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.

These issues have been discussed at the two previous monthly meetings of the taxicab board, on April 23, 2014 and May 22, 2014. The June 26 meeting has a scheduled start of 8:30 a.m. from the city council work room on the second floor of city hall. After the live broadcast, the Mixlr player below will be replaced with a link to the recorded .mp3 audio file.

[.mp3 of June 26, 2014 Ann Arbor Taxicab Board meeting]

Updated: The board did not act on the two draft ordinance revisions, except to ask that staff undertake some amendments for further consideration by the board at its next meeting, on July 24, 2014.

Screen of iPhone showing Uber vehicle responding to request for a pickup on May 24. The resulting trip – from Jackson & Maple to Liberty & Main – was calculated by Uber as costing $8.

Both topics will also be considered at the board’s next meeting on June 26.

Consideration of a general driver-for-hire ordinance comes in reaction to the recent entry of Uber and Lyft into the Ann Arbor market. However, taxicab board chair Michael Benson stressed during the meeting that the point of the possible new ordinance was not to “target” Uber and Lyft, but rather to ensure that all drivers for hire are registered with the city. Those two companies, which coordinate drivers and passengers through software applications, have been sent cease-and-desist letters by the Ann Arbor city attorney’s office – for aiding and abetting the violation of a state statute regulating limousines. [.pdf of cease-and-desist sent to Lyft] [.pdf of cease-and-desist sent to Uber]

But the board heard from a University of Michigan student during public commentary time, who reported that the cease-and-desist letters, dated May 14, 2014, were having no impact – as he’d used one of the services three times the previous evening. In the course of his remarks, the UM business undergrad outlined several advantages of Uber and Lyft, including price, convenience and efficiency.

The board had voted at its April 23 meeting to ask the city attorney’s office to draft general driver-for-hire ordinance language for consideration at its May 22 meeting, but that draft was not yet available.

So at its next meeting on June 26, the board is expecting two possible proposals to be ready for consideration: (1) a new rate structure proposal; and (2) a draft ordinance on regulating all drivers for hire. The taxicab board could forward a recommendation to the city council to enact either proposal. A decision on enactment rests with the city council.

Discussion of the driver-for-hire issue at the May 22 meeting included themes familiar from the board’s April 23 conversation, mostly centering on the desire of board members to ensure public safety for patrons of businesses that operate on the public right-of-way. They want to ensure that drivers who are being compensated for their work are registered with the city, that their vehicles are inspected, and that they are adequately insured.

The rate changes to be considered by the board on June 26 come in the context of board interest in seeing the taxicab industry able to compete with limousine services, as well as with services with business models like those of Uber and Lyft. 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 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. Taxicab board member Robert Goeddel supported setting a significantly higher maximum, saying that if the taxicab industry does not survive, he does not want it to be because the basic costs of doing business can’t be covered.

City CFO Tom Crawford, who sits on the taxicab board as an ex officio member, noted that it’s a challenge to consider changes in rate structures at the same time as new entrants have come into the market – who have a lower cost structure than the taxicab industry. He expressed some concern that the result could be a “race to the bottom” for pricing that could work to destroy the taxicab industry.

In other business, the board elected its officers for the next year – an annual task. Benson and Stephen Kunselman were re-elected as chair and vice chair of the board.  

Public Commentary: Meeting Start

There are two opportunities for public commentary – one at the start of the meeting and another at the end. One person spoke at the start of the meeting.

Tyler Hoffman introduced himself as a University Michigan undergraduate. He wanted to give his perspective, having been here for three years now – as he’d seen the way things were before Lyft and Uber were in Ann Arbor and after Lyft and Uber are here. The positive public response has been too great to try now to make Lyft and Uber go away, he contended. “The cease-and-desist letters have done nothing,” he said, and he knew that because he’d used those services many times since the cease-and-desist letters were sent.

“It’s a great service and is something that the public and especially the students want,” Hoffman told the board. Uber and Lyft are also generally cheaper, he said. He was glad that the board was talking about rate deregulation, calling it very proactive. Taxicab medallions are an outdated business model, he said. With a cab, you’re given a window where you have to wait. With Lyft and Uber, he has a 10- or 15-minute wait, and he can see where the car is at any given point in time. So you can see, for example, that the car is nine minutes away.

Instead of making a taxicab wait five or 10 minutes outside, he knows when his ride from Lyft or Uber is coming, he gets a text message when that the car has arrived, and there is no wait involved. Hoffman went on to describe how using Lyft and Uber is very quick and efficient. It is also cashless, he said, as there’s no cash exchanged. Taxicabs might use Square, but the service provided by Lyft and Uber is even simpler than that. They don’t take cash tips and if you try to give cash tips, the drivers don’t take them.

Another advantage cited by Hoffman is that Lyft and Uber have a more modern fleet. As a college student, when he wants to get a ride to Scorekeepers on a given night, he might not care about how modern the car is. But UberBlack has nicer cars with chauffeur-licensed drivers, he said, describing how Uber and Lyft do have requirements on their fleet. Hoffman reported that he asked a Lyft driver what he does when he’s not driving for Lyft, and the driver said he also worked for a taxicab company.

The driver was reckoning with getting fired – but had told Hoffman that he knew this is the direction that innovation was going in the industry. These new services also created competition and Hoffman felt that’s always a good thing: “It’s got everyone shaking in their boots, so to say.” Hoffman characterized the issue of insurance as convoluted, so he didn’t know if he was going to be protected if he gets into an accident. But the difference between having a chauffeur’s license and not having a chauffeur’s license is the difference between spending 45 minutes at the Secretary of State’s office and handing over $25, he said. To him, that procedure did not improve your ability to drive safely. The question of insurance was more of a legitimate issue, he added.

Changing Rate Structure

Stephen Kunselman, who is the city council’s representative on the taxicab board, opened up the May 22 discussion on raising rates, saying it’s been many years since they were last raised. But he really didn’t want to be “guinea pig” community trying to create a rate system that is more complicated. “If we just want to raise the rates to allow the taxicab companies to have a better time trying to compete, then I’m all for that.”

The bigger issue, Kunselman said, is whether the city is going to begin enforcement against “gypsy companies” – by which he meant Uber and Lyft. Kunselman said he appreciated the comments from Tyler Hoffman during public commentary, but the point that Hoffman had skipped over was the insurance requirements that are necessary to operate vehicles for hire. Competition is important, Kunselman said, but when you compete by cheating, that’s not acceptable – and that’s what Uber and Lyft were doing when they use drivers who are using private cars with private insurance. What Kunselman had read is that when an accident occurs, then a passenger is not covered.

A $1 million insurance policy that’s provided by Uber and Lyft is not necessarily a guarantee, Kunselman said: “It’s just a marketing ploy.” It’s a new and dynamic change in the industry, he said, but that’s not to say that Yellow Car, Amazing Blue, and other local taxicab companies will not come out with their own apps and provide that same sort of service. When that competition catches up, Uber and Lyft would be pushed aside, he felt.

Ann Arbor is a hot market that has a lot of peaks and valleys in the demand, Kunselman said, and that led him to another concern he had with the Uber and Lyft business model: “Surge pricing” is more like price gouging, he said. That’s why there are taxicab rates, so that it’s fair to everyone – wealthy, poor and middle class alike. If the industry uses “surge pricing,” he noted, then during peak demand, only the wealthy are going to get ride. “That’s not equitable, and that’s not appropriate, and I don’t think that’s what this community is about. If that’s the kind of elitism that University Michigan students want, then that’s disappointing,” Kunselman said.

During public commentary at the end of the meeting, Rick Clark of Amazing Blue taxicab company was skeptical that software apps were the answer to everything – partly because of the surge pricing. A young college student might think it’s great that he can get a ride like that, Clark said, but during a UM football game, that student is going to get gouged.

Kunselman ventured that there are issues the state of Michigan might need to address. Kunselman characterized the business models used by Lyft and Uber as “basically cheating,” and ventured that they would get caught eventually, citing other states where Uber and Lyft had been accused of racketeering. Uber and Lyft are pushing the envelope, he said, but at some point it only takes one accident and one lawsuit to shut them down. As far as taxicab rate deregulation, Kunselman said he’d just as soon recommend raising the rates at the next meeting, and let the taxicab companies try to compete at that level, then see what happens.

Eric Sturgis followed Kunselman’s comments by stressing that the number one goal is safety. Uber and Lyft use drivers who are not registered with anyone. The city doesn’t know if there’s a felon out there taking people around in a car, he said. Sturgis pointed out that the number of registered taxicabs was decreasing: “We are losing taxicabs.” So that made him want to consider full rate deregulation. Ann Arbor is an intelligent community, Sturgis said, and he didn’t think the board should be telling people that they’re not smart enough to know which taxicab to take based on fares. He said he’d be willing to look at taking small steps to start, but he’d like to see the board head in the direction of deregulation.

Responding to Hoffman’s remarks, board chair Michael Benson said the board has to balance a few competing priorities – first and foremost public safety. The taxi industry is the only industry that solely operates on the public right of ways, he noted. So the city has a responsibility to ensure not just safety, but a level of competitiveness.

About the Uber and Lyft issue, he noted that the cease-and-desist orders are a first step. Benson said he didn’t know what Lyft or Uber do to inspect vehicles. Maybe the standards are different from what the city requires for vehicles for hire. So if someone is offering to drive a vehicle for hire, there should be a common standard, he said. The city needs to be able to address that.

All of these businesses are operating in the public right-of-way, Benson said, and that makes them different from a restaurant or anything else. That’s why the taxicab industry should be regulated at all. Benson felt that some kind of rate increase is necessary. He expressed concern that the current rates don’t take into account the rising cost of insurance for taxi operators. One approach would be to increase the fares beyond a small $0.25 increase. He also supported allowing a surcharge for three or four passengers.

LuAnn Bullington ventured that if the board deregulated taxicabs, then cabs would essentially be providing limousine service. She felt it would be appropriate to increase the maximum rate based on increases in gas prices. She would like to see Uber and Lyft enter the Ann Arbor market, but she also has concerns about public safety. If Uber decides to go to the state and get themselves a limo license and compete like everybody else, she’d have no problem with that. It’s just another business model.

Bullington also felt that taxicab companies would be adopting new technologies as well, and would be able to let customers know when they’re coming in real time. She mentioned that Yellow Car has been working with the Ann Arbor Area Transportation Authority [as the AAATA's paratransit contractor] to notify passengers at home to tell them that the ride is almost there. As far as options available to the riding public, she did not want to see everything “turning into vanilla.” She hoped that Uber starts playing fair and becomes registered as a limo company, like they should be.

Number of taxicabs licensed in Ann Arbor by year. (Data from the city of Ann Arbor, chart by The Chronicle.)

Sturgis came back to the point about the number of registered taxicabs in the city, saying that the decrease is a great concern. That is allowing Uber and Lyft to enter the market, he said, because they’re seizing upon an opportunity. He felt the reason the number of taxicabs is decreasing can be attributed to the cost of insurance. He said he wants the best service possible and the safest service possible, which Uber and Lyft don’t provide. Raising the maximum rate could be a short-term fix, but Sturgis wondered if there were a longer-term vision.

Tom Crawford offered two points of caution. The first is how to interpret the number of taxicabs registered in the city in 2014, which was recorded as 96 in the materials provided to the board. Crawford pointed out that the figure is footnoted because the count had not been completed, calling it an “interim number.”

While this board is talking about the taxicab industry, Crawford continued, it may be that the city’s perspective is to have a variety of ways to meet transportation needs – taxicabs being one of them. So the board should be cautious about concluding that there is some “right number” of taxicabs. The city may need more taxicabs or fewer, in light of other transportation options that are available, Crawford concluded.

In support of Crawford’s observation, Kunselman noted that voters had just approved a new transit millage that’s going to increase service in the evenings and weekends. That’s going to change the dynamic as well – because bus transportation would be a lot cheaper than a limo or a taxi.

Crawford pointed out that the board was discussing two things going on at once: Rate deregulation and a new entrant in the market. The new entrants actually have a business model, as he understood it, where they potentially have a lower cost of doing business than the taxicab industry. So that would drive rates down. When you have a new entrant that is competing with a different cost structure, that could work out economically to lead to the destruction of the taxicab industry. So now might be exactly the time when you do not want to deregulate, he said.

Instead, it might be more important to make a very clear distinction about what is a taxicab and what is not a taxicab. Crawford understood the excitement of the new business model, but it is not a model that is delivering the same product that a taxicab is delivering, he said. A differentiation of those business models might be healthier for the industry, he said. Crawford ventured that deregulation at this time might result in a race to the bottom of the lowest rate. And that could lead to riskier, less secure businesses, he cautioned.

Responding to Crawford, Robert Goeddel said the current rate structure – which set a maximum rate – did not prevent a race to the bottom. Rates can already go as low as they need to go, he ventured. So we’re already in a situation where a race to the bottom is a risk. But he did not want to see a scenario where people are not using taxicabs because taxicabs are going out of business – because they cannot afford to be in business. If the taxicab industry going to change because of the dynamic in the market, he wanted that to be because there’s a better service out there – not because it’s impossible to do business. And right now, he continued, it seems like it’s not possible to do business and be competitive.

Goeddel agreed with a comment that Kunselman had made at the board’s previous meeting, that more options might not lead to better price – citing the example of increased downtown housing units. After building all those new apartments downtown, many people thought it would drive rents down – but that is exactly the opposite of what has happened, he said. He was paying more to live in Ann Arbor than ever before, reporting that his rent rose by 10% last year. He was amenable to raising the rates, but felt that $0.25 would not be sufficient. He said he might be interested in “pseudo regulation,” where rates are raised beyond the point of reason, which would give the appearance of deregulated rates without taking the full leap.

Bullington contended that Ann Arbor has some of the highest gas rates in the country, so she was interested in raising the maximum rate for that reason. Crawford pointed out that the last time the board had recommended raising the maximum rate, the board had also concluded that if gas prices moved out of a certain range for a certain period, then the maximum rate could be revisited. But gas prices have been lower than that since that time, Crawford said. So he thought that insurance has been more of a cost issue than the price of gas.

Benson noted that the option being considered is not to deregulate the taxicab industry: “We’re still going to inspect vehicles. We’re still going to license the drivers.” The point of discussion was the fare structure, he said. Even if the fares were deregulated, the city would still have interest in compliance on vehicle inspection and licensing the drivers.

Benson said he was pleased that the board was considering either a potential rate hike or deregulation – to allow the industry to be able to compete, but also perhaps distinguish itself in the service it was offering. He pointed out that there are multiple models in which a taxicab can operate. For example, a taxi can be hailed on the street – and that’s the only vehicle that can legally do that. But you can also call a taxicab dispatcher and if a company does have an iPhone app or something similar, you can request a cab and away you go, much like a limo service, he said.

Benson thought it was critically important to educate people about the difference in the modalities – and the city had actually tried that. An ordinance change was approved by the city council a few years ago that tried to help make that distinction, he said. He wondered how effective the educational campaign was. Some people are aware of the difference between a taxicab and a limo, but a lot of people just aren’t, he said. So the educational component is critically important.

Benson asked AAPD officer Jamie Adkins, as she was on the front lines, what could be done to educate folks that taxis are taxis and limos and limos, and there is a difference. Adkins told Benson that part of the problem is getting police officers to understand the difference – because they think that all for-hire drivers are the same.

At the end of the meeting during public commentary, Bill Chinchen, owner of the AirTran taxicab company, addressed the issue of limos acting as taxicabs. He told the board that he’d done a count in the area of South University and Church on Thursday, Friday and Saturday nights. There were 32 unlicensed cabs sporting top lights and picking up passengers off the curb. He’s talked to talked to the police officers, he said, but not gotten any satisfaction.

Chinchen reminded the board that in October 2012, there was a big crackdown on the “fake cabs,” and that lasted about a week. Then they all started filtering back. Chinchen said it’s not that officers don’t know who is who – they just don’t want to be bothered with it. “They have other better things to do than chase around all these guys taking away our business,” he said.

Benson summarized the option that the board had discussed: full deregulation of rates; a fare increase to cover cost of business, including insurance; or a fare increase beyond the cost of doing business to allow some play in the market. Benson also mentioned the possibility of allowing for a passenger surcharge to allow a higher rate for three or four passengers.

Kunselman then suggested that the board ask Crawford to prepare a change in taxicab rates for discussion at the next meeting.

Crawford told Kunselman that he didn’t have a problem with the rates and the publication structure that had been suggested by one of the taxicab companies. Crawford then checked his understanding of the kind of rate structure the board wanted him to draft. Crawford said he got the message that the board wanted to see a substantially higher maximum fare set. He also understood that rates would be published on the rear vehicle doors.

Benson added that the rates should be published so that passengers would see the rates as they entered, and also as they’re sitting, riding in the cab. Crawford noted that a meter should be revalidated if a fare is changed. Considerable back-and-forth ensued between board members and Crawford on this point, with the basic conclusion that the ordinance should state that a penalty would be incurred if the meter was set to a rate that was higher than the published rate, but not if it was lower. But in any case, the meter would need to be revalidated if the company changed its published rates.

Kunselman also wanted to allow for flat rates. If a taxicab drops the flag on the meter and goes out to the airport, the meter might say $60, but they should be able to charge $40 for the trip. Kunselman summarized his view by saying he wanted to give taxicab companies the ability to charge a higher rate, but to compete by offering cheaper rates.

Regulating Drivers for Hire

Benson led of the discussion of the general drivers-for-hire ordinance by saying he understood that the assistant city attorney did not have a draft ordinance ready for review that day – but it was in the works. Later in the meeting, Sturgis asked if the city attorney’s office was confused about what the taxicab board was asking them to do. No, Crawford, said, they’re not confused. Kunselman added: “Government just doesn’t work that fast.”

Kunselman stated that he didn’t think the ordinance should be about registering vehicles, but rather about registering drivers for hire. He noted that vehicles are registered by the state under the limousine act, or by the city as taxicabs. He wanted to focus on drivers: Taxi drivers are licensed by the city but limousine drivers are not.

He continued by saying that drivers for Uber and Lyft are not registered anywhere. About the Uber and Lyft business models, Kunselman said he didn’t know of any private sector business that self-regulates for public safety – and that’s the problem with the Uber and Lyft business model, he said. Uber and Lyft are cheating by not requiring proper insurance, Kunselman said. He ventured that the new ordinance might need to be separate from the taxicab ordinance.

The basic issue, Kunselman continued, goes back to using the public right-of-way to pick up the public and make a profit using public resources – our public roads. That’s very different from regulating restaurants, he said. The taxicab board has a responsibility to protect the unsuspecting public, he said. Education of the public could be talked about all day long.

But based on the remarks of Hoffmann during public commentary, University of Michigan students are just interested in the cheapest ride, Kunselman said – until they end up in a hospital and are hit with a bill of millions of dollars for head injuries. He thought people had forgotten one of the reasons the state’s limousine law was tightened up years ago. It happened when one of the Detroit Red Wings players [Vladimir Konstantinov], following the Stanley Cup win back in the 1990s, had ended up in the back of a limo – which Kunselman believed was improperly regulated – and was paralyzed when he went flying from one end of the limo to the other. That resulted in a tightening up of the limo industry, Kunselman said. When that happens with an Uber driver and their uninsured car, we’ll end up with the same problem, Kunselman ventured.

It’s unfortunate that the younger generation has forgotten the experiences of the older generation with respect to public safety, Kunselman said. So Kunselman wanted the board to consider a totally separate ordinance that regulates drivers who are offering their vehicles for hire. The ordinance should allow the city to require that drivers provide proof of insurance, that the vehicles they’re driving for their business are safe. That way, the city could do its part as a public entity to ensure public safety.

Benson responded to Kunselman’s focus on registering drivers as opposed to vehicles, saying that the city should have a way of registering vehicles other than taxicabs, which it currently licenses. The idea would be to ensure that a vehicle used to provide rides for hire meets minimal standards. Those standards might be the same as what the state requires for limousines. Or maybe the standards would be more like the standards for taxicabs. But Benson felt that all vehicles for hire in the city needed to be registered.

Kunselman agreed with Benson’s remarks – if the city has the ability to enact those requirements under state law.

Sturgis disagreed with the idea that young people don’t care about public safety: “I think they do care about public safety. I think they may be not educated about Uber and Lyft.” Sturgis ventured that students are price conscious because of the high cost of tuition.

Bullington wanted police officers to have the ability to pull over a driver for hire and ask if they are registered with the city. It’s about putting more teeth in the law, she said.

Crawford offered a word of caution about lumping Uber and Lyft into the same category, saying that based on his very cursory research on Uber and Lyft, they appear to have different business models. It might turn out that one or the other of those business models is more amenable to the way the taxicab industry wants to proceed.

A brief discussion among board members – on the point of putting some additional teeth in the existing taxicab ordinance as well – resulted in an approved motion to add that to the board’s request of Crawford and the city attorney’s office.

Public Commentary: Meeting End

Public commentary not already included in the report above included remarks from Stadium Taxi and SelectRide representatives.

During public commentary at the conclusion of the meeting, Mark Newman, owner of Stadium Taxi, told the board he thought the taxicab board needed to get the word out to the students that services like Uber and Lyft are illegal. He suggested that the president of the University of Michigan should send a mass email out to the students telling them that Uber and Lyft. Newman raised the specter of a students getting into an accident and suing the city of Ann Arbor. He’s talked to several different police officers in the evenings, he said, and they’re not doing anything. His business has gone down 30% because of Uber and Lyft, he said.

Newman called on the city to put a cease-and-desist order on the software application itself, so that it could not be used. When he concluded his remarks, board chair Michael Benson got clarification that Newman’s company is not at taxicab company, but rather a limo company. Kunselman responded: “But we are the taxicab board!”

Newman replied that the taxicab board works with the city – and they know the city staff – whereas he does not.

Mark LaSarge with SelectRide objected to the board “stomping on” Newman for not being a taxicab company, pointing out that public commentary is for the public. At the end of all the public commentary, Benson extended his apologies to Newman for any implication that he didn’t have a right to speak.

LaSarge complimented Kunselman for his remarks about price gouging, possible racketeering issues associated with Uber and Lyft. Many of the concerns are based on fear and doubt, he said. Fear and doubt are “twin thieves” that steal from you the ability to do what you would otherwise do right, he said. A business model is the business of that business, not the city, he said.

The city’s business is making sure that everybody is conducting business safely according to the appropriate regulations, and providing a basic standard uniform service. Is the driver a safe driver? Are the vehicles appropriate? Is the insurance appropriate? About those questions, LaSarge told the board: “That’s your job. How I price my ride is irrelevant to you.” Whether the application is called Uber or Lyft or TaxiMagic, “so we can get a cute little dot on the screen coming toward you – that’s not your business. That is ours.”

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

Next taxicab board meeting: June 26, 2014 at 8:30 a.m. at city hall at 301 E. Huron. [Check Chronicle event listings to confirm date]

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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 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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