PEABODY — The nationwide battle involving taxi companies and ride-sharing services such as Uber and Lyft has arrived in the Tanner City.

Sean McKinnon, general manager of North Shore Taxi, is calling on city officials to ban UberX from operating in Peabody. He argues the company is running an illegal taxicab operation by providing virtually the same services but without the burden of regulations placed on taxis and their drivers. McKinnon says that violates city ordinances and it’s unfair — if the government is going to regulate transportation for hire, it should regulate all outfits.

McKinnon lodged a complaint with city officials Dec. 6, and following research into the legal issues involved, Mayor Ted Bettencourt sent a draft of a new ordinance to the City Council before it recessed for the year.

“We require that any taxis in the city have [criminal records] checks, have proof of licensure, have proof of insurance, and right now we do not have any of that with Uber,” Bettencourt said.

He wants to introduce specific local regulations for ride-sharing operations, similar to an approach taken in Melrose, which amended rules for vehicles for hire by adding language regulating livery licenses. The draft ordinance will be reviewed in committee in January and, if approved, would legally end UberX operations in Peabody unless the company makes some significant changes.

Uber partners with drivers as independent contractors who use their own, personal vehicles and work on their own schedules. The company gets a share of the fares. Payment and arrangement for rides is all done via the company’s smartphone app. 

Using the company’s smartphone app, McKinnon says he’s found as many as eight cars available for hire in the city at any given time. But the drivers don’t hold taxi licenses for their vehicles, don’t pay related fees to the city, aren’t subject to background checks by police and don’t carry commercial insurance for those vehicles.

Riding along

Before notifying city officials of his concerns, McKinnon took it upon himself to use the Uber app to arrange a ride from Walnut Street to the Holiday Inn on Route 1, posing as an out-of-town businessman.

He was picked up by a woman in a Lexus who told him she lived in Danvers, he said. There were no official decals on the vehicle and when asked, the woman told McKinnon she didn’t need special auto insurance to drive for UberX (the low-cost end of the ride-sharing service), McKinnon said. He was charged about $13 for the ride — the mandated zone rate for taxis is $10.50 — and after dropping him off at the hotel, the woman told McKinnon to call her personal cellphone, instead of using the Uber app, the next time he needed a ride.

“If UberX wanted to, they could easily comply with the law,” McKinnon said, who is encouraging other local taxi owners to join the fight against UberX. He agrees there are steep financial hurdles for taxi operators in Boston and other large cities, and there are legitimate issues with service, but says that’s not true in Peabody.

He points out there are no medallions, taxi licenses cost $35 per car and another $35 per driver, and his company pays out $150,000 in commercial liability insurance. The company also spends $35,000 in rent and pays $1,662 in excise taxes to the city.

Under the proposed city ordinance, a ride-sharing operation such as UberX would need a livery license from the City Council. Applicants would submit to criminal records checks and provide registration and insurance information for all vehicles in their fleet that would operate in the city. Insurance would comply with state law, application and yearly renewal fees would be imposed and fare rates would be regulated.

The company would also be required to have a permanent business address in the city, identify where vehicles would be garaged and how many would be allowed under the license. Drivers would separately have to undergo background checks on criminal records and driving history, which would be performed by the police.

Open to regulation

For its part, Uber spokeswoman Kaitlin Durkosh said in an email that the company “welcomes reasonable regulations that make sense for our new and innovative business model, and codify our existing safety and quality standards.

“Beyond our stringent background checks for all UberX partners, Uber has a $1 million insurance policy that covers from the moment a driver partner accepts a trip request through the completion of the ride. Plus, both riders and drivers have the option to rate their experience at the end of every trip, and riders can provide feedback. This helps us to quickly correct for issues large or small, and ensure only the highest quality drivers are on the Uber platform.”

That insurance coverage is problematic in Massachusetts, though, according to the state Division of Insurance and the Property Casualty Insurers of America, who warn drivers and riders that personal auto policies do not cover vehicles that are hired out for a fee.They also say the surplus lines policy that UberX retains is from a company — James River — that’s “non-admitted” in the state. That means the company isn’t regulated by the Division of Insurance and doesn’t pay into the state insolvency fund.

Asked how many drivers are operating around Peabody, Durkosh said the North Shore is within the Greater Boston coverage area and includes thousands of drivers. She said drivers must pass federal, state and local background checks going back seven years, along with motor vehicle record checks, a National Sex Offender Registry screen and Social Security trace. 

Peabody is only one of many cities dealing with questions about ride-sharing services. Gov. Deval Patrick has stepped into the fray, proposing that the state Department of Public Utilities regulate such services and require them to obtain permits for drivers, maintain liability insurance, conduct criminal records checks and only hire drivers 21 and older.

The Legislature would have to approve the proposal.

You can reach John Castelluccio at 978-338-2527, jcastelluccio@salemnews.com or via Twitter at @SNjcastelluccio.

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