To provide the public with time for comment on the new ride share business Uber, the Chattanooga City Council held a second public hearing on the matter Tuesday afternoon. It became apparent that the differences between the ride-share business and conventional taxi services were still not clear. The purpose of the meeting was to help determine how to regulate the new type of business and enforce the regulations while creating a level playing field for competition with traditional taxi companies that are in the city.
Uber has already begun operations in the city and presently follows only rules that the company has set for itself. Last week two different proposals were made to govern transportation network companies (TNC) such as Uber and Lyft, one created by Ken Smith and the other by Chris Anderson. After the presentations of both, City Attorney Wade Hinton was asked to give each member of the council a copy of each proposal and to also provide a list of differences in the two.
When reviewing the two plans, Mr. Hinton said that more similarities were found than differences and so a third ordinance which is a combination of the two previous ones was created and presented to the council on Tuesday.
The transportation board that up until now has regulated the taxi industry would get a new name, The Passenger for Hire Board. It would regulate both taxis and ride-share companies. This board would consist of seven members, and be made up of four appointments from the mayor and three by the city council.
Proposed regulations include removing the cap on the number of taxis that may operate in the city, while retaining the right for the board to vote on a cap at a later date if deemed necessary. It is believed that the system will balance itself out. The metered rates for taxis would increase as well as the charge for waiting time. Both increases are wanted by the industry. Also deleted from the current ordinance is the requirement that a 24-hour taxi operation have a central physical location including a central storage facility. Taxis could also be hailed under this new proposal versus the current requirement that they be reserved by a dispatcher.
The board has broad discretion over consequences of any violation. To create consistency, the new system would operate on a point system that would accumulate with various violations but would roll-off after two years.
Insurance standards would be created for TNCs. Off duty cars and drivers would be insured with a private policy. When operating as a ride-share, Uber would be required to have a commercial policy on the vehicle for $1 million. Companies would be responsible for notifying the city inspector of any insurance changes that may occur.
The board would review applications and assure that all regulations have been met. An application fee is recommended at the rate of $5,000 the first year. Additionally, $3,500 would be paid by the TNC annually regardless of the number of drivers. What is needed for inspections would be defined and listed and they must be done on an annual basis. Background checks on the operators and vehicle inspections would be done by the individual company but the city would require verification every year.
The inspector would have more authority and could impound vehicles to get them off of the streets. Additionally, an audit review would be done to see if the TNC is doing what is required.
After presenting conditions in the newly-drafted proposal, questions from the council members revealed issues that have not yet been determined such as a review of the insurance policies that Uberis is using to see if they are sufficient. Also, amendments to the plans from last week have not yet been considered and incorporated into the new plan.
Councilman Russell Gilbert said that since both type of companies operated automobiles, he still wanted to know why taxis and ride-shares should fall under different regulations. Councilman Moses Freeman said that both type of companies are vehicles for hire and should be regulated with other services that do the same. The two systems should be on the same playing field. Attorney Hinton said in most other cities they are treated as different businesses but that is a policy definition that the council would make in Chattanooga. The attorney’s office defines the difference as the method of dispatch. Ride-shares are summoned by an app on a smart phone and taxis by a dispatcher on a radio or phone.
Councilman Yusuf Hakeem expressed concern that by not limiting the number of taxis on the streets and ride-share vehicles that the system might “implode.” Another concern he brought up was if Uber and Lyft both are in the Chattanooga market and get into a “food fight,” that would lower rates. They would then not only impact themselves but also the whole industry including taxis. Calling it arrogant, he also took issue with person after person who spoke at the podium saying that if things are not done the way Uber does them, then it is all wrong.
Councilman Anderson made a motion to come together to find common ground, and since it is still being debated to postpone a vote until the council meeting next week on Dec. 16.
Around 10 people wishing to speak lined up. Most were Uber drivers who praised the business model and the service they provide, and most asked for minimum regulation. One driver for Mercury Cab Co. spoke saying that taxi drivers do not mind the competition. A taxi company must have at least five vehicles. He said that a person could just buy a van and call Uber to become an operator. He asked for things to be fair for everyone. Just one rider came to give an opinion. He said that he was from the inner city and became concerned when he heard there would be a fare increase for taxis when Uber can offer discounted rates and wondered if a monopoly were being developed.