City Changes Regulations on Taxis of All Types

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Although the City Council’s final compromise wasn’t quite everything car-free living advocates might have wanted, the legislation as a whole could be a positive event for Seattle. It’s positive if it’s the first, rather than the last, step in the evolution of how Seattle pays for car rides.

Anna Minard provided the most concise summary of what the bill does:

• Rideshare companies—that’s uberX, Lyft, and Sidecar, which are being referred to as “Transportation Network Companies”—must abide by a rule that no more than 150 drivers can be active on their system, ready to pick up passengers, at a time. Given that Uber last week revealed they currently have about 900 drivers and “regularly exceed” 300 drivers on system at a time, that could really change their service.

• Allows for-hire drivers to pick up street hails but not passengers from taxi stands. (Until now, they’ve been barred from picking up people hailing cabs on the street and limited to only picking up prearranged passengers.)

• Adds 200 new taxi licenses over the next two years.

• Adds new insurance and safety regulations to the app-based services, while also trying to block TNCs from working around the driver caps by creating multiple shadow companies. It also gives the city council authority to remove the cap on the number of drivers in the future, instead of leaving it to city regulators.

For users of everything other than the TNCs, this is an unmitigated good thing. On-demand car travel becomes much easier with for-hire drivers available for immediate use and more taxis.

The impact on TNC users is mixed. The old situation is an unregulated gray area with few rider protections. The bill creates those protections, while forcing a de facto decrease in the supply of drivers. The latter is bad for consumers, but I can appreciate the Council’s position. It makes no sense to destroy the taxi industry with onerous regulation while allowing a competitor to operate without limitations. A superior solution for consumers would be to lift taxi caps too, but the conservative thing to do is to ease the taxi caps and for-hire restrictions while hobbling the TNCs enough to give their competitors some breathing room.*

That’s all fine as an intermediate step. The ultimate policy objective should be to phase out arbitrary caps on all sorts of driver services. A city where it’s easy to get a ride when you need one is a city where not owning a car is a very attractive option, which will boost transit ridership and decrease the crippling weight of parking pressure on our land use. That’s what the three anti-cap Councilmembers (Burgess, Bagshaw, and Rasmussen) seemed to understand, and I applaud them for their vision.

*One can certainly quibble with the level of the cap, but then the TNCs were notoriously secretive about their driver numbers until the last moment.

Comments

  1. John Bailo says

    Does this mean that each of the existing rideshare companies can have 150 taxis on the road…or could I or anybody form, say, Emerald City Rides and also put 150 taxis on the road?

    These companies are really just cloud software services that have the functionality of One Bus Away plus dispatching. Someone could just build their software, and let startup rideshares lease the cloud software.

    • lakecityrider says

      Any company that forms as a TNC (“rideshare”) can have 150 active drivers on the road. The law does prohibit existing TNCs from essentially forming subsidiaries and each of those subsidiaries having 150 active drivers.

      • John Bailo says

        So it really doesn’t limit rideshares at all, but opens the door for locally owned companies to form TNCs and get cars on the road! Very cool and good opportunity for startup businesses writing software in dispatch, location based sharing, etc.

  2. says

    As somebody who occasionally uses a taxicab, this is great news. I don’t live or need a taxi enough to justify the account start-up or renewal fee of a TNC.

    Also really appreciate STB’s journalism on transit issues.

    • djw says

      to my knowledge, none of the existing TNCs charge a fee for signing up or renewing. I signed up for uberx in Detroit last week. Just like signing up for amazon or something; no fees beyond usage.

  3. Frankus says

    What’s frustrating about the rules is that they’re trying to force the TNCs into the mold of a taxi service, when really they have more in common with a car service.

    The whole point of having marked cabs and regulated rates (and meters) is to make street hails safe and predictable for the public. Now they’re allowing street hails with unmarked cars and rates that can be unpredictable (e.g. surge pricing).

    • Matt L (aka Angry Transit Nerd) says

      They’re only allowing street hails for “for-hire” vehicles, which are marked and look a lot like taxis anyway.

      TNCs (Lyft, UberX) are barred from answering street hails.

  4. Zach Shaner says

    I’ve come to peace with the ‘active cap’ as a temporary measure, mostly because Murray, Bagshaw, Burgess, and Rassmussen are so strongly against it and even the most conservative members on this issue (Harrell etc) also see the caps as temporary.

    But other relatively unnoticed regulations seem even more regressive, such as the 7-year age limit for TNC vehicles. This was brought over and copied from taxi regulations, where taxis are frequently driven into the ground by multiple operators daily, and are more likely to be functionally worn out after 7 years. A TNC driver is very likely to drive less than full-time, or even just handful of hours per week, and their cars can last 10-20 years if properly taken care of. There are a ton of Lyft and Sidecar drivers (less so with UberX) with perfectly functional cars from 2006, 2007, etc, and the legislation unfortunately forces them to buy new cars or quit driving. The TNCs themselves imposed a 2000 or newer requirement, and that seems much more sensible.

    • asdf says

      I’m a bit skeptical that the caps will really get lifted in the next couple years. Things like this, once they’re in place, it’s difficult to find the political muscle to remove. Instead, the issue will lose its urgency, and city council will find other issues to worry about (like a $15 minimum wage) that don’t involve fighting organized lobbyists of taxi companies.

      Another question about the caps is what happens with regards to drivers operating elsewhere in the Puget Sound area, such as Bellevue or Renton? Is it legal for a company to have 150 drivers operating in Seattle, and an addition 50 drivers operating in Bellevue, at the same time? What happens if a Lyft driver picks up someone in Bellevue headed for Seattle while the 150-driver cap in Seattle has already been reached? Does the driver have to refuse the trip? Even if the driver accepts the trip, he/she would still likely have to deadhead outside the city limits afterward to be able to accept another passenger.

      Finally, it should be noted that the basic laws of supply and demand mean that the caps are going to make Uber surge pricing a whole lot worse. Instead of surge pricing attracting more drivers, as it is today, it will become purely about managing demand. TNC drivers that get lucky enough to be allowed to operate during peak hours will get a huge windfall, while others get nothing.

      • djw says

        I’m a bit skeptical that the caps will really get lifted in the next couple years. Things like this, once they’re in place, it’s difficult to find the political muscle to remove.

        By the council? You may be right. (They know they’re doing something unpopular, thus the ‘temporary’ talk). But citizen initiatives could take down the stupid caps this year.

      • asdf says

        I just got e-mails about the proposed referendum today. When I posted my comment, I didn’t realize such a thing was even possible. It will be interesting to see if this can get enough votes to work. From what little I know, the service is popular enough that it might have a chance.

      • djw says

        If they get it on the ballot, I’d be pretty surprised if it doesn’t pass, and fairly easily. Taxi protectionism has no constituency beyond those who benefit immediately from it.

  5. RossB says

    I don’t understand why they now allow for-hire drivers to pick up street hails. That doesn’t make sense to me. From your previous post, I think the following makes sense:

    1) Apply the safety steps as necessary (done).
    2) Slowly increase the for-hire licenses. Eventually you issue as many as people want.

    Now you have a limited number of people with taxi licenses and an unlimited number of people with for-hire licenses. The taxi licenses still have value (they are the only ones that can pick up street hails). As a result, the compensation to the taxi drivers (for the loss of business due to less for-hire work) would be less.

    Furthermore, what does this mean if I hail a TNC? Do I negotiate a deal on the spot? Or does the regulation (on fare prices) apply differently to hailed taxis versus for-hire?

    • asdf says

      Street-hailing a TNC does not make a whole lot of sense. For one thing, they look juts like ordinary cars, so there’s no way to tell it’s even available. Second, the payments are all cashless and app-based, so there is no way for a driver accepting a street hail to get paid.

    • Cascadia Bryan says

      If the for-hire vehicles are to be allowed to pick up street hails, it would make a lot of sense to just install meters in them. One of the points of making them reserve trips in advance was that it was also the opportunity to determine the fare in advance. Since they have become de-facto taxicabs (who can apparently now do everything except occupy a taxi stand), it would stand to reason that the vehicles should have meters.

      The main complaint that my taxi passengers have about the for-hire cars is that, while they can get into them on the street, there is then a negotiation process before they can go anywhere to determine the fare. Sure, if the driver proposes a ridiculous amount, they can get out and try again. But I think the average passenger doesn’t really want to have to bargain with the driver. They simply want a ride home at the going price.

    • William Aitken says

      Hard to imagine that anyone would insure them [especially if they drive anything like the one we used in Bangkok], so probably not, at least in practice.

      • Mark Dublin says

        One place where these essentially motorized tricycles might have a place in Seattle is the rebuilt Waterfront. I think I remember reading that the conceptual team for the project openly advocated small vans and other machines of that order.

        Recalling the “tuk-tuks” in Thailand, it might be a good idea to insist that motors be electric rather than combustion-engine- the fumes really do ruin the wonderful smells of Thai street-food and grilled meat.

        Would also suggest that another condition of using this form of transportation is that everyone connected with the project, including the Port of Seattle, develop a positive attitude toward the streetcars which I think are the necessary complement to the updated rickshaws.

        If need be, street rail system could include flat-cars with both bike-racks and tuk-tuk securements. They’ve got the bicycle ones in Germany. One good- and tried and true- transit mode deserves another.

        Mark Dublin

  6. asdf says

    Why is it that none of the three TNC companies support booking a ride through their web site from an ordinary computer? From a business standpoint, this seems like it should be a no-brainer. Lots of trips originate from home, and a big-screen computer is often more convenient to use than a tiny phone screen.

    Is there some legal bureaucratic bullshit that prohibits it?

    • lakecityrider says

      It’s easier on the TNCs and, besides, everybody knows that the hip-and-cool technology these days is smartphone apps. Smartphones have built-in location detection, a two-way communication channel (for both voice and words), and are generally carried with a person all the time instead of being only at home. Building a web site booking engine means testing and supporting a different booking flow while also exposing the site itself to scraping attempts and a larger attack footprint.

      Oh, and most people who will pay the TNC’s rates also have smartphones and credit cards, so there’s that bit of customer selection.

      • Frank Chiachiere says

        I took an UberX to the airport recently (too early in the morning for light rail). It was cheaper than a yellow cab.

      • lakecityrider says

        Apologies, I didn’t mean that TNCs were more or less expensive than cabs, mostly that people who will pay for individual transportation versus transit or car2go. My point, overall, is that the TNCs intentionally don’t want people who don’t have a smartphone, a credit card, and (varying extents) a Facebook account and SMS capabilities.

        To be honest, I don’t really give a hoot who provides cab-type service. I’ve never ridden in a cab in Seattle that I paid for. My employer pays for a guaranteed ride home service via cabs. I’ve used Uber, not UberX, exactly once and liked it. Overall, it doesn’t fit into what I’m doing, so I watch this debate from the sidelines. If I can’t get there via bus, bike, or car2go, I just drive the car I still own.

        It seems to me that the cabs have gotten the thin end of the regulatory wedge for a long time but they also brought all of the complaints down on their own heads. On the other hand, Uber, Lyft, Sidecar, et al were encouraging individuals to perform then-possibly-illegal and very high-liability-risk activities even though it’s a delivery mechanism that a bunch of folks seem to like.

      • asdf says

        I don’t really buy that the argument about how maintain a website to book rides is too expensive. The bulk of the work lies on the server – the client is just window dressing, and the server would be exactly the same. Similarly, a built-in GPS is not needed to book a ride – you just select your location from a map. Nor does a web interface really increase the attack surface. With proper design, it would be same web service on the back end, just a different client. The potential for scraping/exploiting security holes is exactly the same. Both Zipcar and Car2Go allow booking of cars from their websites – I don’t really see what the difference is.

        Nor do I buy the argument that it’s necessary to exclude people who don’t have smartphones. Zipcar Car2Go allow people who don’t have smartphones to drive their cars and seem to be doing just fine. Then, there’s users of Windows Phones, whom all three TNC companies currently exclude.

        I hope someday it happens. But at the same, this is not something that is relevant regulators. Whether booking a ride on a website is supported or not is something that the free market, not any form of government, should be deciding. I’m just surprised that competition among the three companies hasn’t yet motivated any of them to do it.

  7. Mark Dublin says

    Can anyone who knows the honest arguments on both sides of this issue tell me what the justification is for limiting the numbers of either taxicabs or TNC’s? In spite of all the nasty things I’ve said about the so-called free market more like being a butcher shop than a street fair, I can’t see what’s wrong with letting anyone who’s willing to risk the effort and money give the work a try.

    My guess is that, since a huge number if not most small businesses quickly fail, the market will soon feature a huge assortment of very slightly-used cars. Which, with the help of lenders and insurers, put a serious limit on numbers of either cabs or cars with ridiculous purple mustaches- wish there was some way to regulate that. The Seattle Arts Commission, maybe.

    Though given trends in the art world, we might soon wish we had such stately classical things as purple mustaches back.

    If I were to be convinced that passengers were going to have to wait longer for the service they need just to assure that providers could make more money- I’d work harder to turn the whole cab service into public transit. But I’d like to hear the counter-argument.

    Mark Dublin

    • lakecityrider says

      I believe that the idea is to limit the number of combustion engines cruising the thoroughfares of Seattle and King County looking for fares, potentially clogging traffic and routinely putting various unhealthy gasses into the atmosphere. Most of the branded taxis I have seen are some form of hybrid; almost all of the purple mustachioed vehicles I have seen aren’t. The application-based dispatch method reduces the cruising time but I’ve been told, anecdotally, that driving around is still needed to either get back to the “hot spots” or just be within a few minutes’ range of more potential customers.

    • asdf says

      Of course, nobody argues that we need to cap the number of internal combustion engines downtown searching for parking.

      Also, UberX vehicles are hybrids.

  8. Jon Sayer says

    Why are there even limits on taxis in the first place? I understand why they’re licensed, but what’s the point of a limit?

    • Sam says

      Why does the government limit anything? Why are liquor store licenses limited? Why are medical marijuana stores limited? Why are charter schools limited? Why are building heights limited? Why are food trucks limited? Why are businesses limited to certain zones?

      • William C. says

        Except for the zoning laws and maybe the height limits (where there are legitimate concerns about impact on neighbors), I’m for removing every single one of those limits.

    • Cascadia Bryan says

      The *original* reason for the limits on taxicabs was to ensure that the supply of drivers roughly equaled the demand of passengers. In other words, it made sense to allow the drivers to each have enough business to make a living while having enough cars on the road to serve the customers. However, a system like this would require regular monitoring of supply and demand.

      As time went on, and the number of cabs was not adjusted to meet demand, the value of the taxicab medallions went up significantly. The drivers were making more money, since they were constantly busy. They were busy because there was so much business that they had to turn some away. A few additional limited licenses (the for-hire cars) were made available. But now there was a second reason to limit the number of taxis.

      The original reason for limits was still valid. However, it was desirable for the owners of the medallions to limit the amount of competition among themselves. Thus, the *second reason* for limits is for the drivers/owners to protect the increased value of their medallions. This is a perfectly rational response from the owners, but it is not necessarily in the interest of the public who wants to have a sufficient number of taxicabs available to get where they need to go in a timely fashion.

  9. Dick Burkhart says

    We need a new solution for the taxi industry. The fundamental problem is the ownership structure: the primary financial benefits go the the owners of taxi licenses. The results are highly variable in terms of service as well as often being inequitable. My proposed solution is for a city sponsored taxi cooperative:

    (1) The taxi drivers would become the owners of the cooperative over time (a % of each pay check would go toward ownership). Drivers could also donate an existing taxi car in exchange for ownership shares. Profits would become dividends to the owners.
    (2) The city would provide seed money to help finance initial management, an initial fleet of cars, and up to date technology for paying, dispatching / communicating, maps, directions, and customer feedback. This could be provided through grants or bonds to be paid back from future revenues or both.
    (3) The city would also help recruit and train the initial board and would retain a position on the board to monitor operations.
    (4) The city would provide the initial regulatory framework. A critical task would be to decide where city requirements and guidelines end and the board of the cooperative takes over, especially for issues like fares and coverage. Another critical task would be to design and monitor incentives for good driver training and performance.
    (5) A citizens oversight committee would be established to periodically review operations and make recommendations to the board of the cooperative and to the city.
    (6) Given the presence of the alternative services (transportation network companies), and the difficulty of regulating other taxi companies or associations in addition to the new taxi cooperative, the taxi cooperative should handle all in-city traditional taxi service, especially the services that the TNCs don’t provide, though there could be overlap with the TNCs in some areas, to be regulated by the city.

  10. ClaimsAdjuster says

    It looks like Lyft/Sidecar/UberX have no intention of complying with the new law which goes into effect in less than three weeks. Instead they are focusing on overturning the law by putting a referendum on the ballot to overturn the Seattle City Council’s vote.

    Goldman-Sachs, Jeff Bezos and the TNC’s VC backers really want to avoid regulation of any kind. That is why they are paying $3 per signature, two to three times the going rate, to put this referendum on the ballot.

    The law just passed by the City Council on TNC regulation cannot be overturned by a referendum. That is because for-hire vehicle regulation is an adminstrative power specifically delegated to local jurisdictions by the state under RCW 46.72.001. According to an opinion by the City Attorney:

    “Two well-established limits by the courts include (1) the rule that the local government “referendum power extends only to matters legislative in character and not to merely administrative acts.”

    What is the difference between legislative and administrative?

    According to this Washington State Initiative and Referendum Guide:

    “This of course raises the question of what is an administrative action and what is a legislative action. The courts have applied two tests in making this determination. First, actions relating to subjects of a permanent and general character are usually regarded as legislative matters, and actions taken on subjects of a temporary and special character are usually regarded as administrative matters. Second, the power to be exercised is legislative in nature if it prescribes a new policy or plan,whereas it is administrative in its nature if it merely pursues a plan already adopted by the legislative body or some power superior to it.”

    For-Hire laws have of course been part of RCW and SMC for decades. The City Council just passed revisions to the existing SMC. Furthermore, the TNC regs are a temporary pilot program.

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