Lime is pulling its electric scooters and dockless bicycles from Tempe after the city approved new regulations the company felt were too stringent.

The scooters and bikes will be removed Tuesday, a company spokeswoman confirmed.

The Tempe City Council unanimously approved last month new licensing fees and staging regulations that, among other requirements, would require companies operating in the city to pay an annual right-of-way use license fee of $7,888 in addition to paying $1.06 per scooter or bike per day to stage the vehicles in the right-of-way.

The agreement also included an indemnity clause that freed Tempe from any liability related to an accident or injury even if the city was found to be negligent.

Companies had 30 days to obtain a right-of-way license that would allow them to operate in the city.

Lime did not obtain a license by Monday’s deadline, instead choosing to remove its electric scooters and dockless bicycles from Tempe, according to a letter the company sent to city officials that was provided to The Arizona Republic.

Lime said after working with the city for months on the new regulations, it was unable to come to an agreement on a fee structure and liability requirements it felt were fair to the company, citing the costs imposed and the liability issue.

“Given our strong relationship with the Tempe community and growing rider demand in the city, it is with great disappointment that we have made the difficult decision to pull scooters out of the city at this time,” the company said. “While policymaking is never perfect, two critical issues remain unresolved in the existing license. Together, they create a uniquely risky and unsustainable business environment.”

The company said it would continue working with the city to bring requirements that are more in line with industry standards in hopes that it can operate in the city in the future.

Tempe said while it’s unfortunate Lime felt the regulations forced the company out, the city believes the requirements are appropriate for the continued operation of shared vehicles in the city. 

“The city does believe the insurance, fees and other requirements are fair and necessary to ensure the scooter companies operate in a way that ensures community safety and equal access,” the city said in an emailed statement. 

MORE: ASU has impounded 888 scooters, collected nearly $80K in fees

In addition to Lime, Bird and Razor also have electric scooters in the city. 

The city said Monday it had received two applications that were pending. A Bird spokeswoman confirmed the company has applied for an operating license in the city.

Tempe regulations: Scooters ‘inherently hazardous’ 

Lime said an unprecedented liability burden created by the new regulations would make it difficult to operate in the city, according to the letter.

An indemnity provision in Tempe’s license states that riding a scooter is “inherently hazardous.” If the companies were to sign off on the agreement, the companies would be required to admit riding a scooter is dangerous, causing them to be held strictly liable for any injuries, said Lynn Allen, partner in the Arizona branch of Tyson & Mendes, a law firm that represents Lime.

MORE: Scooter accidents in metro Phoenix hit triple digits

The companies would also have to agree to fully indemnify the city against any and all claims that may be made against Tempe as a result of an accident, even if the city is found to be negligent. That means if there was an accident and the city was partially at fault because it didn’t maintain safe sidewalk or road conditions, the city would not be held liable, Allen said.

The responsibility would lay solely on the scooter companies, she said.

Allen said while indemnity provisions aren’t uncommon in these types of licensing agreements, the scope of Tempe’s provisions is. She said such provisions are typically written in a way that the entity or person is liable for their own negligence.

MORE: Electric scooters pull out of Peoria after pilot program

A Lime spokeswoman said Tempe’s regulations are more stringent than what other cities have approved. She said Scottsdale’s regulations, which the City Council approved in November, does not have such a strict indemnity clause, and the company has not seen any language that suggests scooters are “inherently hazardous” in any of the 100 markets it operates in.

Hefty costs to operate in Tempe

The company also cited the cost of doing business as another reason it chose to pull out of Tempe.

Tempe’s right-of-way fee of $1.06 per scooter or bike per day “eclipses” the per vehicle fees in other cities, including Los Angeles and Austin, according to the letter.

MORE: Electric scooters are technically already banned from Phoenix-area sidewalks

Scottsdale’s regulations doesn’t require a fee to operate.

“At $386.90 per vehicle per year, the cost of doing business in Tempe would become one of the highest in the country,” the company said. “At this cost, and given Tempe’s demand, we remain concerned that it will require Lime to raise our affordable rates and undermine our low-income Lime Access program.”

Lime said it supports a flat permit fee and per-ride fee.

Hit to the area

The California-based company, which was first known for its dockless bikes that sprouted throughout Tempe, Mesa and Scottsdale in 2017, introduced scooters in Tempe last August.

Since first operating in the city, more than 80,000 people have used Lime’s bikes and scooters, according to the company. The company also has created local jobs by hiring people to charge its scooters each night and restage them in the morning.

Tempe resident Edwin Young, who works as a charger for Lime, or a “juicer” as they are known, said he was notified Monday morning that the company planned to pull its scooters from the city.

Young, who spoke out against the new regulations at last month’s council meeting, said he made about $7,000 between September and December charging scooters each night.

He said the opportunity was “extremely lucrative,” only worked a few hours a night, and he was able to pay bills and save money.

Young said he was planning to buy his first home and was able to save about $5,000 thanks to the secondary income, but now he’s unsure what he is going to do.

“I’ve had so many secondary jobs, serving or working as a bartender, but there’s so much structure built into them you can’t really take a night off,” he said. “I wanted to purchase a house and supplement my income but now they’re pulling the scooters out and I’m not going to be able to do that. That was really the biggest let down from learning they’re not going to be here anymore because I set some ambitious goals because I was thriving so well.”  

Do you use shared vehicles and will be impacted by this decision? Reach the reporter at [email protected]. Follow her on Twitter: @paulinapineda22.

 

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