App-based ridesharing companies like Lyft, Uber and Sidecar would be limited to 100 vehicles each and pay the city a licensing fee, under the draft rules of a pilot program that a Seattle City Council committee will discuss on Friday morning. Drivers using the apps to pick up riders would be required to obtain a special city-issued permit.
The council has faced intense, conflicting pressures over whether and how to regulate the app-based alternatives to taxis and town cars. The debate over the services has centered on issues such as jobs, insurance coverage, vehicle safety, convenience and affordability. Both rideshare companies and taxi industry representatives made critical remarks about the proposal on Thursday. City Council President Sally Clark, who chairs the Taxi, For-hire and Limousine Regulations Committee said the draft rules are far from final and would provide a starting point for further discussion.
"I don’t think we were under any illusion that we were going to make people happy," she said. "This is by no means a perfect solution, it’s out there for discussion and out there for feedback."
The committee has held a series of meetings during the past year to discuss options for integrating rideshare vehicles into the city’s transportation network. Traditional taxi and for-hire companies and drivers have expressed strong opposition to ridesharing, arguing that they, unlike the app-based services, are saddled with stringent city rules and high licensing and insurance costs. Rideshare companies on the other hand, say new regulations would stifle technological innovation and could kill their fledgling business model.
In addition to the vehicle cap and licensing requirements, the draft ordinance outlines liability insurance and vehicle inspection standards for ridesharing services, and restricts the amount of time a driver can work to 16 hours per week — unless they have a standard city-issued for-hire driver’s license. Also included in the rules is a $1,000 civil penalty for rideshare drivers who pick up riders who hail them in the street.
Uber, in an emailed statement, pooh-poohed the proposal.
“The Committee has already heard from over 12,000 users of the Uber app who would be outraged to see their transportation options diminished," Brooke Steger, general manager for Uber Seattle, said in the statement. "Arbitrarily limiting the number of drivers that can use the Uber app to 100, and the number of hours they can drive to 16 a week, hurts all Seattleites."
Sidecar also knocked the draft rules. "The Committee’s proposed legislation is anti-competition, anti-innovation and anti-consumer choice," a spokesman said in an email.
Taxi industry representatives voiced skepticism as well, but some saw the proposal as a starting point for further debate.
"It doesn’t level the playing field, it doesn’t enforce the law, but it is a step in the right direction," Western Washington Taxicab Operators Association business representative Dawn Gearhart said. Taxicab drivers working in the Puget Sound region formed WWTCOA in 2012. The association works closely with Teamsters Local 117. Gearhart said cabbies would still be paying more for insurance than rideshare drivers under the proposed rules. She also criticized language in the draft ordinance that would allow rideshare companies to hire third party vehicle inspectors, saying it was akin to restaurants hiring their own health inspectors.
Chris Van Dyk, a taxi industry lobbyist and manager of Seattle's Green Cab had some more pointed remarks. "I'm really glad they legalized marijuana, because someone was smoking it at City Hall," he said. "My jaw drops with every paragraph [of the draft ordinance]."
Van Dyk thinks that the rules would devalue existing taxi licenses and incite cabbies to decamp to rideshare companies. "If this proposal goes through, my prediction is that taxicab licenses will be abandoned, not sold."
The 850 licenses currently in circulation in Seattle have sold at prices between $70,000 and $100,000 in recent years, Van Dyk said. Under the proposal the city would also issue 50 new taxi licenses through a lottery. Taxi-drivers who made public comments in recent committee meetings have complained that there are not enough licenses available.
"I think that they’ll stay in business because universally they’re still regarded as the go to transportation for most people," said Clark, referring to taxi license owners and cab companies.
"We need a healthy spread of choices," she added. "I want them all to be successful."
The ridesharing licenses issued to companies through the pilot program would expire on Dec. 31, 2015. The license fee for companies is $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.
Throughout the draft rules, ridesharing companies are referred to as “Transportation Network Companies,” or TNCs.
The cost for a TNC drivers permit in the draft rules is $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.
During the exam described in the proposal, rideshare drivers will have to demonstrate that they can speak and comprehend English; that they understand vehicle safety requirements and that they know how to get around King County, and are aware of popular local destinations.
"If really these are part-time drivers and these are side-jobs, then we won’t require them to go through the full licensing process and the full vehicle inspection," Clark said. She added that if the rideshare drivers are working full-time hours and are also held to lesser standards than traditional for-hire drivers then, "that's pretty difficult for me to tell the taxi folks."
The draft rules stipulate that rideshare companies would need to carry $1 million dollar per-incident “umbrella” liability insurance, and would need to show their policies to the city. The policies would also need to include underinsured motorist coverage, which kicks in if a rideshare driver gets into a wreck with a driver who has inadequate insurance and is at fault.
Ridesharing companies have come under fire because many of the drivers using their apps operate with only personal auto insurance policies. Licensed taxi and for-hire drivers in Seattle need to purchase commercial insurance policies that cost, on average, about $8,000 annually, according to the WWTCOA representative, Gearhart.
Clark said questions still surround the topic of insurance for rideshare companies. "One of the things that we’re going to have to tackle," she said, "is what grade of insurance these companies are going to have to get." She added that she does not think that the disparity in price between personal auto insurance for a rideshare driver and commercial insurance for a for-hire driver is fair.
"I am having a hard time believing that drivers are telling their insurance companies that they’re using their personal vehicles to accept rides," she said. Among her remaining questions is whether the rideshare company's umbrella liability policies will apply when drivers are "trolling" for rides or only when there is a passenger in their car.
Clark said she's prepared for some heated comments when the committee meets at 9:30 a.m. on Friday, but added, "We needed to start some place."