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Traffic congestion can make driving Honolulu’s roads a nightmare, and officials are working to make the city more pedestrian-friendly.
But another idea that some are hoping will catch on is car sharing. Car sharing involves a fleet of vehicles that can be rented out for short periods of time, and is designed to work in tandem with public transportation.
The Hawaii Energy Policy Forum organized a panel discussion that is scheduled to take place Monday at the Hawaii State Capitol. They hope to talk about the merits of a program as well as the issues that are preventing the service from gaining a foothold in the islands.
Blue Planet Foundation, which advocates for eliminating the use of fossil fuels, plans to send a representative, along with officials from the City and County of Honolulu and members of car sharing groups.
The main problem is a tax that car share advocates say makes it too costly to do business here.
Walter Rosenkranz is the business development manager for car2go, a popular car sharing service in 16 European and North American cities. He wants to bring the service to the islands, but says the tax system has created a major roadblock.
This is too bad, he says, because Honolulu is the perfect locale for a car sharing program.
“Honolulu, in particular, is really representative of everything we’re about,” Rosenkranz said. “It’s a dense city, high population, there’s already a robust alternative transportation solution, a terrific bus system.”
Studies by the Washington Public Interest Research Group (WashPIRG) have shown that each car sharing vehicle takes up to 13 privately owned cars off the road, and San Francisco’s non-profit City CarShare found that members walked, biked and used public transport at rates nearly 50 percent higher.
In a city like Honolulu which is constantly looking to find a traffic solution, some say car sharing might be the way to go.
However, the rental car surcharge tax in Hawaii treats car share vehicles the same as regular rental cars, meaning they’re charged at the same $3 flat rate as car rentals that are used for the whole day. This has resulted in huge tax rates — more than 30 percent for one-hour rentals.
Car2go’s business model is to rent by the minute, making the tax rate even higher.
While $3 may not seem like much when it’s tacked on to a $40 or $50 a day rental car, when it’s charged to a one hour, $10 car share rental, the proportion is significantly higher. Car sharing advocates say that’s unfair.
This problem has made it difficult for the program to gain traction.
What separates car sharing from the more traditional rental car?
Car sharing is geared toward local residents who don’t have, or can’t afford to have their own vehicles, but need one occasionally. Rosenkranz says 90 percent of car2go users have the car for 30 minutes or less.
According to the University of California Berkeley Transportation Sustainability Research Center, car sharing had over a million members in North America by 2013, using over 15,000 cars. The study also showed that from January 2012 to January 2013, car sharing fleets grew by nearly 25 percent in the U.S.
Rental fees include insurance and gas; car2go usually charges 38 cents a minute, while other companies like zipcar charge $8 to $10 per hour, or have monthly rates. Users can make their reservations and find a car online or through an app. They pick up the car by waving their member card over a card reader on the windshield, which verifies their reservation and unlocks the car, sending drivers on their way. The one-time signup fee at car2go is $35, and others have similar costs.
Car2go exemplifies “one-way” sharing, where two-seat Smart Cars are rented by the minute, and renters pick up the car and leave it in any parking space near their destination, as long as it’s in the “home area”, the company’s region of service.
Believers in car sharing include Shem Lawlor. He wrote his master’s thesis on car sharing as an integral part of Hawaii’s sustainable future, and now works for the city in the planning and permitting department.
Legislation was submitted last year, SB726 and HB551, to try and pro-rate the tax surcharge to 12.5 cents for carsharing rentals up to six hours, or to exempt carsharing vehicles altogether. Both measures were deferred.
“The major sticking point has been that the Department of Transportation doesn’t want to lose revenue,” Lawlor said. “They prefer to do pro-rated tax. But, the Department of Taxation doesn’t want to administer two tax rates. So far, there’s been no agreement on the best approach.”
The Department of Taxation noted another one of their concerns in testimony on SB726, saying that “the language of the bill provides for inconsistent treatment of taxpayers … as only customers of car sharing organizations would be eligible” to pay the pro-rated tax rate.
Traditional rental car companies would have been left out. However, Rosenkranz maintains that carsharing is a very different service than rental cars.
“It’s a system that’s designed for local residents to use for short periods of time,” he said.
Sen. Kalani English introduced Senate Bill 726. English’s office told Civil Beat that he is planning to introduce a bill again this session, but is still drafting and working out the details with the proponent.
The tax issue could be a major sticking point in car sharing’s ability to succeed in Hawaii, and is a big factor in car2go’s decision on whether to bring its service here or not.
“(The tax) is a strong disincentive to use short term car services,” Rosenkranz said. “Tax is set up for rental cars, folks who are visiting the islands that are using cars on a daily basis. For someone that uses the system daily, so they don’t have to personally own a vehicle … it’s a tough thing.”
If the tax stays as it is, he doesn’t think his business model will work here.
While Rosenkranz and others are trying to bring the concept to Hawaii, it’s already here, but in a different form.
Enterprise CarShare implemented its program at the University of Hawaii at Manoa over a year ago, for faculty and student members over 21. The program is also at Hawaii Pacific University and the Kaneohe Bay Marine Base.
Crysttal Steiner works in the commuter services department at UH Manoa and says the program has been a success.
Steiner used to live in Portland, where she says car sharing was very popular, not only in the city but in neighborhoods too.
“Lots of people would avoid buying a second car, or gave up their cars altogether. It was really cool,” she said, adding that there was a wide array of vehicles, including pickup trucks that entire neighborhoods would share.
UH started out with two vehicles, but the small fleet has grown to four cars, all hybrids. With nearly 170 members on campus, renters can get cars for $10 to $12 an hour, depending on the vehicle. The cost includes the tax surcharge, gas and insurance. There’s a $35 annual membership fee.
“Students often times don’t have a car, so having a car share vehicle is really helpful,” Steiner said. “They can plan trips to the North Shore, and it gives them the ability to have a car without having the horrible expense.”
She added that the sustainability component — getting more cars off the road — is what attracted UH to the program in the first place.
Steiner also supports changing the tax rate, making the price more reasonable for users.
“We’d love to have no fee, frankly,” she said. “On an all-day rental, it’s a small portion, but as a flat fee on a one hour rental, it gets to be substantial.”