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Ride-Sharing License Clears Council Committee Despite Cabbie Opposition

By Ted Cox | April 24, 2014 11:30am | Updated on April 24, 2014 3:15pm
 Ride-sharing companies like Lyft (l.) back a new license suggested by Mayor Rahm Emanuel that will allow them to operate with lower overhead than taxi drivers.
Ride-sharing companies like Lyft (l.) back a new license suggested by Mayor Rahm Emanuel that will allow them to operate with lower overhead than taxi drivers.
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Justin Sullivan/Scott Olson

CITY HALL — A City Council committee moved Thursday to create a new license for ride-sharing services proposed by Mayor Rahm Emanuel, despite fierce opposition from the taxi industry.

The mayor's ordinance would create a two-tiered license for "transportation network providers" that cab companies say would cost ride-sharing firms such as Uber and Lyft far less than what taxis pay. 

Ride-sharing firms with drivers averaging 20 hours a week would face a $25,000 annual fee and a $25 per driver fee, as well as stricter requirements for background checks and car inspections. Those with drivers averaging less than 20 hours would be charged $10,000 a year and $25 a driver and would be largely self-regulated.

 Taxi spokeswoman Mara Georges (r.) says cab companies seek a level playing field.
Taxi spokeswoman Mara Georges (r.) says cab companies seek a level playing field.
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DNAinfo/Ted Cox

Taxi drivers operate under medallions that can cost $300,000 or more.

Emanuel's chief of policy, Michael Negron, said the "transportation network provider" license would "establish common-sense safety regulations for the ride-share industry."

After a marathon meeting by Council committee standards, Ald. Bob Fioretti (2nd) moved to table the ordinance for 60 days "pending what the Legislature does" in Springfield with a proposed state law considered more favorable to cab companies.

That measure failed by a 7-5 vote, however, and the ordinance was approved by the License Committee. It heads for a vote by the full City Council next week.

"It is not agreeable at all to the taxi industry," said taxi industry lobbyist Mara Georges, a former city attorney. "In fact, it will cause the demise of Chicago's taxi industry."

Andrew Macdonald, regional general manager of the ride-sharing service Uber, found some of the ordinance's proposals needlessly restrictive, especially in the higher tier, but supported passage, saying, "I do think this framework keeps ride-sharing in Chicago."

Lyft issued a statement echoing that, criticizing city fees and new regulations, which include fines for cars that aren't equipped to handle wheelchairs and a continued restriction on airport service for the firms.

But the ride-sharing service concluded: "We are hopeful the full City Council will approve this measure that encourages innovation and consumer choice while providing more access to transportation options in underserved neighborhoods."

The ordinance is meant to distinguish between large and small ride-sharing companies, but Georges said that larger companies might actually benefit and qualify for the lower fee, as they could sign up more drivers averaging fewer hours.

"None of those other requirements kick in," Georges said. "So it establishes an unlevel playing field for taxi drivers."

Macdonald said his firm intended to observe safety and insurance measures no matter which tier it fell under.

Georges urged the City Council's License Committee to "study this issue a little bit more," preferably after a state bill, seen as protective of taxi companies, passes into law.

That bill would require ride-sharing drivers working a certain number of hours in a week to obtain a chauffeur's license, carry commercial insurance, have cars no less than 4 years old and prohibit them from dropping customers off at airports, critics say.

The statehouse bill would also prohibit local municipalities from enacting more liberal measures for ride-sharing companies, although they could impose stronger restrictions.

"I expect that bill to be received favorably by the Senate," Georges said.

"The taxi companies took their fight to the state level," Macdonald said, describing the state bill as a way for traditional cabs to "protect their business."

"We believe that the City of Chicago should not wait for Springfield to figure out how to ensure our residents can safely use ride-share services," Negron said. Pointing out the bill would allow cabs as well as ride-sharing services to charge "surge pricing," hikes in peak hours, he called it "a reminder of why the City of Chicago is best suited to regulate public vehicles like taxis, liveries and ride shares. Our ordinance strikes a balanced approach that above all protects riders and consumers."

Referring to the Emanuel proposal, Macdonald said, "Ultimately, the city has found a solution that they like, and they should move forward with it," adding, "The state should back off."

He said Uber was agreeable to new demands on surge pricing and that it was about "transparency" in being clear what riders are being charged.

Ride-sharing firms cited a Federal Trade Commission opinion sent to Ald. Brendan Reilly (42nd) stating: "Regulations should not in purpose or effect favor one group of competitors over another or impose unnecessary burdens on applications or drivers that impede their ability to compete without any justification that benefits the public interest."

Yet Georges insisted that FTC opinion actually favored taxi companies. "As you would expect them to do, they're promoting competition," she said. "But open competition requires a level playing field."