Austin City Council gives initial thumbs-up to ridesharing companies

Sept. 27--

The taxi drivers who packed into the Austin City Council meeting Thursday evening wore their mantra on their bright yellow shirts: "Same industry. Same rules."

After nearly four hours of testimony and debate, council members gave initial approval shortly after midnight to new rules that would temporarily legalize ridesharing companies such as Uber and Lyft, whose drivers have been providing rides-for-hire for months in defiance of city code. The measure, which could still be amended before a second vote next week, would last for a year while permanent rules are drawn up.

Simply legalizing the ridesharing services, which connect passengers with drivers through a location-based smartphone application, is no trivial matter. As council members discussed a range of details, they kept returning to an essential question: Should the city treat those drivers the same way it treats cabdrivers?

The proposed ordinance would allow ridesharing companies to operate without having to adhere to many of the regulations the taxi industry abides by, such as fares approved by the city, disability-friendly vehicles, city-performed background checks and exhaustive vehicle inspections.

Council Member Kathie Tovo offered several amendments to try to change that. One amendment would have banned the practice of "surge pricing," when ridesharing companies temporarily raise the rates, sometimes significantly, during periods of high demand. She called the practice gouging and noted that taxi rates are highly regulated.

But the amendment stalled as other council members defended the practice. Mayor Lee Leffingwell, for instance, said he had no problem with such pricing, comparing it to when airlines charge different ticket prices based on demand. Council Member Chris Riley, the sponsor of the effort to legalize ridesharing, said the point of surge pricing is to draw more drivers out, solving a lack-of-supply problem.

"I think we need to go ahead and give (surge pricing) a fair test to see how it works rather than handicapping it from the outset," Riley said.

The council was also split on background checks. The city currently provides the required checks for taxi drivers (and bills them for the service). When Tovo suggested another amendment requiring the same for ridesharing drivers, Uber and Lyft balked, saying they do even more thorough checks.

"Why would the city of Austin be our HR department?" asked Chris Johnson, a policy advisor with Uber, noting the proposed ordinance would require an audit that would let the city peek at the background checks. Tovo's amendment failed when no one seconded it.

The council did vote to make some changes to the ridesharing ordinance -- for instance a Tovo amendment requiring that ridesharing companies report data about their pricing, rider pick-up and drop-off patterns, and driver information monthly instead of quarterly.

But for the most part, efforts to add stronger regulations failed, either because of a lack of votes or because the council wanted more time to examine such complex issues as insurance requirements before coming back for a second vote. Some council members warned they might change their votes of support when the ordinance comes up for a final vote.

Council Member Laura Morrison, who cast the only vote against the ordinance on first reading, worried the new standards would put taxi drivers at a disadvantage: "What we can't have is the taxi industry basically go out of business. ... We have a public interest in what the taxi industry provides."

The fight between ridesharing companies and taxi drivers is a familiar business battle between an old-school, heavily regulated and locally based industry and scrappier, technologically savvy and well-funded ridesharing startups.

Taxi drivers say it's fundamentally unfair to allow these ridesharing companies to operate without adhering to the same regulations as taxis.

"It costs me a dollar every time I pick somebody up at the airport," Yellow Cab taxi driver Hannah Riddering said. "If I have to do that, why don't they?"

But supporters of ridesharing companies -- who showed up by the dozens wearing mostly dark shirts -- said the drivers provided a faster, more reliable service than taxis and filled a much-needed transportation gap.

"With Uber and Lyft, I've had nothing but positive comments and no incidences where I was refused a ride," said John Herzog, who is blind and said he prefers the service to taxis or buses.

Uber driver Debbie Wood, 53, told the Statesman that driving passengers in her 2008 Scion xB is so fun it's addicting. Wood said she earns an average of $800 a week, and it has become her livelihood.

But when the city started cracking down on Uber and Lyft drivers who don't have a chauffeur's permit, Wood said she stopped driving as much. "I was scared, and I don't particularly like feeling like a common criminal," she said. "It cut my hours down, it cut my livelihood down."

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Where things stand

Under current city code, a driver providing rides for hire must have a chauffeur's permit and must work for a permitted transportation company. Drivers affiliated with ridesharing companies have neither. Since the first wave of ridesharing drivers hit the streets of Austin in May, more than 50 have been cited and had their cars impounded (Uber and Lyft have reimbursed their drivers for those costs). City officials said the most recent citation was Sept. 12.

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