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Uber, Lyft Can Surge All They Want As City Crackdown Put On Hold

 A measure to crack down on surge pricing from ride-share services during emergencies is on hold in Chicago for now.
A measure to crack down on surge pricing from ride-share services during emergencies is on hold in Chicago for now.
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Uber

CITY HALL — Ald. Anthony Beale (9th) Wednesday postponed a measure that would limit ride-share companies' ability to raise their prices during an emergency — and force them to fingerprint drivers — saying he would use the delay to explore new technology to boost rider safety.

Aldermen endorsed a measure in August to cap fares for companies like Uber or Lyft at 150 percent of the average price for a ride during the seven days before an "unforeseen emergency."

That vote came two weeks after the discovery of a body on the tracks near Belmont Avenue shut down the Brown, Red and Purple lines during the morning rush hour, driving a huge demand for Uber and Lyft rides and what some called price-gouging from the ride-share companies.

City officials determined the vote was invalid because members of the public had not been properly notified about the measure and sent the proposal back to Beale’s Transportation Committee.

Beale would not say what technology he would consider, saying only it could help his push for greater security for users of ride-share services.

Before the measure can return to the committee’s agenda, Mayor Rahm Emanuel will unveil his spending plan for 2018 — and Beale said raising fees on firms like Uber and Lyft was under consideration.

“Everything is on the table,” said Beale, a frequent critic of Uber and Lyft, who long has been pushing for more restrictions on the firms' operations and higher fees. “The market is still unfair. We need to level the playing field.”

The move by London officials to revoke Uber’s license was “eye-opening,” Beale said.

“This is not a friendly company,” Beale said, acknowledging that Uber’s new leadership is attempting to change the firm’s image after sexual harassment allegations led to mass firings. 

Beale did not rule out backing a comprehensive package that included his proposal to limit surge pricing as well as stepped-up security — and higher per-ride fees for firms like Uber and Lyft.

"I would love to put this baby to bed," Beale said.

The latest version of the Pullman alderman's proposal would prohibit surge pricing during a disaster declared by the mayor during "an actual or threatened terrorist attack, mass shooting, failure or shortage of electric power, or inclement weather, or a major disruption in public transportation."

After the August vote, Uber and Lyft promised to work with city officials on new surge-pricing regulations. However, both firms have long objected to requiring their drivers to be fingerprinted.

Uber officials have said such a law would have a "discriminatory impact" on members of "minority communities."

A spokesman for Lyft said the measure would be "disappointing and counterproductive."

Officials from both firms have said such a requirement could force the firms to stop operating in Chicago entirely.

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As the mayor's staff prepares next year's spending plan, city officials said the rocketlike growth of the ride-share industry has cost taxpayers about $40 million in lost revenue from other sources.

As part of an agreement brokered two years ago with Beale, Emanuel agreed to give cabdrivers a 15 percent fare increase but allowed Uber and Lyft to make pickups at McCormick Place, Navy Pier as well as O’Hare and Midway airports.

Riders who get a ride to or from those four locations pay a $5 fee, under the city ordinance. In addition, the city added 52 cents to the bill for every ride in Chicago.

In 2016, those taxes and fees generated $59.6 million, with 81 percent of the money coming from Uber and Lyft, said Molly Poppe, a spokeswoman for the city’s Office of Budget and Management. In 2017, the city expects to collect $85.2 million, with 88 percent coming from Uber and Lyft.

But more people sharing a ride has meant a significant drop for other parts of the city budget, including parking garage fees, CTA fares and rental car taxes, totaling $40 million, Poppe said.

Scott Coriell, a spokesman for Lyft, said city officials had used "creative accounting" to turn ride-sharing into a net loss for Chicago.

"In the short time ride-sharing has existed in Chicago, the industry has contributed hundreds of millions of dollars in revenue to the city, and continues to do so," Coriell said in a statement. "The City of Chicago already charges the highest ride-sharing taxes in the nation, and is now looking to increase those even further."

City officials have promised not raise citywide taxes to cover the looming budget gap of $114.2 million — or to bridge the remaining $80 million shortfall facing the Chicago Public Schools. The city also has not announced how it will cover the $60 million cost of hiring another 266 police officers, 100 detectives and 75 sergeants in 2018.

That makes raising taxes and fees on services like Uber or Lyft one of the remaining ways officials can generate revenue without reneging on that promise.