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Legally Speaking: Phoenix City Council has viable argument for rideshare fee

(AP Photo)

I hate to say it, but I think they will win.

Since October, KTAR News 92.3 FM’s Larry Gaydos and I have been railing against what he calls the “evil Phoenix City Council” about its decision to charge a fee on all Uber and Lyft rides to and from the airport.

Unfortunately, after reading the letter written by attorney Jean-Jacques Cabou to Attorney General Mark Brnovich, I believe the council has a leg to stand on.

Back in October 2019, the Phoenix City Council voted 7-2 to impose pickup and drop-off fees on all rideshare trips to and from Sky Harbor.

After the vote, Lyft threatened it would no longer operate at the airport if the fees were actually imposed.

The public found out the vote had to be redone because some technical requirements were not met with the vote. As such, the revote was scheduled for December.

For two months, Lyft, and eventually Uber, tried to negotiate with the council and others tried to convince the council not to vote for the increase.

The Goldwater Institute even informed the council the fee would be unconstitutional and a lawsuit could result. Nothing worked.

The Phoenix City Council stood its ground. At the December vote it again approved the fees 7-2.

Opponents claim the fee is really an illegal “tax” or surcharge and cite to Proposition 126.

Passed in November 2018, Proposition 126 added language to the Arizona Constitution and, according to the letter, “prohibits cities from imposing or increasing (1) ‘any sales tax,’ (2)’transaction privilege tax,’ (3) ‘luxury tax,’ (4) ‘excise tax,’ and (5) ‘use tax.’”

It also states that cities “shall not impose or increase any…other transaction-based tax’ or ‘fee’ … on the privilege to engage in … any service performed in this state.”

The letter makes numerous arguments that attempt to show the action taken by the council is legal.

Here, I address the two most influential ones.

First, it points out the city is entitled to operate the airport as a private business. Just like a private business, it is allowed to make money off of others using its property.

In other words, it is allowed to take a cut.

Rideshare companies like Uber and Lyft use the airport roads and curbs to make money and the airport is entitled to have a share of that income.

Just like every restaurant and store in the airport has to pay rent to use the airport property, the rideshare companies should have to pay rent for the time they use the roads and curbs.

This amounts to a substantial amount of money since they account for two-thirds of all ground transportation pick-ups at the airport.

Second, Uber and Lyft agreed to pay the fees. “Like all other transportation providers, [Uber and Lyft] are required to have permits to operate at the [a]irport.”

As part of obtaining that permit, they contractually agreed to pay the fees. So, it would be a breach of contract to now refuse to make that payment.

Regardless of the two strong legal arguments above, I, like many, do not like the fees.

It will be a $4 fee per drop-off and per pickup at the airport. No, not $4 total, but $4 each way.

This is more than what cabs and buses have to pay for the same roads and curbs and I think they should all be the same. Unfortunately, #legallyspeaking, the arguments in this letter are strong and will be hard to overcome.