Below are the notes I used in today’s Full Council vote on Seattle’s first rules expanding access to taxi ownership and defining operating rules for transportation network companies (TNCs) and their affiliated drivers. The Council, after debating several amendments, voted unanimously to put in place a framework for legal TNC operations in Seattle.
My experience on Council has been that every few years something about taxi regulations gets to the point where something has to be fixed; we can’t dodge it any longer. This seems true in most cities. Government performs a quick, band-aid fix, avoiding acknowledgement that the regulatory system is old and heavier than needed, then government jumps away from taxi regulatory reform as quickly as possible.
Avoiding a comprehensive fix is no longer possible. What we’re voting on today isn’t a complete fix, but it’s a start.
First meeting of the Taxi, Limo, For-Hire Committee – March 14, 2013.
We started not to address the operational rules for the new companies, but out of a need to resolve conflict between the taxis and the flat-rates and to better fund enforcement of the rules governing the existing, legacy players.
Previously, the laws of the universe were simple and constant – the taxis have been angry at the flat-rates, both have been angry at the limos.
Then, the laws of the universe changed.
The question for the committee quickly came to be: how do we bring new players with different business models into a regulatory framework built for a different time.
We met pretty much once a month, taking a break during Council’s consideration of the budget, then twice last month.
- We’ve heard hours of testimony at the microphone.
- Contracted for a study of the Seattle market to get a better idea of the demand for alternatives to the personal automobile and bus. (Reviewed in committee in September.)
- We’ve been inundated with form emails, personal emails, personal phone calls and robo-generated calls.
- We’ve been worked over by drivers, owners, riders, lobbyists, pundits and PR flacks.
Through all of this we’ve attempted to ground our work in three goals:
- Consumer protection
- Expanded mobility choices
A lingering question is whether the City should regulate taxis and flat-rate cars – and now TNC cars — in order to accomplish a fourth goal:
Ensure drivers can make a living. This was a goal of re-regulation in the early 90’s and has been an underpinning of the cap on the number of taxi licenses up to now. Charge people a fair, managed rate – and allow as many operators as can make a decent living. That idea is greatly challenged in 2014.
A reminder that two state code definitions determine the boundaries of our work:
Rideshare: limited definition in state code to carpools and vanpools for commuters between home and work or school. Maybe you’re splitting gas. IRS keeps that at 56 cents/mile.
For-hire vehicle: any vehicle used for the transportation of persons for compensation.
UberX and Lyft aren’t ridesharing under state definitions. They are for-hire transportation – charging more than a share of the gas. That triggers a host of safety, training and operational requirements – requirements that admittedly need an overhaul.
Unfortunately, the limited access to taxi licenses in Seattle and King County coupled with driver and vehicle regulations that haven’t kept up with contemporary service expectations and technology, make disruption not only inevitable, but welcomed by many drivers and riders.
And disruption there has been – in cities across the United States and other parts of the globe. The companies have chosen to launch first, ask questions later. Every city and state looks to be playing out the same debate as we’re having here.
- Cease & desist in multiple cities – NYC, Washington DC, Portland, Miami, Madison, WI
- Austin – limited to IRS 56 cents/mile
- Houston – strife
- Chicago City Council — subpoena for insurance records.
- CA defined transportation network companies for the first time, but didn’t dig into safety checks or insurance. San Francisco supervisors may seek authority to regulate, perhaps even cap car numbers
- Violence in Paris against Uber cars and drivers
In Seattle, we’re about to define the regulatory framework under which UberX, Lyft, Sidecar and their followers can operate legally in the city. These rules recognize that times are changing – and that safety and consumer protection never go out of style.
What does this legislation do?
I like to think it hits on safety, consumer protection and expanded mobility choices from multiple angles.
Starting with the Council Bill:
- The City will expand the opportunity to own a traditional cab by releasing 100 taxi vehicle licenses in 2014 and 100 in 2015. Potential owners will have to pre-qualify to show good driving records and they can’t already own a cab or a share of a cab.
- Flat-rate cars – we discussed the future of this small segment of the provider market and decided to let them live. When this legislation comes into effect, flat-rate cars will be able to pick up street hails, but not be able to queue at taxi stands.
- The bill loosens the requirements on owner/drivers of wheelchair accessible taxis, a more expensive and necessary service model.
- The bill establishes a two-year pilot phase for operating a new form of for-hire transportation.
- For the first time, Seattle will define a new entity engaged in for-hire operations – the Transportation Network Company. Think of this as the mother ship.
- When this legislation comes into effect, anyone who drives a for-hire vehicle (including a TNC-affiliated vehicle) will go through the same training in order to receive a For-Hire Driver’s License.
- All vehicles engaged in for-hire work (including TNC-affiliated cars), will go through a safety check. For TNC-affiliated cars, you’ll be able to do this with a certified mechanic.
- TNCs and their affiliate drivers will have to provide insurance coverage while “live on the system” equal to commercial insurance required of other for-hire ride providers.
The companies’ announcements last week that they recognize the pre-match, trolling time live on the app as requiring their coverage is a step in the right direction. The companies should further recognize that people should have the same security in case of an accident in a car with a pink mustache as they do in a taxi.
- For the at least the first year of this pilot, TNCs will be limited to having no more than 150 cars “live” on their system at any time. That’s an additional 450 cars serving passengers in Seattle if the systems max out.
The cap during the pilot phase allows a transition. It allows operations at a significant scale and minimizes the possible “rush to drive” seen in San Francisco. On the one hand, the migration of drivers to TNC work meets new demand. On the down side, it may sap drivers from modes other people depend upon. Crashing the taxi system isn’t a desired outcome. Too many people in our city depend upon taxis. The cap allows us a controlled test and transition.
- After one-year, the city may raise, lower or remove entirely the cap on “live” cars. We’ll discuss in the amendments in a moment who has the authority to move the cap.
We’re not regulating the fare that TNC’s can charge. Fares will have to be filed with the City, they’ll be public record, but it will be up to consumers to decide who they want to pay.
The great news is that we have much more work to do.
- Driver training must be reworked with King County, focused on safety and customer service.
- Vehicle licensing and re-licensing must be reworked with King County, simplified and streamlined.
- The resolution states we’ll review insurance classification levels in pursuit of greater options for taxi and flat-rate drivers.
- Council will receive regular
reports on how the new taxi licenses are being distributed and on how the options and ride quality for passengers may be affected by opening up the provider market this way.
- With King County we’ll review the composition of the Taxi Advisory Committee so that it better reflects the different provider models operating in Seattle.
SideCar reported a new harvest of $10 million in investment capital a few weeks ago.
Uber raised $237 million last year.
Lyft has raised $83 million in the last year.
I don’t bring these numbers up to say these massively successful funding rounds are necessarily a bad thing (that all depends upon how you treat drivers and passengers in the long run). But it does beg a question –
- Riders tell us they love your service quality.
- Drivers tell us they love the flexibility.
You’re doing so many things right. You have a lot to teach regulators about how to strip back over-weight and redundant regulatory constraints. If only you would communicate and collaborate.
How can you raise this much money, have what I imagine are battalions of lawyers and not have a better plan for how to engage with policymakers? It’s amazing how many simultaneous city and state-level wars you’re waging.
To the taxi owners, this is a wake-up call. Or shout. Or cannon shot. Thousands of taxi trips happen in our city each day. Most are great are at least unremarkable. Too many involve poor dispatch, poor driver comportment, a battle over presentation of a credit card or out-right refusal of a short hop ride.
We are moving several dials at the same time. We will be working with Mayor Murray as we track the impacts on passengers and drivers. I’m very glad to see his commitment to quick and focused revamping of the city’s for-hire regulations. I hope King County regulators, our partners in all of this, are as excited as we are to crack open licensing.
What is before Council today is not the complete fix, but it’s a start.