compared to the theoretically limitless risk they face in the event that they injure or kill someone while behind the wheel. These days, personal injury attorneys are constantly on the hunt for victims who were hurt or disabled in these types of incidents.

Rental car companies do offer products that protect their customers from both collision and liability risk, but these products are expensive. Enterprise, for example, offers damage waivers for $13.99 - $18.99, and supplemental liability protection for $11.99. That adds an additional $26 to $31 per day to a car rental. In some cases, the price of the insurance and waivers can cost more than the rate for the car itself.

For this reason, travel advisers sometimes say it's best to decline the add-ons that rental car companies offer when you step up to the counter. It's often believed that insurance products are profit-centers for rental companies and bad deals for the customer. This may be true, but only if the customer already carries a good insurance policy.

What about credit cards? Many renters mistakenly believe that their credit card offers adequate protection. But again, if you don't have your own auto insurance, this isn't the case.

Most credit cards offer a type of "secondary collision" coverage, which kicks in only after you've filed claims with your "primary" insurance provider. That might be your auto insurance policy, if you have one, or your homeowners or renters policy, in the event of damage or theft.

Even when credit card coverage does take effect, it might only cover damage to the car you are driving. When I looked at the fine print of my own credit card, I found that the protection is indeed rather limited. It reads:

This coverage is not all-inclusive, which means it does not cover such things as personal injury or personal liability. It does not cover you for any damages to other vehicles or property. It does not cover you for any injury to any party.

Even the "premium" coverage American Express offers, which costs the cardholder an additional $25 per rental, doesn't cover liability risk. The main benefit to AmEx's premium coverage is that it is "primary," so if you do need to file a claim, your auto, homeowners or renters insurance provider doesn't need to handle it, and won't raise your premiums as a result. It's also usually less expensive than the waivers offered by the rental companies.

Many insurance companies offer a product called a "non-owners policy," also referred to as a "named-operator policy." This is auto insurance for people who don't own their own cars. Information about it can be difficult to come by.

I called auto insurance companies who advertise in the area, who then referred me to agents in DC after hearing my ZIP code. After being passed from one person to the next, I eventually got some answers about this product. One agent in DC explained that these policies are often required by law for people who have lost their drivers licenses for one reason or another, and that the premiums can be very high.

When I asked if I could receive a quote, he explained that the average cost of a non-owners policy in DC is roughly $600 per year. He talked me out of getting a quote, recommending instead that I buy insurance through the rental car companies, as the non-owners policy wouldn't offer savings or give me better protection.

For car-free renters, insurance options are limited. Buying supplemental liability protection from rental companies is virtually necessary, unless you are comfortable with the bare-bones, state-mandated level of liability coverage that rental companies are required to provide when you drive off of the lot.

Collision coverage can go either way. For 100% guaranteed protection, you can purchase the damage waivers offered at the time of rental. If you're willing to take on some risk, the secondary coverage offered by most credit cards might be enough to cover your bases.

For car-free renters, the key is homework. Even though the options are expensive, simply assuming that your credit card covers you may be a riskier move than you're willing to take.

23 comments

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DC cycling concentrated in Northwest and Capitol Hill

Tue, 01 Mar 2011 10:14:00 EDT

by Rob Pitingolo

An analysis of American Community Survey (ACS) data shows that bicycling rates are not evenly distributed across the District.

Throughout the city, 2005-2009 ACS estimates indicate that approximately 1.9% of DC workers commute to their jobs by bicycle, but examining the data by Census tract tells a different story. The highest rates of bicycle commuting tend to be concentrated in areas adjacent to Downtown, as well as in Northwest Washington and on Capitol Hill.

The highest rates of bicycle commuting also tend to be correlated with those neighborhoods where the city has invested in bicycle infrastructure and facilities. For example, the map shows strong rates of bicycling along the 14th and 15th Street corridors, where bike lanes, and now a cycle track, run north and south.

Bicycling is also strong on Capitol Hill, where bike lanes run both north/south and east/west. In Northwest, the Capital Crescent and Rock Creek trails provide safe means for bicyclists to get into the city.

Anecdotally, this confirms the hypothesis that "if you build it, they will ride," and suggests that further investment in bike facilities would help boost the bicycling rate in neighborhoods where it currently isn't very high.

Though it's concerning to see a number of Census tracts register 0.0%, it's also important to understand that these numbers don't necessarily mean that no one rides a bike in any particular geography. The 2009 ACS questionnaire specifically asks: "How did this person usually get to work LAST WEEK?"

In practice, this means that a person who commuted to work primarily by another means, like automobile or public transportation, but still rode a bicycle that previous week, wasn't counted. Nor was a person who just happened not to bike to work the previous week, for whatever reason; nor was a person who wasn't working that previous week.

While the Census Bureau's metric isn't perfect, it's one of the few proxies for understanding rates of bicycling. Washington has made great strides in making the District a good place to ride a bike. As long as it's working, that progress should continue.

37 comments

DC funding depends on 2010 Census mail-back rates (Mar 25, 2009)
Downtown posts big gains in housing units (Dec 28, 2010)
Georgetown makes a big shift towards transit (Jan 11, 2011)
ACS shows Ward 6 growing fastest, while Ward 1 shrinks (Dec 15, 2010)
St. Elizabeths plan threatens South Capitol Trail (Jan 11, 2011)

Downtown posts big gains in housing units

Tue, 28 Dec 2010 14:24:00 EDT

by Eric Fidler and Rob Pitingolo

Recent American Community Survey data reveal strong growth in the number of housing units in downtown Washington and adjacent neighborhoods. Of the 10 census tracts that saw the greatest net increase in units, 9 are located within the area covered by the L'Enfant Plan.

After comparing the housing unit numbers from the 2000 census and the recent ACS averages for 2005-2009, we found that Wards 3 and 7 barely changed overall while all the other wards gained a significant number of new units.

Source: Census 2000 and ACS 2005 - 2009.

The change in housing units is a important number because it signals where residential real estate development is occurring in the city. The greater the net increase in units, the greater the investment during the past decade.

While each of the eight wards must by law contain one-eighth of the city's population, the graph above shows that the number of housing units per ward varies significantly. The greater the number of units in a ward, the smaller the average household size. Despite the fact that Ward 1 gained housing units, the same ACS data found that the ward's population and occupied housing units actually fell, thus suggesting the replacement of large families with small families and singles and a slow transition of residents into new housing units.

The latest data also reveal that the greatest increases in housing are occurring in some of the densest areas of the city. Since DC is nearly all built out, new housing usually appears when bigger buildings are built on old sites and where existing buildings (often rowhouses) are converted into multi-unit residences.

Source: Census 2000 and ACS 2005 - 2009.

Whereas much of the housing growth in the suburbs and exurbs comes in the form of single-family houses, DC's big growth centers are adding apartment and condo buildings.

A single project has the ability to increase the population of one city block significantly, especially in the areas where zoning laws permit taller buildings. Recall that much of the city is zoned to restrict building heights far below the Federally set height limit.

Downtown, for instance, is far better known for its restaurants, offices, and entertainment venues than for its housing. Even still, the two tracts that cover Metro Center, Penn Quarter, Chinatown, and Judiciary Square were some of the biggest winners of new units.

The neighborhoods immediately north of Massachusetts Avenue NW and east of 16th Street NW saw big gains, too. These areas include Logan Circle, Mount Vernon Triangle, parts of U Street, and the area west of the Convention Center.

These neighborhoods are already walkable and well served by transit and an emerging bike infrastructure. The reason that the number of units increased sharply in places like Logan Circle but very little in Dupont Circle and Georgetown is that these latter areas have been built-up for several decades now. The past decade, in contrast, has seen development expand eastward and these housing numbers reflect this shift.

Keep in mind that these numbers only reflect the averages for the years 2005-2009. When the Census Bureau releases tract-level data for Census 2010 in the coming months, we expect to see areas like the Navy Yard posting sharp gains.

7 comments

ACS shows Ward 6 growing fastest, while Ward 1 shrinks (Dec 15, 2010)
DC funding depends on 2010 Census mail-back rates (Mar 25, 2009)
Community revitalization must start with persisently poor neighborhoods (Aug 10, 2009)
Make sure you get counted for the 2010 Census (Jan 15, 2010)
DC breaks 600,000 (Dec 21, 2010)