Deal would allow Uber to operate in Lansing

Lansing-area cab drivers want city leaders to write stricter rules for ride-sharing services that use smartphones to hail drivers, saying they're held to different standards that create an unequal playing field.

The mayors of Lansing and East Lansing, however, say the local guidelines they're drafting for startups like Uber are unprecedented and will keep passengers safe, while giving people more choices for hitching rides.

Lansing City Council on Monday is expected to vote on a plan to create a regional taxi authority to manage cab service in Lansing and East Lansing. East Lansing's council already approved the deal.

The authority will handle all licensing for taxis, including collecting fees. It will draft uniform requirements that cover everything from how fares are displayed to how many cabs a company must have on the road overnight.

Taxi companies have had few complaints about the rule changes themselves. Much of the attention paid the authority so far has focused on how it would control ride-sharing services like Uber, the San Francisco-based company that links customers with drivers via a cellphone app.

Uber launched its lower-cost service, uberX, in July in Lansing. It pairs passengers with drivers who offer rides in their personal vehicles.

Cab operators have a vested business interest in the success or failure of companies like Uber, in that they occupy a share of the for-hire transportation market. In San Francisco, for instance, a recent report to the city's transit agency showed average monthly taxi trips fell by nearly 65 percent in a roughly two-year period since Uber launched there. Similar data isn't readily available in Lansing.

"Our plan is not without detractors," said Randy Hannan, executive assistant to Lansing Mayor Virg Bernero. "It's fair to say that there's a significant part of the taxi industry that, frankly, does not want Uber competing with them. We understand that, but we also believe competition is a good thing for the customer."

Steve Denniston, a co-owner of Shaggin' Wagon Taxi in East Lansing, said the problem isn't losing business to new competitors. Rather, he said, companies like Uber have fewer requirements — particularly, insurance coverage — than taxi operators do.

"The idea that Uber can undercut us is ridiculous because our price points are so low that we're practically operating like nonprofits," Denniston said. "I have no problem with Uber coming in and complying with the same thing (we do)."

Uber is the target of lawsuits in several U.S. cities alleging unfair competition and tipping practices, for a few. California lawmakers recently set minimum insurance levels for services like Uber and its main competitor, Lyft.

The pushback has spread abroad. A nationwide ban on Uber service recently was overturned in Germany, and cab drivers reportedly have staged protests in several European cities.

For now, Uber operates on the regulatory fringe, a classic case of technology advancing faster than government. The company's business model — in particular, the use of personal vehicles for commercial rides — has ignited concerns across the globe about passenger safety and driver liability in the event of an accident. State transportation laws mostly have not caught up, so it's difficult to determine whether Uber must comply.

The Michigan Department of Transportation believes Uber falls under the state's limousine law — defined as a for-hire vehicle that carries up to 15 passengers — and should carry commercial vehicle insurance with a minimum coverage level of $1 million.

Uber has said the company has a $1 million corporate insurance policy that covers all of its drivers, but MDOT spokesman Michael Frezell says Uber's policy has not been made available to the state, so it's uncertain what the policy covers.

An Uber spokeswoman did not respond to a message seeking comment for this story.

The state's biggest concern is that Uber's drivers are driving for hire on personal liability policies, which might not cover damages in the event of an accident, Frezell said.

MDOT welcomes local efforts to regulate the companies and drivers, since state law only covers vehicles, he added.

Locally, Uber won't be able to set up rides via phone or email, or pick up passengers curbside, East Lansing Mayor Nathan Triplett said. Uber's drivers will be put through background checks, and their personal vehicles are required to have annual inspections.

Uber has not said how many drivers it employs locally.

City leaders consulted Uber as they drafted the requirements, Triplett said, adding that the company already complies with the authority's rules. The authority will have to be named on Uber's insurance policy, and other records will have to be provided upon request.

If it fails to meet any of the authority's requirements, he said, it's automatically considered out of compliance and can be cited by police for operating as a taxi company without a license.

"We're not going to take the route that some communities have taken in trying to shut (Uber) down," Triplett said. "Our objective was to allow this new transportation model to operate in our region, but to do it in a way where residents would have confidence that there was a safe option to choose from."

At a glance

The Greater Lansing Taxi Authority would regulate taxi companies and smartphone-based ride-sharing services like Uber, which launched in July in the Lansing region.

If approved, East Lansing would administer the authority, which would be funded through license and registration fees, officials said. Among its first tasks would be to set those fees.

The authority also could serve as a regional model, East Lansing Mayor Nathan Triplett said. Officials from Delhi, Delta, Lansing and Meridian townships already have expressed interest about joining, Triplett said.

Taxi operators only would have to pay one fee to operate in both cities, rather than separate fees as happens now. The authority also would set uniform rules for how fares are displayed, among other things.

If you go

Lansing City Council will meet at 7 p.m. Monday at City Hall, 124 W. Michigan Ave. in Lansing

A vote is expected on creating the Greater Lansing Taxi Authority, which will license taxi companies in Lansing and East Lansing and set requirements for smartphone-based ride-sharing services such as Uber.