Uber and Kansas City Go at It Again

Kansas City hasn’t been the friendliest place for ridesharing/transportation network companies (TNCs) like Uber and Lyft. Although regulators in the city of fountains haven’t been as bad as those in Philadelphia who compared Uber to ISIS, they still managed to receive a ‘D’ in terms of their friendliness to TNCs.

First, the city and TNCs got into a bit of a spat. (Listen to Mayor James’s thoughts here.) Then a compromise was reached, allowing TNCs to operate in the city. But now the terms of that compromise are coming up for review, and guess what? The city wants more control, and TNCs don’t want them to have it.

The major proposed changes to the City’s TNC ordinance include: (1) eliminating a 30-day orientation period and replacing it with a 30-day temporary permit; (2) forcing drivers to acquire additional insurance and increasing the company’s permitting fee from $45,000 to $70,000; and (3) handing all background-checking duties to the city.

1. The Star and regulators have cast a 30-day orientation period—during which TNC drivers can operate without a city permit—as a loophole for “dangerous” and “undocumented” drivers to “overcharge passengers or do something much worse.” While these worries are likely overblown, simply replacing the orientation period with an issued-on-the-spot permit is unlikely to threaten TNCs’ ability to operate in the city. In fact, if this measure were implemented, Kansas City would still be one of the easiest places to start driving for a TNC (compared to, say, Dallas). If this change assuages the concerns of regulators at little to no cost, so be it.
2. Requiring extra insurance and increasing the fees TNCs pay to the city are a different story. In short, the heavier insurance burden forces TNC drivers to carry the same insurance as taxi drivers. It requires insurance to cover incidents even when, for example. a TNC driver is involved in an accident while providing a ride but not working through the ridesharing app. This, in conjunction with higher city permitting fees, will place a significantly greater financial burden on drivers and will likely keep many from entering the market at all.
3. Lastly, and most controversially, handing background-checking duties to the city’s preferred vendor over those contracted by TNCs is complicated. This proposed change would keep driver information centralized and thereby prevent unqualified drivers from going from one TNC to another. But it isn’t clear that the vendors TNCs currently use for background checks are any less thorough than the city’s preferred vendor. If it came down to just this change, Kansas City regulators should ask themselves: is conducting their own background checks worth driving Uber and Lyft out of town for good? Although officials have public safety in mind, as my former colleague Joseph Miller has argued, they should let riders assess the level of “risk” they are willing to take.

So, overall, and unsurprisingly, city regulators are vying for greater control in a market averse to red tape. Not all of the proposed changes are onerous, but many would put additional barriers between consumers and service providers. Perhaps city leaders will learn how to get out of the way this time around.

To learn more about the proposed ordinance changes, and to leave your comments, click here.