Council Passes Two Bills to Improve Taxi Service

Here's the full press release:

ROCKVILLE, Md., July 21, 2015—The Montgomery County Council today unanimously approved Bills 33-15 and 53-14 that will improve taxi service in the County by helping the existing taxi structure better compete with new types of services. The bills will provide opportunities to have more taxicabs available to respond to calls and address working conditions in some situations for drivers.

The lead sponsor of Bill 33-15 was Councilmember Roger Berliner, who chairs the Council’s Transportation, Infrastructure, Energy and Environment Committee. The bill was co-sponsored by Councilmembers Marc Elrich, Nancy Floreen, Sidney Katz, Tom Hucker, Craig Rice and Hans Riemer. The bill will create a Transportation Services Improvement Fund, impose a per-trip surcharge on certain transportation network services to finance the fund and provide for disbursements from the fund to be used to improve the delivery of accessible taxicab services and transportation services to eligible senior citizens and people of limited income.

Expedited Bill 53-14 was sponsored by Councilmembers Berliner, Floreen, Rice and Riemer. The bill was combination of three original bills directed at improving taxi service.

Key provisions of the bill address taxicab regulations for company owners and drivers, including rules for Passenger Vehicle Licenses (PVLs). The bill authorizes the issuance of 50 accessible vehicle licenses to a driver-owned cooperative to help individual drivers and spur innovation in the expansion of accessible transportation. It also creates a centralized dispatch system for all County cabs—an idea strongly promoted by Councilmember Riemer. 

The bill provides for more taxicabs to be available for calls and requires the County’s Department of Transportation to develop a plan to increase the numbers of wheelchair-accessible cabs (vans) that have lifts or ramps, with a goal of having 100 percent accessible taxicabs in the County by 2025.

In its 2015 session, the Maryland General Assembly passed a law regulating "transportation network companies" (TNCs), otherwise known as ride-hailing services such as Uber and Lyft. The law, which became effective on July 1, created a new regulatory framework within which TNCs in the State will operate. The law also authorized a county or municipality that licensed or regulated taxicab services on or before Jan. 1, 2015, including Montgomery County, to impose a charge of up to 25 cents on every TNC trip that originates within the county or municipality. The revenue generated from the assessments must be used for "transportation purposes." 

This opened the way for Montgomery Bill 33-15 that will create a Transportation Services Improvement Fund, impose a per-trip surcharge on certain transportation network services to finance the fund and provide for disbursements from the fund to be used to improve the delivery of accessible taxicab services.

“The measures our council passed today will fundamentally reform our County’s regulation of the taxi industry, and these reforms will accrue to the benefit of all – the industry, drivers, consumers, the disabled community, seniors and low-income residents,” said Councilmember Berliner. “These bills address the legitimate issues of our drivers’ working conditions for the first time in our County’s long history of taxi regulation, and support the creation of a new, competitive, low-cost driver cooperative. Our drivers have been exploited have been exploited for too long. It needs to stop. And with this bill, it will stop. The bills also provide new funds and 66 new licenses to support service directly to our disabled residents, who have been poorly served by our existing fleets and remain unserved by the TNCs. And we also have made reforms that help our existing taxicab companies, reducing their costs, eliminating outdated regulations and providing new licenses to our smaller, newer fleets. These bills were truly a win for all stakeholders and our entire riding public.”

Most County taxicab companies lease their vehicles to drivers by the day or the week, and it is up to the driver to meet their expenses and make a living. Taxicab leases are often upward of $100 per day, and the driver keeps their vehicle full time. Under this model, the company has little direct interest in how much business the driver turns over, but if it has many drivers bringing in substantial income, demand to lease its vehicles will increase, and it may collect more money in lease fees. Under a lease system, the driver typically pays for the gas, while the company pays for any repairs. Taxicab companies that run on a lease arrangement make their money on how many vehicles are being used—in effect turning them into car rental companies that provide dispatch, marketing, insurance and credit card payment processing services. 

At present there are five fleets operating in the County holding a total of 549 PVLs. In addition to the fleets that hold the majority of PVLs and engage the services of lessee drivers, there are 221 PVLs held by individuals. Individual PVL holders own their vehicles, but must affiliate with a fleet or association. Affiliation rates are substantially lower than lease rates, as they essentially represent the cost to a driver of using a fleet's dispatch and marketing. 

Among the provisions of amended Expedited Bill 53-14 are a requirement of one-year maximum terms on agreements between licensees and affiliates or drivers and a prohibition on automatic renewal of agreements between licensees and affiliates or drivers. The bill will also require the County Executive to establish standardized lease/affiliation agreements, maximum lease and affiliation rates and permissible ancillary fees that may be charged to drivers.

“While the transportation industry has evolved dramatically over the years, particularly with the introduction of TNCs like Uber and Lyft, our fundamental commitment to ensuring quality service for our residents with disabilities has not wavered,” said Councilmember Floreen, who chairs the Council’s Planning, Housing and Economic Development Committee. “Now, TNCs will be required contribute to improved accessible services through a surcharge they will pay into the Transportation Services Improvement Fund. This is good news for our residents who have mobility challenges and rely on taxi service for their routine transportation needs.”

Councilmember Hans Riemer said: “We are dealing with an industry in crisis. Our challenge was to find a way, in the face of the State’s decision to allow Uber to operate, to ensure the taxi industry remains profitable for drivers and attractive for passengers so that disadvantaged populations can continue to get the service only taxis provide. I am hopeful that we have risen to meet this challenge. I put forward provisions in this bill that will greatly improve service for consumers by applying Uber-like features to the taxi industry through universal digital dispatch apps, drastically improve working conditions for all drivers and provide a framework for a new, driver-owned cooperative to emerge, dedicated to providing service that is universally accessible to all residents of our County. I was glad to support other provisions that reduce outdated regulatory burdens for the industry as a whole. My congratulations to Committee Chair Roger Berliner, who put his heart into this bill, and everyone involved. It is a new day for taxis in Montgomery County.”

Bill 53-14 will require the issuance of 100 new licenses by Jan. 1, 2016. Of these, 25 will be to individuals who do not currently hold a licenses and 25 will go to small fleets operating in the County. Each of these allocations of 25 new licenses will include eight licenses for accessible taxicabs. The remaining 50 licenses will be for accessible vehicles, and will be issued to a driver-owned cooperative fleet, if the cooperative meets the fleet requirements of the law. If the 50 accessible licenses are not issued to the cooperative by June 1, 2016, either because it does not meet the fleet requirements of the law, or because it otherwise declines to apply for them, the licenses must also be issued to individuals who do not currently hold licenses.

Under the bill, all licenses issued on or after Jan. 1, 2016 will be non-transferrable.