City Council passes ride-sharing regulations. Again.

Rideshare companies catch a break with Mayor Murray's new plan. Credit: Credit: Raido Kaldma

The months-long saga surrounding ride-sharing regulations in Seattle finally neared an end Monday, as the City Council approved legislation that would allow services like Lyft, Sidecar and UberX to operate legally within the city limits.

The council voted 8-1 to approve a bill based on a compromise recently brokered by Mayor Ed Murray’s Office between ride-sharing companies and members of the traditional taxi and for-hire vehicle industry. Councilmember Mike O’Brien cast the lone no-vote, expressing concerns over ride-sharing insurance standards and saying that the council had taken too little time to thoroughly vet the bill.

“It’s great,” said Uber’s Seattle general manager, Brooke Steger. “It’s been a year-and-a-half of so much work.”

Murray issued a statement applauding the council action, and he is expected to sign the measure into law.

The newly approved legislation outlines requirements for ride-sharing auto insurance, driver licensing and vehicles. It also calls for the city to issue 200 more taxicab vehicle licenses over the next four years and allows flat-rate for-hire drivers to pick up passengers who hail them on the streets. Under current rules, there are 688 taxicab licenses available in Seattle and flat-rate drivers can only pick up passengers who have called to arrange rides in advance.

Taxicab licenses will also be converted to a medallion system, which will allow owners to use them as collateral for bank loans. And a 10-cent surcharge will be added to fares in for-hire and ride-sharing vehicles that are not equipped for riders with wheelchairs. The money will go to a fund that helps support wheelchair-accessible taxi service.

Ride-sharing, taxi and for-hire representatives involved in the discussions arranged by the Mayor’s Office had urged the council to approve the bill. Monday’s vote was the second time in recent months that the council has passed an ordinance with ride-sharing rules.

The council approved legislation in March, which capped the number of vehicles each ride-sharing service would have been allowed to have on the city’s streets at any one time at 150. Ride-sharing companies objected to that rule, saying that the vehicle caps would make their business model untenable in Seattle. Although Mayor Murray did not support the caps, he signed the ordinance into law.

Uber and Lyft then contributed just over $1 million to a referendum campaign that would have repealed the ordinance, according to the most recent Seattle Ethics and Elections Commission figures.

Once the campaign had collected enough signatures to get the referendum on the ballot, the ordinance was suspended until a vote could take place. After that, the mayor initiated a mediation process that led to the compromise legislation. The referendum effort was called off as a part of the mediation process. But if the council did not act to swiftly approve the compromise bill, Lyft and Uber said they would move forward with a separate ballot initiative, which included the companies’ own preferred set of ride-sharing regulations.

“The time frame under which we’re doing this is not ideal,” Sally Clark said during Monday’s meeting, alluding to the pressure created by the initiative.

Clark chaired a committee that did the bulk of the work on the original set of regulations, which the council voted to repeal last week. The committee process involved a series of meetings that began in the spring of 2013 and featured consistently packed council chambers, and public comments sessions marked by furious debate between backers of the traditional taxi and for-hire industry and proponents of ride-sharing.

“This landscape will continue to change, this landscape will continue to move based on the economics, based on the technology, based on some of the cultural shifts about where drivers want to work,” Clark said shortly before casting her vote in favor of the new bill.

Insurance requirements remained a thorny issue on Monday, as they have throughout much of the discussion about how to regulate the new car services, which allow passengers to request rides using a smartphone app from drivers piloting personal vehicles. The city refers to the ride-sharing services as Transportation Network Companies, or TNCs.

Lyft, Sidecar and UberX, the city’s three major TNCs, all provide $1 million liability insurance policies that cover the drivers who use their apps. But these policies only apply after a driver taps their smartphone to accept a passenger, up until the time the ride ends.

The new city rules require levels of insurance coverage that are aligned with state standards for taxi and for-hire vehicles, and apply any time a driver is logged onto one of the apps, even if they are not carrying passengers or are not on their way to pick up passengers. The minimum amount of coverage the state requires for taxis and for-hire vehicles is $300,000 per incident for injuries and deaths.

The companies already provide $100,000 per incident policies that cover drivers who are logged in and awaiting ride requests. But there’s a gray area here, because this coverage only goes into effect if a driver’s personal insurer declines to pay for a claim.

During the council meeting, O’Brien noted a high-profile San Francisco case where an UberX driver hit and killed a 6-year-old girl. The girl’s mother was also injured in the accident and accrued $187,000 in medical bills. The driver’s personal auto policy only paid out $15,000. Uber has not offered to cover any additional damages.

An amendment O’Brien floated would have called on the TNCs to provide the “exclusive” coverage during all times that a driver is logged into one of their apps. The intent was to eliminate confusion over whether a driver’s personal auto insurance or the company’s insurance policy would pay for damages in the event of an accident.

“What is at stake here is not innovation,” O’Brien said. “The question is, while we’re trying to innovate, do we require the type of insurance that we know has worked for decades, the type of commercial insurance that cabs and for-hire vehicles have had to date? Or do we allow to experiment with this insurance that we’ve seen problems with around the country?”

The amendment was shot down in a 5-4 vote. Clark, along with Sally Bagshaw, Jean Godden, Tom Rasmussen and Tim Burgess voted against it.

“We don’t want any gaps,” said Bagshaw, who noted that she had talked to a number of the TNCs about creating a “portal” for anyone who is involved in an accident so they could “push a button on the website” and know exactly who they should be speaking to about where they should be filing their insurance claim.

“I really do want to put the burden back on the company, not the driver, to resolve this,” she said. “But I also want to support innovation.”

State Rep. Cyrus Habib, who is running for state Senate on the suburban Eastside, spoke during the public comment period at Monday’s meeting. He encouraged the council to pass the bill without amending the insurance requirements. And in a statement issued after the meeting, Habib said he planned to introduce a bill in the state Legislature that would update state insurance requirements to factor in TNCs.

“We do need to address this, but we need to do it at the state level,” he said.

Some drivers at the meeting were not so sure about the merits of the council’s legislation.

“There’s too many TNCs out there now,” said Fasil Teka, who drives both a taxicab and a town car for Uber Black, one of Uber’s higher-end services. Teka said he’s seen a substantial decline in his business in the last three to four months and blames it on the TNCs.

During the meeting, Harrell acknowledged that the legislation was “far from perfect.” But despite his misgivings, he was optimistic. “Let’s work together,” he said, “let’s make Seattle better for a robust transportation network, let’s employ some people, let’s please some customers.”

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