City Council, January 9th - Ride-Booking Companies and Monoculture

Last night the Mayor and new Councilors were sworn in. They meet formally on Monday for their first set of actions. Already the Mayor, himself a lobbyist it is perhaps relevant to note, is jumping up to lobby for ride-booking companies. It is a strange priority. Is this really the first, and most important thing to jump on?

Back in 2014, the City tried to apply rules consistently

From Mayor Bennett:

MOTION:
I move that Council direct staff to prepare amendments to the Salem Revised Code to better allow transportation network companies, such as Lyft and Uber, to operate in Salem.

DISCUSSION:
Last year, the City Council considered amendments to the Salem Revised Code (“SRC”) to address transportation network companies (“TNCs”) and app-based technology related to passenger transportation services. Council adopted an ordinance amending the SRC to remove unnecessary regulation, and address the use of a digital, application based, passenger transportation systems. However, the changes were insufficient to accommodate the business model of TNC’s, and as a result that service is not available in Salem.

In order to provide Salem residents with more transportation options, it is necessary for the City to be willing to accommodate different passenger transportation business models. Therefore, I move that Council direct staff to prepare, for Council’s consideration, amendments to the SRC that accommodate the current business model of major TNCs such as Lyft and Uber.

Over at Human Transit, Cherriots' current consultant Jarrett Walker had written "Sounding the Alarm about Uber's Impacts on Transit, and on Cities." He says

cars’ inefficient use of urban space is rarely reflected in the cost of urban driving, and Uber skates through on the same invisible subsidy that all urban motorists enjoy. Transit, which doesn’t enjoy any such subsidy, is unable to properly reflect its efficient use of space in its pricing....

Uber’s behavior often looks like an intentional effort to undermine competitors and thus reduce customer choice — in which case you’d call it predatory pricing — but it doesn’t matter what the intention is. Underpricing is a blunt weapon with zero targeting ability. It mows down everything in its path....

But it’s time to quit discussing Uber and similar companies as though they were improving the world in a permanent way, and as though they will necessarily make cities better for everyone. We already know that’s not true.

The scope of underpricing is breathtaking:

A new analysis of Uber's financial data suggests the ride-hailing company is losing as much as $2 billion a year, with passengers on average only paying 41 percent of the actual cost of a trip.

Parsing a set of three private financial statements that were published on three separate occasions, Yves Smith of Naked Capitalism writes that its clear that for the year ending in September 2015, Uber posted $2 billion in losses on revenue of $1.4 billion....

It seems clear that the overall goal is not "more transportation options" overall, and not here in Salem in particular. The overall goal is monopoly as far as possible: To use underpricing to drive out other "transportation options" and to create a transportation monoculture.

Later, once the investors in ride-booking companies force them to maintain actual market pricing - you know, to make a profit - users of the ride-booking services will find much higher fares. And in the mean time, we may have lost the other compensating transportation choices.

It may be that we have a choice in Salem, and we can choose one of these:

1. Develop a plan to fund evening, weekend, and more frequent transit in Salem; or
2. Make it easy for ride-booking companies to underprice the market and to further erode transit or other choices

There are other issues, too:

• The employee/independent contractor question
• Fair wages for drivers
• Adequate background checks for drivers
• Commercial insurance requirements and coverage gaps for drivers who hit people walking and biking
• Equity and discrimination in avoiding parts of town or certain classes of names (more here)
• Fairness and consistency for taxi companies and for ride-booking companies

It is far from obvious that ride-booking companies as they currently operate offer a clear set of advantages for a city like Salem. Mostly they appear to be asking for a regulatory environment that gives them special advantages and unlevels the playing field.

Note that Mayor Bennett asks for "amendments to the SRC that accommodate the current business model of major TNCs." That does not look like much of a negotiation.

Choose wisely, Mayor Bennett and Councilors.

(Previous notes on ride-booking companies are here.)

Other items

• Details on $750,000 in partial funding for affordable housing and the rehab of Yaquina Hall at the State Hospital.
• $100,000 for the "code clean up" project in West Salem, associated with the West Salem Business District Action Plan, which will promote better walking, storefronts, and housing and business in the close-in flats of West Salem. (Strangely, it's identified as in Ward 8, but I think it's Ward 1 instead.)
• At the north end of the Deaf School, folks associated with Capitol Auto Group have got a parcel reclassified from “Community Service - Education” with PE (Public/Private Education) zoning to “Industrial Commercial” with IC (Industrial Commercial) zoning. Out-buildings have already been demolished. This is on a supposed route for a family-friendly bike boulevard to the Kroc Center, and it is slightly worrisome to see more car dealership or other car-oriented business here. One condition of the approval is to construct bike facilities on Cherry, Maple, and Auto Row Streets, but it's not clear how "family-friendly" these actually will be. The conditions also include some intersection widening and new turn lanes for cars, so the area will get worse, not better in some ways for bike travel.