Bill setting insurance, safety standards for peer-to-peer vehicle rentals advances

PHOENIX — State lawmakers are weighing what kind of new regulations they should put on what’s becoming the Lyft and Uber of car rentals.

SB 1305, approved Wednesday by the Senate Committee on Public Safety and Transportation, would set a standard for things like insurance and safety when individuals choose to rent out the cars they own to others. Proponents say it’s necessary to ensure people are protected against riding around in unsafe vehicles.

But the heart of the bill — and the big point of contention — is taxes amid concerns ranging from fairness to trying to ensure that cities and tourism groups do not lose the revenues now generated from traditional car-rental companies.

The move is getting some kickback from Turo, which acts as the conduit between vehicle owners and renters.

Lobbyist Michelle Peacock told lawmakers the company is willing to accept some reasonable regulations. But she is objecting to efforts to impose the same rules on Turo and the vehicle owners that now exist for companies like Enterprise, which supports the bill. Enterprise owns its vehicles, which are used exclusively for rentals.

Peacock said Turo is not in the car-rental business.

“SB 1305 is built on the foundation that peer-to-peer car sharing is the same thing as a rental car company,” she said.

As Peacock described it, Turo maintains a website to connect people who want to rent out the vehicles they own to those who need a car or truck for several hours or several days. But she said the actual details are worked out between the vehicle owner and the renter, with Turo taking a share of the transaction costs, which Peacock said is in the 25 percent range.

Much of that money, she said, provides basic insurance coverage. But Turo also runs its own insurance firm selling additional coverage to renters who want additional protection.

Sen. David Livingston, R-Peoria, who crafted the measure, grilled Peacock about some of how the business operates, including whether people can rent out multiple cars that they own. And she said that, at least theoretically, owners could be renting out 10, 20 or 30 or more cars.

That concession took Livingston aback.

“You made it sound like it’s mom and pop only,” he said, people sharing personal vehicles when they don’t need them versus people buying vehicles specifically to rent them out.

Peacock said that 95 percent of those on her company’s website have no more than two or three vehicles.

Sen. Lupe Contreras, D-Avondale, said his big issue is safety.

Peacock said vehicle owners are required to sign agreements saying their vehicles are in good working condition and have adequate tires and brakes. Contreras, however, said that self-attestation is not good enough, saying that anyone who is going to rent out a vehicle for money should first have that physically examined, with periodic requirements for checkups.

Peacock bristled at the argument that owners would rent out unsafe vehicles.

“These are their personal cars that they’re using to transport their families to work and to school and to the grocery store,” she told Contreras. “And just like you, I’m sure, take care of your own cars, these folks are taking care of their own cars.”

Contreras rejected the comparison.

“If you’re going to use it as a commercial vehicle there should be something that states that you have maintained that vehicle,” he said. And Contreras said it’s irrelevant that owners may use the vehicles for their own families, as each person has a different definition of what’s safe in things like tire tread.

“Some people take it down to the end, until they puncture it,” he said. “Just because they ride their family in there does not mean that they care.”

But Sen. Sine Kerr, R-Buckeye, said these questions are none of the state’s business.

“Ultimately it’s my decision if I decide to use a company like Turo to put my family in,” she said.

The bigger political question revolves around taxes — who pays it, how much and who gets it.

Jaime Molera who lobbies for the Arizona Lodging and Tourism Association reminded lawmakers that the current levy on vehicle rentals is paying off not only the cost of the Arizona Cardinals football stadium but also had helped build Cactus League facilities.

And Barry Aarons representing visitors bureaus in Tucson, Mesa, Scottsdale and Phoenix said they, too, share in those revenues.

“As this new paradigm grows there will be a market shift,” he said. “We don’t want to see those revenues evaporate from market-share shifts.”

But Suman Tatapudy, representing Getaround, said it would be wrong to impose the same tax scheme on peer-to-peer companies like hers as exist for traditional car-rental firms.

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