City's rules could put Uber out of reach in Sioux Falls

At a glance

• The city attorney's office says drivers for ride-hailing services such as Uber and Lyft would have to follow the same rules that govern taxi cab drivers.
• The requirements include obtaining licenses and permits, vehicle inspections, and commercial license plates, as well as collecting sales tax.
• Uber, which has recruited drivers in Sioux Falls but not yet launched here, said it would not be able to operate under the regulations.

The rules that govern taxi cab drivers in Sioux Falls could put Uber and Lyft out of reach for some people thinking about driving for extra cash.

Ride-hailing services like Uber and Lyft, technology companies that use smartphone apps to connect drivers with people looking for rides, aren't operational in Sioux Falls yet, but city officials say they're ready.

Assistant City Attorney Keith Allenstein said though the companies themselves would fall outside of Sioux Falls' jurisdiction because they don't operate local brick and mortar dispatch centers, existing city rules governing both independent contractors and taxi cab drivers would apply to ride-hailing drivers.

"If they keep a vehicle as a vehicle for hire, then these do apply," Allenstein said. "I don't think there's a need to change anything in ordinance right now to regulate the drivers."

Uber drivers are independent contractors and in Sioux Falls would need to apply for operators permits, have their vehicles inspected, obtain independent contractor licenses, provide proof of insurance and get commercial license plates. Sales tax remittance would also be required.

Those conditions might kill alternative transportation for hire in Sioux Falls before it arrives.

Uber spokesperson Jaime Moore said although the company performs its own background checks and vehicle inspections before signing off on a driver, too many local regulations have kept Uber from expanding to some markets.

"I have seen this once before and we couldn't launch there," she said.

Moore said because 80 percent of Uber drivers do so part-time, placing burdensome and costly regulations on them could hinder recruitment.

Sioux Falls resident Scott Hudson, who also is a freelance writer for Argus Leader Media, recently cleared Uber's hurdles to become a driver. If it launched in Sioux Falls and he was required to register as an independent contractor, he said he would think about scrapping the money-making venture altogether.

"It might be a deterrent because I'm not looking at doing it full-time or anything," Hudson said. "I'm looking at just, you know, supplementary income type of situations."

Since establishing in 2009, Uber has grappled with authorities in hundreds of cities across the United State and the globe. Today they serve 58 counties and 300 cities, and 47 U.S. have adjusted their rules to better enable ride-hailing.

Councilor Kermit Staggers said he's not surprised ride-hailing services wouldn't want to come to places where drivers have to jump through so many regulatory hoops. He's hopeful, he said, that the council could rework city ordinance to make Sioux Falls more inviting to Uber and other services like it.

"That's the way it is with a lot of regulations. People are put off by it," he said.

But others aren't so sure the rules should be tinkered with. Councilor Rex Rolfing said although he's always open to revisiting city ordinances, certain parts of what's on the books are necessary for public safety and fairness. Waiving the sales tax requirement, for instance, would create an uneven playing field between Uber drivers and traditional taxi cabs, he said.

"Who would (pay) it if they didn't do it?" Rolfing asked. "It's like doing things in a cash-only situation. That's not going to be good for everybody in the long run."

WHAT IS UBER?

What it does: Uber is a transportation service controlled by the user.

How it works: Users download an app and can select a cab based on available cars in the area. There, a price, will be displayed. Payment is handled entirely through the app. Costs are comparable to an average cab, if not a little bit more depending on demand and time of day/year. But vehicles are generally nicer.

How much drivers make: Uber drivers in Boston, for instance, make an average of $19 an hour, but that doesn't factor in expenses such as gas, depreciation of car and insurance.