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In 2017, Uber and Lyft's next regulatory fight could be in St. Petersburg

Uber and Lyft seem to have the upper hand in their battle with Hillsborough regulators, but their next fight could be in St. Petersburg. The companies object to a $65-per-vehicle tax.

JAMES BORCHUCK | Times

Uber and Lyft seem to have the upper hand in their battle with Hillsborough regulators, but their next fight could be in St. Petersburg. The companies object to a $65-per-vehicle tax.

ST. PETERSBURG — For the last several months, the move to legalize rideshare services like Uber and Lyft in the Sunshine City purred along smoothly, if slowly, especially compared to the contentious two-year battle in Hillsborough County.

Uber and Lyft currently hold the upper hand in Hills­borough. After a long fight with the county's Public Transportation Commission, they can legally operate through 2017. But legislators appear poised to do away with the PTC altogether next year. The agency regulates Hillsborough's for-hire vehicles like taxis, but never got Uber or Lyft to play by the same rules.

That's why ridesharing's next battle could be in St. Petersburg in 2017.

The companies may not agree to a measure that Mayor Rick Kriseman says will level the playing field between the rideshares and taxi companies.

The city's revamped vehicle-for-hire ordinance, first discussed in February 2015, has taken an unusual twist: It satisfies neither the ridesharing firms nor the taxi cab companies.

"It's one of these intractable issues," said the mayor's chief of staff, Kevin King.

The ridesharing companies have objected to paying the city's $65-per-vehicle business tax, which taxi cab companies have done for years.

Instead, Uber, the dominant firm in the rideshare industry, wants to pay a $5,000 annual fee for all its drivers. Kriseman hasn't budged on the tax. The St. Petersburg City Council is poised to vote on the issue Thursday.

"Truthfully, it's kind of a sticky wicket," King said. "We're hopeful Uber (and Lyft) will come around to this ordinance. Our fear is that they won't, the ordinance passes and police have no choice but to enforce the law."

Carol Vallee, owner of Bay Area Taxi Service, a St. Pete Beach company founded in 1981, said the city should have been enforcing its existing vehicle-for-hire ordinance in recent years when the rideshare firms first began operating in the city.

Taxi cab companies have paid the tax and a $200-per-car fee, she said, and they had to pay more for commercial insurance. Vallee said that's given rideshare companies an unfair advantage.

But she isn't holding out much hope that council members will defeat the mayor's proposal. Her prediction for Thursday's vote: "They're going to pass it unanimously."

If that happens, Uber representative Cesar Fernandez said the company will be forced to make "a business decision."

Would it pull out of the market as it did in Austin, Texas? Uber did so in May when the city demanded it allow its drivers to be fingerprinted. Background checks and fingerprints are issues that have long divided the rideshare companies and the Hillsborough PTC.

"We'll react to that decision if and when it happens," said Fernandez, who was Kriseman's campaign manager when he was elected mayor in 2013.

Uber would prefer to negotiate a flat fee with St. Petersburg, Fernandez said, like it has done with Tallahassee and Gainesville. Those cities get between $5,000 and $10,000 to allow rideshare companies to operate there.

In a statement, Lyft said it was "optimistic" that the company could reach a deal with the city. "We're continuing productive conversations with Council around the vehicle-for-hire ordinance, including discussions about possible fee structures," Lyft spokeswoman Chelsea Harrison said in an email.

St. Petersburg's per vehicle tax proposal doesn't fit the company's flexible business model, Fernandez said, in which 70 percent of drivers work less than 10 hours a week and new drivers come on board constantly.

"We see it as an operational burden," he said.

A major sticking point? Uber's position is that the city's business tax code requires taxes to be paid by the number of employees. The company's drivers aren't directly employed by Uber — they're independent contractors. So rideshare companies said they don't owe any taxes.

City attorneys disagreed. They said the city's business tax code has been streamlined in recent years, but its intent remains clear: the tax applies per vehicle — not by employee. The city's attorneys have tweaked the code to reflect that position. The council is also scheduled to vote on that change Thursday.

But Fernandez said part of the city's fix — classifying independent contractors as employees — won't stand up to legal scrutiny: "I think they're being a little too creative."

Even if the council approves the ordinance, Vallee doesn't think Uber or Lyft will comply.

How will the city enforce the new ordinance, she asked, if they can't identify who is an Uber driver? After all, the city won't require drivers to identify their car with "dressage" or logos identifying the car as a rideshare vehicle.

"There's really no way to enforce this," she said.

The PTC employs sworn officers to enforce its rules and ticket rideshare drivers in Hillsborough County, but Pinellas County has no such agency.

King said it would be difficult for police to catch rideshare drivers, but officers would adapt.

"Like a lot of communities, they'll just learn," he said, citing instances of rideshare drivers trying to use taxi stands as one way to spot violators.

State lawmakers have said they'll seek to pass a statewide law in 2017. That may have contributed to the ridesharing companies reluctance to agree to the city's plan, King said.

"My fear is that the status quo is so beneficial to Uber and Lyft because they're already here and would prefer state pass a (rideshare) friendly law," he said.

So the standoff continues. Who will blink first?

"The market has spoken in St. Pete," King said. "Everyone wants this option but we need them to give a little bit."

Contact Charlie Frago at cfrago@tampabay.com or (727)893-8459. Follow @CharlieFrago.

In 2017, Uber and Lyft's next regulatory fight could be in St. Petersburg 12/30/16 [Last modified: Saturday, December 31, 2016 9:01pm]
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