Pink mustaches, custom T-shirts, petitions and placards flooded City Hall Tuesday as opposing transportation companies clashed at a public hearing over proposed regulations for app-based services like Lyft and UberX.
At issue was whether the app-based services, which essentially allow people to become chauffers of their personal cars, are distinct enough from taxicabs to warrant more relaxed regulations. Taxi industry representatives, highlighting the growing use of smartphone apps to find cabs, said the services are similar enough to warrant one ordinance covering both.
The debate mirrors one happening in cities across the country, where Lyft and UberX have run up against regulators more used to dealing with traditional cabs. Lyft and UberX are currently operating illegally in Minneapolis, but city regulators have only cited and towed four UberX vehicles, said business licensing manager Grant Wilson.
The proposed rules would legalize Lyft and Uber as “transportation network companies” (TNC), while regulating their insurance, setting inspection requirements and imposing other requirements. By definition, however, only taxicabs could accept passengers that hail vehicles on the street — TNC rides must be prearranged.
The City Council panel weighing the new regulations took public testimony Tuesday but is expected to continue working on the ordinance for several weeks before a final vote.
Lyft and Uber supporters argued that the services are unique by allowing drivers to work part-time, make connections in their community and deliver superior service because of driver and customer ratings. “I have now built relationships with many of the drivers in the Lyft community,” said Lyft customer Jesson Hunt. “I know them, they know me. I know their back story, they know mine.”
The taxi industry argued that the proposed ordinance sets up a two-tier regulation that heavily benefits app-based companies. A long list drawn up by the industry’s lobbyists at Faegre Baker Daniels notes taxi drivers can only charge the city-specified meter rate (TNCs are free to apply “surge” pricing), must submit to a city background check (versus a private one), must swap out cars every five years (versus 10 for TNCs) and can’t charge cancellation fees (TNCs already do).
“They’re cab drivers,” said Zach Williams, owner of Rainbow Taxi. “We need one ordinance for all of this transportation because we’re the exact same business.”
They are seeking a solution similar to what occurred in Dallas, where stakeholders jointly hashed out new rules that essentially applied one standard to all “for-hire” vehicles. But the ordinance sponsor, council member Jacob Frey, said after the hearing that, “I dont know at this point whether that’s an option or not.”
The threats posed by new, unregulated competitors like Lyft and Uber come at a tumultuous time for the Twin Cities taxi industry. The number cabs roaming the streets of Minneapolis has skyrocketed since a cap on the total number of licenses was lifted in 2006, rising from 373 in 2007 to 854 vehicles today.
And the cost of doing business as a cab isn’t cheap. Drivers who own their taxis must pay $475 a year to maintain a license, $135 twice a year to have vehicles inspected, upwards of $155 a week to their dispatch company and about $580 a month to maintain commercial insurance, said Waleed Sonbol, owner of Blue and White Taxi. That’s not including gas and the cost to replace the car every five years — eight if it is handicap accessible or fuel efficient.
Under the proposed ordinance, drivers would be “endorsed” by the company rather than individually licensed through the city. Vehicle inspections would occur at a city-approved facility and the companies must carry commercial liability insurance that’s applicable when vehicles are active in the system. Testifiers raised questions Tuesday about just how “active” drivers would be determined for insurance purposes.