San Jose May Ease Up on Taxis to Level Playing Field with Uber, Lyft

UPDATE: On Tuesday the City Council unanimously passed new rules to ease restrictions on local taxi companies.

Despite a two-day taxi strike protesting deregulation last week, San Jose lifted fingerprint and background check requirements for ridesharing services Uber and Lyft. Come Tuesday, the City Council will vote on whether to extend similar treatment to traditional taxi companies.

The city rolled out a pilot program this past summer that required mobile app-based shuttle drivers (namely Uber and Lyft) to undergo criminal background checks, submit fingerprints and obtain a business license as well as permits to pick up passengers at Mineta San Jose International Airport.

But no Uber or Lyft drivers even applied to work at the airport under those rules, which also required them to disclose vehicle conditions and banned cars more than a decade old.

San Jose has borrowed a regulatory scheme from San Diego, which requires a monthly audit on 1 percent of drivers. Uber and Lyft drivers will still have to undergo background checks, which are required by the California Public Utilities Commission (CPUC).

Cabbies have argued that they face stricter regulations and higher trip fees, which puts them at a competitive disadvantage. In protest of this inequity, last week cab drivers refused to provide rides at the airport, instead driving by people and honking their horns. It was a dubious strategy to win the hearts of people in need of a ride.

To level the playing field between conventional taxis and ridesharing services, the city may simplify car inspections and allow lower fares for rides booked online.

“Ground transportation options and related regulatory frameworks are rapidly evolving,” according to a memo signed by Mayor Sam Liccardo and council members Don Rocha, Raule Peralez, Johnny Khamis and Rose Herrera. “To address that reality the city council gave staff direction to review taxi regulations in Title 6 and 25 in an effort to ‘level the playing field.’ Staff recommendations include removal of vehicle inspections by the police department, issuance of temporary permits, establishment of alternate methods of background checks, reduction in annual company license fees for the taxi industry, and the deregulation of fares booked via mobile app. We support these recommendations, which will create a more cost competitive and less burdensome regulatory framework.”

The proposal is a clear reversal from Mayor Liccardo, who proposed the ridesharing pilot program from last summer. This new proposal, in a sense, levels the playing field by going the opposite direction of what was attempted earlier this year.

Union officials cautioned the city against relaxing too many regulations for airport transportation.

“There is concern by airport officials that this open entry approach will result in a ‘race to the bottom’ for fares and service as more [Uber and Lyft drivers] jump into this young, and as yet not clearly defined, transportation service model,” wrote Ray Mundy, director of the Airport Ground Transportation Association. “After all, it was the lack of quality in taxi and van services that led many airports to develop their own requirements and contracts/conditions for the services that exist today.”

While using private cars driven by their owners may lower fares and expand options for consumers, it’s a questionable model for airports, he said.

“Random driver checks at the airport … is no substitute for having every driver to be thoroughly vetted, exactly like taxi drivers, prior to ever getting behind the wheel of a commercially available passenger vehicle at the airport.”

Uber and Lyft drivers face varied local laws throughout California, as cities and counties grapple with how to regulate the nascent industry.

Pending litigation also threatens to undermine the on-demand industry. A class action lawsuit in California asserts that Uber—a $50 billion company—has misclassified its drivers as independent contractors.

Meanwhile, a federal lawsuit filed by a SoCal taxi company against Uber and the state last week accuses the ride-hailing service of flouting unfair competition laws.

This article has been updated.

More from the San Jose City Council agenda for November 17, 2015:

  • Adjusting for inflation, the city will bump up its campaign contribution limits to $600 for council candidates while keeping the limit for mayoral candidates flat at $1,100.
  • After decades of planning, the city is moving forward with plans to develop an empty parking lot in the heart of Japantown into a hub of housing, shops and a performing arts center.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408535.1260

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

11 Comments

  1. The quoted memo does not have Chappie Jones signed, or else it would be a Brown Act violation.

  2. I know if taxi companies were listed on the stock exchanges (maybe they are), I would probably want to short them.

    But it still isn’t fair to have different, more lenient rules for the competition.

  3. One more thing you forgot to add on your article Transportation network work companies drivers they have to pay city of Sanjose business license fee at the city hall before they start picking up fares at SJC but we don’t know how the city will enforce it ?

  4. Mr. Liccardo was for pension reform. Now he is for invalidating most of Measure B. Mr. Liccardo was for fingerprinting Uber drivers. Now he is for removing the fingerprinting requirement for taxi drivers.

    San Jose residents deserve better.

  5. This evening the council will also be discussing the future of its three municipal golf courses. San Jose Municipal Golf Course is owned free & clear and is leased to a private company with the city getting a percentage of the gross revenue. The course brought in $200,000 of profit last year. Los Lagos is an award winning course with undulations throughout. Coyote creek runs through it and it is home to wildlife. The course has exceeded operating costs 10/14 years. Last year it lost $300,000, but the city admits that if the management company was aloud to pay market wages instead of a “living wage” the city would have saved $370,000 last year. Rancho del Pueblo is used less than half as much as Los Lagos. It is a short, flat course with most holes being straight ahead. It has never brought in enough revenue to cover operating costs. Which course do you think some of our leaders are thinking of destroying for development and soccer, softball, & cricket fields?

    Here’s my letter to Mayor Liccardo,

    I am disappointed to read the memorandum you coauthored regarding Los Lagos Golf Course. You wrote, “From prior experience, we know the community around Rancho del Pueblo values their golf course and we should honor that value by maintaining it.” How do you know that is true? The First Tee of Silicon Valley certainly has lobbied hard for Rancho del Pueblo, but do they represent the whole community? Are you certain that the San Antonio/ Alum Rock residents would not prefer first class soccer facilities for their children? You suggest that the should reach out to the neighborhoods around Los Lagos to find out what the community wants. Why not do the same at Rancho del Pueblo?

    Many neighbors at the McLaughlin Neighborhood Association have expressed their desire to keep Los Lagos to our city council representative who expressed his willingness to protect the golf course, but now has co-authored the memo with you.

    If the community values Rancho del Pueblo so much, why is it utilize half as much as Los Lagos? Rancho del Pueblo Golf Course had 24,000 rounds of golf played and 23,000 visits to the range last year. Whereas, Los Lagos Golf Course had 50,000 rounds of golf and 42,000 visits to the range last year.

    If the issue is underutilization of public space, why would you suggest destroying the golf course that is utilized by 45,000 more golfers every year than the other golf course in question?

    If the other main issue is finances, why destroy the golf course that is utilized more and has had a net profit, over operating costs, ten out of fourteen years? Los Lagos has, over the years, had much stronger finances than Rancho del Pueblo, which has never covered operating costs?

    I hope you reconsider your position and consider the wishes of all your constituents. I also hope you reexamine the numbers and see that if the city’s priority is to have parkland utilized more and to spend less money subsidizing golf, you should keep the course that is utilized twice as often and is in much better shape financially. Not the other way around.

    • Good letter.

      It would be interesting to see a cost benefit comparison between Los Lagos golf course and St. James Park.

      If Los Lagos has 50,000 customers per year and pays it’s on way, what does St. James Park do for the community? I suspect that St. James Park is just a huge social services cost black hole for the city.

      Maybe the City should turn the park into a par three golf course.

  6. If the bottom line is safe travel for SJC arrivals, why not keep it the way it is now- that is a de facto ban of Uber and Lyft (who choose not to participate) and allow the vetted taxi drivers to provide transportation?

    Yes, it’s more expensive- but that’s exactly how regulation works. However, it’s not like there’s only these 3 choices. Passengers have always been able to plan ahead and get a rental car, arrange for a friend/family member to pick them up or to arrange for traditional shuttle (TCP regulated) to pick them up.

    If Lick-hard-doh was honest in his assertion about fingerprinting and regulation being about safety of SJC passengers, then Uber & Lyft drivers can continue to simply not participate. It’s not sensible to cave in to Uber/Lyft because the City will not make money from them- their business model is all about skirting the law to save sheckles.

  7. It’s really risk if you riding in uber or lift because all criminal people are driving uber and lift. Taxi regular taxi stay safe highly recommended.

  8. Any things th at happens our teenage doughters becouse city. Dont want background check of Uber or lyft. City counci are liable and will be sued. City of San jose Owes more for you guys

  9. I think allowing Uber & Left or other TNC companies at San Jose airport can be dangerous if not following rules & regulations as commercial business models.
    I do not understand Why San Jose City Mayor take right action instead.