Ride sharing firms could expand into region

Gov. Terry McAuliffe has signed legislation into law legalizing and regulating the operation of ride sharing companies like Uber and Lyft in the commonwealth.

Senate bill 1025 and House bill 1662 establish licensing procedures and regulations for “transportation network companies” like Uber and Lyft that use contracted drivers to pick up and drop off passengers through a smart phone application.

Administered by the Virginia Department of Motor Vehicles, the law requires companies to conduct background checks on drivers, make sure drivers are 21 years of age and licensed, as well as requiring drivers to maintain $1 million of liability coverage for drivers when they agree to pick up a passenger until they drop the passenger off.

In Virginia, Uber operates in Charlottesville, Roanoke, Blacksburg, Richmond and Hampton Roads. Taylor Bennett, an Uber spokesperson, said the company does not operate in the Northern Shenandoah region, but is looking into it.

“Uber aspires to be in every city around the world where current transportation options fall short of meeting consumer and driver demand, and we are always exploring which city will be next,” Bennett said.

He added, “We’ve heard from residents, visitors and drivers throughout, including the Shenandoah area, that they are excited for Uber to come to town.”

Larry Henry, owner of Colonial Taxi Service in Woodstock, said while he does not think the legislation will affect his business or other area taxi companies, he is not a fan.

“It’s taking business away from the cab companies who work hard to get it,” Henry said. “It’s like letting people run restaurants out of their house and competing with the restaurants … it’s just not a level playing field.”

Henry said he was concerned that Uber and other companies would not have to pay local taxes like a brick and mortar taxi company.

Tony Elar, president and operating manager of Yellow Cab of Shenandoah, in Front Royal, said he welcomed the legislation because he hoped it would force localities to revisit their taxi regulations, particularly background checks.

“I say kudos to the governor and the legislators in the General Assembly because maybe some of the people in the government of Front Royal will wake up and realize we need background checks on people who drive customers on a daily basis,” Elar said.

He also said he does not believe Uber and Lyft will hurt area cab companies.

“I think we’re a couple years behind it,” Elar said. “We’re out here in exurbia … Uber and Lyft are really doing well in major metro markets and suburban markets. We’re a couple of clicks west of that.”

Christina Nuckols, the governor’s deputy press secretary, said the law is part of the governor’s commitment to modernizing the Virginia economy.

“No one had really envisioned these types of options when existing rules for taxi companies were put in place,” Nuckols said. “This is an effort by the governor and legislators to support that innovation and supporting entrepreneurs while ensuring safety.”

In June 2014, Uber and Lyft were banned from the state by the DMV and police began ticketing drivers up to $1,000 for providing the service. In August 2014, the DMV provided the companies a temporary operating permit with the understanding the issue would be solved in the 2015 legislative session.

Del. Tom Rust, R-Herndon, the chairman of the House Transportation Committee, spent 90 days in the legislature spearheading the bill, which passed on a bi-partisan vote 67-28. He said the most significant difference between regulations governing Uber-type companies and taxi companies is the insurance.

“Taxi companies operate a 24/7, 365 operation, so their insurance requirements are 24/7, 365,” Rust said. “Uber, Lyft, Sidecar, companies like that, their drivers are part time, they drive their personal cars, so we require them to have insurance when they are operating as an Uber or Lyft driver.”

Rust said establishing the insurance rules was “a major point of contention” amongst legislators.

“Some wanted drivers to have 24/7 coverage, others wanted them to only have it when somebody’s in the car,” Rust said. “What we ended up with is they must have insurance whenever they have their app turned on even if there’s nobody in the car but the driver, and when they pick up a passenger, the insurance requirements go up equal to a taxi.”

This month, GEICO began offering special insurance for Uber and Lyft drivers, who must comply with Virginia law by July 1, 2016. Rust said the bill was a “consensus bill.”

“This was a bill where everybody gave something in,” Rust said. “Everybody you talk to can probably find something in it they don’t like, which usually indicates it’s probably a pretty fair bill.”

Del. Scott Surovell, D-Fairfax, cast one of the dissenting votes. He said he felt the bill did not have adequate language addressing underprivileged customers.

“This service is not available to people who do not have credit or bank accounts,” Surovell said. “The FDIC released a study that says 27 percent of Americans are either unbanked or under banked, so this service would not be available to them.”

Surovell added, “I also had concerns about whether or not the drivers would pick and choose what neighborhoods they’d go to and not serve lower income, more diverse or high crime neighborhoods … the way the bill was structured there was no way to track data to verify they were actually serving everybody who asked for a ride.”

He also said the licensing fee for the companies, which is $100,000 initially and then $60,000 for an annual renewal, barred small businesses from providing the service.

“If you have a small town in rural Virginia, with 5,000, 10,000 people, you’re not going to spend $100,000 to start up that service,” Surovell said. “I’m not so sure Uber is going to serve areas like that and that fee is so high, it restricts competition from small businesses.”

Surovell also cited concerns regarding insurance coverage and wheelchair accessibility.

Carol Sinclair, legislative aide to Rust, said the bill “is bigger than one specific issue” and can be tweaked in future sessions.

Brandy Brubaker, a DMV spokesperson, said the program will cost the agency $639,116 to implement in the first year and $439,116 to operate on an annual basis, mostly due to the hiring of up to seven employees to handle enforcement of the laws, licensing, vehicle registration, insurance monitoring, complaint handling, hearings and reviews.

“The DMV is already hard at work in implementing this new legislation,” she said. “As you can imagine, it takes a lot of behind the scenes planning to implement a new law and the work touches almost every department in the agency.”

Contact staff writer Henry Culvyhouse at 540-465-5137 ext. 184, or hculvyhouse@nvdaily.com