This is a guest post by Alan Mond.
Whether you know it or not, you are already affected by the sharing economy. In fact, you are likely a part of it. Car rentals, taxi rides, hotel accommodations and even the food we eat are all products of the sharing economy. Sharing economy companies like Uber, Airbnb and ZipCar have quickly become household names.
I believe that government is the next sector that is ready to play a role in the sharing economy.
Government is naturally collaborative. Cities, counties and towns don’t necessarily compete with each other – they just happen to be in different geographic jurisdictions, and they already share the very important goal of delivering valuable services to taxpaying citizens in the most efficient manner. The idea of government sharing resources existed long before the sharing economy ever became part of our cultural landscape. In the case of mutual aid agreements (contracts signed between municipalities for emergency situations), most units of governments join forces to support each other. The term collaborative government is a new way of referring to this growing trend we are seeing at the local, state and even federal levels.
Providers in the sharing economy are solving problems that typically aren’t addressed by the prevalent economic framework. For example, heavy duty equipment used by pubic works departments, such as excavators and street sweepers, is expensive to buy and costly to maintain. Geographic regions are composed of large and small municipalities with fleet utilization discrepancies. Large municipalities often have more equipment than they need. Smaller communities lack heavy-duty equipment and often resort to renting from expensive commercial rental shops or contractors.
The logical solution to these problems would be for a large city to loan equipment to a smaller city in order to reduce equipment expenses for both parties. In my work, I often ask city managers why this doesn’t happen more often, and I usually receive an all-too-common answer: liability. Liability seems to be the main reason city staff often avoid the otherwise sound practice of sharing resources. When I dug deeper, I discovered that “liability” was really a blanket term for two specific concerns: property damage to the machines involved, and liability in the case of operator injury. Because underutilized equipment is such an enormous problem, my business partners and I decided to attack the liability issue in order to remove the primary barrier to sharing.
In my recent blog post, “Five Tips to Write a Shared Services Agreement,” I outlined some of the general tips to writing a shared services agreement. After working with over twenty-five different local government attorneys, my company was able to create a workable intergovernmental agreement. On the property damage side of things, we established simple rules of the game. For example, we decided that, if a piece of equipment was incidentally damaged, the renter or borrower was responsible. Regarding the liability issue, we solved the problem by requiring that all participating agencies show proof of insurance covering liability, property of others, and workers’ compensation.
This was a great victory. Risk managers, city attorneys, city managers and even finance directors were happy with the resulting agreement. However, not all Public Works Directors were convinced. Some of the common questions asked were: “What if I need my excavator exactly when a neighboring community had borrowed it?” and “What if I have a water main break and someone is using my Vactor truck?”.
As I mentioned before, collaborative government is not a new concept, and we were able to address all of these questions. We asked for advice from public works directors who were already sharing resources. Some of these folks had been sharing equipment within the states of Oregon and Minnesota, for example; some had been sharing for more than 20 years on a smaller scale. They told us the answers were simple.
Developing trust and relationships as a first step was highly recommended. Equally as important was the idea that owners should have the right to retrieve their equipment at any time should emergencies arise. This made a lot of sense – if the city that rented the equipment knew that it might be needed in an emergency, then they would understandably return the machine. Most of the equipment that is made available by companies such as ours typically comes with an operator, so the equipment often returns to the owner’s yard at the end of the day.
In my experience, many barriers to operating as part of the sharing economy can be removed through the development and establishment of best practices, enabling federal, state and local governments and their agencies to collaborate and share resources more effectively.
About the Author: Alan Mond is the CEO of MuniRent, a web-based platform that makes it easy for local governments to lease heavy duty equipment to other local governments. He will be hosting a webinar, “The Path to Efficient Government Fleets”, on January 29 at 10am. You can also connect with him on LinkedIn or follow him on Twitter at @mondalan.