State, Las Vegas split on legality of $100 annual fee for ride-hailing companies

Las Vegas and the state are miles apart in their interpretation of whether the city can require ride-hailing companies to have a business license to operate within city limits.

The state's Legislative Commission, a 12-member panel of Senate and Assembly members, listened to three hours of testimony Friday, but failed to resolve whether an ordinance passed by the Las Vegas City Council on Jan. 20 is legal.

The city, represented by Deputy City Attorney John Curtas, Assistant Planning Director Karen Duddelston and Councilmen Bob Beers and Bob Coffin, contend it is, adding that laws approved by the Legislature last year legalizing transportation network companies are ambiguous about whether companies such as Uber and Lyft can be assessed a license fee.

The state, backed by a 16-page legal opinion drafted by Kevin Powers, chief litigation counsel for the Legislative Counsel Bureau, says it's clear that ride-hailing companies can't be charged a fee for licenses to operate within a municipality.

The opinion was sought by state Sen. Michael Roberson, R-Henderson, who heads the commission.

City officials are expected to return when the commission meets March 11 to consider whether additional regulations are needed to clarify legislative intent.

From the state's perspective, the intent was clear; from the city's, it's ambiguous.

"As a matter of law, I think the city of Las Vegas is wrong on this," Roberson said when wrapping up the hearing.

"The city respectfully disagrees," Curtas replied. "It's an ambiguity that needs to be resolved. We feel we are on firm legal ground."

At issue is whether the city can license and charge for city services that are provided to ride-hailing companies — city streets, police protection and emergency services.

The state contends that the law is clear that counties and municipalities cannot generate revenue through taxation, noting that if every city were allowed to do that, ride-hailing companies wouldn't be able to afford to operate.

The City Council in January voted 4-2 to approve requiring ride-sharing drivers to annually pay $100 over two payments to be licensed to operate within the city. Coffin was one of the two voting against the provision, opposing the measure because he believes the city should be entitled to conduct background checks on drivers to protect ride-hailing customers in addition to charging them for basic services.

Roberson said Coffin was raising issues that were debated when bills went through the legislative process and that he didn't want to rehash policy issues.

Representatives of Uber and Lyft also testified during Friday's session, siding with the state's viewpoint that the city had no right to require licensing and fees. Michael Hillerby, representing Lyft, said the company's drivers already pay regulatory fees through a $200 annual state business license and they collect a 3 percent tax on every ride fare that goes to the state highway fund and to pay for a medical school at the University of Nevada, Las Vegas.

"We thank the Legislative Commission for their commitment to state law," said Taylor Patterson, a spokeswoman for Uber. "We remain open to working with the city of Las Vegas on a path forward that complies with state law requirements."

Testimony raised the ire of Sen. Kelvin Atkinson, D-North Las Vegas, who challenged the companies to account for how many contracted drivers they have and how many of them have paid for a state business license.

Neither Hillerby nor Uber representative John Griffith had specific answers to the inquiry.

Earlier in the month in a separate hearing, the Nevada Transportation Authority reported about 19,000 contracted drivers work for Uber, Lyft and GetMe, the state's three licensed transportation network companies. Some drivers work for more than one company.

In the commission's afternoon session, Nevada Taxicab Authority Chairwoman Ileana Drobkin and Administrator Ronald Grogan were asked for their views on an executive branch audit that accused the taxi industry of overcharging customers $47 million in unnecessary fuel surcharges and overpriced credit-card fees.

Drobkin defended the industry's initiation of a $3 credit-card fee, which began almost a year before the Legislature authorized it. Drobkin said at the time, authority board members believed they were allowed to implement the fee since they have the authority to set all taxi rates.

But legislators on the commission said they were concerned that the authority board hadn't reviewed the charge in five years. Drobkin said no one within the public or the industry asked for any changes.

The Taxicab Authority is awaiting an independent review of the audit by Jeremy Aguero of Las Vegas-based Applied Analysis.

— Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow him on Twitter: @RickVelotta