Ann Arbor Taxi Board Reacts to Uber

As new business enters market, board action asks city attorney's office to work on draft for local law requiring all "drivers for hire" – not just taxicab drivers – to register with the city

Ann Arbor taxicab board meeting (April 23, 2014): In its one action taken at the meeting, the board approved making a request of the city attorney’s office to come up with a draft of an ordinance amendment – that would require all drivers for hire to be registered in the city.

April 23, 2014 meeting of the Ann Arbor taxicab board.

April 23, 2014 meeting of the Ann Arbor taxicab board at city hall. (Photo by the writer.)

The action comes in response to Uber‘s entry into the Ann Arbor market. Uber is a service, based on a mobile app, that coordinates prospective passengers with drivers who are willing to make the trip. Currently the city’s taxicab ordinance covers only taxicab drivers – not limousine drivers or any other drivers for hire. The board wants to see a draft ordinance that would include all drivers for hire – so that Uber’s drivers would need to be registered in the city of Ann Arbor.

Stephen Kunselman, who serves as the city council’s representative to the taxicab board, put it this way at the meeting: “The number one issue of regulating drivers in the industry is for public safety, alright? I want to know who these drivers are who are driving around picking up people in our town, okay? Number one issue.”

A change to the city’s ordinance could come only after approval by the city council.

The action requesting the city attorney’s office to begin work on an ordinance amendment was not actually on the board’s meeting agenda. The one item for discussion had been to consider possible deregulation of taxicab fares in the city – a topic the board has been considering for about a year. As board chair Michael Benson put it, “It’s time to address it one way or the other.” Currently the maximum rate is $3 to get in, $2.50 per mile, and $0.40 a minute waiting time.

Those rates were last adjusted upwards on May 16, 2011, in response to gas prices that had nudged past $4 per gallon. With one exception, representatives of taxicab companies at the April 23 meeting were not looking for the kind of $0.25 adjustments that have been made in the past. Instead, they’re looking for a high maximum – along the lines of $5 to get in and $5 per mile – so that a competitive market could develop under that cap.

Benson and Tom Crawford – the city’s CFO and an ex officio member of the board – steered the conversation toward identifying ways to measure success of any change in the city’s approach to regulating fares: “What is it that you want to achieve? Let’s get some clarity on that so that we can identify whether we have succeeded or not. That’s the real point,” said Crawford.

What came out of that board discussion was that the measurement of success should include the number of taxicabs being operated in the city. At the meeting, Ann Arbor police officer Jamie Adkins told board members that for the three years from 2008 to 2010 there were 177, 193, and 179 taxicabs operating in the city, respectively. But when Yellow Car converted all but one vehicle to limousine, that number dropped to 111 in 2011. In 2012 there were 132 taxicabs, she said, and the current figure is 124.

The board’s past effort to regulate the entire livery industry – including limousines, which are supposed to take only pre-arranged, not hailed rides – has included recommendations to revise the city’s ordinance so that limousine companies cannot hold themselves out as taxicab companies. And the city council enacted those changes in 2011. But according to officer Adkins, AAPD has learned that those aspects of the ordinance can’t be the primary reason for a police traffic stop. [.pdf of Ann Arbor taxicab ordinance]

Public Commentary: Initial Opportunity

Rick Clark of Amazing Blue Taxi addressed the board at the start of the meeting during time allotted for public commentary. He contended that in essence, the transportation industry in Ann Arbor has been deregulated as far as fare structure goes. Uber is coming to town, he noted, and that is the market.

The ordinance that Ann Arbor has is a fine ordinance for 1984, but now it’s 2014, Clark pointed out. Technology has changed, but the city has not changed the regulations – to take into account how the market has changed. The city has to decide whether it wants to have a healthy taxicab business over which the city could have some control, he said, or if it would prefer just to have the wild, wild West.

Deregulation of Fares?

Board chair Michael Benson noted that the deregulation of fares has been on the taxicab board agenda for about a year now. “It’s time to address it one way or the other,” he said. He reported that he and Tom Crawford, along with financial services support staff Sarah Singleton, had met during the previous week and talked about key questions. One of them was: How do we quantify success?

Crawford, who serves on the board in an ex officio capacity as chief financial officer of the city, said that during his time on the board, what he’d seen is the board react to a things that happen – things don’t just stay the same. As the board thinks about either experimenting or moving to a deregulated restructure, he suggested board members think about ways to measure success. “What is it that you want to achieve? Let’s get some clarity on that so that we can identify whether we have succeeded or not. That’s the real point,” said Crawford.

The way Crawford understood fares to work is that the city sets the maximum rate – and drivers may charge less but they cannot charge more. Typically when you deregulate rates, the intent is that the rates become more competitive, and that competition would drive the rates down, Crawford said. He wasn’t sure he would see that happening here. The question he put to the board was: Why should we make any change? Just to say that technology is out there was not enough, he said. What is not working, and why should the city change fares? Crawford asked.

Board member Eric Sturgis said that Rick Clark of Amazing Blue Taxi had made a good point in a letter he’d written to the board: What else does the city set prices on and regulate what a business can and cannot charge? If the taxicab board let the taxis set their own rates, Sturgis thought it could drive prices higher or lower. He wondered if the city had ever tried deregulating fares.

Board member LuAnne Bullington ventured that the city of Ann Arbor already had a situation where fares were not regulated – with limousines. The city doesn’t regulate limousines, she said, so was that not already an experiment that the city was in the midst of?

Initial Discussion of Uber

After a few minutes, the fact that Uber has entered Ann Arbor’s market was mentioned.

Board member Stephen Kunselman agreed with Crawford’s framing of the question. Kunselman thought that limousines were pricing themselves based on taxicab rates. Taxicab fares are the benchmark used by limousine companies, Kunselman said. Everyone knew that Uber is already in Ann Arbor, Kunselman said. He’d received a call from the Detroit Free Press writer commenting on this, and the Free Press reporter had notified him that the city of Detroit has issued a cease-and-desist order against Uber.

Kunselman noted that assistant city attorney Kristen Larcom was in attendance at the meeting, so he expected that Ann Arbor would be following Detroit’s lead. “The number one issue of regulating drivers in the industry is for public safety, alright? I want to know who these drivers are who are driving around picking up people in our town, okay? Number one issue.” As far as setting rates, the other issue identified by Kunselman is that bartering should not happen: The city doesn’t want people getting in a car in and bartering, so that it costs someone $10 to get across town and the next person pays $30.

Back to Fares

Bartering would create a lot of issues, Kunselman thought, and the taxicab board would end up hearing complaints about why people are getting gouged. In terms of the deregulating fares, from all the discussions that he’d had with Rick Clark and what he’d been finding, Kunselman had not seen any other community that has no regulation of rates, or that does anything complicated. Kunselman was not sure he wanted Ann Arbor to be the guinea pig in that respect. At the same time, he said, he recognized that the technology and the industry are changing pretty dramatically. So he didn’t know what the next step is. But the most important issue is that the city should make sure it knows who the drivers are in town, Kunselman concluded.

Bullington said she’d been talking to people who use cabs, and she uses cabs herself. Right now, we have the best of both worlds, she said. Ann Arbor has limos that are deregulated and can set their own price, and also has taxicabs that are regulated. So if people want to call around to find out what the prices are to get from A to B, they can do that. The people she was talking to know what they will get charged by a taxicab, and they know that taxicabs are regulated and they’re very comfortable with that. But there’s another group who want to see who can get the best rate so they call the limo companies. Bullington concluded that Ann Arbor has the best of both worlds.

Benson responded to Sturgis’ question by saying that Ann Arbor had not ever tried deregulation. Crawford ventured there was a time that the ordinance had a provision such that if you don’t have a meter, then you must post your rates – but he was unsure of the details. He did not think it was completely deregulated. Larcom’s recollection of that version of the ordinance was also vague. She said there was a provision of the kind Crawford described, but she didn’t recall exactly what it said or how it worked. She didn’t recall anybody ever using the alternative of posting rates instead of using a meter.

Benson noted that it’s important to remember that the taxicab board could not itself deregulate rates: That would require an ordinance change, he said. Any decision the board eventually made would likely just be a recommendation. Benson also agreed with Kunselman’s point – that the principal goal is to ensure safety. At the same time, the board was doing its best to make sure that the taxicab industry can thrive and succeed. Benson was concerned that if the board does nothing, more and more of the taxi companies would become limos, which could upset the balance. Now, is that the city’s responsibility to try to keep the balance? Benson asked. How many cabs does the board actually want on the streets of Ann Arbor? What makes sense?

Sturgis agreed that the point about safety is a good one.

Uber Redux

Kunselman noted that a lot of the issues the board is trying to deal with are handled at the state level. He thought there has been some legislative movement on the state level. On the other hand, he also recalled hearing that the state would actually allow cities more flexibility, and the city just hasn’t tried taking action. Kunselman said he was open to pushing the envelope and passing an ordinance amendment that basically requires all drivers – taxicab drivers and limo drivers alike – and push that to see what happens. If the limo companies take the city to court, then maybe that’s something the city needs to do. “We need to push from the bottom up as well as the state pushing down,” Kunselman said.

About Uber’s position that it does not take responsibility for the transportation and that the company is just coordinating these drivers, Kunselman said: “I’m not buying that. They have direct involvement in using their technology and they’re doing it to make money. If they are making money, then they should be subjected to our regulations.”

“Uber is here and we’re going to counter it,” Kunselman said. “We have to counter it. We can’t just let them come into our community and dictate that they are basically going to wipe out the taxicab industry because they are only using limo drivers.” From what he’d read in the paper, Uber was using all licensed limo drivers. But if they’re not using limo drivers, and if they are not being regulated, then the city needs to regulate them. Any driver who is picking up passengers for a fare should be licensed by the city of Ann Arbor, whether they are a limo driver or a taxicab driver, Kunselman said.

At that point, it was apparent that the board’s conversation about fares had been transformed into a discussion of what to do about the entry of Uber into the Ann Arbor market.

Sturgis ventured that it would be possible to have an ordinance that requires all drivers to register with the city, but also to deregulate fares.

Kunselman felt that deregulating fares is a good concept but agreed with Crawford that the board doesn’t know what the impact of that would be. He thought that step might drive fares higher – because limos are benchmarking themselves to Ann Arbor taxicab rates. Kunselman then drew a comparison of the effect of increased housing supply in downtown Ann Arbor: Everyone thought that increased supply of housing downtown would cause prices to come down. What had actually happened is that the new units just filled the market for 5,000 additional students that have been enrolling at the University of Michigan in the last decade, he said.

The introduction of services like Uber into the market means that it’s a very dynamic market, Kunselman said. He continued by describing the Ann Arbor taxicab market as kind of boom-and-bust, with weekends getting heavy use. That’s why the board needs to stay very focused on the safety issue, he said.

Kunselman called the taxicab rate issue very delicate, and suggested that rates should be calibrated to gas prices. Fares haven’t been changed due to increases in gas prices since 2011, he pointed out. If fares need to be adjusted, Kunselman was open to that and he was willing to tweak the fares. But he didn’t want to try to create a new fare system that included zones or other complicated features.

Success Metric: Number of Taxicabs?

Benson tried to get board members to focus on the question posed at the start: How would the board measure success, if it decided to change the fare structure? Benson then asked: Are we succeeding now? Since 2011 have we been succeeding? Hypothetically, if the city council allowed the board to raise the maximum fare to $10 – in effect deregulating fares – how would the board define success? Is it the number of cars on the street? Is it the number of companies? The number of incidents? The number of complaints? What might make sense? Benson asked. He noted that these are the kind of questions that should be answered, whether rates are deregulated or not.

Distribution of taxicabs companies operating in Ann Arbor by the number of vehicles in operation. Only three companies have more than 18 cabs. Most companies have just on cab in operation.

Distribution of taxicabs companies operating in Ann Arbor by the number of vehicles in operation. Only three companies have more than 18 cabs. Most companies have just one cab in operation.

Board member Robert Goeddel ventured that the main incentive for deregulating would be to encourage more taxicabs – because however the city of Ann Arbor filters drivers, the city at least knows who is on the street picking up passengers. He thought success should be tied to the number of taxicabs operating in town, as opposed to limos. One thing that prompted this call for deregulation of fares, Goeddel said, was that a lot of cabs were switching over to limos – which are under state control, not under city control.

Crawford then asked Adkins to share information about the number of taxicabs that are operating in the city of Ann Arbor. Currently there are 124 vehicles and 21 companies. Previously, there were significantly more – when Yellow Car was part of the taxicab industry. From 2008 to 2010 there were 177, 193, and 179 taxicabs operating in the city, respectively. But when Yellow Car converted all but one vehicle to limousines, that number dropped to 111 in 2011. In 2012 there were 132 taxicabs, she said, and the current figure is 124.

Kunselman summarized the numbers by saying that when Yellow Car converted to primarily limo service, that took a big chunk of the taxicabs out of service, and it’s been pretty steady since then.

Success Metric: Citations for Limo-as-Taxicab?

Benson again asked the board to focus on metrics for success – whether the board takes on fares or not. Kunselman said he did not know if it was a metric for success, but he’d like to know on a regular basis how many limos are being pulled over for operating as taxis.

Adkins responded to Kunselman by saying that part of the city’s taxicab ordinance is very difficult to enforce – especially once the limos caught on. Adkins explained that when a limo is pulled over, before an officer makes contact, the driver would tell the passenger to tell the officer that it was a prearranged fare and tell the officer that the passenger had called for the ride. Kunselman ventured that the limo driver would still need to show their licenses. Adkins told Kunselman she’d talked to the state police about whether Ann Arbor police officers could stop limos – to make sure they were properly licensed through the state and that they had their current driver record with them. Adkins explained that it could not be the primary reason to pull over a limo.

The state police had suggested that Ann Arbor look at enacting a local ordinance regulating limousines. Kunselman’s response: “Then let’s do it.”

Adkins said that East Lansing has done something like that already. Kunselman ventured that the state is realizing it’s not working to regulate limos at the state level. If the limo company wants to sue Ann Arbor over a local ordinance, that company will need to have something to point to at the state level saying the statute clearly prohibits cities from enacting ordinances regulating limousines. Kunselman understood the message from the state to be that it’s not that clear.

Sturgis said he did not know why the board did not simply place on a meeting agenda an ordinance amendment that requires all drivers to register with the city. “To me, that should be a no-brainer,” he said.

Registration of All Drivers for Hire

Crawford asked for clarification, saying he thought the limo drivers were licensed by the state and not licensed by local municipalities. Adkins explained that limo drivers have to have a chauffeur’s license, but it’s the vehicles that are registered by the state, not the drivers.

Sturgis said that the drivers should be registered locally if they’re not registered by the state.

Bullington noted that building trades contractors get a license from the state, but they have to be registered in the city. Sturgis again pushed for the board moving toward an ordinance amendment that would register all drivers – limo drivers and taxicab drivers alike. “I don’t understand why we can’t move that forward,” Sturgis said. Kunselman replied: “All right, let’s do it. I move that we ask the city attorney’s office to draft an amendment that would allow for the regulation of all drivers for hire in the city of Ann Arbor.”

Crawford ventured that the draft would come back for a broader discussion by the board. He got clarification from Kunselman that standards for taxicab drivers would be the same as for limo drivers as well.

Larcom, who will be doing the work to write the ordinance amendment, got clarification that the board wanted all drivers for hire – taxicab drivers and limo drivers – to get what is essentially right now is just a taxicab driver’s license. Kunselman indicated that he wanted all drivers for hire to be registered, because his understanding of how Uber works is that there is no cash transaction between the driver and the patron – but that’s still a driver for hire.

Benson raised the question of whether this issue falls under the purview of a taxicab board – or if the board should be named the taxicab/limo board? Kunselman ventured that changing the title of the ordinance itself might be an option. Benson got confirmation from Kunselman that he definitely wanted the taxicab board to be involved.

Crawford got additional clarification that the board’s intent was to require all drivers for hire to be registered, whether the rides were hailed (as with a taxicab) or pre-arranged (as with a limo).

Sturgis ventured that once the safety issue is figured out, the board could then talk about the fares.

Outcome: The board unanimously approved the motion to ask the city attorney’s office to draft an ordinance amendment that would require all drivers for hire to be registered with the city.

Later in the meeting, the board came back to the issue of the city’s ability to enforce ordinances on limo drivers holding themselves out as taxicab drivers, and on other ancillary issues.

Benson asked Adkins to what extent the city is trying to enforce the city’s ordinance now? Adkins told Benson that what can be done about it must be done through ordinance changes. In terms of current enforcement on limousines holding themselves out as taxicabs, there’s no enforcement because officers can’t make it the primary reason for a traffic stop. AAPD has tried, but it’s very difficult, she explained. There are officers who make sure that a limo or taxi has proper documentation, when the officers stop a limo or taxi for other reasons. But as far as enforcement of the prohibition against limos working as taxicabs, it is not happening, Adkins explained.

Kunselman ventured that if the city enacted an ordinance that requires all drivers for hire to be licensed, that would give the AAPD the responsibility to make traffic stops. Adkins was not sure that was automatic, saying “We have to make sure that that’s a primary offense that we can stop for. That’s something that I would defer to the city attorney’s office for.”

Adkins explained that this issue is something the police department is confronting now on the state regulations: They can’t stop somebody just to make sure the limo or taxi is properly licensed. That’s a secondary offense, and so an officer would need to stop them for a primary offense first. As an example of a primary offense, she gave a traffic violation.

Kunselman asked if stopping in the road to pick somebody up could count as a traffic violation. Adkins indicated that impeding traffic is one possible traffic violation. Adkins said she’d like to have something with more meat to it – so that officers on patrol would be able to enforce it instead of having to wait for some other traffic violation to occur.

More Discussion on Uber

During the final round of public commentary, the board returned to the subject of Uber.

A representative of Arbor Taxi ventured that Ann Arbor already has the highest taxicab fares in the whole country – the same rates as in New York City. Rates should go down, not up. But with Uber’s arrival in the market, he wanted to hear from board members: What you going to do to protect us?

Kunselman reiterated that with Uber, one issue is the drivers. The other issue is insurance. If you pull over a person who is impeding traffic to pick up a ride and is doing it for hire, can you ask for proof of insurance to drive for hire? Kunselman asked. The answer from Adkins was: Not until the city has done what the city of Detroit has done – by attempting to regulate Uber. Detroit has issued a cease-and-desist order and told Uber that the business needs to register with the city as a limo company. So until Ann Arbor has city ordinances in place and the business is required to register as a limo company, not much can be done.

Adkins reviewed how there are two kinds of services offered by Uber: UberX and UberBLACK. For UberBLACK, they’re contracting with limo companies, she said. It’s UberX that’s of more concern, she said. Anybody passes Uber’s vetting system if they have an operator’s license in a vehicle that accommodates four people and personal insurance.

Kunselman wanted to know if Ann Arbor could piggyback on what Detroit is doing and issue some sort of cease-and-desist order. “We need to send that message pretty clearly to Uber,” Kunselman said. If their app is allowing for drivers for hire without the proper credentials and insurance, then Kunselman thought “it behooves us as a city to make sure that they are notified that that’s not acceptable.”

Larcom responded to Kunselman by saying she couldn’t say right away if action could be taken now. If the business is violating a city ordinance, then just like an officer can write a ticket without going to the city council, the city can enforce its ordinances, Larcom said.

Kunselman asked what had caused Detroit to issue a cease-and-desist order. Adkins explained because Uber was registered as a limousine company. The city of Detroit has a limo ordinance in addition to a taxicab ordinance, she explained. Kunselman said his understanding is that once Detroit’s population dropped below 750,000 that Detroit no longer had the authority to have a limousine ordinance. But if Detroit issued a cease-and-desist, then the city was “pretending” it did have that authority, he said.

Adkins told Kunselman that there is currently some language within the state statue that she felt the state attorney general’s office and certainly the Michigan State Police have interpreted to mean that cities can regulate limousine companies. Adkins said she only knew what had been explained to her. At any rate, she reported that the previous evening she’d looked up on the state’s website to see if Uber was even registered as a limo entity within the state – and they are not. [Updated after initial publication: A query from The Chronicle about the ability of cities to regulate limousine companies was referred by the state attorney general's office to the Michigan Dept. of Transportation. Jeff Cranson, MDOT director of communications, emailed The Chronicle the following statement: "Public Act 271 does NOT prohibit local limo regulations."]

Adkins also reported that she’d been provided that morning with descriptions of eight different cars that were seen on the road the previous night that are providing transportation for Uber. Only one of them had a commercial plate; the other seven did not have commercial plates. She described how there’s a light that plugs into the cigarette lighter and sits on the dashboard, to identify that the vehicle is providing rides through Uber.

Kunselman said the bottom line is that the city needs to enact some ordinance amendments to reflect the change in business practices, and then start enforcing the ordinance. “We can’t wait for the state. I would like to follow the lead of the city of Detroit,” Kunselman said. So Kunselman told Larcom he was looking to the city attorney’s office to start that ball rolling.

Kunselman indicated that he would certainly bring it up at the next city council meeting and report that as a result of the taxicab board’s meeting, that process is getting started. He ventured that there are other, ancillary issues that need to be dealt with – and he would look to the city attorney’s office to somehow “draft that up.” Larcom indicated that she would rely on Adkins to learn what exactly Uber does.

Metrics for Success

The board continued with its discussion of metrics for success. Sturgis said that success should depend on safety – not having incidents come up with customers. He also felt that riders should feel like they’re getting a fair deal for the ride. Benson ventured that whatever the board does or doesn’t do affects the industry and affects the riding public. Ann Arbor loves transportation, Benson continued, so as the board proceeds in this discussion and its multiple facets, he would envision a good amount of public interest with “folks wanting to tell us things.” The traveling public wants cheap transportation and safe transportation, Benson said. At the same time, people who work in the industry need to be able to earn a living.

Benson summarized what he was hearing – that people would like to see the general case addressed to some extent before the board looks to deregulate fares, if the board were to do such a thing. As far as measures of success, he said it would be measured in terms of safety, in a variety ways. Success would also be measured by maintaining the number of companies operating vehicles in the city. Benson was concerned that if a critical mass of taxis is lost, the limos will be able to ignore the basic taxicab fare as a basis of comparison. Benson felt that fares would rise as a result.

Crawford wondered how the number of vehicles licensed in the city would be used as a metric. The number could go up or down – so would that be a reflection of success or a lack of success? Having more taxicabs in the city might make it more difficult for the industry to survive, he ventured.

Kunselman observed that the seasonal character of the Ann Arbor market – with football games, for example – would make it difficult to measure success. Kunselman indicated he was not interested in creating anything complicated.

Bullington noted that success would be difficult to measure in a college town where the population fluctuates. Crawford suggested that if the board does go through with setting a much higher maximum fare, under its existing authority, it might be done as a pilot – and that would have to be for a full year, because of the seasonality.

The conversation then moved to how rates are advertised, but again swung back to the issue of regulating drivers for hire. Larcom, who would be doing the drafting of the ordinance amendment, stated: “I just need to know what is being proposed.”

Kunselman ventured that at this point, Ann Arbor might be the city to push the envelope because the state is not able to. The state is essentially saying that the locals need to take care of it, he said.

Goeddel returned to the historical data about the number taxicabs operating in Ann Arbor. Adkins reviewed how it had remained pretty steady since about 2011, but there’d been a significant drop when Yellow Car converted all but one of its vehicles to limousines. Benson ventured that it would be interesting to know how long various companies have been registered in the city. Benson said that if the board knows how many limos are running in Ann Arbor, and also knows how many taxicabs are here, then the board will have a better idea of what’s going on in the city.

Crawford responded to Benson by saying he thought the board could get an idea of how many drivers are registered in the city but not necessarily how many are operating. The drivers might not be operating here. Kunselman pointed out that there might be four drivers per car.

Crawford indicated that to get a clearer picture, you’d have to start counting vehicles, drivers, and hours of operation. Adkins added that drivers migrate between companies, so initially the city might know who they’re working for, but that ebbs and flows over the year. The drivers could start out today with one limo company and then for whatever reason tomorrow go to a different one, she said.

Public Commentary

After the board discussion, toward the end of the meeting during public commentary, John Etter of Blue Cab told the board he was kind of impressed that board members had focused so heavily on customer safety. He’d thought he’d just been yelling into a void about the importance of safety. He felt that the primary purpose of the board was to ensure public safety in the industry. On the topic of fares, he thought the fact that almost all taxicab companies charge the maximum rate indicates a flaw. There should be variation in a competitive marketplace. He wanted the city to set a high maximum and then let people come in under it. That way you prevent absolute gouging, he noted – you can’t tell somebody it’s 10 bucks to get in and 20 bucks a mile.

But a high maximum of $5 to get in and $5 a mile – might be something to explore, he said. Etter indicated he would never charge anything as high as 5 bucks to get in and 5 bucks a mile – because he would lose most of his customers. But if you set it high, then the prices that companies would set, under that high maximum, would at least resemble a market. If he wanted to run 2013 Tauruses and someone else wanted to run 2004 Crown Victorias, then some people would take the Crown Vic because it’s cheaper, Etter said, and other people would take a ride in a 2013 Taurus because they’re willing to pay for it.

Etter then criticized the idea that taxicab rates should be regulated at all. The state regulates a lot of things about restaurants to ensure public safety, he said, but the state doesn’t regulate price. If you want to eat a McDonald’s burger, you do that. Or if you want to pay Zingerman’s 18 bucks for sandwich, he said, you can do that.

Etter also touched on the topic of insurance, saying there are only two or three companies that provide insurance for taxicabs in the state of Michigan. He reported a recent conversation with a colleague about his insurance, and the first quote he got was $2,000 higher than last year. If that happened to him, with his 50 cabs, he would convert his business to limos immediately, saying he would have no choice. With a $100,000 increase in operating costs, it would just be a no-brainer – because he could not pass that cost along to riders.

Benson asked Etter: If the city were to set a high maximum, what should that high maximum be? Etter told Benson that if the board didn’t want to keep revisiting it, he couldn’t imagine in the near future anybody wanting to charge $5 to get in and $5 a mile – but that kind of maximum would give companies potential for a lot of range, he said. He couldn’t see his company approaching that limit in 20 years – barring an explosion in insurance and gas prices.

During public commentary, Rick Clark with Amazing Blue Taxi told the board he was interested in seeing added features of a fare structure that would include the ability to charge different rates for groups of a certain size, for example.

Kunselman told Clark that just keeping track of the drivers is what he wanted to focus on. Managing the rates is a lower priority for him right now, Kunselman said. Clark told Kunselman that if he wanted taxicabs in Ann Arbor, they had to be allowed to be profitable. Kunselman indicated that there was openness to the idea of raising the allowable fare.

Clark told Kunselman that it’s not just gasoline that has increased in price. Insurance is up and the cost of tires is up, he pointed out. Kunselman said he was in favor of tweaking the rate, by increasing it by $0.25 or something like that. “That’s not going to do it,” Clark stated. Clark said it was an economic decision.

Kunselman told Clark that what he saw in the industry is cheating. The limo industry and Uber are cheating the public trust if they’re not holding the proper insurance, Kunselman said. They are cheating the public trust if their drivers don’t have proper licenses. Clark told Kunselman that it might be that the public trust is being violated with respect to insurance and registration, but “the public is not being screwed or shafted on price.” Clark indicated that he needed room under the maximum fare to be able to react to a rise in insurance rates.

Adkins told the board that based on her experience, the majority of the taxicab companies in Ann Arbor are really doing their best job to upgrade their fleet. There are a lot of vehicles that are only a couple of years old. The quality of the vehicles is high, she said, and there’s only one, maybe two, companies that she’d have to go after.

Mark LaSarge with SelectRide thanked Kunselman for his comments on public safety. He thought the biggest thing for Ann Arbor is driver safety. His company does both taxis and limousines, he said. He’d been licensed as a taxicab driver in the city of Ann Arbor, and he’s also a limousine chauffeur in the state of Michigan. So he’s operated on both sides. He called Ann Arbor a testbed.

He felt Ann Arbor is in a really neat position to deal with all the different issues: taxis versus limousines versus Uber. He felt that if the board focused on transportation for hire, that would actually be more accurate, because the reality is it’s the livery industry. He questioned why price was being regulated. Students show an ability to evaluate the price of milk at Plum Market versus Whole Foods versus Kroger – they know where to go for cheap milk. He reiterated that safety is the number one issue: We want to know who our drivers are, he concluded.

Present: Tom Crawford, Jamie Adkins, Eric Sturgis, Stephen Kunselman, LuAnne Bullington, Michael Benson, Robert Goeddel.

Next taxicab board meeting: May 22, 2014 at 8:30 a.m. in the city council workroom on the second floor of city hall at 301 E. Huron. [Check Chronicle event listings to confirm date]

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  1. April 29, 2014 at 8:20 pm | permalink

    When you say “bartering” do you mean “bargaining”? Bartering would be where you trade, say, a bag of cookies for a ride across town.

  2. By Douglas Smith
    April 30, 2014 at 7:02 am | permalink

    Drivers for hire is an ambiguous term. It would seem to include truck drivers or other jobs that require a chaufer’s license. It would have to be clear in the ordinance that it applies to those who primarily carry passengers.

    The problem with deregulating fares is that those of us that just use cabs occaissionally, don’t know the rates until we get into the taxi. If deregulation is designed to increase competition, then there would have to be some type of requirement for making the rates known. When I take a taxi, it is usually because I am taking my car to the repair shop or I am at a hotel or the airport. In those cases, I ask someone to call me a cab, so I don’t select the cab company. That also raises the possibility that the hotel employees, and the repair shop employees may be offered kick backs to send customers to the more expensive taxi companies. When I am at the airport, there is no competition because I have to take the next taxi in the line. Those are rules set up by the airport authority.

  3. By stewart resmer
    April 30, 2014 at 7:49 am | permalink

    Kudos to Dave Atkins who has written a most comprehensive article as I have ever seen on the issue of the illegal predatory business practices of Uber and Lyft on a nationwide bsiais as well as Berlin Paris Barcelona the Phillipines China and now Austrailia having ruled the scheme illegal.

    In numerous cities across the US cease and desist orders have been issued and Uber and Lyft defiantly continue to operate regardless, in St Louis a judge has ordered Lyft to shut the app down entirely, in Texas the chief of police in San Antonia has repeated his warning his department has a zero tolernace for the practices.

    In Houston a federal case was filed citing the R.I.C.O. act ( Running an Incouragble Corrupt Organization)and while the court has initialy dweclined to issue an injunction against Uber and Lyft given th e afct that these rogue operations have continued to operate in open defiance of the cities cease and desist order, it may well be that the court will in fact issue that order in the upcoming expidited hearing.

    In Arizona the Governor there vetoed a bought and paid for bill that would have carved out an insurance exception that favored the TNC’s.

    In city after city, in county after county in state after state it is always the same gvt regs rules and laws dont apply to them according to Uber and Lyft who exempt themselves as other existing compliant operators #playbytherules.

    In Minneapolis yesterday the disabled community rose in support of existing fully compliant operators citing the total disregard that both Uber and lyft have for servcing the disabled under the ADA ( Americans with Disabilities Act)and their hiring practices, as the Teamsters joined the fray there calling for one city one ordinance, as Taxi operators spokespersons displayed how the use of apps to ehail a ride are not unique and original as the TNC’s would have every one else believe.

    In Seattle Uber and Lyft have spent $400,000 to agther 36,000 signatures to put the matter on the ballot there after the city council voted to cap the # of TNC operators.

    Uber and Lyft have been floating a line about insurance but neither will actually present their nmaster policy to regulating authoritiies and in the example of the 6 year girl killed in San Francisco as she and her mother and brothjer were mowed down in a cross walk, Uber has refused to accept any liability for the death of the child and the hospital bills of the family as the city of san frnacisico is reported to have payed out $500,000 to mitigate the cities financial exposure for having NOT reined in these unscrupuolous operators.

    Here they are Ann Arbor, like it or not. Lead follow or get out of the way as Chicago commercial for hire livery operators have taken their city tto federal court for unequal protection under the law there.

    * Point of order:
    Chicago Mayor Rham Emanual’s brother is reported to be heavily invested in Uber.

  4. By Scott
    May 27, 2014 at 2:30 pm | permalink

    It would be nice to see the city tackle this in a way that does more than protect the entrenched monopolies of the established cab companies.

    Safety is the primary concern? I support that. I did my first weekend driving for Lyft this Saturday and Sunday. It took me about 2 week to get through the driver vetting process. I conducted a drivers test with another Lyft member, had my car inspected, and waited to be cleared by a background check.

    I carry personal insurance on my car, which will decidedly NOT cover me when I am using my vehicle for personal use. So before I set out on the road I spent time with Lyft’s phone support hearing them out on the supplemental coverage they provide for their drivers. That keeps me covered when I’m operating as a vehicle for hire. I printed out that certificate of insurance and keep a copy of it in my glove-box along with my personal proof of insurance.

    If the city wants to get involved I don’t see that as a problem. But I hope they will explore getting involved in a way that doesn’t completely cut off innovation. Provide an avenue for TNC drivers to get approved by the city that is reasonable. I’ll gladly play ball.

  5. May 28, 2014 at 12:07 pm | permalink

    Tangentially related: here is a report [link] cited in a New York Times article today about the use of driverless cars. Ann Arbor was one of three examples chosen for modelling. It discusses use of shared fleets in order to reduce ownership and use of personal cars.

    A number of humorous things about its description of Ann Arbor. From the ivory tower where the study was done, potholes and pedestrian crosswalks are probably not visible.