Chicago would create two categories of ride-sharing licenses based on hours driven, “reserve the right to place a cap on surge-pricing” and require companies to serve all neighborhoods, under a revised mayoral plan unveiled Tuesday.
Mayor Rahm Emanuel is strengthening his own ride-sharing ordinance in an attempt to referee the high-stakes competition between ride-sharing companies and taxicabs that has triggered lawsuits and created a full employment program for lobbyists.
The changes would require ride-sharing companies like UberX, Lyft and SideCar that allow drivers to offer rides in their personal vehicles to passengers who order them on their smartphones to monitor driver workloads, to forward that information to the city and to purchase the appropriate license based on the number of hours driven.
Companies whose drivers average more than 20 hours a week would be required to pay $25,000 a year and $25 per driver for a Class B license.
Each driver would be required to obtain the same public chauffeur’s license required for cabdrivers, with City Hall conducting the drug test and background check. Companies would also be required to hire a city-approved “third-party” to conduct an annual, 21-point inspection of ride-sharing vehicles.
A Class A license would be reserved for ride-sharing companies whose drivers average less than 20 hours a week. Those companies would be required to pay $10,000 a year and $25 per driver. They would be permitted to do their own background check, driver training, vehicle inspection and random drug testing, but City Hall sign-off would be required.
Ride-sharing companies at both levels of regulation would be required to secure $1 million in commercial auto liability insurance to make certain that the “first dollar of injuries or damages are covered” in the event of an accident.
Emanuel is still refusing to regulate ride-sharing fares for fear of snuffing out a burgeoning industry on the cutting edge of technology that gives Chicagoans more transportation options.
But he’s reserving the right to “place a cap on surge pricing” during periods of peak demand if increased disclosure requirements fail to “alleviate consumer complaints.”
In the meantime, ride-sharing companies would be required to “publicly announce” when surge pricing periods are in effect and “take steps to ensure that customers clearly agree” to those higher prices. That includes providing customers with a “true fare quote in dollars and cents” instead of a multiplier.
Ride-sharing companies would also be required to service “all parts” of Chicago — not cherry-pick the downtown area and the city’s most lucrative neighborhoods.
Former city Corporation Counsel Mara Georges, an attorney representing taxicab companies, said an amendment similarly creating two categories of ride-sharing licences — and regulating full-timers more rigorously than “Mom and Pop” drivers — was introduced Tuesday in Springfield with support from the taxi industry.
“It’s the best of both worlds. It’s very broad in its appeal,” she said.
“We’ve heard from members of both the General Assembly and the City Council that there is a public sentiment toward allowing ride-sharing. This plan allows it while protecting the riding public.”
Attorney Michael Kasper, who helped Emanuel survive a residency challenge and now represents UberX, could not be reached for comment.
David Spielfogel, senior adviser to the mayor, characterized the revised ordinance as a “good compromise” that will ensure that the taxicab industry “stays vibrant” while ride-sharing companies operate safely.
“We differentiate between true ride-share where drivers do relatively few hours-a-week and companies that want to bill themselves more like taxi companies,” Spielfogel said.
Why not outlaw surge pricing, instead of “reserving the right” to impose a cap?
“It’s a model that many companies argue puts more drivers on the street during high-demand times. It’s a way to get them there similar to how airlines charge higher prices during higher demand periods,” Spielfogel said.
“If we felt the industry was taking advantage of consumers or not disclosing prices fairly, we would step in. The compromise does require that companies disclose surge pricing in a much more transparent way. A lot of folks during surge pricing periods don’t have a calculator with them to figure out what the multiplier means in dollars and cents.”
The City Council has held two marathon hearings on the regulatory vacuum that has allowed ride-sharing companies to siphon business from taxicabs and drive down the value of taxicab medallions.
At the first hearing, Georges complained that ride-sharing companies allow drivers who are not licensed by the city to offer rides in personal vehicles that are neither inspected nor insured. She likened it to “paying someone to pick you up while you’re hitchhiking.”
Georges accused SideCar, Uber and Lyft of bypassing entire neighborhoods and charging “up to 13 times the normal rate” whenever they determine there’s high demand. She called surge pricing “a euphemism for charging whatever they want.”
Ride-sharing companies, their drivers and riders had the stage largely to themselves at the second hearing and used it to refute virtually every charge made against them.
They maintained that they do provide insurance. They do conduct extensive criminal background checks. And while they acknowledged charging a “prime-time tipping” fee of up to 200 percent during peak periods, they also offer “Happy Hour” incentives when demand is low with fares reduced by up to 50 percent.