Citing gridlock, city proposes temporary cap on Uber and rivals

by siteowner, June 29, 2015

By Andrew J. Hawkins http://www.crainsnewyork.com/article/20150623/BLOGS04/150629952

The de Blasio administration and City Council proposed Tuesday to limit for-hire vehicle licenses in response to explosive growth by Uber and other e-hail app companies, which officials suspect is causing traffic congestion.

More than 25,000 new for-hire vehicle licenses have been issued since 2011, increasing by 63% a market that includes livery cabs and black cars, according to the Taxi and Limousine Commission. Much of that growth has occurred in the past year: At least 2,000 licenses were handed out in each month of fiscal 2015, which ends June 30.

Meanwhile, average traffic speeds in Manhattan fell 9% between 2010 and 2014, and rush-hour bus speeds dropped 5% from 2013 to 2014, according to the Department of Transportation. An overwhelming number of for-hire pick-ups (73%) take place in Manhattan’s core, the agency said.

The city wants to pause growth in the number of for-hire vehicles while it studies impacts on congestion, pollution and quality of life. One observer noted that Vision Zero, the administration’s plan to reduce traffic fatalities, features measures to slow traffic, including a reduction in the citywide speed limit to 25 mph from 30 mph. Another source noted that 2010 was an especially fast year for Manhattan traffic, making the comparison to 2014 seem especially dramatic. Using 2009 as the baseline would have produced a much smaller change, the source said.

A bill to be introduced in the council would limit the industry’s rate of growth based on the fleet size of individual for-hire vehicle bases. The limit would be in place until the city completes an analysis or August 31, 2016, whichever comes first. A base with 500 or more vehicles would be limited to 1% growth, while one with 20 to 499 vehicles could grow 5%. Small bases, those with 19 or fewer vehicles, would be allowed to grow by 15%. Borough taxis–the green cabs that can’t pick up street hails in most of Manhattan–would not be affected by the legislation.

Officials from the de Blasio administration and City Council held a conference call with reporters Tuesday afternoon to explain the proposal. They sought to downplay the turf war between Uber, which says 26,000 drivers are using its app, and the traditional taxi industry, which includes medallion owners and lenders, base owners and driver groups. About 63,000 for-hire vehicles and 13,587 yellow cabs operate in the city today.

Medallion owners and the lenders who finance medallion purchases complain that Uber’s growth since its 2011 arrival–and particularly since mid-2014–has caused the value of medallions to plummet. Some have demanded a city-backed bailout, and a group of lenders recently sued the city to force it to stop Uber from responding to e-hails.

TLC Chairwoman Meera Joshi said the temporary cap would let the city better understand the effects of for-hire vehicles’ growth.

“The rate at which new cars are coming onto the road is tremendous,” Ms. Joshi said. “I think it’s something we all see traveling in and around Manhattan.”

She argued that companies like Uber could continue to grow despite the temporary cap, because individual drivers can add e-hail apps to their smartphones, regardless of their base affiliation. For example, Lyft-affiliated drivers could start moonlighting for Uber without affecting the cap on licenses. New drivers could use cars that already have licenses, she said.

But Uber blasted the proposal.

“Three months ago, the taxi industry put forward a proposal to protect the status quo, and limit competition and innovation,” the company said in a statement. “Today, the de Blasio administration and City Council members revived a nearly identical proposal. Unfortunately, this would reverse improvements made by Uber and others to our transportation system and, most notably, stand between New Yorkers looking for work and their opportunity to make a better living.”

The TLC adopted new rules Monday that were hailed by Uber for removing many of the provisions that the company and its allies in the tech industry saw as harmful to their industry. Having backtracked on that proposal, city officials said the new one is “tech agnostic.”

Uber could wage an opposition campaign similar to the one it launched over the previous TLC proposal, which saw companies including Google and Facebook question the de Blasio administration’s commitment to the tech sector.

A similar proposal was recently put forward by the Committee for Taxi Safety, an industry group. Ms. Joshi and other officials said no meetings were held with representatives from the traditional taxi industry in relation to the bill prior to its unveiling Tuesday.

Late Tuesday, critical reactions to the proposed bill started rolling in. Michael O’Loughlin, campaigns director for Cab Riders United, said the cap “seems backwards,” adding, “We’ve seen no evidence to adequately justify limiting New Yorkers’ car service options citywide until the study is completed.”

Tech advocates also chimed in. “It is unfortunate that New York City bureaucrats continue to look for ways to limit competition and consumer choice in transportation,” Noah Theran, spokesman, Internet Association. “New Yorkers have made it clear that they demand transportation choices in the city, and it is our hope that the TLC will eventually heed their calls.”