Luxury SF bus company Leap Transit service suspended over permits

Bus company that shuttles commuters around San Francisco temporarily halts service after getting a state cease-and-desist order related to its permits.

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Leap co-founder and CEO Kyle Kirchhoff (left) sits aboard one of his private San Francisco commuter buses. Dara Kerr/CNET

Leap Transit, a private bus company that shuttles commuters between San Francisco's neighborhoods and its downtown, has suspended operations after receiving a cease-and-desist order related to lack of proper permits.

Leap announced Tuesday it would halt operations until at least the end of the week after receiving the order from the California Public Utilities Commission on May 11. The company said in a Facebook post on Tuesday it has been in the process of ironing out its permits with the state and that the shutdown order was the result of "clerical issues."

"We embarked on a fairly complex regulatory process nearly a year ago and we've cleared many hurdles along the way, including the unanimous approval of Leap's operating authority under the California Public Utilities Commission (PUC) in March," the company said. "However, the finalization of this permitting process has been held up due to various clerical issues and we have now been issued a cease and desist notice from the PUC."

Like the buses for Google, Apple, Facebook and other high-tech firms, which shuttle employees from San Francisco to company offices about an hour's drive away, Leap and rival bus company Chariot have become a symbol of gentrification and income inequality in San Francisco. However, unlike the corporate buses, Leap and Chariot focus on commuters traveling from various neighborhoods in the city to downtown.

Launched in March, Leap positions itself as an alternative to San Francisco's often-crowded municipal busing system, aka Muni. With the backing of influential venture capital firm Andreessen Horowitz and Salesforce CEO Marc Benioff, the company provides rides for $6 apiece. For that fee, passengers sit in a plush Wi-Fi-enabled vehicle that feels more like a coffee shop on wheels than a bus.

Each Leap shuttle has a concierge-like employee with the title of "experience manager," who greets passengers and helps scan their smartphone tickets. People can use Leap's app to order iced Blue Bottle coffee for $4.50, blueberry yogurt for $2.50 or $7 cold-pressed juices from a company called Happy Moose that come in flavors like kale or strawberry.

The PUC's order says Leap failed to meet multiple requirements to receive a permit to operate, including providing evidence of property damage insurance, workers compensation insurance, and testing for alcohol and controlled substances. The commission said if Leap continued to operate without a permit, it could face a fine of up to $5,000 a day and/or up to a year in county jail.

The company, which was granted a precursory "authority to operate" last month by the PUC, was accused by the San Francisco Chronicle of trying to "game" the regulatory process by applying for a permit through the state rather than going through local channels, which would likely be more strict.

Leap representatives did not respond to a request for comment, but the company said in its statement that "we believe that our service is in full compliance with all state and local laws."