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San Francisco: No-Go to Sharing Economy Parking App

Jan Lee
Jan Lee | Thursday June 26th, 2014 | 7 Comments

San_Francisco_parking_meter_JasonTester_GuerrillaFutureHas the sharing economy concept gone to far?

This week San Francisco City Attorney Dennis Herrera issued a cease-and-desist demand to the mobile-to-mobile bidding app that’s been gaining a popular footing in the parking-poor Bay Area, MonkeyParking. The service, which is currently used on iOS devices, allows drivers to auction off their public parking places. As of this week, it was still available on the Apple Store, with the tagline that the app “lets you make money every time that you are about to leave your on-street parking spot.”

And that, says the city, doesn’t fly.

Herrera has apparently sent a letter to one of the CEOs of the Rome, Italy-based startup, Paolo Dobrowolny, to let him know that there is “a key provision of San Francisco’s Police Code that specifically prohibits individuals and companies from buying, selling or leasing public on-street parking.” And, the letter says: “Police Code section 63(c) further provides that scofflaws – including drivers who ‘enter into a lease, rental agreement or contract of any kind’ for public parking spots – face administrative penalties of up to $300 for each violation. Because MonkeyParking’s business model is wholly premised on illegal transactions, the letter contends that the company would be subject to civil penalties of up to $2,500 per violation under California’s tough Unfair Competition Law were the city to sue from buying, selling or leasing public on-street parking.”

Oops.

Reading city bylaws is always a good thing to do before launching a locally-based startup (this appears to have been one of the worst cities to choose for a hang-loose premise like auctioning public property use). But it also looks like the enthusiasm for sharing-economy startups may be wearing just a bit thin in SF. Only last year, the city launched a suit against another three-member partnership, FlightCar for its airport drop-off-and-share concept. It seems the service overlooked the sizable revenue that the city gets from traditional car rental companies that operate at the airport.

FlightCar’s growing popularity has highlighted consumers’ frustrations with airport parking costs, but it also dug into the revenue that the city uses to cover airport operating costs. San Francisco’s suit against the startup, which launched last year, is still ongoing and, not surprisingly, could ultimately have an impact on the rights and responsibilities of similar car-sharing programs in San Francisco.

Still, can you really blame three up-and-coming entrepreneurs for trying to solve city parking woes? The city has been struggling with parking issues for more than 40 years (I speak as a former Bay Area native) and get-ahead tactics like an online auction platform seem like a natural, if not extreme, outgrowth of the problem.

But what MonkeyParking and the city’s struggle really highlights – unfortunately – is where the sharing economy seems to be going. Remember the days when people shared because they could help, or because they valued the exchange it fostered? In this case, I think it’s a fair bet that few, if any, of the drivers who swap parking places via MonkeyParking ever exchange glances, a smile or a casual word. Sharing, in this case, is a major misnomer.

The question at hand may not be how the city addresses a sharing economy startup that it feels encroaches on public-run property or city bylaws, but what it is going to do to replace the incentive by residents and ticked-off tourists who hate searching for parking places.

I can’t help but wonder what would happen if the city were to sit down with six (or more) new entrepreneurs from FlightCar, MonkeyParking, Lyft, Uber and other sharing-economy initiatives and pick their brains for alternative, city-friendly ways to solve parking, traffic and consumer woes. (And yes, I’d love to be a fly on the wall with that one.)

As the city no doubt noticed last year, NerdWallet’s 2013 list of the 10 best cities for entrepreneurs –which looked at things like funding availability, cost of living and networking/collaboration options — was missing a key mention: San Francisco. That should be a wake-up call to a city that has made its reputation from innovative approaches. It just might find that smart, edgy professionals that have the moxie and the brains to find out-of-the-box solutions for city growth problems (especially those that aren’t the city’s favorite concepts) might have something unexpected to offer. The outcome, however awkward that first brainstorm might be, just might offer the next evolution to the sharing economy.

Image of parking meter: Jason Tester Guerrilla Futures


▼▼▼      7 Comments     ▼▼▼

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  • Bern Grush

    Confusion between price and availability, Jan. MonkeyParking is addressing an availability issue, not an expense issue. That is obvious since the bidders are willing to pay more just to get hold of a spot for which they can then pay the city rate. The problem is that the city needs to raise on-street prices (which are almost always lower than off-street (and those are indeed expensive!)) If there is a shortage of a commodity (in this case spaces), you either make more or charge more. Any non-communist born since 1950 understands that. While Herrera is likely correct in his assessment and action re MonkeyParking, you are misreporting the real problem with parking. Furthermore, the FlightCar is yet a different kettle of fish. The airport sensibly charges a lot for parking and (presumably) uses the revenue for operations. So FlightCar is taking revenue from the airport (and should at least be licensed and taxed to do so) while MonkeyParking simply favours wealthier drivers w a smartphone and an extra $5, so that becomes a social equity issue. I say raise on-street prices and leave MonkeyParking alone. Proper pricing would put MonkeyParking out of business. As for FlightCar, that kind of sharing is going to be crushed by the autonomous vehicle by 2035 anyway. Of course maybe lawyers can find a way to stop that, as well.

    • J_N_Lee

      Hi Bern. Thanks for your comments.
      I agree my mention regarding parking costs were a bit unclear. My reference was to the knee-jerk reaction drivers have to the increasing costs of parking, which in SF is not only location based, but determined seasonally and by time of day. And, as you point out, with limited on-street parking, off-street is greater (SF varies from some cities that set their street parking to match off-street costs). But the ref confuses the issue, so I’m amending that.

      You raise excellent points on both of these startups, and the city’s responses. My point was we seem to be in a phase when suing is the first avenue past the warning. Maybe there’s a way to tap these resources without escalating court cases and steps that ultimately bankrupt instead of resolving problems?

      Thanks again!

  • http://www.triplepundit.com Nick Aster

    I usually like sharing economy concepts but these Monkey Parking guys definitely are taking it too far. This is really shady business idea. Forget the fact that in order to use it you have to sit around and wait in your car until someone bids – even in a fast turn around area that’s going to be a nuisance! But it’s kind of like refusing to leave a restaurant until someone pays for your meal at the expense of the restaurant… not cool.

    However, I actually think FlightCar is a great idea. Now, how do you get around the problem with the city depending on rental car tax? That might be another problem but doesn’t seem too complicated to solve.

    • J_N_Lee

      Great points Nick. Thanks for chiming in on this. Yes, it strikes many the wrong way. And what I didn’t say is it is good that the city spoke up. Ground rules were already in the playbook with the bylaws against this kind of thing. Your point on Flightcar is along the lines of what I am saying: maybe it would reduce litigation costs to look at other avenues of dialogue. Thanks for bringing those points up.

  • http://chrisoestereich.com/ Chris Oestereich

    This is usurpation plain and simple. We need to call out these charlatans as they emerge to ensure that they don’t derail the positive opportunities presented by the sharing economy. Thanks for sharing this Jan.

  • jd_x

    What really should happen: the city should start charging market rates for parking and stop the current situation where parking is ridiculously subsidized ($100 for a residential parking permit?! You’ve got to be kidding me.). The fact that this app is tapping into something shows the ridiculously of the current situation where parking is way too cheap and that people would pay much more for it. Time to massively raise prices and use the money to improve public transit, cycling, and walking (all of which will become more popular when parking is made more expensive).

    • J_N_Lee

      Thanks jd_x. It’s an interesting point that’s been tried in other
      cities. I know in at least one city that increased cost of parking has a
      tendency to discourage people who would be less apt to take public
      transportation and certainly wouldn’t be likely to cycle or walk
      (seniors and disabled). So I am not sure it’s as simple as raising
      parking meter costs across the board.

      As to the residential
      parking permit, I believe that is only for the area of residence, and I
      for one would want to be able to park my car if I own a house. SF’s
      purchased permit concept actually vies with some other cities where the
      permit is free if you live in the area (or a high-impact area whee a permit preserves your access to parking). It seems to me though, that while raising the cost of public parking options may help add to the city coffers, it cycles back to my point that making SF an attractive city for entrepreneurs is in part, dependent upon making it affordable for those starting up without six-digit figures that can support SF’s high cost of living. It’s notable that SF and NYC were the two cities left off of that list of
      affordable locations for entrepreneurs due to cost of living.

      Thanks again! These are great points on the challenges SF faces in this issue!