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Taxis could be a platform for innovation

I previously wrote about the Council’s efforts to overhaul our taxi regulations to adapt to Uber. Earlier this year, the Maryland General Assembly passed legislation that allows Transportation Network Companies like Uber and Lyft to operate in Maryland and preempts local jurisdictions from regulating them. Over the past year, I have been working with the Council’s Transportation Committee, chaired by Roger Berliner, a group of taxi drivers represented by the AFL-CIO, transportation technology companies, the County’s taxi industry and MCDOT to adapt our taxi regulations to this new environment.

On July 28, the Council passed a landmark taxi reform bill, and I am very pleased that almost all of the reforms I advocated for were included. The key parts of the bill were:

  • Eliminating outdated regulatory burdens
  • Protecting taxi drivers from exploitation
  • Creating a groundbreaking new framework for taxi apps to use our taxi fleet as a platform for innovation (adapted from my Bill 55-14)
  • Providing 100 new taxi licenses, 50 of which will go to a new, driver-owned cooperative operating wheelchair accessible vehicles

I am very hopeful that these reforms will create a more balanced and high-performing taxi system in Montgomery County that works better for customers and drivers. Currently, customers must request a wheelchair accessible taxi days in advance. We hope to cut that down to minutes. Under the old system, taxi drivers were being exploited with high rents, no benefits, and long hours. With these reforms, driving a taxi will still be hard work, but there will be a more balanced relationship between drivers and companies. And with the formation of a driver-owned cooperative, drivers and customers will have more choices.

But of course, none of that matters if taxis cannot compete with Uber. That’s why I am especially excited about the development of a framework for universal taxi dispatch apps in the County. Under my proposal, which the Council adopted, companies can submit taxi dispatch apps to DOT, which will approve them as “universal dispatch apps” if they meet certain requirements. Drivers can choose among approved apps, but will be required to use at least one. The most important requirement is that each approved app must allow all other approved apps to see and dispatch their drivers through an open data feed, and must dispatch the drivers using other approved apps. This means that no matter which app a customer is using they will get sent the closest licensed cab, regardless of which company or app it is affiliated with.

Right now, the push toward universal dispatch apps is about catching up to the user experience and technology pioneered by Uber and Lyft. But over time, if other jurisdictions adopt this approach, taxis themselves could become a platform for fast-moving innovation. Any entrepreneur that can think up an idea and develop an app could have a nationwide fleet of regulated, safe vehicles and drivers at their disposal.

If you’d like to learn more about this idea, here is a White Paper I wrote to explain why I think this development is so important. The White Paper also includes model legislation that other jurisdictions can adapt to implement this approach.

Learn More about Bill 53-14 – Taxicabs:

– Staff Analysis prepared for Council action

Final text of Bill 53-14

White Paper on Universal Digital Dispatch

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Council backs historic liquor reforms

Since the end of prohibition in 1933, Montgomery County government has barred private restaurants and stores from purchasing alcohol from private distributors, requiring them to buy exclusively from the Department of Liquor Control warehouse.

As a result, Montgomery County has become known as a very difficult place to run great restaurants or beer and wine stores and a place where consumers cannot get the choices that are available in other communities.

This policy is the aspect of liquor control that I feel most needs to change, and I am pleased to share that today the County Council backed a resolution that will ask our state lawmakers to move forward with an historic reform: to liberate our 1,000 restaurants and stores to buy craft beer and fine wines directly from private distributors.

Throughout 2015, the County Council’s Ad-Hoc Committee on Liquor Control, which I chair and which also includes Council President George Leventhal and Councilmember Marc Elrich, has taken a deep look into the County’s liquor regulations and how they affect our community.

What we have found has been disheartening. Our restaurants and our beer and wine stores are having tremendous problems ordering from the DLC — all too often they are stuck with empty shelves and empty taps because their orders never arrive.

Problems at the DLC have become more significant partly because the consumer environment today is radically different from 80 years ago when our system was established, or even 20 years ago when the modern craft beer movement began. Today, to prosper, our restaurants and stores need an ever-expanding list of choices of specialty beer and wine — because that is what our residents want and can get elsewhere in the region.

Sales data, unfortunately shows that county residents are spending their money outside of the county — our per person in-county sales are about 1/3 less here than in Howard, Frederick and Prince George’s counties. What a loss of economic impact for our restaurants and stores and the families that depend on jobs in those industries.

The Council Committee’s solution is to allow restaurants and stores to buy “special order” products directly from private distributors. The DLC maintains a list of about 29,000 products that can be bought by restaurants and stores. About 4,500 are stocked in the warehouse for delivery, while about 24,500, largely craft beer and wine, are special order.

For restaurants and stores that want to showcase variety and choice with craft beer and wine, and the consumers who love those products, the committee’s proposed reforms are a game changer. Some restaurants and stores today have as high as 90% or even 100% of their beer/wine lists as special order.

The fiscal and employment impact on the county is manageable, particularly if the county does a better job running the department more profitably. Towards that goal, the committee has recommended expanding the number of county liquor stores. Montgomery County is the only retailer of spirits in the county, and operates 25 stores. Thanks to committee progress already embraced by the County Council and the DLC, the county will open 3 more stores in FY16 and more in subsequent years as part of a “retail modernization” plan. Each store averages about $750,000 in profits to the county while employing about 8 county workers. These new stores can absorb any workers who might be displaced by the change in distribution policy.

A second reform recommended by the committee is for the state to establish a small fee on distributors for the rights to sell into the county — a clean and simple way for the county to change how it claims revenue from alcohol sales.

The full Council’s actions today constitute a recommendation to the Montgomery County delegation in the state legislature, which has jurisdiction over liquor laws. We hope to advance legislation in the Spring 2016 session to take effect later in 2016.

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Next Steps in DLC Reform

The full Montgomery County Council is now considering recommendations to reform the Montgomery County Department of Liquor Control by allowing restaurants and retail beer/wine stores to deal directly with private distributors for “special order” products. The Department of Liquor Control maintains a list of about 29,000 products that can be bought by restaurants and stores; about 24,500 are special order.

On July 21 at 7:30pm in Rockville, the County Council will conduct a public hearing about a resolution supporting this change, which the Ad-hoc Committee has introduced to the County Council.

The Council is scheduled to vote on July 28. The resolution is a request to our state delegation to draft and support legislation that will enable the county to implement this change.

This proposal represents achievable and meaningful reform, but we need to hear from you. Can you make it? Please request to testify by calling 240.777.7803 before 10am, July 21.

You can view the resolution here; please let me know if you have any questions by emailing me at Councilmember.Riemer@montgomerycountymd.gov or calling me at 240-777-7964.

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A Future for Taxis

Das letzte Taxi

On July 21st, the County Council is scheduled to consider a package of groundbreaking reforms to Montgomery County’s taxi regulations.

I truly value Transportation Network Companies (TNC’s) such as Uber and Lyft, but I am compelled to find ways to help taxis compete with TNC’s because taxis are governed by public service mandates such as universal coverage and service to vulnerable populations.

In order to compete, taxis must provide consumers with the features and convenience of a TNC, coupled with the regulated reliability of a taxi. To meet these goals I introduced a bill [pdf] which would have our Department of Transportation develop a centralized, universal dispatch app for all taxis. Councilmembers Berliner and Floreen also introduced bills that changed different aspects of our taxi regulations.

As the Council’s Transportation and Environment (T&E) Committee, led by Committee Chair Roger Berliner, began a review of these three bills, the Council also heard from the Montgomery County Professional Taxi Drivers Union (MCPTU). MCPTU proposed a package of reforms they dubbed the “Taxi Driver’s Bill of Rights.”

As I began to closely examine the taxi industry in Montgomery County and talk to drivers from different companies and different circumstances, I was disturbed to learn that many drivers have to work 12 to 16 hours a day just to break even on the rents they pay on their vehicles. Because taxi drivers are employed as independent contractors, they cannot form a union or bargain collectively, and the companies have no responsibility to provide even basic benefits workers comp or ensure drivers make minimum wage. I always figured that driving a cab was hard work, but I came to learn that the drivers, many of whom are recent immigrants, are often making less than minimum wage and have almost no voice in their working conditions. I have talked with drivers in other jurisdictions who refer to some of our Montgomery County-based drivers as operating under “wage slavery” conditions.

So in February, I sent a letter [pdf] and draft language [pdf] to the T&E Committee proposing a package of legislative changes that would remake Montgomery’s taxi industry to be a better deal for drivers — and thereby hope to preserve the industry, which is rapidly losing drivers to the TNC’s.

Then in April, the Maryland General Assembly passed legislation that creates a framework for TNCs to operate in Maryland and preempts local governments from regulating them, removing that issue from our consideration.

Chair Berliner, also clearly moved by the dis-empowered state of taxi drivers, embraced the need to create a fairer environment for the County’s taxi drivers. After several worksessions, the Committee, with Chair Berliner and Councilmember Hucker in support, recommended amended versions of many of my proposals, along with text to create a universal dispatch in the County, in a new omnibus bill.

Taxi Meeting
Councilmember Riemer meets with taxi drivers representing the new taxi drivers’ union.

Following are several key elements of the bill:

Universal Digital Dispatch for Taxis

As taxi companies, drivers, and regulators take a fresh look at taxi regulation in light of Uber and Lyft, one emerging theme is improving taxi service by importing the features that made the new entrants so successful – smartphone apps, GPS tracking, seamless payment, consumer-friendly rating systems, and even dynamic pricing. Taxi fleets are developing or buying branded apps and upgrading their dispatch systems. In Boston, taxi companies are banding together offer a new app. A number of app startups have attempted to create “Uber for Taxis.” These include mytaxi, Curb (formerly TaxiMagic), HailO (no longer operating in the US), Easy Taxi, Flywheel, and Zoro (Canada). “Aggregation” apps have also started to appear, which provide access to a number of taxi services. ek is one recent example.

But even with great design and features, the success of any transportation service is dependent on how quickly, cheaply, and reliably a customer can get to their destination. For car services like Uber or taxis, speed is dependent on the number of cars on the road. The more cars available, the sooner a car is able to pick up a customer, on average. The challenge facing taxis is that when apps are fragmented by fleets, the customer will not get the same level of service as the fleets could provide if they were all combined on one app. To address this fragmentation, governments have begun to pursue “universal” taxi apps that would make all taxis in a jurisdiction available on one app. Chicago, Washington DC, New York City, and Los Angeles are all pursuing, in different ways, the development of a government-sanctioned universal taxi app which all taxi drivers in the jurisdiction would be required to use. This was the original idea that I proposed in my bill in October 2014, modeled after Chicago’s law.

But as I talked with stakeholders and explored this concept, I found that having the government develop one universal app was an unsatisfactory solution. It would solve the fragmentation problem within Montgomery County, but could still require a customer to download a new app each time he or she crosses a jurisdictional boundary. Especially in a region like DC, something like Uber provides a much more seamless experience.

The best result would be the development of a universal taxi protocol - a uniform specification that would allow taxi apps to share driver, passenger and fare information with each other. This could function similarly to the open source General Transit Feed Specification (GTFS) and GTFS-realtime, developed by Google, which now helps many different apps, websites, and services provide information on trains and buses from hundreds of jurisdictions.

If all taxi apps could talk to each other, no matter which app a driver or customer uses, all passengers would have access to all taxis within each jurisdiction, and all drivers could receive requests from all passengers within the jurisdiction. Government bodies, rather than developing and running their own apps, would be in the more comfortable regulatory role of approving apps and requiring that all drivers use an app that makes its data available.

So I developed an alternative proposal (see pages 10-12 and 599-600 of the linked memo), which the T&E Committee accepted. The new language allows MCDOT to approve universal apps on the condition that they provide an Application Programming Interface (API) that allows other approved apps to see and dispatch the drivers using each app. All drivers would be required to use an approved app. If other jurisdictions adopt similar legislation, a standard protocol could emerge and be adopted for national, or even global, use.

Fairness for Drivers

Among other things, I am very pleased that the Committee’s bill:

  • requires DOT to create uniform model leases and affiliation agreements that cap the rents and other charges that companies can use to get payments from drivers
  • caps the credit card charge and allows drivers to choose their own credit card processing provider
  • requires that companies use a dispute resolution process culminating in binding arbitration when taking any adverse action against a driver

Reduced Operational Expenses

Councilmember Floreen’s legislation allows fleets to operate older vehicles, which is cheaper for the fleets; reduces requirements for markings; and potentially reduces insurance coverage and expenses, depending on action by the Maryland Public Service Commission (the state law requires the PSC to rule on insurance issues for TNC’s). These changes make the industry more cost competitive with TNC’s.

A Driver Co-Op

As the conversation has evolved, many drivers have expressed a desire to form a cooperative – a driver-owned taxi company. They feel that, with a sufficient number of drivers participating and universal digital dispatch, a non-profit co-op could provide competitive service at lower cost. I am excited about this idea and I have been working closely with the drivers to help connect them with available resources and to ensure that our laws support this vision.

With this goal in mind, I proposed issuing 200 new Professional Vehicle Licenses or PVL’s to individual drivers. The Committee has recommended issuing 50 new PVL’s for individual drivers in the first year followed by 50 more the second year, split between drivers and fleets (potentially including a co-op). I feel strongly that we need to allow enough new taxis to form a viable co-op in Montgomery County, and certainly if the co-op works then it will attract more drivers over time from other fleets and even from TNCs.

A Representative Commission

The T&E recommendation also includes the creation of a new Taxicab Services Commission, which would have representatives of companies, drivers, and the public, and would provide the Executive and Council with advice on setting the lease rates and other charges, and generally review the taxi industry and recommend regulatory changes every two years. Given that it has been about ten years since we last reviewed the taxi code, we will benefit from having the commission recommend changes more regularly as the industry changes rapidly around us.

Ensuring a Voice for Drivers

One crucial aspect of my proposal, for which I will seek support at full council, is the development of a system to allow drivers to voluntarily pay dues to an association or fund. Because drivers are independent contractors rather than employees they cannot collectively bargain or have mandatory dues collection for a union. Their history of exploitation, however, demonstrates that taxi drivers need a voice in their working conditions. I think that our own deliberations demonstrate that drivers are much more powerful when they have the ability to participate in the process as a collective entity, and a digital dispatch app provides a reasonable tool to accomplish that goal, using the integrated payment system.

A mechanism to pay dues could allow drivers to have ongoing representation and protection from abuse by taxi companies, pool resources to help with dispute resolution, possibly create a common benefit fund to finance retirement, life insurance and disability benefits, and enjoy a host of other benefits that are usually associated with a union.

I hope that the full County Council will agree with me that taxi drivers deserve these benefits too. Providing a mechanism for voluntary contributions would enable drivers to be more successful with their efforts.