City ride-sharing bill would impose fare cap on Uber, Lyft drivers

Two bills designed to tweak the city’s new private transportation vehicle ordinance governing taxis and ride-hailing companies like Uber and Lyft will get their first airing before the Honolulu City Council Budget Committee on Wednesday.

Council Budget Chairwoman Ann Kobayashi said Monday she is offering two proposals to address concerns raised by the companies and the administration after the new ordinance became law without Mayor Kirk Caldwell’s signature last month.

Ordinance 16-25, also introduced by Kobayashi, would “level the playing field” by requiring that ride-hailing operators, also known as transportation network companies, abide by many of the same rules pertaining to taxi operators — more strictly regulated competitors, she said.

The ordinance says the new transportation vehicle law takes effect Jan. 15. But administration officials have warned that they won’t have time to get the rules in place in by that date.

Bill 55 would give the Caldwell administration more time by extending the implementation deadline. The new deadline has not yet been proposed.

The bill would eliminate a “grandfather” clause that allows ride-hailing operators holding valid taxi certificates to retain their current approvals and let them expire as scheduled before needing to obtain the new private transportation certificates. Under the bill, those drivers would have to get the new certificates like everyone else, which would require them to obtain more extensive and thorough seven-year national background checks.

City Deputy Customer Services Director Randy Leong said the current ordinance “provides an unrealistically short amount of time to go through a formal rule-making process, train employees and prepare and order materials such as official forms and decals.”

Bill 56 gets to the heart of the dispute between taxicab companies and the ride-hailing firms by proposing a maximum fare drivers can charge. Taxicab drivers have long operated under such a requirement.

The bill would task the city’s community services director with establishing maximum fares and baggage charges through a standard rule-making process. All would need to abide by the same fare-posting regulations, install digital taxi meters and provide hard copy receipts, not currently used by ride-hailing companies.

Uber’s biggest objection is over the fare caps largely because it could disrupt the way the company does business, said Taylor Patterson, Uber policy director. Patterson said she knows of no other U.S. jurisdictions that require both taxis and ride-sharing companies to follow the same pricing guidelines as is proposed under Bill 56.

The bill does not take into account that Uber offers different products with different pricing, Patterson said. Passengers may want to ride in a nicer vehicle on a long trip to Ko Olina, and pay more for that, she said. “To me, in all fairness, that driver should be able to make more money on that trip without being penalized, without being capped,” she said.

The company also wants to be able to institute “surge pricing” rates during periods of high demand by potential passengers coupled with low supply of drivers on the road, she said. “The idea of surge pricing really is a supply-and-demand issue. If there are more people requesting than there is supply on the road, it’s to incentivize drivers to get out. But that surge does end once the supply is met.”

But Kobayashi said she views surge pricing as a problem, saying that on mainland trips to visit family in San Francisco, she paid $68 on two occasions and then $128 during a third trip as a result of surge pricing, even though all three trips were to the same place at the same time of day.

Charley’s Taxi CEO Dale Evans said Bill 56 doesn’t go far enough in regulating ride-hailing companies the same way as taxis. Transportation network company drivers are not required to carry proof of insurance, name the city as additionally insured, or give 30-day notice of cancellation of their policies, she said.

If passenger safety is a major concern, fingerprinting should be mandatory and “certain offenses should permanently bar applicants from being a private transportation driver,” Evans said.

Councilman Brandon Elefante opposes Bill 56 and agrees with Uber that there should be two regulatory models. While the city should explore ways of capping surge pricing during times of disaster or other emergencies, “I feel there should be flexibility given to transportation network companies along the lines of how they establish their fares,” he said.

Caldwell spokesman Jesse Broder Van Dyke said the administration is still reviewing Bill 56. While Caldwell supports equitable rules and protecting riders, “the mayor opposes provisions intended to prevent 21st-century alternatives like ride-share from operating on Oahu,” he said.

Evans said she also opposes Bill 55 because ride-hailing companies “have been operating in Honolulu for four years in violation of Hawaii’s Motor Carrier Law.”