Frustration abounds as council debates ridesharing plan

While City Council members discuss a proposal, cabbies and rideshare companies balk. But the city's push for training and inspections does win a nod.
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Cabbies brought Teamsters 117 balloons to a City Council committee meeting about rideshare regulations on Friday. The Western Washington Taxicab Association works closely with the union.

While City Council members discuss a proposal, cabbies and rideshare companies balk. But the city's push for training and inspections does win a nod.

The ridesharing debate in Seattle City Council is running at the same temperature it has from the start: hot.

At a meeting Friday, rideshare and taxi representatives raised objections to a set of draft city rules for the app-based car services, and council members raised concerns about the number of rideshare companies operating in Seattle and insurance coverage.

The meeting was the latest chapter in the Taxi, For-hire and Limousine Regulations Committee’s months-long effort to hammer out guidelines for tech upstarts like Lyft, Uber and Sidecar. The Council Chambers were packed with a standing room only crowd that included cabbies, flat rate and ride share drivers. The proposed rules outline a pilot program that would run through Dec. 31, 2015. Each rideshare service would face a 100-vehicle cap, and drivers using the apps could work a maximum of 16 hours per week — unless they have a city-issued for-hire driver’s license. 

During the meeting, Councilmember Bruce Harrell said he wants to take the regulations a step further and limit the number of rideshare companies — referred to in the draft ordinance as “transportation network companies,” or TNCs. The council is trying to move away from using the term "ridesharing."

 “Saying 100 [vehicles] per TNC seems a little artificial if we don’t limit TNCs,” he said. “I just think it’s logical to go a step further and say how many TNCs.” 

“It’s all about the number of cars out there,” he added. Later in the meeting Harrell said, “We are limiting supply, that is the policy choice we made.”

There are currently 850 taxi vehicle licenses in circulation in Seattle. As part of the current proposal, the city would issue an additional 50 licenses through a lottery. Many cabbies complain that there aren’t enough licenses available. The licenses have sold for between $70,000 and $100,000 in recent years, and some drivers lease rather than buy them, according to a local cab company manager.

Lyft, Uber and Sidecar have declined to tell the city how many drivers are using their apps in Seattle.

Insurance coverage, meanwhile, remains one of ridesharing’s murkier aspects. The draft rules include guidelines that would require rideshare companies to carry $1 million per incident liability policies that cover all of the drivers using their apps. Lyft, Uber and Sidecar say they already have the $1 million coverage. But the companies have not shown the policies to the city.

Ben Noble, the director of the City Council’s Central Staff, said the companies argue that the policies are proprietary and that they don’t want the details of their coverage to become part of the public record.

Asked whether the company would let the city take a look at their insurance policy, Uber’s Seattle general manager Brooke Steger said: “We’re a private company with competition.” 

“We’ll work with the city to ensure they’re comfortable with it,” she added, referring to the insurance coverage.

The draft proposal would also require companies to carry underinsured motorist coverage, which would kick in if a rideshare driver gets into an accident with another driver who does not have adequate insurance to cover the damages and is at fault.

Clark is especially concerned about whether rideshare drivers are covered when they are not carrying passengers and are "trolling" the streets. She said she wants to have an expert brief the committee early next year about insurance industry perspectives on ridesharing. 

Taxi drivers say the proposed rules are unfair because they’d still face high commercial insurance costs, while rideshare drivers can carry cheaper personal policies. Taxi industry representatives say that drivers pay, on average, $8,000 per year for insurance.

During the meeting, Clark recognized another taxi industry concern: A fear that drivers would abandon cabs and take up ridesharing. The fear among some in the industry is that this trend would devalue taxi licenses.

“We’re getting a lot of push back about well, ‘everybody’s going to rush to be a TNC, if I have to just go through a lighter vehicle review, insurance doesn’t cost me as much end of month, why the heck am I still going with a taxi,' " she said. It would be important for the committee members, Clark said, to consider the interplay between taxis, flat rate cars and rideshares as they develop the rules.

The proposed rules, said Uber’s Steger, would likely sink UberX ridesharing service in Seattle.

“These limits will effectively shut UberX down,” she said. Apart from UberX, Uber also offers higher-end services in Seattle that rely on city-licensed, commercially insured drivers. Lyft , in a statement issued on Thursday, also said the draft ordinance would "effectively shut down" their service. Both companies, along with Sidecar, say the city's draft rules are anti-competitive and would stifle innovation.

Taxi drivers were also displeased about the number of rideshare vehicles in the draft ordinance.

“We’re going to be out of business because of them,” Rasheed Ahmed, a majority owner of CNG For Hire, said. “It’s going to destroy the livelihood of my community.”

Several commenters at the meeting mentioned that Seattle’s taxi industry is an important source of employment for the city’s East African immigrant community. Steger said that Uber presented those drivers with an additional job options. 

“The vast majority of drivers we partner with are from Ethiopia and Eritrea,” she said. “All of us are pulling from the same community.”

During the pilot program described in the draft rules, rideshare companies would also need to purchase a city-issued license that would cost $50,000 for the first year. Beginning in the second year and thereafter, the license fee is 0.35 percent of the company’s annual gross revenue or $50,000; whichever amount is greater.

Rideshare vehicles would have to undergo third-party vehicle inspections. And drivers would need a TNC driver’s permit that costs $50 annually. Drivers would also need to pay $5 for a license photo and an unspecified amount for fingerprinting. To obtain the permit, drivers will have to complete a training program and pass an exam. The training program will cover topics that include defensive driving, emergency procedures and crimes commonly committed against for-hire drivers.

Uber's Steger said the company doesn't oppose the driver permitting, vehicle inspections or the company license fees.

Cities across the country are grappling with rideshare regulations. The California Public Utility Commission issued the nation’s first set of comprehensive rules in late September. According to information prepared by the City Council staff, Washington, D.C. is developing its own set of regulations and Austin, Texas allows ridershare drivers to be compensated only for the cost of operating their vehicle.

Silas Lindenstein, who drives for UberX and Lyft, said he’d get a TNC driver's permit if that’s what the rules required.

“It’s kind of ridiculous, but I’d be willing to do it,” he said, adding that he thinks a star rating system rideshare apps include makes it easy to identify sketchy drivers. “The great thing about all the apps is if you’re an unsafe driver you’ll get kicked off quick.”

Last Saturday, Lindenstein says he worked four and a half hour shifts for both Lyft and Uber and stayed busy. “They can’t hire enough people to get the weekends filled,” he said. “It’s hard to get a Lyft, it’s hard to get an Uber, it’s hard to get a cab. The demand is there.”

How that demand gets met, at least in the near term, could be decided by the council next year. Clark said the next committee meeting would be scheduled for sometime in January. But the issue appears destined to stay contentious until final council action — and possibly beyond.


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