Cities Power the Sharing Economy

Cities Power the Sharing Economy

So much of the news we read these days is peppered with the words Uber, Lyft, or Airbnb. With the swiftness of their rise in cities nationwide and globally, city leaders and policymakers are scrambling to find out how to best approach this new economic model—the sharing economy. At some point in the last five years the word ‘Uber’ transitioned from a catchy company name to a household verb, and the sharing economy became a game changer.

People think of a lot things when they hear the term “sharing economy.” The rapid diffusion and evolution of this new economic model has left people with a variety of feelings, most of which fall somewhere in the realm of ambiguity and utter confusion. And that’s reasonable, given the warp speed at which the sharing economy thrust itself into our everyday lives, becoming commonplace in cities large and small around the world.

Furthermore, the vast difference in types of sharing economy platforms can be mind-boggling and often times policymakers are solely aware of what is happening with ridesharing or ride-hailing and homesharing, not realizing the vast array of goods and services that can be shared from food to ones time to tools and even municipalities sharing heavy equipment.

The common theme within this space is that cities make the sharing economy work. With the unanticipated surge in sharing or collaborative consumption companies, there has been what is commonly referred to as ‘disruption’ of existing systems. Traditional industries are being upended with the growth of innovative sharing economy models that do not neatly fit into existing local regulatory environments.

Residents both expect on-demand services and crave collaborative opportunities. City leaders must walk a fine line, embracing change and innovation while simultaneously prioritizing safety and market fairness. As they grapple with this, they find that there is no best practice or one-size-fits-all solution, but rather an opportunity to experiment, to find a unique, context-sensitive answer that works for their community.

When it comes to cities and the sharing economy the legislative and regulatory system has been most affected by ridesharing and homesharing, and emerging models for how to incorporate these services are developing, but the newness of this issue still precludes long-term tested best practices. Additionally, there is no one-size-fits-all regulatory solution, because one of the true innovations in cities is always the ability to experiment and come up with solutions that work best for the local context.

At the National League of Cities, we conducted a study to measure the sentiment and direction of the sharing economy in the 30 largest cities in America.

Findings are based on a content analysis of media sources covering:

  • the subject of sharing-economy services
  • the introduction of sharing-economy services in cities
  • the overall sentiment pertaining to sharing-economy services
  • policies and regulation on sharing-economy services

Because of the sheer expansiveness of the sharing economy, NLC refined this study’s scope to focus only on ridesharing and homesharing services. Part of measuring the sentiment, also included an exploration of whether each city has or is undertaking legislative or regulatory action to address these new models.

Every city is different, have different needs, a different culture, and different existing economic conditions, and they all subsequently address the sharing economy in different ways. Even given the wide variety of responses to sharing, most of the cities in our sample are working toward accommodating or adjusting to the operation of ridesharing or homesharing companies.

Looking specifically to the 30 cities analyzed we found 9 cities that showed overall positive sentiment and 21 that had mixed sentiment to homesharing and ridesharing. Additionally, we found that 15 of the 30 cities experienced regulatory action or other intervention from state policymakers. Our analysis also found that states are playing a big role in this discussion. State level interventions ranged from legislation to regulatory rulings to state legal action.

Most mixed and negative sentiment for the sharing economy is based on concerns over safety (provider and consumer), fair business practices (equal application of regulations or “leveling the playing field”), or lost tax revenue (uncollected hotel taxes). Overall, cities are finding that there is a way to strike a balance between promoting innovation, ensuring consumer safety and addressing existing industries.

Within the study we highlighted more in-depth what is happening with the sharing economy in a number of US cities, including Denver and Portland. Denver is an interesting city for further exploration, because it is one of the cities that have seen intervention from state lawmakers. Colorado was the first state in the union to pass legislation authorizing ridesharing statewide.

While this legislation received pushback from some traditional industries, Governor John Hickenlooper celebrated the state’s move toward embracing innovation. While the state legislature made a bold move in legalizing ridesharing outright, the policy still underscores the importance of safety with provisions that require insurance and background checks. In October of 2014, the Denver City Council convened a special task force to explore the city’s sharing economy, with an initial goal of understanding the social and economic effects of the city’s homesharing market.

Portland, Oregon has definitely displayed mixed sentiment toward the sharing economy. Homesharing has been legalized, and the city partnered with Airbnb to launch its Shared City Initiative. Part of this will include efforts to assist Airbnb hosts collect hotel taxes on the city’s behalf. Ridesharing has posed a different challenge for the city, as existing city codes prohibit the practice. Portland Mayor Charlie Hales initiated a new task force to explore the possibilities of a regulatory framework that might accommodate everyone.

In the meantime, Uber has agreed to temporarily halt operations in the Rose City, and is working with city officials to reach an agreement. An official statement from the city in December expressed optimism, and willingness to work “with Portland’s lawmakers, working to create a regulatory framework that works for everyone, not just us. Not just the taxi cabs. Not just the city officials. Everyone.”

City ordinances that govern more traditional fields of commerce took decades to develop, and while the sharing economy is wildly popular and nimble, we cannot expect things to change overnight. Cities are meeting these changes with open arms, though, and committing to addressing them responsibly, with the best interests of residents in mind. The National League of Cities (NLC) is helping them navigate and prepare for this new environment with resources and the development of a Sharing Economy Advisory Network.

Because this is a rapidly changing environment our findings represent a snapshot in time. In addition to reflecting what we could see at the time of our data collection and analysis, however, our findings indicate the presence of some trends in the sharing economy. Overall, city policymakers are trying to strike a balance between promoting innovation, ensuring consumer safety, and respecting existing industries.

This is only the beginning of the sharing economy, and we will undoubtedly continue to see more new companies, more disruption, and more social and political interplay between existing and new actors. Cities will continue to serve as the laboratories for these ever-changing technologies and business models. The best thing that city policymakers can do is keep an open mind about how the new economy might be fruitful with the right regulatory framework in place. Sharing is here to stay.

Nicole DuPuis
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Nicole DuPuis is the Senior Associate for Infrastructure in the City Solutions and Applied Research Center at the National League of Cities. Her areas of expertise include transportation, telecommunications, public works, and urban innovation. Throughout her career in urban policy she has published several articles and contributed to numerous research reports on these topics. She is also a regular contributor to NLC’s blog, CitiesSpeak, on a variety of infrastructure issues. Follow Nicole on Twitter @nicolemdupuis.

Brooks Rainwater
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Brooks Rainwater is the Director of the City Solutions and Applied Research Center at the National League of Cities. The Center strengthens the capacity of municipal leaders to create strong local economies, safe and vibrant neighborhoods, world-class infrastructure, and a sustainable environment. As a strong advocate for vibrant and successful cities, Brooks frequently speaks and writes on the subject, and has published numerous research reports and articles on the creation of innovative, sustainable, and livable communities.Follow Brooks on Twitter @BrooksRainwater.

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