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Analysis & News on the Future of Public Finance

CSG: New York City Taxi Vote/Dockless Scooters and Bikes

By CSG Partner Joseph Krist

New York became the first large U.S. city to cap Uber and other ride-hail vehicles. The City Council voted to enact a package of bills that would halt the issuance of new licenses for Uber and other ride-hail vehicles for a year while the city studies the industry. The legislation would also allow the city to set a minimum pay rate for drivers. Drivers hope the cap will halt the flood of new vehicles clogging city streets and allow them to complete more trips and improve their earnings. Uber and other ride-hail services could add new vehicles only if they are wheelchair accessible.

The bills will address worsening street congestion and improve low-driver wages. Uber says the laws could raise prices for rides and lengthen wait times for passengers. Drivers hope the cap will halt the flood of new vehicles clogging city streets and allow them to complete more trips and improve their earnings. If the city sets a minimum wage of $17.22 an hour after expenses, that would increase driver earnings by about 22.5% on average, according to a study by independent economists. About 40% of for-hire vehicle drivers have incomes so low that they qualify for Medicaid and about 18% qualify for food stamps, according to the study.

Are the TNCs afraid of the new law? Lyft’s leaders say the ride-hail companies offered to establish a $100 million fund to help taxi drivers if the city dropped the cap proposal, but city officials refused the offer.

While car-based ride-sharing services are fighting their battles, the lower-tech form of disruptive transit modes — dockless bicycles and scooters — is unfolding as well. That industry, which is also attracting investment from the likes of Uber and Lyft, is approaching somewhat of an inflection point. San Francisco banned all shared e-scooters in June, forcing companies to stop operations and go through a permit process. A Los Angeles City Council member last week called for a ban on scooters and asked the city to issue cease-and-desist letters to companies already operating there. Advocates in the District of Columbia are fighting a cap on fleets from 400 per company to allow up to 20,000 dockless bikes in the District.

Byrd electric scooters were ordered out of Somerville and Cambridge, Mass., last week just days after launching. And Providence is crafting a new policy for the scooters. Dockless bike-sharing company Ofo has pulled out of several major U.S. markets — including the District, Chicago and Miami — citing regulatory hurdles. In the opposite direction, the Seattle City Council voted to allow up to 20,000 bikes, doubling the number now available. But with the expansion, the city also adopted a plan to allow four companies to operate up to 5,000 bikes each, as long as they pay the city an annual fee of $250,000.

Public backlash has arisen as abandoned bikes and scooters began littering sidewalks, parks, and other public spaces. The lack of regulation has also led to increased tension among other road users, including pedestrians, over issues such as right of way and where the vehicles are permitted. Higher operational fees may result in higher costs for users who can now rent bikes for $1 for a 30-minute ride and scooters for $1 to start plus 15 cents a minute.

The cities have to decide if they want to pick winners and losers among the various modes of transportation seeking to use public streets. Then they have to decide on a road pricing scheme that provides for availability, safety, and realization of the intrinsic financial value that is inherent in the ownership of the public thoroughfares. The other policy issue has to do with employment and compensation levels for drivers of both traditional taxis and TNC vehicles. The proposal to limit expansion of the number of TNC vehicles was supported jointly by taxi and TNC drivers. The union representing their interests went on the record in support of the plan.

Uber drivers say they will have less competition and could spend more of their day carrying passengers, instead of driving around in an empty car. Some drivers hope the legislation will mean a return to the better wages that they earned in the past. 

In sum, we are looking at a brave new world for transportation, mostly in major cities, and adapting to these changes will take leadership and thoughtfulness from elected officials