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sidecarThe City of Seattle’s proposed regulations for ride-sharing startups, which will be discussed at Friday’s City Council meeting, are not making companies like Sidecar and Uber very happy. (Lyft is not pleased, either. Story updated with comment from the company below)

The draft ordinance would require ride-sharing companies, among a bevy of other rules, to obtain a $50,000 annual license to operate as a transportation network company, and have no more than 100 vehicles driving a maximum of 16 hours per week — limits that Uber says “hurts all Seattleites.”

[Follow-up: Here’s what happened at Friday’s City Council meeting]

Brooke Steger, general manager of Uber Seattle, said in a statement that her company is concerned with “the anti-competitive direction this draft ordinance has taken.”

“The Committee has already heard from over 12,000 users of the Uber app who would be outraged to see their transportation options diminished,” the statement reads. “Placing arbitrary limits on the number of drivers that can use the Uber app, and the number of hours they can drive, hurts all Seattleites.”

uberxUber also said that the proposed ordinance keeps its drivers from building small businesses that will “grow and thrive.”

“It will also reduce supply in traditionally underserved communities, a problem we’ve seen with the current system,” Uber said. “Our hope for the City Council to create a policy that benefits all of Seattle – drivers and customers alike – by encouraging entrepreneurial activity instead of restraining it.”

Meanwhile, Sidecar feels the same way. The company gave this statement to us, noting that the draft ordinance is “anti-competition, anti-innovation and anti-consumer choice”:

People want transportation options in Seattle. We are disappointed in the Seattle City Council’s reluctance to embrace innovative transportation solutions that will benefit all Seattleites. The Committee’s proposed legislation is anti-competition, anti-innovation and anti-consumer choice. We hope that the Seattle City Council follows California’s lead and moves in favor of legislation that is best for its citizens, not the business interests of the taxi industry threatened by competition.

California became the first state to initiate such regulations in September when the California Public Utilities Commission voted unanimously to legalize ride-sharing. The state did not enforce limits on number of vehicles or hours driven.

lyft-pink
Lyft, another ride-sharing company, would have its famous pink mustaches regulated by the city in the proposed draft ordinance.

The discussion tomorrow by the Seattle City Council Committee on Taxi, For-hire, and Limousine Regulations follows earlier rumblings about the city potentially shutting down the ride-sharing services, which ultimately didn’t happen.

There won’t be a vote on Friday. The purpose of the meeting is to discuss the ordinance and the new approach, and gather feedback in advance of a vote next month.

The draft ordinance, which proposes a two-year pilot program designed to ensure public safety and a create a more level playing field with taxicab companies, contains various other regulations. They include a $1,000 civil penalty for drivers who pick up riders who hail them in the street, a $50 drivers permit and $5 for a license photo. Even Lyft’s famous pink mustaches, attached to the front of its vehicles, would be regulated.

Perhaps even more interesting is the annual license fee issued to ride-sharing companies. The fee would be $50,000 for the first year, but every year after that, it would be 0.35 percent of the company’s annual gross revenue or $50,000 — whichever amount is greater.

A summary of the proposed regulations is summary from city staff is below:

Summary of Draft Taxicab and For-hire Legislation 

Transportation Network Companies (TNC) 

  • Purpose – To address public safety and consumer protection issues associated with mobile “app” dispatch companies using unlicensed for-hire drivers to provide transportation services.
  • Entire “program” is a pilot. Licenses will expire on Dec 31, 2015 unless Council acts to extend.
  • Maximum of 100 vehicles per TNC (minimum of 15).
  • Can only dispatch through an individual, exclusive mobile “app”, with all payments via credit/debit card (no cash).
  • May not dispatch Taxis, but can dispatch licensed For-hire Vehicles.
  • All drivers must have a TNC Driver’s Permit (see below) or a For-hire Driver’s License.
  • Must enforce a “zero-tolerance” drug/alcohol policy for drivers.

Insurance: 

  • Must have an “umbrella” $1 million policy – per incident, with City as a named insured.
  • Copy of policy must be submitted to the FAS Director.
  • Must include underinsured motorist coverage.
  • Must be in effect while vehicle is “active” on system. This includes times when the driver is waiting for a call, but has not yet been dispatched.
  • Policy must meet State requirements and FAS Director will determine whether policy provides adequate coverage to protect public.

Vehicles: 

Must arrange for third party to conduct a 19-point safety inspection of all vehicles.

Vehicles not subject to more complete inspection by City (e.g. For-hire Vehicles), are restricted to 16 hours per week. (Limits use of vehicles that are not subject to City’s full inspection regime. Commercial Taxis and For-hire Vehicles accumulate many more miles than a typical private vehicle.)

Rates – different possible structures: 

  • Distance charge based on zones, which can vary by time of day.
  • Any distance/time rates measured by smart phone GPS must be cleared through the State.
  • Rate structures must be clear to customers (transparency) and description of rate structure must be filed with the City.

Fees – $50,000 per year for TNC license (or 0.35% of revenue, whichever is higher) to offset the anticipated 2-3 FTEs required to administer and oversee program.

Records – TNCs shall maintain driver and vehicle records and collect data such as dispatch and revenue records, vehicle collision reports, and passenger complaints. The City has the right to inspect TNC records at any time.

Transportation Network Drivers 

  • Must be 21 and must obtain a TNC Driver’s Permit or a For-hire Driver’s License. Providing services without a permit or license results in a $1,000 civil penalty for first violation, criminal misdemeanor for second.
  • TNC Driver’s Permit will require taking a course, including instruction in defensive driving and driver safety, and passing an associated test. Process will be less extensive than that for a For-hire Driver’s License, but with emphasis on safety issues.
  • Permittee applicants will be subject to a criminal background check and a driving record review – same as current requirements for a For-hire Driver’s License.
  • RenewalCity /County will determine initial eligibility and issue permit. TNCs have an ongoing obligation to review driver’s DOL and criminal records and arrange vehicle inspections. Prior to annual renewal, TNCs shall certify the eligibility of drivers and vehicles.
  • Will be limited to 16 hours per week active on the system, unless they have a For-hire Driver’s License. (With “lighter” training not appropriate to be a full-time driver; and restricted hours will help address peak time demand without flooding market with vehicles during off-peak hours.) $1,000 civil penalty for exceeding 16 hour requirement.
  • Can only affiliate with one TNC.
  • May not pick up hails – $1,000 civil penalty and revocation of permit or license for violation.
  • May only provide services when active on the system.
  • Must maintain personal auto insurance.

Taxis 

Authorize up to 50 new licenses to be issued by lottery, under rules set by FAS.

For-Hire Vehicles 

  • Clarify that any trip booked through an “app” is prearranged, regardless of timing.
  • Per above, For-hire Vehicles and For-hire Drivers may operate on a TNC without the hours limit imposed on other drivers and vehicles.

Update, 4:18 p.m. PT: We heard back from Lyft. Much like Sidecar and Uber, the company isn’t happy, either. Here’s their statement:

The Seattle City Council committee’s draft legislation would effectively shut down new transportation options in Seattle and eliminate consumer choice for residents who depend on safe and affordable transportation alternatives like Lyft. The draft legislation states that these rules address public safety and protect consumers; however, by limiting the Lyft community to 100 drivers who may only drive 16 hours per week, it is clear that these rules are designed to protect existing industries. The committee claims that new transportation options available to Seattle residents are “competing with existing taxicab and for-hire drivers in the transportation market and causing negative impacts,” while the City of Seattle’s taxi usage data shows that taxi companies have made more money in 2013 than in previous years. We have worked closely with regulators across the country to protect public safety while allowing for innovation and consumer choice, and we hope that the City Council will listen to their constituents who want more transportation options.
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