Ride-sharing ordinance advances as mayor denies conflict
BY FRAN SPIELMAN City Hall Reporter April 24, 2014 11:04AM
Justin Timberlake, Ari Emanuel
Updated: May 26, 2014 6:24AM
Mayor Rahm Emanuel’s plan to create two tiers of ride-sharing licenses and “reserve the right” to cap surge-pricing cleared a key legislative hurdle Thursday, as the mayor scoffed at suggestions that he had tilted the scales in favor of ride-sharing because of his brother’s investment in one of the companies.
The Sun-Times reported this week that the Hollywood talent agency owned by Ari Emanuel, the mayor’s brother, has an ownership interest in Uber Technologies, one of the major players in Chicago’s burgeoning ride-sharing industry.
Pat Corrigan, an owner of Yellow Cab, has branded Ari Emanuel’s ownership interest an “outrage” and the “black matter that holds all the facts together” to explain why ride-sharing companies have been allowed to operate in a regulatory vacuum for years while siphoning business from taxicabs.
On Thursday, Emanuel addressed those conflict of interest concerns head-on.
“Look. Let me say this about Ari. He doesn’t need his older brother to get rich. Think of it as me getting back at him,” the mayor said with trademark sarcasm.
Even though he allowed the ride-sharing industry to go unregulated for two years, the mayor said his legislative actions have been “just the opposite” of family favoritism.
“There is no industry that wants more regulation. The ride-sharing industry we’re regulating for the first time — and it’s the most comprehensive regulation anywhere in the country. The fact is, they don’t also support what we’re doing. That speaks for itself...It was expanding before there were regulations. Now, we’re putting regulations in to make sure there’s a level playing field and they’re not advantaged against regulated industry,” the mayor said.
Earlier this month, Emanuel strengthened his ride-sharing ordinance to referee a high-stakes competition between ride-sharing companies and taxicabs that has triggered lawsuits and created a full employment program for lobbyists.
On Thursday, the City Council’s Committee on License and Consumer Protection approved that legislation over the objections of a taxicab industry that has lost business to ride-sharing.
It would require ride-sharing companies like UberX, Lyft and SideCar, which allow drivers to offer rides in their personal vehicles to passengers who order them on their smartphones, to monitor driver workloads, forward that information to the city and purchase the appropriate license based on 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 third-party to conduct a 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 checks, driver training vehicle inspections and random drug testings. But, City Hall signoff 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, which the city does for taxis. But his ordinances reserves the city’s right to “place a cap on surge pricing” during periods of peak demand if increased disclosure requirement 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.
They would be prohibited from picking up street hails or riders at McCormick Place, O’Hare and Midway airports “unless the commissioner determines, in duly promulgated rules, following consultation with the commissioner of aviation, that such pick ups can be accomplished in a manner that preserves security, public safety and the orderly flow of traffic; and…designated taxicab stands or loading zones.”
Street hails would also be off-limits.
When Thursday’s hearing began, Emanuel’s chief of policy Michael Negron addressed the elephant in the room — mayoral bias — without mentioning Ari Emanuel’s investment.
“Our goal is not to protect any one company or any one industry from competition. Our focus is on protecting consumers,” Negron said.
“But we also want to provide a fair playing field for taxis and liveries,” he said. “So this ordinance imposes different sets of requirements, based on how many hours drivers spend behind the wheel.”
He noted that roughly 70 percent to 75 percent of ride-sharing drivers are on the road for less than 20 hours a week, and less than 5 percent do it full-time.
Negron also explained why the mayor opposes the ride-sharing ordinance that passed the Illinois House. Not only would it impose what he called an “unfunded mandate” on cash-strapped Chicago by requiring City Hall to track driver hours. An 11th-hour amendment added “at the behest of the taxi industry” would allow cabs to impose surge pricing, just as ride-sharing already does, Negron said.
“On any given night, there are a few hundred ride-share drivers who might engage in surge pricing. On any given night, however, there are thousands and thousands of taxi drivers looking for fares,” Negron said.
“If the state allows taxis to surge price, residents who know nothing about either ride shares or surge pricing who view this as some kind of crazy thing that young people do in different parts of the city will know what surge pricing is. You [aldermen] will start to hear about it from your residents as people pop into a taxi and face fares that are three, four, five, six times normal rates.”