Minneapolis officials advance Lyft/UberX ordinance despite taxi company objections


Yesterday, the Minneapolis Community Development & Regulatory Services Committee unanimously approved a new ordinance that will regulate so-called "transportation network companies" like Lyft and UberX, along with changes to the city's taxi ordinance.

The vote means the package of new regulations heads to the full City Council, which could give its final approval next Friday.

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Despite Commerce Department warning, Jacob Frey says Uber/Lyft ordinance still on its way

After the vote, Noah Rouen, a spokesman for a coalition of Minneapolis taxi companies, sent us a statement expressing cab companies' objections to the direction city officials seem to be heading in.

One of their main concerns is that while cab fares are regulated by the city, the TNC ordinance on the table allows Lyft and UberX to charge whatever they want.

"The city of Minneapolis should not be rushing to pass an ordinance that leaves city regulators unable to monitor and regulate potentially predatory fare schemes," Waleed Sonbol of Blue and White Taxi says. "Instead the city should focus on protecting consumers and preserving accessible taxi services that serve residents citywide."

That last comment speaks to concerns about TNC drivers refusing to pick up passengers in certain parts of the city. But during the meeting, the author of the TNC ordinance, Council Member Jacob Frey, said that's already a problem with cab companies.

"There has been discrimination for years now in the taxi industry -- let's just be honest," Frey said. "We live in a society that is at times discriminatory. Now, as government, it's our job to guard against that, and we're going to be putting in place a regulation to make sure that doesn't happen, but let's not be the pot that's calling the kettle black."

Frey also attempted to address concerns about TNCs gouging customers by adding an amendment to the ordinance requiring companies like Lyft and UberX to make customers "positively affirm higher rates" on their smartphones during peak fare times, before they summon a ride.

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St. Paul also plans to regulate Lyft, UberX

On another topic, Rouen's statement highlights cab companies' concerns about TNCs having inadequate commercial insurance coverage that could leave drivers, passengers, or even the city on the hook if there's an accident.

"The ordinance proposed by CM Frey grants Uber and Lyft and similar companies license to operate with little regard for consumer protection," says Taxi Services President Steve Pint. "This is why 17 states, including Minnesota, have issued consumer protection warnings about these companies. The lack of proper insurance is troubling and likely leaves the city liable when accidents and injuries to passengers occur."

But those concerns were also addressed during the meeting by Frey, who pointed out that TNCs are currently covered by well-endowed surplus line insurance. The companies will be required to have commercial coverage by the beginning of next year, Frey added.

One concern Frey didn't address, however, pertains to the amount of fees cab companies are forced to pay compared to the TNCs if the proposed ordinance becomes law.

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In Rouen's statement, Sonbol says, "Under the proposed ordinance...TNCs will pay a flat license fee of $35,000, regardless of the number of cars in service."

See also:

Frey on Lyft/Uber regulations: "I think the taxi industry needed some competition"

"For example, if a TNC has 300 cars on the road, the TNC will pay the City a total of $35,000 for an operating license," Sonbol continues. "By comparison, a taxi operator with 300 taxis on the road will pay the City $142,000 in vehicle license fees, $17,700 in per driver license fees, and $1,188 in company license fees. This totals a whopping $160,888 in fees, nearly five times what a TNC will pay for the same number of vehicles."

But during the meeting, Council Member Abdi Warsame, author of the taxi ordinance revisions, said, "Nobody is going to be satisfied 100 percent."

Though the process was a collaborative one involving lots of input from taxi companies, Warsame continued, "Just as with the TNCs not [being] satisfied 100 percent, the cab industry is not going to be satisfied 100 percent with this amendment that we've done."

Send your story tips to the author, Aaron Rupar. Follow him on Twitter @atrupar.