Uber and Lyft threaten to abandon Chicago to avoid licensing

Two-thirds of Chicago’s 50 aldermen want to license ride-hailing drivers to improve public safety and level the playing field with a taxicab industry fighting for survival against Uber and Lyft.

That didn’t change Wednesday even after a daylong hearing that saw both companies play the race card and threaten to abandon the Chicago market if that’s what it takes to avoid licensing.

“If this ordinance were to pass, ride-sharing as we know it would no longer exist in Chicago,” said Uber’s Chicago general manager Marco McCottry.

Joseph Okpaku, Lyft’s vice president of government relations, said it’s a “distinct possibility” that the company would pull up stakes.

Both Uber and Lyft have recently left the Austin, Texas, market after losing a regulation battle there.

Okpaku argued that Lyft drivers — 80 percent of whom drive less than 15 hours-a-week — would not be willing to jump through the regulatory hoops to get a restricted chauffeurs license. That includes paying a $115 fee, passing a one-day course and undergoing a fingerprint-based background check.

“We cannot operate under a regulatory framework like this. If you can’t get part-time, casual drivers on board, the model fails . . . If you shut off the critical mass of drivers, the whole system starts to crumble,” Okpaku said.

Ald. Anthony Beale (9th), chairman of the City Council’s Transportation Committee, wasn’t cowed by the threats to abandon the Chicago market. He argued that a $68 billion industry can afford to absorb the nominal cost of licensing.

“If you keep pulling out of every city that tries to regulate, you won’t have any place to operate,” said Beale, who made several threats to clear a City Council chamber filled with Uber and Lyft drivers.

“Nobody’s trying to run you out. But if you decide to leave, that’s on you guys . . . There is a court decision that has stated there is an unlevel playing field. The judge has stated the City Council has to fix this problem . . . We’re trying to make sure that is taken care of before the courts tell us” what to do.

Ald. John Arena (45th) added, “If the industry doesn’t want to meet a very low standard, then go somewhere else.”

Mayor Rahm Emanuel, whose brother is an Uber investor, is lobbying hard to kill Beale’s licensing ordinance.

The Illinois Transportation Trade Association is fighting equally hard to push the ordinance over the goal line. The group and its political action committee have contributed more than $35,000 to aldermen in recent months.

The high-stakes competition remains a full-employment program for clout-heavy lobbyists.

On Wednesday, that gravy train got longer. Former Ald. Latasha Thomas (17th) returned to her old stomping grounds as a lobbyist for the Illinois Transportation Trade Association.

“It’s good to see you back in the chambers,” Beale said.

“I had to wait a year,” Thomas said, referring to the city’s ethics ordinance.

The marathon “subject matter” hearing that was meant to take testimony but not a vote kicked off with a pep rally news conference that played the race card.

Participants argued that Uber and Lyft are responsible for providing 92 percent of rides to and from under-served Chicago neighborhoods and that, without them, passengers will be left high and dry.

“I live in the Austin community . . . Ain’t no cabs coming over there. It would be like seeing a spaceship come down . . . I’m serving my people,” said Uber driver Priscilla Beecham Joseph.

Participants further maintained that a background check based on FBI fingerprinting would discriminate against minorities who are “far more likely to have an interaction with the criminal justice system,” often for minor, non-violent offenses where the charges are dropped, but the record has not yet been expunged.

Uber and Lyft drivers pleaded with the City Council not to take away the part-time jobs that have given them the freedom to become better parents.

“It’s an amazing opportunity . . . to be a present dad,” said Lyft driver Lamont Campbell.

Beale’s ordinance would require Uber and Lyft drivers to get restricted chauffeur’s licenses after a one-day class, be fingerprinted by a city-approved vendor and get their vehicles inspected by City Hall.

A minimum of 5 percent of the total fleet of both companies would have to be accessible to customers with disabilities. No ride-hailing vehicle could remain on the streets that is more than 6 years old.

Lyft and Uber, whose drivers owe the city $15 million in unpaid parking tickets, red-light and speed camera fines and water bills, would also be required to immediately settle those debts to renew their operating licenses.

On Wednesday, Business Affairs and Consumer Protection Commissioner Maria Guerra Lapacek disclosed that 10,000 Uber and Lyft drivers would be “deactivated” after failing to comply with a May 23 deadline to settle their debts.

“Of the $15 million, we’ve collected $2 million . . . There were about 10,000 drivers [who] still were not compliant . . . Those drivers will not be allowed to drive on that platform unless and until they either pay the debt or enter into a payment plan,” the commissioner said.

Coming down on ride-hailing deadbeats is “not necessarily” an effort to “fend off” licensing, Guerra Lapacek said.

“Taxi drivers are required to pay their debt before they’re able to get licensed. In fact, any business is required to pay city debt. You can’t buy an empty lot in the city without clearing your city debt. It really is just a leveling of the playing field,” she said.

When the six-hour hearing finally ended, Beale promised to hold a “final hearing” in a few weeks and get the licensing ordinance to the full Council for a vote on June 22.

“We want to take the testimony that we’ve heard, see if we can tweak it, strengthen it and then move it forward,” the chairman said.