City Council Rejects Ride-Share Regulation
In action taken on Aug. 18, 2014, the Ann Arbor city council approved one change to its taxicab ordinance, but rejected another one meant to provide some regulation of shared-ride services like Uber and Lyft. Based on the council’s deliberations, the city will instead likely be taking the approach of establishing an operating agreement with the companies.
The rejected ordinance failed on a 5-5 vote, as Margie Teall (Ward 4) was absent. Voting for the regulation of all drivers for hire were Sumi Kailasapathy (Ward 1), Stephen Kunselman (Ward 3), Jack Eaton (Ward 4), Chuck Warpehoski (Ward 5) and Mike Anglin (Ward 5). Voting against the change were mayor John Hieftje, Sabra Briere (Ward 1), Jane Lumm (Ward 2), Sally Petersen (Ward 2) and Christopher Taylor (Ward 3).
The one ordinance change given initial approval by the council would establish certain parameters to mitigate possible negative consequences to the setting of a very high maximum allowable taxicab rate, under which taxicab companies might eventually compete. Those parameters include a requirement that a taxicab company commit to a single rate annually and that the rate be advertised in a vehicle with signage in letters one-inch tall.
The city taxicab board’s next meeting is scheduled for Aug. 28 at 8:30 a.m. at city hall, and will likely include discussion of the appropriate price point for that very high maximum.
The ordinance change rejected on Aug. 18 would have required all drivers for hire to be registered with the city, to have commercial plates on their vehicles and to maintain insurance commensurate with commercial plates. And the absence of commercial plates on a vehicle that is observed to be used for picking up or dropping off passengers would have provided a reason for a traffic stop by Ann Arbor police. At the taxicab board meetings over the last few months, representatives of the taxicab industry argued that the state statute regulating limousines already gives the city the ability to enforce against Uber and Lyft drivers.
All drivers for hire would include those who work for Uber and Lyft, who together had a contingent of about 50 people in attendance at the meeting, several of whom addressed the city council during public commentary at the start and the end of the meeting. A representative from Uber, Michael White, was invited to the podium during the council’s deliberations on the ordinance. He spoke to councilmembers in a back-and-forth that lasted about 25 minutes, and recited many of Uber’s standard marketing points. No representatives from the taxicab industry seemed to be in attendance at the meeting; in any case, councilmembers did not inquire as to whether a representative might be available for comment.
The recommended ordinance changes came from the city’s taxicab board in the context of the entry of Uber and Lyft into the Ann Arbor market. The companies offer the arrangement of rides through mobile networks with drivers who operate their own vehicles. Both companies have continued to operate in Ann Arbor, despite cease-and-desist orders from the city. [.pdf of cease-and-desist sent to Lyft] [.pdf of cease-and-desist sent to Uber]
The vote by the taxicab board to recommend the ordinance changes came at its July 24, 2014 meeting.
These issues were also discussed at three monthly meetings of the taxicab board prior to that, on April 23, 2014, May 22, 2014 and June 26, 2014.
At the council’s Aug. 18 meeting, Kunselman – who serves on the taxicab board – advocated strongly for the changes, making arguments based on public safety and adherence to existing law. He argued that Lyft and Uber can make a profit with lower rates because the companies are “cheating” the law.
Taylor said that Uber and Lyft are safe and that the companies provide an alternative transportation option, which is desirable. He announced that he would be working with Briere to bring forward a resolution directing the city administrator to develop an operating agreement between the city and ride-sharing companies along the same lines that the city of Detroit has with such companies. His remarks were met with applause from Uber and Lyft supporters, including some riders and drivers who spoke during public commentary.
Regarding fare regulation, the city’s current structure already allows for the establishment of a maximum rate to be adopted by the city council. Currently the maximum rate in Ann Arbor is $3 to get in, $2.50 per mile, and 40 cents per minute waiting time. Those maximum rates were last adjusted upwards three years ago, on May 16, 2011, in response to gas prices that had nudged past $4 per gallon. At that time, the taxicab board indicated it did not anticipate considering another rate change until the gas prices were over $5 for at least two consecutive months.
So the taxicab board’s thinking is not being driven by gas prices, which are currently between $3.75 and $4 in the Ann Arbor area. Instead, a possible increase in allowable fares is based on concern that the taxicab industry in Ann Arbor might not be able to survive unless taxis are allowed to charge more.
At its July 24 meeting, taxicab board members discussed the possibility of delaying their recommendation on the ordinance changes until the board could also make a specific recommendation on the price point for a very high maximum rate. But ultimately board members felt that a recommendation on a price point for a new maximum rate could come later – especially because ordinance changes require a first and second reading in front of the council. There would be a window of opportunity between those readings to make a recommendation on the higher maximum. The taxicab board’s next meeting is scheduled for Aug. 28 at 8:30 a.m. at city hall.
This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.