Brnovich: Phoenix rideshare fee increase "very likely" violates Arizona law

Posted 1/15/20

The top attorney for Arizona believes the city of Phoenix violated the state constitution when it imposed new ride share fees for companies operating at Sky Harbor International …

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Brnovich: Phoenix rideshare fee increase "very likely" violates Arizona law

Posted

The top attorney for Arizona believes the city of Phoenix violated the state constitution when it imposed new ride share fees for companies operating at Sky Harbor International Airport.

“The Phoenix City Council is placing its policy preferences above the rights of the people to whom the government must always answer,” Attorney General Mark Brnovich stated Thursday. “Arizona voters clearly spoke when they overwhelmingly approved Proposition 126. We will now take this matter to the Arizona Supreme Court and seek an expedited ruling. This is the most definitive way to provide clarity on the law, protect Arizona taxpayers, and hold the City of Phoenix accountable.”

The Attorney General’s Office has released an investigative report concluding that the Phoenix City Council very likely acted in violation of Article IX, § 25 of the Arizona Constitution when it voted in December to increase the fees for companies like Lyft and Uber for trips to and from the airport.

In 2018, Arizona voters passed Proposition 126 with over 64% of the vote. It amended the state’s constitution to prohibit a city from increasing or imposing any new tax or fee on a person or business for providing a service in Arizona.

City officials have said the fee increase is allowed. However, others don’t think that is the case, including Mr. Brnovich and Rep. Nancy Barto, who filed a request for the attorney general to investigate.

“The City’s argument that the constitutional prohibition is ‘concerned with fees that are broadly applicable within a taxing jurisdiction’... does not comport with the Constitution’s text,” Mr. Brnovich’s report states. “Section 25 does not contain any geographical limitations to support such a conclusion. Rather, the transportation services are ‘performed in this state’ and the Constitution’s other requirements are satisfied.”

However, the Attorney General’s Office recognizes that Section 25 has not yet been interpreted by Arizona courts. Thus, Mr. Brnovich’s office will file two actions with the Arizona Supreme Court to strike down Phoenix’s rideshare fee and prevent the ordinance from taking effect at the beginning of February. If the high court agrees with Mr. Brnovich’s determination, the city’s ordinance will be void.

“The city of Phoenix stands by its ordinance and legal position,” city spokeswoman Julie Watters said in a statement. “We are confident that the Arizona Supreme Court will properly interpret the law of Arizona and uphold the constitutionality of the city ordinance.”

Lyft and Uber have long stated plans to stop servicing the airport if the fee increase passed. Uber previously stated they would stop service sometime in January. As of Thursday, Uber’s app still allowed people to request rides to Sky Harbor. An estimated trip to the airport from 99th Avenue and Bell Road at 2:30 p.m. Thursday would cost nearly $35.

Phoenix’s ordinance would raise the fee on ride share companies by $2.66 per curbside pickup at Sky Harbor to $4. It would also create a drop-off fee of $4. The fees would then increase to $4.25 in 2021, $4.50 in 2022, $4.75 in 2023 and $5 in 2024.

The measure also included a second option for ride-sharing, a $2.80 fee for the companies to pick up or drop off at the Phoenix light rail’s 44th Street station, which connects with the Sky Train. City officials have said the fee increases would contribute to maintenance and advancement of the Sky Train, among other things around the airport.

Phoenix is required to post a bond equal to 6 months of state-shared revenue — an enormous sum — but Mr. Brnovich said his office hasn’t asked for that in previous cases.

“They’ll have time to rescind this ordinance and if they don’t we’ll see them at the Supreme Court,” Mr. Brnovich told The Associated Press.

Since the legislature enacted SB 1487 in 2016, the Attorney General’s Office said it has conducted 13 investigations of cities or towns that allegedly violated state law or the constitution by enacting illegal ordinances or taking illegal actions.

To date, the Attorney General’s Office has determined four ordinances “may violate” state law — including Phoenix’s rideshare ordinance — two ordinances “do violate” state law, and four ordinances “do not violate” state law. Three requests for investigations were withdrawn by lawmakers. Six ordinances were ultimately repealed or amended by cities or towns as a result of the office’s investigations.

In 2016, the office determined Tucson’s ordinance allowing for the destruction of confiscated firearms “may violate” state law. That case went to the Arizona Supreme Court, and Tucson was forced to reverse its illegal gun destruction policy.

Sedona was on the hook of two of the investigations, one which looked at whether the city’s bed tax and agreement with the Chamber of Commerce violated the Gift Clause of the state constitution. That case was withdrawn. However, officials also determined Sedona’s ordinance requiring business licenses for “transient rental” but not for long-term rentals was unconstitutional. The city later repealed the ordinance.

Also, the city of Bisbee was found to violate state law with its ordinance regulating the use of plastic bags. The ordinance was also repealed.

Legislators are able to request investigations into violations of state law through the Attorney General’s Office. Once a request is completed and received by the agency, there is a 30-day period for the agency to complete its investigation and for the attorney general to issue a report concluding whether the action that is the subject of the request violates, may violate, or does not violate Arizona law.

With Mr. Brnovich’s conclusion Thursday, there are no current open investigations.

The Associated Press contributed to this report.

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