Tensions growing over Lyft, UberX regulations in Minneapolis

The city's taxicab industry is growing increasingly frustrated with a City Council effort to legalize app-based transportation companies like Lyft and UberX.

A group of taxicab drivers and company owners looked on Tuesday as a council committee discussed new regulations governing Lyft and UberX, which essentially allow people to act as chauffeurs of their own vehicles. They said afterward that the rules are unfair, since taxicabs are subject to more burdensome regulations.

The committee decided to hold a public hearing on the proposed regulations on April 29. The city is hoping to hear back from the state's insurance commissioner and several insurance trade groups, which are reviewing UberX's insurance policy.

"Within two weeks it's going to escalate," said Zach Williams, owner of Rainbow Taxi, surrounded by taxi drivers in a hallway. "You're going to have a much bigger crowd out here two weeks from now."

In other cities, like Los Angeles and San Francisco, the app-based companies have spurred taxicab protests at City Hall. Cities across the country are grappling how to regulate the companies, including Seattle, which recently capped the number of drivers.

Council Member Jacob Frey is sponsoring the new regulations, which are being devised by regulators from Minneapolis, St. Paul and the Metropolitan Airports Commission. Lyft and UberX are currently operating illegally in Minneapolis, since city ordinances require them to license their vehicles as taxicabs.

A regulatory outline presented to the committee said they would require the companies, rather than vehicles themselves, to be licensed. The companies would also perform their own background checks and vehicle inspections, meeting city specifications, unlike taxicabs which must submit to city checks. The city would conduct audits, however.

Waleed Sonbol, general manager of Blue and White Taxi, said he was shocked by this provision.

"The way I look at it is, 'All you guys are worth millions, so we trust you. And you guys aren't worth millions so we don't trust you, so we're going to make sure we hold your hand throughout the entire process,'" Sonbol said. "That's all this is in the end. It's another form, in short, of gentrification."

Lyft and UberX would only be able to make prearranged trips under the proposal. "This will leave a certain type of traditional taxicab ride like street hails, taxicab waiting stands at hotels, for licensed, regular taxicabs," said Grant Wilson, the city's head of business licensing.

Other possible requirements specified on Tuesday include having commercial insurance in effect when the driver is "active on the dispatch network " and creating incentives – or a surcharge – for the companies to have wheelchair-accessible options.

Williams said taxicab companies serve the entire public, while Lyft and UberX only serve people with smartphones. "That's no good for neighborhoods or people with so-called dumb phones," he said.

He added that so-called Transportation Network Companies can do many things at a lower cost than he can because of the different regulations. "I'm going to be the first one in line to apply for my peer-to-peer transportation network license," Williams said.

The industry's concerns were raised to the committee by Council Member Abdi Warsame, who says his office has "grave concerns" with the ordinance. "it's unfair on them," Warsame said. "Because they have to get licenses, they have to get inspections, and these operations don't have to do that."

Frey said that the new regulations are necessary because Lyft and UberX can't operate under existing taxicab rules. "We've presently got Lyft and Uber that are operating largely illegally," Frey said. "So we have to find a way to move forward as expediently as possible."

But, he added, it's important that the final regulations are "equitable." "Perhaps there needs to be sort of a large- or small-scale deregulation of how we handle taxicabs right now," Frey said.

Just when to hold the public hearing was another area of debate. Council Member John Quincy wanted to wait for stakeholder meetings and an answer from the insurance commissioner.

"I don't want this committee or the public hearing to be a place of refinement of it and having a room full of people suggesting changes," Quincy said. "I'd like to have that kind of fully baked before it's brought out to the public hearing."

The committee's chair, council member Lisa Goodman, emphasized the need to be transparent.

"I personally think that the kind of public hearing when the decision's already been made is terrible," Goodman said. "I think it's better to have a public hearing, hear from everyone who has a concern and attempt – to the best that we can – to take another cycle and deal with those issues."

The committee isn't expected to take a vote on the matter until the meeting following the public hearing, which will take place in early May.