It looks like UberX, Lyft and Sidecar are here to stay in Seattle.
After more than one year of City Council meetings, protests and debate, Seattle Mayor Ed Murray today announced an agreement between the major industry players, the taxi industry and city officials that will let app-based transportation services such as Lyft, Sidecar and UberX keep operating without any limit on the number of drivers that can be on the street at any given time.
That’s a big change from the original ordinance that was approved by the City Council in March, which set a maximum of 150 active drivers per company — a decision that left the ride-sharing companies unhappy.
“I believe Seattle once again will lead the nation in showing how what appears to be conflicting interests can actually come together,” Murray said after announcing the agreement. “We have deregulated a highly regulated monopoly, allowing taxis and for-hires to become far more competitive than they are in the current situation. We are recognizing that a technology exists that is rapidly changing the marketplace.”
Here are the key components of the agreement, as announced by Murray this afternoon.
- Transportation Network Companies (Uber, Lyft, SideCar, etc.) and their drivers will be licensed and required to meet insurance requirements. All aspects of this industry will be required to carry insurance.
- For-hire drivers will have hailing rights for the first time.
- The city will provide 200 new taxi licenses over the next four years. Taxi and for-hire licenses will transition to a property right similar to a medallion in other cities.
- There will be no cap on the number of drivers for transportation network companies.
- Accessibility fund will be created through a 10 cent per ride surcharge for riders who will acquire accessible services.
(See full news release below.)
The agreement still needs to be approved by the Seattle City Council. Perhaps the most notable part of today’s agreement is that there are no limits on how many cars each company can have driving on Seattle’s roads. Murray is asking the Seattle City Council to repeal the controversial ordinance that set those limits, which would also end efforts to hold a public referendum on the ordinance.
If this new agreement had not been reached, Murray had promised to issue cease-and-desist letters to stop services like UberX and Lyft from operating in the city without regulation — similar to what’s being done in Virginia right now.
Today’s decision effectively ends a year-long debate in Seattle over how the TNCs, which use smartphone apps to connect riders and passengers, should be regulated. Many felt that the City Council was limiting innovation with the 150-cap; others said that the startups need to follow the law and stop avoiding regulation.
During the news conference, Murray talked about new technology from taxi companies that he expects to compete more effectively with the apps from the technology startups.
“I think the technology has created something that didn’t exist before. But what I heard from folks in this city — on the far left or somewhere else — is that they like to use an app to get a car. Someday, it will be a Yellow Cab, and today it’s Uber and Lyft.”
Lyft issued this statement on the news.
Today is a first step on a path to securing a future for ridesharing in Seattle. Thousands of residents have spoken up in support of Lyft’s community-powered movement and today their voices have been heard. Peer-to-peer transportation options like Lyft benefit the local economy, improve residents’ and visitors’ quality of life, and promote safe and affordable rides. We appreciate Mayor Murray’s desire to find a solution that prioritizes public safety without stifling innovation, and we will continue to work collaboratively to improve transportation access, safety and affordability for Seattle residents.
As with many compromises, however, not everyone will be happy with the outcome. One theme from Murray’s press conference today was that everybody lost in some ways, and won in others.
GreenCab Taxi General Manager Chris Van Dyk, who’s listed as a plaintiff in the referendum lawsuit against the City, said in advance of the announcement that there would be a major problem with ending the cap on the TNCs.
“The experience in Seattle in years past, in San Francisco and in Ireland now, is that if you have unlimited entry, if you have no limit on the number of taxi and for-hire vehicles, operators simply cannot make a living wage, and the industry goes to hell in a handbasket, and in a relatively short time,” Van Dyk told GeekWire. “The economics of the industry are counter-intuitive, because of the low threshold of entry. Apps do not change this.”
Seattle joins a small handful of cities who have created regulations that allow the TNCs to legally conduct business (none have enforced caps). Most recently, Chicago approved new laws that drew the ire of taxi drivers.
Meanwhile in California, where the TNCs have been legal since September, regulators now want to add more laws around proper insurance coverage. They also are now threatening to shut down the TNCs if they continue offering their services at the major California airports.
But investors do not seem to be worried about potential legal and regulatory roadblocks. Uber, which is operating in 130 cities worldwide, has now raised $1.5 billion, while Lyft has reeled in more than $330 million.
Update: Here’s the full text of the news release announcing the agreement.
Mayor Ed Murray, for-hire representatives reach historic agreement
SEATTLE (June 16, 2014) – Seattle Mayor Ed Murray was joined today by Seattle City Councilmembers and for-hire industry representatives to announce a historic agreement that provides a framework to enable all parties in the for-hire industry to compete fairly to serve the needs of the public.
“The agreement honors the taxi industry’s historic role in Seattle as a key component of the city’s transportation infrastructure and as a vital source of jobs, particularly for Seattle’s immigrant communities. It also embraces this rapidly transforming industry and recognizes that Seattle must stand at the forefront of innovation and not impede new ideas or add the burden of unnecessary regulations,” said Murray. “I am grateful for the willingness of all of the parties to come together in the spirit of compromise and consensus in order to find common ground.”
On April 16, Murray convened a mediation group that included representatives of taxi owners, dispatch companies, taxi drivers, for-hire owners and drivers, and transportation network companies. Over 55 days and more than 12 meetings, this group made steady progress toward balancing the legitimate interests of all sides, protecting public safety, and promoting access to a broad array transportation options in Seattle.
“The taxi industry is pleased that we can now compete and will soon offer mobile app technology. We will soon be the only service that the public can get with smart phone, phone, taxi stand and traditional hail without discrimination,” said Amin Shifow, wheelchair-accessible taxi operator.
“The For Hire drivers and owners thank Mayor Murray for bringing all parts of our industry together in order to reform city regulations to create a fair and competitive market for our services,” said Abdul Yusuf, Owner CNG For Hire and member of the For Hire Drivers and Owners Association.
“Uber is committed to providing the safest and most convenient rides in Seattle while also offering consumer choice for riders and economic opportunity for drivers. Today’s announcement recognizes that the innovation economy is critical to Seattle’s future and we thank Mayor Murray for his leadership in reaching a compromise that benefits both riders and drivers,” said Brooke Steger, General Manager, Uber Seattle.
“Seattle is a city that supports innovation and understands the transformative potential of technology. This is a city that is embracing ridesharing, and that’s why Lyft intends to be here for the long haul helping to facilitate a new era of transportation choices for Seattle residents. This agreement is a step in the right direction, and we look forward to working with the City Council to get it enacted into law,” said Katie Kincaid, an executive with Lyft.
Key terms of the deal:
- Transportation network companies and their drivers will be licensed and required to meet specific insurance requirements.
- The City will work with the industry to clarify or change state insurance law to account for recent changes in the industry, similar to recent actions in Colorado.
- There will be no cap on the number of transportation network company drivers.
- The City will provide 200 new taxi licenses over the next four years.
- Taxi and for-hire licenses will transition to a property right that is similar to a medallion in other cities.
- For-hire drivers will have hailing rights.
- An accessibility fund will be created through a $0.10 per ride surcharge for drivers and owners to offset higher trip and vehicle costs for riders who require accessibility services.
“Earlier this year I called for an agreement that would remove burdensome caps on transportation network companies and also continue the Council’s goal of reasonably regulating the industry to ensure that passengers and drivers are safe on our City streets,” said Councilmember Tom Rasmussen, chair of the Transportation Committee. “I applaud the Mayor for bringing all of the interested parties together to reach a compromise agreement which addresses this important issue, and for his work to ensure that innovative companies in this industry will be able to continue to thrive in Seattle.”
“I praise the inclusive process that ultimately led to this agreement. I fully support the growing industry of alternative transportation, while assuring the public is safe, well served, and fares are fair. This agreement takes a giant step in that direction,” said Councilmember Sally Bagshaw.
Murray will work with the Council to repeal the suspended ordinance. New legislation will be transmitted in the coming weeks.