The Uber model runs into the DMV
A state agency is the latest to say: Get permission first. But sharing economy companies aren’t interested in that.
By Tim Redmond
JANUARY 26, 2015 – About ten years ago, my brother and I were at a meeting of the planning board of a small Upstate New York town where my family has owned a little piece of property since the 1920s. We were there about a water tower a developer was trying to build; another story entirely.
But what fascinated us was the parade of people who appeared before the board to ask permission for something they’d already done.
My brother’s a contractor; he goes before planning boards all the time. I’m a reporter in San Francisco, and I’ve been watching city planning for more than 30 years. We were both boggled.
In nearly every permit case we watched, over the course of about four meetings stretching over almost a year, the applicant had already built the project – without approval, typically in violation of the zoning laws. It typically went like this:
Applicant: “Yeah, I need a permit for a dock I built.”
Board chair: “Did you get a permit before you built it?”
Applicant: “No, because it doesn’t conform.”
Board chair: “What’s the problem with it?”
Applicant: “The waterfront site is too small so there’s not adequate clearance for the docks on the other two sides. The retaining wall infringes on my neighbor’s property and might screw up his septic. Oh, and it’s a protected wetland and I had to dredge it.”
Board chair: “And now you want us to approve it?”
Applicant: “Yeah, I mean, the dock is already there. It would be silly to have to tear it out.”
Board chair: “Well in that case, all in favor: Aye.”
After about half a dozen of these, my brother looked at me, shook his head, and said: Does anyone around here get permission for anything?
Small town, whatever. But that reflects pretty clearly the attitude of the sharing economy that the mayor of San Francisco and his supporters so love.
There’s been a lot of press about Uber’s latest problem – the California Department of Motor Vehicles has announced that ride-sharing drivers, who are in fact using their vehicles for a commercial purpose, need to get commercial plates.
That’s not the end of the world – but it’s a big blow to the Uber model, which calls for people to buy cars, with Uber-backed financing, and turn them into taxis without following the rules that apply to taxis. Getting commercial plates takes a little longer (if there are 11,000 Uber drivers in San Francisco, and all of them have to get appointments at the DMV, the backup could take a while.)
But Uber is saying it doesn’t care: The company protests the ruling, and will keep right on encouraging people to register their cars as personal, noncommercial vehicles – the same way the company has offered to pay the fines in some cities for Uber drivers who illegally pick up and discharge passengers at airports.
The same way Airbnb encouraged people to violate city zoning and tax laws and rent out their homes as hotel rooms.
Here’s the motto: It’s better to ask forgiveness than permission – particularly if you have a billion dollars or more in the bank and some very powerful people on your side. What did Leona Helmsley say? Only the little people pay taxes. Or follow the rules.
I understand that disruptive industries are going to be, as they say, a “challenge” for regulators, who are often way behind. And there are some really dumb regulations out there.
But there are also rules – protecting wetlands, regulating airport conveyance, requiring commercial plates and insurance – that exist for a purpose. And if we as a city and a state are going to say that they don’t matter, that you can do whatever you want if you can get VC money for it and ask permission later—then we’re setting kind of a bad precedent, no?
What about all the rules regulating financial institutions? Can there be a Airbnbank that takes investor money and moves it around the world without oversight? Haven’t we gone there before? Wasn’t it a problem?