Uber in action is nearly impossible to see. Except for an identifying decal in their rear window, “Uber X” cars look like what they are: privately owned vehicles.

But they’re out there. Just ask bar owners.

“Our late-night bartenders say twenty-five percent of the calls for rides are for Uber,” says the aut Bar’s Keith Orr. “And it’s definitely generational. One bartender said that younger kids seem to love Uber [pronounced “oober”].

“We’ve seen great positive reaction and usage from our customers,” reports Brad, a bar owner who wants to remain anonymous. “We’ve definitely heard people talk about grabbing an Uber. I would think it was higher than twenty-five percent.”

Brad remembers when Uber first came to his bar last year. “One group of young people had their phone out and screen up showing how Uber worked–how they were contacted, where the cars were, where this car that was four minutes away was coming from–and you could see his friends downloading the app. You could see the word of mouth spreading it in that one conversation.”

But it’s hard to actually see Uber working.

“It’s an app, so the bartender is not involved in the transaction,” says Orr. “Twenty-five percent is an estimate based on watching and talking.”

“Our customers still ask bartenders for a cab,” concurs Brad, “but it’s much less frequent than it used to be. And from a spectator standpoint, just watching, you wouldn’t know if it was an Uber or a friend picking them up.”

While Orr hasn’t used Uber, Brad has.

“I love it,” he gushes. “I used it in other cities before it came to Ann Arbor. The technology is cool, and it’s helpful to see where the cars are.”

As far as Brad can tell, “the people in our bar aren’t anti-taxi or pro-Uber. They’re just for convenient rides the easiest way possible.”

“This is more better than a cab,” says Mohammed, an Uber X driver who responded to an order for a ride from the west side to downtown. “They keep you busy all the time. They have more customers, so I make more money than with a private cab.

“I’d been driving cabs one and a half years in Ann Arbor,” the driver adds. “I applied for this when [they] came to Ann Arbor [last April], and they approved me. I was the third [driver here].”

Mohammed pulled up in a worn but clean minivan twelve minutes after my daughter placed the order on her smartphone. He whisked us downtown in a couple minutes for $8.40, automatically billed to Claire’s credit card.

While Mohammed likes Uber, he believes the company’s arrival hurt local taxi companies: “When Uber came in, they took all the customers. A lot of private cab companies go with them too. And other people [with] one or two cars, they go with Uber. Some do both: They drive with Uber, and if they have private customers, they can keep them.”

He makes two exceptions. “Blue Cab and Yellow are big companies. They have their own customers, and they have some contracts with companies.”

An older Yellow Car driver, responding to a call for a ride downtown early one evening, explains the taxi contracts. “A lot of our daytime business is subsidized. We’re subcontractors for the Ann Arbor [Area] Transportation Authority, transporting people with disability and seniors under their A-Ride program.”

Like Mohammed, the Yellow driver arrives in twelve minutes. His leased Prius is a step up from Mohammed’s minivan, but so is the price for my run downtown–$11.40 plus tip.

The Yellow Car driver agrees with the bar owners about Uber’s inroads at night. “Our night-shift drivers have been really significantly impacted. They’ll tell you that our nighttime business is down.”

Later that night, I ask a younger Yellow Car driver how Uber has affected his business. His reply is blunt:

“Uber is illegal. They’re not properly licensed and not properly insured.”

He’s not the only one who feels that way. Uber got its start arranging rides in licensed limousines, and it promoted that “Uber Black” service when it arrived in Ann Arbor last April. But limos are no longer on the local menu. The company now is pushing the cheaper–and virtually unregulated–UberX.

“It’s cowboy capitalism,” says Ward 3 councilmember Steve Kunselman. “Uber[X] drivers don’t have chauffeur licenses, and they don’t have commercial insurance coverage. Though there is a small set of people who think it’s the best thing since sliced bread, these companies are nothing more than fancy pimps that encourage people to cheat the law.”

Uber is often described as an example of a new “sharing economy.” Kunselman, council’s rep on the city’s taxicab board, is having none of it. “They’re just a dispatch service,” he says. “There’s nothing about ride sharing in their business model: you pay. It’s a race to the bottom to see who can pay the least.”

Mayor Christopher Taylor thinks differently. “Uber is a transformative transportation option that is enabled by the ubiquity of mobile technology. I’ve only used Uber once, and it was functionally immediate and excellent. And I’ve heard from constituents that they value the option.”

Because Uber isn’t licensed as a taxi or limousine company, Kunselman believes it’s violating state and local laws. Taylor, a lawyer, responds that “they’ve not been declared illegal.” The company says that the laws don’t apply, since it only makes connections between riders and drivers.

Soon after Uber began operating last year, the city attorney’s office sent it a “cease-and-desist” letter. Since a letter isn’t a court order, the company didn’t actually have to cease and desist, and it didn’t. As Kunselman explains it, the letter only “put them on notice that if anything goes wrong, the city won’t be in the position of liability.”

“We’re not a taxi company,” says Michael White, Uber Michigan’s general manager. “We’re a technology company. We developed a seamless technology: a smartphone app that connects passengers with transportation providers … Instead of sticking your hand out at a street corner when it’s raining and you need a ride, you can order your ride and stay inside until you see the car on your map on the smartphone.”

While UberX drivers aren’t required to have chauffeur’s licenses, White says the company performs “federal, state, and local background checks, and we also look at their driving records and do a nineteen-point vehicle inspection by a registered mechanic.”

As for insurance, White says “UberX drivers carry at least the [state] minimum insurance, and on top of that, we have a primary policy for $1 million for [each] trip. This policy also meets all the requirement of personal property and personal injury for Michigan.”

Uber isn’t worried about Ann Arbor’s cease-and-desist letter any more than they’re worried about similar letters they’ve gotten in dozens of other towns. “We had a cease-and-desist letter in Detroit,” says White. “But once we talked to the city and they understood how we fit into the transportation scene, we reached an operating agreement there. The same thing will happen in Ann Arbor.”

He’s probably right: Last fall, council voted 8-3 to negotiate an operating agreement with Uber. Only Kunselman, Sumi Kailasapathy, and Mike Anglin dissented.

Two local cab company presidents agree with Kunselman: Uber is illegal.

“It’s ludicrous,” says Dave Reid, president of Select Ride, which operates Ann Arbor Yellow Car, Arbor Limousine, and Select Ride Paratransit. “They arrange for cars and passengers to get together, but they’re not following the same rules as everyone else.”

“Any municipality that wanted to could bust them for impersonating a taxi company,” says Rick Clark, president of Amazing Blue Taxi. “Under the state’s Limousine Transportation Act of 1990, drivers have to have commercial insurance, they have to have a sticker saying they’re licensed as a limousine, they have to have a chauffeur’s license, and they have to be licensed by the state.”

Uber’s White spoke by phone–he’d confused a meeting time–but Select Ride and Amazing Blue’s presidents met in person: Reid in his company’s complex of buildings, garages, and parking lots on the city’s west side, Clark in a basement office in his home outside Ypsilanti.

While White won’t say how many local drivers Uber has, the cab company presidents will give the figures for their own companies. “We have one hundred vehicles of various types and about fifty Yellow Cars,” explains Reid from behind dark shades and dark snap-brim cap. “We have two hundred people working for us, around eighty-five employees, and the rest drivers who are not employees but lease vehicles from us.”

“I started this company with one car,” says Clark, a lean man with a long face and mustache who worked for Veteran’s and Yellow before striking off on his own ten years ago. “We have twenty cars now and thirty drivers, three or four part-time and the rest full-time. Seven people handle dispatch, plus I do it and my girlfriend does it.” Like Yellow, Amazing Blue owns and maintains its vehicles, and leases them to its drivers.

The owners will even talk about market share–sort of. “Call center folks tell me [Uber has] had no impact on day business,” Reid says. “But it has significantly reduced calls during bar rush time from 10:30 p.m. to 2:30 a.m.” In a follow-up email, he estimates that “business has fallen at least 50% during prime night hours for taxis and legally-licensed limo vehicles.”

Reid and Clark don’t dispute Uber’s lower prices–but they dismiss everything else.

“Uber’s million-dollar insurance policy is not going to cover catastrophic accidents,” says Clark. “Plus their drivers only have conventional insurance, and if their insurance company found they’re using their personal vehicle as a commercial vehicle, they will void their insurance. But it’s a cost they’re not bearing, and that gives them an advantage, since insurance is roughly 18 percent of overhead.”

That’s not all. “Uber takes 20 percent off the top and dumps all the rest of the costs on the driver for gas and maintenance,” Clark continues, “and with their cutthroat rates, people are eating their cars. Say you make $300 in a week: you spend $100 for gas, and on top of that you need oil changes and brakes and the sort. It all costs money.”

“When you have a business that cares for people’s lives, there has to be government oversight,” says Reid. “The public expects this company will behave responsibly and provide supervision. We recruit, hire, and train our drivers with ongoing monitoring by supervisors for quality control. They have some selection process and no training or supervision.”

Like Clark, Reid believes the city could stop Uber now if it chose. “There’s no need of an operating agreement,” he says. “They should agree with existing regulations; until they do, they should not be on the road–and if they do go on the road, they should be stopped, ticketed, and impounded.”

Predictably, Uber likes the city’s approach just fine. “I’ve been pleased with the way city council has reacted,” says White. “They’ve rejected extending taxi regulations to peer-to-peer services and are working on an operating agreement that allows peer-to-peer.”

Mayor Taylor says what council wants are “appropriate levels of insurance, background checks, drivers’ safety checks, and vehicle inspections–and I’m confident [Uber will] be able to provide it.”

An operating agreement is “not legislation,” Taylor adds. “It doesn’t confer license upon them. It’s a contract between the city and the companies on how they can operate in the city. If other transportation network providers of similar nature came in, they conceivably could have agreements as well.”

Ward 3’s Kunselman calls any agreement “worthless. My colleagues set it up for failure because they can’t vote to approve something that’s against state law.” At best, he says, “an operating agreement is a temporary measure until they change the laws.”

Tom Crawford, the city’s chief financial officer, agrees. “Any operating agreement we come up with is contingent on what the state does.”

Where does that leave the city’s licensed taxi companies? “They need to evolve their business to meet the competitive challenge,” Taylor says. Judging from what he hears from constituents, the mayor says, “people love Uber.”

After reading our March article on Uber, the online car service, Yellow Car driver Joe Gelinas dropped by the Observer office to say we’d omitted an important source: “You didn’t talk to an insurance agent.”

We did quote others who said that Uber drivers’ personal insurance didn’t cover commercial use, but Gelinas thought we should have talked to an agent to confirm that. He says he his own agent told him that his policy would be void if he used his personal car as a cab.

In a follow-up email, Gelinas also questioned the value of Uber’s own insurance. “What damages would Uber suffer, and thus be able to recover through insurance, if a driver were in an accident?” he asked. “Uber doesn’t own the car, nor do they employ the driver, so on what ground would they be sued, in the event of an accident? That might be a good question to ask a lawyer. :)”