tech shuttles

Why San Francisco's tech shuttles should pay

January 8, 2014: 4:39 PM ET

Even the CEO of the leading transportation company thinks the regulation is needed.

Protesters block a Google-employee commuter bus bound for Mountain View, Calif.

Protesters block a Google-employee commuter bus on Valencia Street in San Francisco bound for Mountain View, Calif.

FORTUNE -- The days of unregulated tech shuttles are numbered.

For years, tech companies have hired private buses to transport their workers who live in San Francisco to their leafy suburban campuses in towns like Redwood City and Mountain View. Now those shuttles have become a lightning rod of criticism for some non-tech workers, citing class inequalities. The buses are certainly one of the most visible indicators of the thriving tech industry, which is held largely responsible for escalating city rents and a rise in evictions for residents who can't afford to keep up. Over the past few months, disgruntled locals have protested Google employee commuter buses in the Mission District with signs that read, STOP DISPLACEMENT NOW and WARNING: TWO-TIER SYSTEM. The latest sign of unrest? A spot of sidewalk graffiti in Oakland spotted by video game designer Bill Budge that perhaps summed it up more succinctly: "Die techie scum."

In response, San Francisco Mayor Ed Lee proposed on Monday to charge tech companies like Apple (AAPL), Google (GOOG), and Facebook (FB) for running commuter shuttles that stop at public MUNI bus stops. If passed, the 18-month pilot program could go into effect as early as this summer, according to Paul Rose, an SFMTA spokesperson.

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The proposal will be voted on by the SFMTA at a meeting on Jan. 21, after which the organization will work with both shuttle providers and tech companies to identify 200 stops in the city, out of the 2,500 total, where buses can stop. Shuttle operators would be charged a daily fee based on the number of stops a shuttle makes: potentially $1 per bus per stop, or $100,000 a year for some businesses, and $1.5 million over the entire span of the pilot program.

"Apple is committed to providing safe and environmentally friendly commuting options that benefit our employees as well as the communities where they live," Kristin Huguet, a spokesperson for Apple, told Fortune. "We have been working with the mayor's office on ways to improve commuter bus policies in San Francisco, and we strongly support the new rules he is proposing." Echoed a Facebook spokesperson: "We look forward to continuing our collaborative relationship with SMFTA."

For billion-dollar businesses like Apple and Facebook, $100,000 may seem like chump change, particularly given the inconveniences local protesters argue they pose when a shuttle hogs a stop in their neighborhood, but for smaller companies still wrestling with profitability, the fee could prove a larger burden. But the CEO of one of the top shuttle providers argues that their benefits easily overcome the regulatory hurdles.

"You see a bus go down the road or at a Muni stop, you don't think about, Hey, what is the positive in this?" explains Gary Bauer, CEO of Bauer's Intelligent Transportation. The San Francisco-based transport business launched in 1989, but it took until 2005 for tech companies to start transporting their workers down 101, when Google hired three buses from Bauer IT to shuttle its employees. Bauer IT was eventually operating up to 55 buses for the search giant during the mid-2000s before Google started operating shuttles on its own. Currently, 27 out of 30 local Bauer IT clients are tech and biotech firms, accounting for 30% of Bauer IT's overall business. The tech boom is a major part of why the number of vehicles Bauer IT operates and people it employs continues to grow at up to 100% annually, with 450 Bauer IT employees enabling 225 vehicles to shuttle 6 million passengers a year. Should Mayor Lee's proposal pass, Bauer IT's bottom line could be significantly affected, although Bauer declines to speculate how much.

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As for those tech shuttle protests, Bauer argues that the shuttles should be seen as a benefit for San Francisco residents and not a target of complaints. "People don't get they are a good thing for San Francisco: Instead of 56 cars parked in your neighborhood with 56 people, we take them all in one bus. You could have the smog, the parking, the congestion, or you could have one bus coming through here."

That said, even Bauer admits regulation is needed, even if their bottom lines are affected. There is little communication between MUNI and shuttle providers right now, according to Rose, creating congestion and delays for both sides. So identifying official bus zones for tech shuttles to stop at could help traffic flow and be a win-win. Says Bauer: "At the end of the day, [regulation] is something we've got to look at as a group and make happen."

And if all this regulation on the roads proves to be too much, techies can soon hit the high seas: Google is now testing a ferry service for some workers.

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