Murray Compromise Lifts Seattle Rideshare Caps

Lyft and UberX win big in the proposed agreement.
This post is 11 in the series: Crimp Your Ride

With everyone facing something to lose, representatives from Seattle’s new(ish) ‘rideshare’ industry stood alongside vehicle-for-hire owners and taxi owners and drivers Monday to announce a compromise brokered by Seattle Mayor Ed Murray that they all can apparently live with.

It’s a big win for companies like Lyft and UberX, which could operate with no caps on their numbers of drivers and grow as fast as the market demands. It also apparently offered enough sweeteners to satisfy at least some taxi and for-hire owners and drivers, who had spent more than a year arguing that solution was unacceptable and put them at an unfair disadvantage.

Here’s a rundown of what everyone got out of the negotiated deal—which, significantly, still needs approval from a majority of city council members who passed a much different framework earlier this year:

Transportation Network Companies (TNCs)—No caps

Companies like Lyft, UberX, Sidecar, and any other competitors would be allowed to operate legally in Seattle, albeit under the scrutiny of city regulators. But the compromise throws out the caps on the number of rideshare drivers (150 on the road at any one time) that a majority of city council members approved earlier this year.

To protect consumers, the agreement would also establish driver training requirements for TNCs, which the companies could administer with city oversight, as well as vehicle inspection policies. A TNC driver would also be covered by the parent company’s umbrella insurance policy whenever he or she is active on the company’s app.

Here’s what Brooke Steger, general manager for Uber Seattle, had to say:

We are very happy that caps were taken off the table. I think there was a realization that we are all here to stay and that we share so many drivers. It’s really creating an environment where we can all focus on our business rather than on regulatory battles.

Taxis—More taxi licenses, fewer regulations, and property rights

After refusing to issue any new taxi licenses for decades, Seattle would issue 200 more taxi vehicle licenses over the next four years. This gives current taxi drivers who are forced to lease a cab at least a shot at controlling their own destiny, and it may help alleviate taxi shortages on busy weekend nights.

It would also convert those taxi and for-hire licenses into a property right, similar to medallions issued by other cities. Owners of Seattle’s transferable taxi licenses—who typically purchased them for tens or hundreds of thousands of dollars—currently operate under something like a high school demerit system. If they acquire enough “points” for things like not wearing the proper uniform or having mismatched hubcabs, the city can revoke their expensive license. Under Murray’s proposal, they would “own” the license outright and could borrow against it, taxi representatives said Monday. (This doesn’t appear to protect the value of their licenses, which presumably would steeply decline once the city issues more licenses and opens the system up to an unlimited number of TNC drivers.)

The proposed agreement would also give the taxi industry ten new taxi stands in the city; loosen some insurance standards; and remove offensive requirements on dress code, language tests, and other red tape that has limited the taxi industry’s ability to develop their own smartphone-based apps. Amin Shifow, a wheelchair-accessible taxi operator, said Yellow Cab and Farwest Taxi are close to releasing their own apps, and are in discussions with Orange Cab about a shared one. As Shifow put it,

Everyone’s not going to be happy with this. But you have to face reality, and we are ready to compete.

Amin said the market will eventually find its level and impose its own caps. If there are too many vehicles-for-hire on the road, drivers will stop driving when they are unable to make enough money. At least taxis will still have access to the more “traditional” segments of the market, such as taxi stands, street hails, and trips from the airport, he said.

For-hire owners and drivers—Hailing rights

This category of for-hire vehicles, which confusingly look like taxis but have not been allowed to pick up people trying to flag down a cab on the street, will now have hailing rights.

Wheelchair-accessible taxi drivers—More money

The proposal would impose a 10-cent fee on rides of any kind to help offset the higher costs of outfitting and operating a wheelchair-accessible taxi. The TNCs will also include an option on their app for customers who need wheelchair-accessible taxis and send them to those drivers.

When asked how he managed to get parties that had once been so at odds to agree to anything, Murray joked: “I just locked ‘em in another room, down the hall from the minimum wage room.” But the reality was that everyone was operating under fairly large uncertainties after the TNC companies collected enough signatures for a referendum that temporarily invalidated and would have likely permanently overturned the vehicle-for-hire legislation that the city council passed earlier this year.

The taxi industry was operating under the threat that they’d lose a fight against those wildly successful and well capitalized innovators later this year at the ballot box, which would have essentially turned the issue into a popularity contest. In the meantime, Murray was threatening to shut down Lyft and UberX for operating illegally unless the parties could reach a different agreement through mediation.

However, not everyone from the taxi industry is on board with the compromise. Chris Van Dyk, general manager of Green Cab Taxi, said his group and other taxi industry plaintiffs that have sued to block the rideshare referendum have no intention of dropping their suit. He called yesterday’s agreement “a bogus deal” that opens Seattle up to an unlimited number of for-hire vehicles and will erode or erase current drivers’ standards of living.

This agreement also effectively tells anyone who disagrees with the policy the city council is setting: “Go for it, file a referendum, you’ll get what you want.” It’s anarchy at best.

Murray said the city council would need to first rescind the ordinance that it passed in March, which would effectively invalidate the TNC referendum. Then the council would have to pass a new ordinance with the provisions contained in the negotiated deal. Stay tuned—he acknowledged Monday that getting his deal through a council with its own opinions about the issue would be “a heavy lift.”

Murray also said that working on taxi industry issues was only one narrow solution to a much bigger problem between Seattle and its immigrant communities.

This city I don’t believe has truly reached out to its East African fellow citizens…and truly worked to integrate them into the life of the city. A model that existed in taxis five years ago is not a way to build a future by itself. We are not reaching out enough when it comes to education….issues of violence…issues of social services. We are not reaching out in very basic ways that would make this community feel like they are a part of Seattle.

We are a community-supported resource and we can’t do this work without you!

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Comments

  1. Guy says:

    Good write up.

    The caps on taxis should have been lifted. If innovation is good for Uber then it’s good for taxis. If caps stifle innovation for Uber, then they stifle innovation for taxis.

    You rightly point out the medallions and caps are not going to prevent further erosion in value when faced with the now legal, unlimited outside competition via TNCs. Those licenses have already lost most of their value and are not selling on the secondary market. If you are a driver looking to own your own business, why would you pay hundreds of thousands for a taxi license when you can simply get your own car and ride for a TNC?

    The real value in medallions and a cap on taxis is to ensure that a very small handful of people/companies are able to compete for the $17+ mil Seatac contract. This cap and medallion system protects the current players from having new competition for the airport. You need around 200 taxis to bid on the contract as an association. Caps just means the current group of bidders will be protected.

    We had to “Save Uber” by lifting the caps on TNCs otherwise they couldn’t compete. Taxis? not so much.

  2. Anthony says:

    Uber pays 0 in municipal fees and permits back to the city
    it operates in.
    Regulated small businesses pay all the fees, all the taxes
    and all the permit expenses.

    So which mode of transpiration is beneficial for the city
    and its residents?

    And why this PLUNDER of municipal revenue is masqueraded
    as an “advance” ??

    Regulated Uber and Lyft !
    These OFFSHORE based private corporation plunder YOUR municipal
    revenue. It is YOU who will then face higher taxes to cover
    for this THEFT from municipal coffers!

    Unbelievable. Murray is asleep at the wheel.
    Or better yet – how BIG was the BRIBE, Ed ??

  3. Michael Andersen says:

    Three cheers!

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