Detroit reaches operating agreement with Lyft ride service [Detroit Free Press :: ]
(Detroit Free Press (MI) Via Acquire Media NewsEdge) May 04--One of the two smartphone-hailed ride services in Detroit has been given a temporary legal blessing by the city.
Lyft and the city signed a two-year agreement Friday that will allow the San Francisco-based transportation company to continue service in Detroit in exchange for adhering to new safety and insurance requirements.
-- Tom Walsh: Uber Technologies brings touch-screen transit service to Detroit
Prior to Friday's deal, Lyft, like its competitor Uber in metro Detroit and Ann Arbor, was operating in a legal gray area in regard to Detroit's "vehicles for hire" regulations. Both companies use smartphone applications to match fare-seeking drivers with riders.
"It's a win-win situation," Detroit Corporation Counsel Melvin (Butch) Hollowell, the city's top lawyer, said Saturday. "It recognizes our needs to ensure that the public is protected, and it embraces the new business model that we think is good for transportation in the city."
Lyft and Uber recruit regular folks to be drivers using their personal vehicles. Both assert that existing state and city regulations for the cab and chauffeur business should not apply to them, as they don't own vehicle fleets and instead function as high-tech coordinators and middlemen.
Under the new agreement, Lyft will need to conduct police background checks on its drivers and provide proof that all of its drivers have commercial-grade auto insurance, similar to that which traditional cab drivers carry. It also establishes a "strenuous" vehicle inspection program.
Lyft drivers adorn their vehicles with pink fuzzy mustaches.
Lyft spokeswoman Paige Thelen hailed the agreement and applauded the city for having "recognized the value of peer-to-peer transportation and embraced innovation in a way that will forge a path for other cities and states to follow."
Hollowell said he considers the agreement to be an interim fix until the Detroit City Council can take action to possibly update the city's official regulations. He acknowledged the car ride service would still need to meet any state requirements.
"It's a new form of transportation," Hollowell said, "and frankly one of the reasons it's become so popular is people are not totally satisfied with taxicab service."
Although Lyft drivers will now have to pay significantly more for insurance coverage, they will not have to pay to register themselves as drivers for hire, a cost of up to $2,000 for a taxi bond plate. Hollowell said he believes there is "room for interpretation" in current regulations that might classify Lyft drivers as such.
The city has yet to reach any similar agreement with Uber, the first of the two companies to arrive in Detroit. In February, Hollowell's office sent Uber a "cease and desist" notice.
"Until they get the green light from us, that cease and desist is in full force and effect," Hollowell said. "That means that they're subject to what the penalties in the ordinance are, which are very substantial fines and potential criminal penalties."
An Uber representative could not immediately be reached for comment Saturday.
Contact JC Reindl: 313-222-6631 or email@example.com. Follow him on Twitter @JCReindl.
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