"Just Say No" – Chris Hayashi's Letter to the Seattle City Council on TNCs

I'm posting Director Hayashi's letter for two reasons:

1. It's one of the best summaries of the problem that I've seen.

2. It was instrumental in Seattle's decision to limit the numbers of TNCs. Before Hayashi sent her letter the Seattle Council was split on the vote. After they read it, they voted unanimously to regulate.

A third reason is that the Director hasn't gotten her props for helping keep the bogus taxis out of numerous cities including Austen, San Antonio and Philadelphia – where the TNC's get towed if they show up.

March 12, 2014

Dear Seattle City Council Members:

I am writing this letter in the hopes of helping to inform your upcoming decision about appropriate regulation of companies that provide smartphone access to individuals using personal vehicles to provide for-hire transportation to the public.  Please notice that I did not call it “ridesharing.”  That is a false characterization of this type of for-hire vehicle service that was adopted in the hope that by characterizing these services as “carpools” they would not be required to carry commercial insurance under California law.  What we now call Transportation Network Companies (TNCs) in California asserted that position before the California Public Utilities Commission (CPUC), but the CPUC rejected it, finding that the TNCs are commercial, for-hire vehicles that are operating for profit.

Ever since TNCs launched their operations in San Francisco about two years ago, including more than a year that they operated in open defiance of a cease and desist order from the CPUC, the numbers of these vehicles have proliferated on a frightening scale.  While they consider their numbers (and the terms of their insurance coverage) to be secret, proprietary information, it is obvious to any casual observer that there are hundreds if not thousands of TNC vehicles on the streets of San Francisco during periods of high transportation demand.  The San Francisco Cab Drivers Association has started a list of observed TNC vehicles that establishes that there are over 3,000 known vehicles, and that data is several months old.  For the SFMTA as the local public agency that manages all modes of transportation there is no way to ascertain how many vehicles are working as TNCs.  Because their trade dress is removable there is not even any way to determine whether a particular vehicle is operating as a TNC.  

Just as the TNCs attempted to characterize themselves as carpools that only requested voluntary donations, they also represented to the CPUC without any evidentiary basis that authorizing this type of car service would reduce congestion and emissions because more people would get rid of their cars.  The opposite is true.  A quick perusal of Craigslist in the Bay Area shows that it is extremely common for people to buy or even lease vehicles to be used as TNC vehicles.  In addition, in the San Francisco Bay Area a new industry has arisen where fleets of vehicles are maintained to be leased to TNC drivers,(1) in some cases without the TNC company being aware that the vehicle is being driven by someone other than the authorizedvehicle owner.(2) It is very common to see a TNC vehicle that was newly purchased with temporary license plates.  This is no surprise, since it is logical to assume that if authorized to use a personal vehicle for profit without any overhead cost, people would not only not get rid of their existing car, they could easily be inspired to go get a new car so that they can make some money with it.  The result is a shadow taxi industry that is only distinguishable from the licensed taxi industry by its opacity and lack of oversight.

This burgeoning phenomenon has had very destructive influence on our taxi industry.  On this subject, it is important to remember that the taxi industry fills a role that the TNCs cannot provide under their business model. 

• ·      Taxis provide transportation that is universally accessible on a 24/7/365 basis, whereas TNCs can pick and choose when and where they drive, who they want to pick up, to the extreme that the companies Lyft and SideCar give the drivers a choice as to whether they want to pick up service animals, which SideCar calls “service pets”.  
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• ·      Taxis are required to charge the same amount to everyone at all times, and that amount is set by a public agency with the goal of making sure that on-demand, point-to-point transportation is available to people are disabled or on fixed incomes who cannot maintain their own personal vehicle.  The TNC companies on the other hand, set their rates behind closed doors and can and do change them at will, hour by hour and neighborhood by neighborhood, to undercut their competition and to secure market share with lowball prices that can be tripled or more if it rains, if there is an emergency, and during special events or times of high demand. 
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• ·          In San Francisco, we depend upon our taxi industry to service our paratransit customers who are not able to use the transit system.  A paratransit service is required for these customers by federal law, and the most efficient mechanism to provide that service is through the use of taxis.  If the taxi system collapses, the public will have to fund van service that is much more expensive (by about $30 per trip taken) than taxis, and the service quality will decline substantially for people who are dependent on the paratransit system, because paratransit vans must be arranged well in advance and cannot provide on-demand service.

The point being that there is a reason to maintain a taxi industry to serve the populations that taxis have always had to serve, and the most vulnerable segments of the community will suffer the consequences if the taxi industry collapses because of TNC competition.

Because there appears to be no end to the exponential growth of TNC vehicles on the streets of San Francisco, and because they cherry-pick the best business, our taxi drivers have become extremely discouraged.  Many have left the industry to pursue other careers, including becoming a TNC driver.  In fact, the TNC companies have actively plundered the taxi driver supply with advertising to taxi drivers to become TNC drivers.  This has resulted in an undersupply of taxi drivers to fill shifts, and has caused extreme economic harm to the businesses that maintain the fleet of taxi vehicles.

In particular, the wheelchair accessible vehicles are not getting out onto the streets because there are no drivers to drive them.  Fully 25 percent of our accessible taxis are no longer in operation, and even those that are still operating are idle more often than not.  The level of service to people in wheelchairs in San Francisco plunged by 50 percent during 2013.  Our agency is dedicating public funds to try to solve this crisis in service to our disabled residents and visitors, including wheelchair pickup incentive payments, waivers of lease fees for accessible medallions and new driver application fees and subsidies of the costs to train drivers to make wheelchair pickups. We have also had to take on a new role for our regulatory agency: new driver recruitment.  The situation is dire.

For the drivers who remain there is an atmosphere of anger and desperation on the streets.  The hostility between taxi drivers and TNC drivers is palpable.  The competition for limited fares among an ever-increasing number of vehicles has resulted in more and more reports of speeding, illegal U-turns, failure to yield and other aggressive driving behavior.  It is only a matter of time before these drivers come to blows, or someone is hurt by reckless driving.

The experience in San Francisco demonstrates that it is not viable to have a transportation system like taxis where numbers are managed to address supply and demand, next to an “open entry” system that performs exactly the same function in the same manner that has no limit on the supply.  For example, even if rules are adopted they become impossible to enforce if the enforcement capacity of the regulatory agency is overwhelmed by vehicle numbers.  Without limits on numbers, you can expect increased congestion, increased pollution, and a riskier environment for pedestrians and bicycles from the sheer increase in numbers of motor vehicles on the street.

I would like to point out that it is not necessary to change the law to authorize TNCs just because they refuse to abide by existing laws.  There is nothing “new” about this service other than that it is requested on a relatively new technology platform.  The application of technology does not change the fact that a member of the public is being charged for transportation that requires getting into an inherently dangerous vehicle with a stranger.  I expect people would laugh at the idea that selling burritos to the public on a smartphone app does not require oversight of food inspectors from the Health Department because you ordered it through your phone.  Or that a community could not control the numbers of vendors of alcohol as long as it is sold through an app.

Many jurisdictions that have considered this issue have recognized the problems TNCs create and have prohibited them outright, including New York City, Austin, New Orleans, Portland, Miami, Detroit, Philadelphia and most recently Madison, Wisconsin.  Other jurisdictions are also considering prohibitions of or at least regulation of TNCs, including Boston, Chicago, Washington DC, Georgia, Denver, Dallas, Houston and Pittsburg. 

I consider this to be an extremely important issue for public safety and transportation planning.  You should be aware that other states and municipalities will be looking to your example; what the Seattle City Council does on Monday will likely set the direction for the rest of the nation. 

Please feel free to contact me if there is any additional information that I can provide.

Sincerely,

Christiane Hayashi

Deputy Director, Taxis & Accessible Services

San Francisco Municipal Transportation Agency

 Notes:

1. March 11, 2014

“[I and selling my car because I] Needed to buy a 2006 X Type to start my Uberx/Lyft driving career.”

March 7, 2014:

Drivers living in the Bay Area, wanted to drive UBERX registered vehicles.
You should be an UberX driver with rate of 4.7 and up.
The deal is: Either 50% for the driver including gas. OR: Leasing the hybrid vehicle [2009 Toyota prius] for $80.00/day. Damage to the body if it was your fault, the deductible [$1000.00] paid in advance.

February 18, 2014:

•       HIRING DRIVERS / ACCEPTING NEW UBERX / UBER BLACK / DAILY LEASE $89

•       WE ARE LEASING HYBRIDS TOYOTA PRIUSES AND HONDAS . . . WE ARE LEASING EACH VEHICLE FOR $89.00/DAY

•       ALL OUR CARS IS ACTIVE (SIC) AT UBER AND READY TO WORK

•       WE ARE RESPONSIBLE FOR REPAIRS AND MAINTENANCE

•       AIRPORT FEES WILL BE CHARGED AT $3.65 PER AIRPORT

2. February 24, 2014:

 I’m leasing my 2008 prius to be used with rideshare companies.  It is already set up with UberX, lyft and sidecar. I’m asking $300 per week and you can keep the car at your place.  I have averaged over $1000 per week driving this car (part time ~ 20-30 hours) myself for the last 10 weeks.  If you have already signed in with UberX you can start driving today!  If you have a partner that would also like to drive, I can arrange for 2 people to drive the car and the price would be $400 per week.  If you want to just drive a few hours I can put you under my account and charge a rate per hour or per shift.  Prices can be flexible with longer commitment for use.