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Ald. Reilly proposes cap on ride-hailing vehicles, congestion fee

The downtown alderman wants to follow New York City’s lead and impose an additional congestion fee on Uber, Lyft and Via vehicles clogging Chicago streets.

Downtown Ald. Brendan Reilly (42nd) talks to Chicago Sun-Times City Hall reporter Fran Spielman on Friday.
Downtown Ald. Brendan Reilly (42nd) talks to Chicago Sun-Times City Hall reporter Fran Spielman on Friday.
Rich Hein/Sun-Times

Downtown Ald. Brendan Reilly (42nd) on Friday proposed a New York-style cap on ride-hailing vehicles and a “congestion fee” on Uber, Lyft and Via vehicles to help solve Chicago’s traffic and budget troubles.

Chicago now imposes a 72-cent flat fee on each ride booked on Uber, Lyft and Via.

In a letter to Mayor Lori Lightfoot in late June, the Metropolitan Planning Council and seven other transportation groups argued that the current fee is not nearly high enough to “fully support the goals of equity and reducing congestion and green-house emissions.”

Reilly couldn’t agree more. He’s proposing a double-whammy of sorts — by raising the fee and imposing the cap on ride-hailing vehicles.

In August 2018, New York’s City Council agreed to cap the number of ride-hailing vehicles for one year. The cap has since been extended indefinitely. The Big Apple has also imposed strict and escalating limits on the number of empty vehicles that can “cruise” the streets of Manhattan.

“People complain about downtown congestion. It’s because we’ve got 80,000 ride share drivers in Chicago. … Having a cap would be prudent. Other cities have done it, and it’s helped,” Reilly said.

“I also think we need to look at a fee. ... I’d much rather do that than have us pay higher property taxes. A lot of people who use ride share are visitors and tourists. They’re paying a big chunk of tax for using ride share and congesting our streets. I like that idea. I like people that don’t live here paying more taxes to help us out of our problems.”

The same premise is behind Reilly’s proposal to re-write Chicago’s “weak” home-sharing ordinance and impose yet another fee on Airbnb.

Former Mayor Rahm Emanuel taxed Chicago’s burgeoning home-sharing industry twice. The first time, it was a 4% tax earmarked for homeless services. That was followed by an additional 2% to bankroll a 50% increase in shelter capacity and support services for domestic violence victims.

On Friday, Reilly proposed hitting the home sharing industry a third time along with tightening the regulatory noose.

“New York City’s eating our lunch when it comes to regulating home-sharing …They have $10 million-a-year budgeted for regulating that industry,” he said.

“We need much stricter regulations than are on the books. The industry couldn’t have written a better ordinance for themselves. ... That’s job No. 1. But while we’re at it, let’s take a look at taxing them more. They need to be policed better for sure. And they can help us with our revenue issue.”

Airbnb spokesman Sam Randall refused to comment on Reilly’s proposal for a stricter ordinance, stepped up enforcement and an even higher fee.

Uber spokesperson Kelley Quinn said, “Capping the number of Ubers would only hurt Chicagoans on the South and West sides of the city who have long been ignored by taxis and who don’t have access to reliable public transit.”

Earlier this month, Uber Technologies CEO Dara Khosrowshahi said the ride-hailing giant is willing to do its part to help reduce congestion on Chicago streets, but its vehicles are not the main culprit.

He argued that, during a typical morning rush, there are “only 1,400 Ubers on the road” in Chicago, he said; “that’s “around 3% of miles driven,” he said.

At a joint appearance with the Uber CEO, Lightfoot said she plans to make “modest recommendations that address some obvious issues” in the short-run while launching a more comprehensive study of what a broader congestion fee might look like.

Lightfoot is trying desperately to close an $838 million budget gap without raising property taxes that Emanuel more than doubled. But she has conspicuously refused to rule out another property tax hike.

Reilly argued Friday that the “fear of the unknown” — including a progressive caucus push to reinstate the hated employee head tax — has already had a chilling effect on downtown development.

“You’re seeing a slowdown in investment in real estate deals in Chicago right now more due to uncertainty,” he said.

“A lot of folks are sitting back and waiting to see what the mayor’s budget proposal looks like, what budget proposal actually passes and also how Assessor [Fritz] Kaegi re-balances the tax burden in Cook County. Those are the major inputs that finance folks worry about.”

Reilly said his primary focus during City Council budget hearings will be on cost-cutting and on eliminating Chicago’s bloated middle-management bureaucracy.

“When I was an executive at AT&T, we had one manager [for every] 12-to-14 employees. In the city of Chicago, it’s 1-to-6. You correct that, it’s $120 million in savings,” Reilly said.

“These are folks making six-figures. ... We have managers at City Hall that manage two people. In some cases, one person. Across all departments. Especially, infrastructure departments. That’s wrong.”