City puts breaks on ride-share companies
February 17, 2014
Ride-share companies, such as Uber and Lyft, are facing roadblocks because of regulations pro- posed by the mayor and a lawsuit filed by major cab companies.
Mayor Rahm Emanuel and Alderman Emma Mitts (37th Ward) introduced a draft ordinance to City Council Feb. 5 to standardize the currently unregulated ride-share companies.
If the ordinance passes, ride-share companies would be required to pay an annual fee of $25,000 plus $25 per driver to obtain a city license. The proposal also mandates that companies conduct back- ground checks, drug screenings and vehicle inspections. Drivers would also have to undergo training and get commercial liability insurance.
Believing that the proposed ordinance aims to decrease competition between ride-share companies and city-regulated taxis, ride-share businesses oppose the legislation because the regulations would hinder operations, said Lyft spokeswoman Paige Thelen in an email.
“As it stands now, the proposed ordinance would not support the continued operation of Lyft,” Thelen said. “We’ve had productive meetings with city leaders to discuss Lyft’s peer-to-peer business model and commitment to safety and look forward to continuing a conversation that allows for innovation and consumer choice.”
Lyft hosted a community meeting Feb. 13 to gather drivers and customers who oppose the regulations and discuss how Lyft could successfully stop the ordinance’s passage, according to a Feb. 11 email from Laura Copeland, Lyft Chicago’s community manager. According to the email, more than 5,000 people called their alderman to oppose the ordinance.
While Lyft worries that the ordinance would harm business, cab companies and drivers do not think the suggested regulations are strict enough. Major cab companies filed a lawsuit against the city Feb. 6, calling for ride-shares to be regulated as stringently as cab companies are regulated.
Cab companies must pay a minimum of $300,000 for taxi medallions and the city’s 6,800 operating cabs pay more than $24 million annually in taxes and fees, which ride-share companies do not incur, according to a Feb. 5 letter from Aldermen Edward Burke (14) and Anthony Beale (9).
Burke and Beale proposed a resolution to eliminate ride-share companies entirely because they are a violation of Municipal Code, which states only taxicab companies can lawfully transport passengers.
Ade Dada, a local taxi driver, said it is unjust that ride-share companies do not have to pay the same expensive license and insurance fees as cab companies and that they take business from taxi drivers.
“I heard some [ride-share drivers] make about $1,000 a week; that’s what I would make if I was working 16 hours a day,” Dada said. “If [the city] really wants to do anything, I think they should get rid of [ride-share companies and allow it] in only neighborhoods.”
According to the Bureau of Labor Statistics, the 2012 median income for taxi drivers in the United States was $22,800.
Not only do ride-share companies take customers from taxi drivers, they are also uninsured, posing dangers to passengers, said Dave Sutton, spokesman for the Taxicab, Limousine and Paratransit Association. A 6-year-old girl was hit and killed by an Uber driver while crossing the street in San Francisco on Jan. 31 and the company did not abide by commercial insurance regulations, refusing all liability, Sutton said.
“In that exact same instance, a legitimate taxi cab company would possess insurance to somehow try and compensate for the family’s pain and suffering,” Sutton said.
Brad Saul, president of the Chicago Disability Transit, said he supports the proposed ordinance because it would place more safety and financial responsibility on ride-share drivers.
“Why are any of these places exempted from what the cab companies need to do?” Saul said.
Sutton said despite common misunderstanding, ride-share companies are the same as taxi companies because they provide the same public transportation.
“What we would simply like to see is one set of regulations,” Sutton said. “We are taxi companies and so are these companies.”
