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Taxi, for-hire and TNC issues

As a member of the City Council’s Taxi, For-Hire, and Limousine Regulations Committee, my colleagues and I have spent countless hours figuring  out how to update the regulations surrounding the industry, which are far outdated.  We have been digging into the myriad of issues surrounding how to incorporate new market entrants like ÜberX, Lyft and Sidecar (we call these “transportation network companies”, or TNCs), too.  This has been one of the most complex and challenging policy issues I have tackled in my tenure on the Council. Not as challenging as raising two teenage boys, but close.

A few weeks ago, I co-authored a guest editorial in the Seattle Times that helps outline some of my values going into this decision. In it we argue that it’s critical for the City Council to keep a sharp eye on equity and fairness as we make these decisions.  That’s particularly critical in regards to how the decisions we make will impact the existing taxi industry, which is a driver for economic opportunity in immigrant and refugee communities. I won’t revisit that argument here, but I suggest you go read it if you are interested in understanding the social and racial justice case for regulating TNCs.

Unrestricted by the word limit of an oped, in this post I will go into greater detail on why during the final debates at last night’s meeting  I ultimately supported regulations that will help ensure public safety, consumer protection and help level the playing field for current and future drivers of taxis, for-hires, and TNCs.

I have been advocating for a proposal that would legalize TNCs by creating 400 new licenses for TNC drivers. I also advocated for giving the new licenses to the drivers themselves, instead of to the TNCs.  I did this so that the drivers have some power in the situation by owning an asset that they can take to whichever TNC offers the best work environment for the drivers. By giving the licenses to the companies, they get to pick and choose which drivers get activated at any given time. This can make it difficult for drivers to plan their work schedules or make a budget based on projected income, and potentially limits drivers’ ability to adequately provide for their families. This proposal for capping TNCs was voted down 4-5.

Councilmember Clark proposed an alternative way to cap TNCs—no more than 150 active drivers per TNC at any given time. There are currently three TNCs operating in Seattle, so that is essentially a cap of 450 of active TNC vehicles. The licenses will go to the companies and not the drivers.

I don’t know if these caps we were debating are set at the right number, but I do know that the companies have been unwilling to negotiate with the City.  Therefore, the Council also proposes a two-year pilot while we study the impacts. These new TNC licenses, combined with 200 new taxi licenses, represents about a 50% increase over what is legally on the road today. We already have very precise information on taxi usage (including number of trips, distance travelled, fares charges, etc.) because we require them to provide the City with that info.  We have no information or answers from the TNCs, including simple questions such as “how many drivers do you have?” or “what does you insurance policy cover”. They continue to refuse to share information. What I am proposing is a two-year pilot that may ultimately be a transition away from caps in any industry. But I want data to help me understand how the markets will work and how to design policies that serve the public interest.

At issue is bringing TNCs into compliance with City code, not shutting them down. We want more opportunities for drivers, as do they, not less. Everyone also recognizes that too many drivers and not enough customers creates an environment where drivers cannot support themselves, which is why we have caps on taxis and for hire vehicles in the first place. Über representatives have told me they set internal caps, restricting the number of drivers on their system at any one time. This story from San Diego highlights how they do this to help encourage surge pricing so the driver and company can get higher earnings. But I also hear from TNC drivers a real fear in the lack of transparency for how drivers are added to their system and how at any time a TNC can kick them off the system. I am in no way opposed to Über, Lyft or anyone else running a wildly successful business in Seattle.  However, I am opposed to anything less than a system that is fair for drivers and safe, reliable, and convenient for customers. And I feel a transparent, public process for allocating licenses is better than a secretive private process that has no protections in place for TNC drivers.

My goal is great customer experience, not an unreasonable limit on cars and drivers available for hire. But I also don’t want hundreds of excess drivers on the road cutting corners to try to make a buck and no one able to make a decent living other than the corporations. If we institute TNC caps and find that we need to raise the number either during or after the pilot is complete, I am prepared to do that swiftly.  Once we get actual data from Lyft or Über (or their successors), we will be much better poised to make comprehensive policy decisions.  Until then, I do believe this is the most prudent course forward.

Consider the case of car2go. In December 2012 council issued 350 permits. In March 2013, car2go came back and said they wanted to expand and we issued an additional 150 permits. I have not seen a request to further expand this number, but I remain open to it if it comes up. My understanding is that Seattle is car2go’s biggest market. I see this as an example that the council can be flexible and nimble in adjusting regulations to meet demand.

I have used TNCsand have many friends and constituents who love the service they provide. Their app-based model of dispatch is a great innovation and has forever changed the way many of us get around. Regulations are reasonable and prudent as we thoughtfully transition from a highly-regulated industry to a much less regulated one.

This is not about protecting the status quo or some big, bad taxi lobby. Taxi and for-hire operators will need to compete like everyone else to provide a high quality service and convince customers that their service is great if they want to survive. Many of them are already scrambling to adopt new apps like Flywheel.  The taxi drivers I talk to are also excited for the type of transparency and feedback mechanisms that apps provide. We all know a few bad experiences can destroy the reputation of an industry. The current taxi model has drivers as largely anonymous. That means the “bad actors” can ruin it for the good ones. The existing industry definitely needs to do much better on the customer service front.

It is important to recognize that that immigrant drivers were actually the first to use app-based dispatch two years ago but they were told to shut it down or the City would revoke their licenses. They did what anyone trying to feed their family would do and followed the rules. Along came Über and Lyft, openly flouting city laws, backed with millions, if not billions, in venture capital financing and a level of political access that allows them to avoid consequences for their actions. Imagine if you are the innovative immigrant driver who first used an app, but stopped to play by the rules rather than be penalized. To the immigrants in our community who feel the system is constantly against them, this is painful and unfair.

I know Über and Lyft claim they cannot operate under these proposed regulations. Of course they will argue vociferously against any regulations that cut into their profitability. But I am confident that the market here will remain strong regardless.  They will continue to fight for customers in Seattle under this new system, or they will leave the market and new businesses will come along to provide a similarly great service.  It is clear that there is a lot of customer demand. The regulations I am advocating for are designed to allow plenty of room for both successful businesses and happy customers.

I also have letters from the Seattle Hotel Association, the Seattle Restaurant Alliance and the tech community saying they want to see City Council scrap proposed regulations, specifically the caps on TNCs, as a means of promoting innovation and preserving a popular transportation option for their members and customers. We even got a tweet from Macklemore in support of ÜberX.

The question I have for the hotels is this: Are you also okay with AirBnB operating in Seattle and providing the same service as hotels but without paying hotel taxes and fees? Are the restaurants okay if the City Council goes back and amends the food truck regulations to lift the restrictions we placed on how far food trucks can operate from existing restaurants? Are the tech companies okay if we allow companies to come in and pirate their software as long as the pirated products are popular and consumers enjoy it? Is Macklemore okay if we bring back Naptser (the original, free version) in Seattle? I mention these examples not because I think these are good or bad positions, but to highlight just how we often regulate the “the free market” in an effort to ensure a level playing field for businesses and consumers alike.

Let me leave you with one last example of why we regulate in this industry and the complications the new unregulated companies are bringing to bear. A few years ago, we licensed about 45 wheel chair accessible taxis. They are required to prioritize any customer who has a wheelchair, often leaving more profitable rides behind.  In exchange for that public service, they get the right to also provide regular taxi service.  This provides a good transportation option for those in wheel chairs without the City having to provide a public subsidy.  Today, many of those drivers are leaving their wheel chair taxis at home and driving for TNCs because they can no longer compete when they are required to provide wheel chair access. If that is the new reality, we will need to find new ways to provide wheel chair access—perhaps with a new tax source and direct subsidy—or decide as a policy matter that we no longer want to subsidize wheel chair transport at this level. Complex stuff, right? We need some additional time to sort this out, and the two-year pilot buys us some time.

Even if you disagree with the points I am making here, I hope you can agree this is a complex issue, and I hope you can see just how difficult it can be to balance competing public interests in setting policy. Fundamentally, if we are saying it’s okay for companies to come in and operate illegally for a year or two, build up a customer base and then expect the City will bend our rules and regulations to meet their needs, that is a policy debate I am prepared to have and we should have it. But if this is an exception, a special case that only applies in this one instance, and it just happens to be an instance where the people most negatively impacted are largely low-income, people of color, and people from the immigrant and refugee community, then I don’t see how City Council can support it without undermining all the work we’ve done in this city on racial and social justice.

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