As Uber Looks to Expand, Debate Flares in Dallas

When Uber, the San Francisco-based company that allows customers to order rides with a cellphone app, expanded its operations to Texas, it chose Dallas as its starting point. 

But the company’s arrival has caused friction with the city’s cab and limousine drivers, and raised debate over what regulations should apply to it. As officials deliberate whether to change the city code to address Uber’s operations, the company is continuing efforts to expand in Dallas and other Texas cities. But cab and limo business representatives say that if Uber is not subject to the same regulations they face, they could go out of business.

Soon after beginning operations in Dallas in October 2012, the city sent Uber a cease-and-desist letter, telling it to halt operations because it did not have the proper licenses.

"We’ve seen this conversation happen before,” said Leandre Johns, general manager of Uber’s Texas operations. He said Uber is a technology company, not a transportation company, because it connects riders with drivers who it does not employ. He said that though it meets or exceeds many standards that govern transportation companies — screening drivers and tracking customer satisfaction, for example — it is different. Uber makes money mainly by taking a portion of its drivers’ fares, Johns said.

A technology company would be exempt from many of the taxes, fees and regulations that affect taxi and limousine companies in Dallas. That includes providing transportation to all parts of the city and for customers with disabilities.

In an email to Joey Zapata, Dallas’ assistant city manager, a lawyer for Dallas Yellow Cab called the lack of regulations for Uber unfair, and asked to have Dallas police ticket Uber drivers or stop charging cab companies thousands of dollars in permit fees.

“I’m getting very angry in the Uber intrusion and your department’s lack of protection,” the lawyer, John Barr, wrote in the email. “What will it take? Bankruptcy of the cabs?”

According to an investigative report from the city that was released Oct. 23, Uber ignored the cease-and-desist letter and Dallas police began ticketing Uber drivers for violating transportation code. Uber paid for lawyers to challenge the citations.

In August, A.C. Gonzalez, the interim city manager, placed an item on the City Council agenda — with no prior council discussion — that would have effectively halted Uber’s operations there. The item was a proposed overhaul to city code that would have required minimum limousine fares and a 30-minute prearrangement for a limo ride.

The lack of discussion over the proposal prompted council members and Mayor Mike Rawlings to call for an investigation into how the item came to be placed on the council agenda.

The report from that investigation faulted Gonzalez for putting the item on the agenda without prior discussion, but said no illegal activity took place. It also dismissed remaining tickets given to Uber drivers.

Councilman Scott Griggs said officials would look at ways to ensure that Uber is facing the same regulations as taxi and limo services, taking changing technology into account.

But representatives for the cab and limo drivers say Uber should be subject to the same regulations and permit fees that they are.

Johns said that while Uber would like to expand into Austin, San Antonio, El Paso and other major Texas cities, the focus now is on Houston.

For Uber to operate there, Johns said, the city would have to change its laws setting a $70 minimum fare and 30-minute prearrangement time on limousine rides. The city is conducting a study of the laws, and Uber is in talks with city officials.