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Will customers be 'exploited' by taxi cab deregulation?

City Council approves first vote on new vehicle-for-hire rules

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CEDAR RAPIDS — Price restrictions on taxicabs, limousines and shuttles are to become a thing of the past in Cedar Rapids, pending adoption of sweeping deregulation of vehicles for hire so they fall under standards similar to those for online ride hailing companies such as Uber.

Cedar Rapids officials are proposing changing the city’s municipal code regarding such services so they are in step with a new state law that went into effect on Jan. 1. Among the biggest changes required by state law:

l A Class D driver’s license is not required when transporting fewer than seven passengers.

l All vehicle-for-hire companies must have at least $1 million in liability insurance.

l A physical office is not required.

l Uber will be under supervision of the Iowa Department of Transportation.

Cedar Rapids officials are recommending additional changes to lessen the requirements of traditional vehicles for hire.

“We have been hearing all along from cab companies they are not on the same playing field,” said Brad DeBrower, Cedar Rapids Transit manager, who helped draft a proposed new ordinance. “We hope this balances that.”

The City Council on Tuesday unanimously approved a first vote on the rule changes. The ordinance change requires two more votes, and if approved would take effect on April 3.

No representatives from the seven local taxi cab companies, five shuttle companies, 10 limousine companies and one pedicab company registered in Cedar Rapids spoke during the meeting.

The owner of one cab company, Nicholas Hassinger of Nick’s Cabs, said by phone later Tuesday he has mixed feelings about the changes.

“From a customer standpoint, some of the changes are going to be opened for customers to be exploited,” Hassinger said. “Customers are going to get in the car and not really know what the cost is. I feel like once you allow the cab companies to charge what they want, some cab companies are going to take advantage.”

Those on fixed incomes and the elderly are among the most frequent customers, and Hassinger said they could be negatively impacted.

Not requiring top lights for cabs, meters and a home office also could erode credibility of cab companies, he added. Among positive changes, some duplication, such as multiple rounds of background checks for drivers, would be eliminated, and he is glad to see increased liability requirements, he said.

The city has historically controlled the cost of rides, and as of 2011 created a “not to exceed amount” of $3.50 for the first one-sixth mile and $3 a mile thereafter, DeBrower said. From his perspective, he anticipates the prices staying the same or possibly declining as competing companies strive to remain competitive.

DeBrower acknowledged the new system would allow “surge pricing” for in-demand times or locations.

“It’s really going to be market forces at work,” Council member Pat Shey said during discussions about the ordinance on Tuesday. “If you want a ride at 2 a.m., you are probably going to pay more.”

The driver would have to disclose a cost estimate in advance, but it would be up to the rider to seek it out, DeBrower said.

Sgt. Mike Wallerstedt of the Cedar Rapids Police Department, who was also involved in drafting the ordinance, added the vehicles would be required to post a rate card.

A spokesperson for Uber said the company supported the new state laws and is “thrilled to be in Cedar Rapids ... serving riders across the city.”

Uber’s emergence in Iowa markets in the past few years forced the issue of how to fairly handle all vehicles for hire. Given the popularity of Uber and the challenges in oversight for the web-based service model, cities around the state grappled with leveling the playing field for cab companies, which had higher overhead and fare restrictions.

Cedar Rapids has had a set of regulations for the approximately eight cab companies in the city but none for San Francisco-based Uber.

After Uber entered the market in 2014, Cedar Rapids officials began drafting rules in stops and starts, but ultimately waited until the Iowa Legislature drafted a statewide law.

While the city of Des Moines repealed all vehicle-for-hire regulations, Cedar Rapids officials are taking a more nuanced approach. The proposed changes include the following:

l Deregulating limousines, shuttles and smaller vehicles for hire if there is a prearranged contract or reservation and no hailing of customers.

l Instead of Cedar Rapids licensing every taxicab business, vehicle and driver, the proposal calls to license taxicabs similar to how the state licenses companies such as Uber. Cedar Rapids would issue a business license only and turn over the driver and vehicle licensing to the company, including performing driver background checks, issuing driver ID cards, tracking vehicle inspections and insurance. Cedar Rapids would audit taxicab business records for compliance periodically.

l Meters would not be mandatory. Flat rates and zoned rates could be used.

l No regulation of business hours, although incentives would be offered to those taxicab businesses willing to operate all day, year-round.

l No minimum number of vehicles or drivers.

l Cabs can be inspected annually by a licensed mechanic, instead of through the Iowa DOT or the city.

l Comments: (319) 339-3177; brian.morelli@thegazette.com

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