Taxi, for-hire and TNC issues


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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and I have spent countless hours figuring  out how to update the regulations surrounding the industry, which are far outdated.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.

Comments

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Comment from Dawit
Time March 4, 2014 at 6:19 am

Well observed. Keep up good work
what can I say ?
Thankyou!!!!!

Comment from kas
Time March 17, 2014 at 3:26 am

That good point .more car.less income .god blees u.appe its not made in Uber .

Comment from Dustin
Time March 17, 2014 at 10:44 am

You’re seriously trying to talk about issues of fairness and openness, and you’re trying to shut UberX down? Sorry, going to some unreasonable cap of 150 cars is exactly that– unreasonable.

Your position is against everything Seattle stands for. This is why we voted for districts, because we’re tired of this cronyish, pseudo-democratic activity. The customers have spoken, and we want our Uber. Stop making us look like New Jersey, who recently banned Tesla from selling because it didn’t go through the protection racket known as car dealerships.

Comment from Chris
Time March 17, 2014 at 12:05 pm

The one thing that isn’t covered in the above is what the evaluation criteria is for the pilot? How will you determine whether the pilot is successful, which companies are better or worse for seattle consumers, etc… You should benchmark off of the existing taxi services that are provided and see how the new TNCs perform. But be transparent with the goals and the metrics you are judging by. Chris from Queen Anne

Comment from K
Time March 17, 2014 at 1:07 pm

Requiring transparency, meeting safety regulations, etc, are all fine and good, and I support the idea that TNC need to adhere to such policies set up for taxis. However I don’t see how capping drivers can act as even an interim solution and don’t see the need to cap even the number of taxi drivers. Oversaturating the market is good for no one, and this is one aspect of market supply/demand that should balance itself out. Indeed, pushing for TNCs to actually follow existing laws and policies may well put the Council’s position into more of a public favor as it will make TNCs’ present sidestepping of them more obvious.

Comment from Ian Maddox
Time March 17, 2014 at 1:48 pm

Mike,

You make a lot of interesting points. I really appreciate the idea of tying the licenses to the drivers. My only beef with what you’ve laid out here is the cap. If you’re capping, it should be the per-driver licenses (requiring proof of minimum insurance, etc). I don’t agree with the idea of the cap in the first place, but if it is a must, then it should be high enough to service today’s peak demand.

I’m also interested in hearing more about the definition of success for the trial.

I agree that this is a complex issue, but there is room to make sure everyone gets to where they need to be. The wheel chair accessible taxi (WAT) issue is a good example. The city got a very good deal when they approved the change in 2010; there was pent-up demand for more drivers so the city could issue 45 of these “second class” licenses that had all of the rights of a normal taxi but with extra revenue-sapping responsibilities. With the noblest of intentions, the WAT program is subsidizing accessibility at the expense of the taxi operators.

We shouldn’t be the least bit surprised when some of the WAT drivers abandon their vans for the likes of UberX if it means more money in their pocket. We’ve been operating on borrowed time since 2010. A more equitable solution might be to subsidize licenses and/or insurance for WAT TNC (out of fees and taxes collected from all TNC) and then put the umbrella operator under onus to ensure a certain number of WAT ride-hours are provided each month–the stick being cost-sharing the subsidy back to the operator if thresholds are not met.

Thanks for writing this post. It’s much more elucidating that 140 characters.

Comment from sam Dastan
Time March 17, 2014 at 6:06 pm

Yes. Yellow cab or Orange cab Sucks but this is not the drivers fault. More than 90% of Uber or UberX are ex or current Cab drivers. The majority of cab drivers honestly believe that the city/county officials are in the pocket of Taxi owners and Associations. Because every regulation law they pass is against them. As a yellow cab driver I am not in favor of caps , but no cap on Taxis should be implemented either. A cab driver leases a cab from so called co-ops or single owner for $85 to $125 per shift plus gas. A cab driver has to work for owners 75% or even more these days of his shift. When an Uberx or Uber earns $50.00 in 1-2 hours that is all his or hers. He is sure when gets a fare it is already paid and they are there. At yellow cab (I am using yellow cab generally because they have %75 all cabs in their fleet. When yellow cab (Yellow airport cabs exclusively are single owners) won the airport contract from Stita, They added more than 200 cabs to their fleet at cost of $15000.00 or more joining fee to those cabs plus regular weekly dispatch fee. Their system was already outdated became practically useless. No city or county regulation applied or investigated. By the all those WATS Taxis or Wheel chair Taxis are doing airport trips because they are dual (city & county) plates. When wheel chair passenger is required often stays on the screen not serviced for hours. Yellow cab drivers these days are horrified and simply mad to the point of mentally breakdown from their dispatch system. There is one head dispatch person that majority of drivers, call takers, secondary dispatch wish to be removed. He has held the whole system hostage. He has ordered the call takers they have only spend more than 30 seconds with a caller! He also has told them when the customers demand a non CNG or other small cars because they have too many luggage’s to send them two cabs, even when they are one or two persons! The credit card system at yellow cab at best is illegal. This is one of the reason public like Uber or Lyft. They get in they get out, that is yet and they are willing to pay extra for it. Most areas their system will not run or very slow resulting customer sitting in the cab for more than 5-10 minutes waiting for the driver to get an approval. However most driver give up and let the customer go and some cases later that transaction declined, the driver do not get paid or worse(the illegal part of it) customers get charged twice because the driver didn’t receive the first approval and run it again later in different areas not knowing it had been processed. But he will not get paid for any of them. The cashier does not have authority to simply cancel one of them and pay the driver the correct one. Every yellow cab driver receives an average of $150 or in declined credit card transactions. This put this system in Feb. 2013 and was supposed to be back seat system with printer and new computer system incorporated based on new Wi-Fi android technology. But it didn’t happened, simply because it would make the head dispatch job easy but not irreplaceable.
The Cab drivers has to pay an extra $15.00 per shift, $30.00 per day or $900.00 for renting a CNG car. The city/county gave this to the owners and yellow cab co-op. Why?! I could buy three Toyota Preious on lease with this amount. There are only two CNG Filling station in Seattle area and one of them usually closed for one reasons or other. I have personally received good fares from rejected CNG cabs for reason of long distance (their tank capacity does not have the round trip range) or not enough space for customer stuff. Interestingly the call takers at yellow cab thought the drivers of CNG getting a discount on lease, and they were in disbelieving when they were told they have to pay more. Recently City/ County made it mandatory for drivers to take credit card; In fact the drivers like to take credit card if it works like Uber. Most they do not like it because it take so long to process, they are losing another fare while they are waiting for the system, the customer is in hurry, the police behind them shouting at them for blocking the traffic, no parking space to stop and run the card, …etc. THE MOST OUTRAGEOUSE PART IS WHEN A DRIVER GOES TO RENEW HIS/HER FOR HIRE LICENSE AT KING COUNT WHERE THEY HAVE POSTED THE NEW RULE ABOUT CREDIT CARD, NEXT TO IT AT THE CLERK WINDOWS SAYS:”NO CREDIT CARDS ACCEPTED!!!!” I do not know if this is stupide, sad or funny! They have all the means to run the cards, if it declined the driver would be denied of issuing his/hers license, they even could add the processing fee, but simply they do not because they could and the drivers are their mercy. Every time you go they have increased either the license fee or limited the service or add new rule against the drivers. The Taxi drivers do not get anything in return except making it more difficult to earn a living. Except issuing a plastic Polaroid Id Card and their so called Inspectors goes to cab stands and giving them ticket for color of their clothes, ID Enlargement misplaced in the car, they absolutely do not do anything for drivers.
You see Tacoma, Everett, unmarked Taxis work free in the city without fear. The bottom line is that the city/county, even if they are not in the pocket of owners and cab companies, they are morally and criminally incompetent. Buy freezing the Cab Licenses and issuing fir hire driver licenses basically empowers the owners, left no incentives for companies to improve their business. They practically blocked the cab drivers from negotiating and complaining about their service. They have been intimidated, fired or mistreated. Therefore the Taxi licenses even technically is good for only one year,- it is not medallion system-, prices skyrocketed, up to $350000.00/ea. or more have been sold. Majority of 850 or so licenses belongs to absent owners, means they do not drive. They make an average $2500.00 to 3500.00 pure net profits for each cab not even driving. The cab business in Seattle-with the help of city/county- is merely a mafia-type business.
They do not have hit man to kill drivers physically but economically. The few majority owners, they have made millions, some make millions annually, not because they were smart and invented and improved new products, just because of city/county regulations. In no other major city in the nation the regulations are so specifically designed to be disadvantageous for the drives. With the supply of thousands of issued for hire drivers and no taxis available for them they have become practically slaves to their jobs and cab companies and owners. It is for some people have become inhumane. Working 12 hours a day 7 days a week is the only way you get by unless you own your own cab. An Airport cab owner charges his driver in excess of $2500.00 or more per shift while himself driving the best shift. A regular city driver pays $475 to $580.00(for CNG/Hybrid) per week. Most days he takes home $20 or $30 after expenses and occasionally even negative. Unless he is lucky and get a few good trips, which these days as rare as winning the lottery! That is when the question of fairness in respect to these new so called network transportation comes in. Unfortunately the city officials does not have a clue about the taxi industry in their own city, most of them have not taken a cab in their career! You think it would be easy to walk to hundreds of cab drivers in the city introducing them and talk to them; they would be happy and might even give you free ride! They just relay on professionally corrupt, lazy, incompetent people like Dearborn office or city consumer office. When you get a ticket from Dearborn-which their qualification is testing and measuring thus their duty should stop there- there is not even phone number to call them. Or since they have all drivers name and addresses they send them a letter regarding their situation. They just like one end of the law, the stick! Last summer the temperature was around 80-85 when the city or Dearborn office sent a message to driver that they would get a ticket if backseat windows are down uncovering the decal sign about the Airport flat rate. When I told my fare he shouldn’t roll down the windows for that reason, He correctly said this is stupide and…(F words)Fascist!
The city claims that freezing cab licenses protect cab business, I agree, but only cab owners, co-ops and companies. Then why they issued hundreds of For Hire Flat rate vehicles? thousands of town cars.
Apparently there was a demand for more cabs. If there were enough Cabs, there would be new dispatch companies to compete for new business with better services. At the end this unfair regulatory practice creates some bad taxi drivers, bad service, and unhappy customers.
If Taxi driver close to the end of his shift still negative, meaning has not even his expenses, tries to get decent fair and tend to refuse short trips. Remember A taxi driver is not paid by the city, does not get any benefit, social security, health, retirements, sick leave, and if he gets in an accident next hour his career is over and there is no unemployment benefit. This is not to justify any bad service but just a fact. All of these new services have checked and pre-approved, customers, drivers have peace of mind, paid and safe. This is not true for a cab driver, at night the customer sit behind them, who he is, has money or not, he is going to assault him or not, going to federal way paying by credit card is it going to be approved or declined with yellow cab he has not any means to find out-. Then you have customers they vomit in your cab, fart in you cab, some racially and ethnically insult you. Do not just complain about a cab driver and pretend all of them are rude. If being rude and bad service was basis for dismissal more than half city/county employee should be fired without pay! Uber and such companies are Wall Street companies, here to take advantage of drivers and exploit them as well as you. At times you need them desperately they rub you. On New Year’s Eve they were charging $70.00 from lower queen Ann to bell town. $146.00 from 5th and Roy in Queen Ann to Capitol Hill.

Comment from Georgia
Time March 17, 2014 at 9:45 pm

Every driver I have had with Uber was an immigrant driver who was using Uber to supplement his normal business.
Every driver has been very openly pleased about the opportunity Uber provides. Is the real issue the tax collection? Setting an arbitrary limit on Uber for two years is basically extortion. You are not acting in the best interests of the drivers or your citizens. Public demand for excellent services should be the deciding factor. This seems very condescending to the citizens of Seattle who have chosen the superior service model over the inferior service model – but now we are being told what is in our best interest is to have city Council arbitrarily shut down this option for us. By the way,there is never a Car2go near my location – so even though I signed up for it – it’s totally useless. Uber, however, works perfectly every single time.

As a tax paying citizen of Seattle I am extremely disappointed that you would push aside the best interests of the citizens to protect the taxi cab industry.
Uber is safe, reliable and convenient. As a professional woman, I travel extensively and rely on Uber wherever I go. Singapore, Austin, Dallas, California, Florida, Tokyo. Why are you protecting the “horse and buggy” industry at the expense of your Citizens? The taxi cab industry model is outdated. You have to have cash or a physical credit card on your person. It takes forever to get a cab – and you never know if they are coming or who they are. There is no certainty from a time/arrival standpoint. They are not convenient. They are not clean. It is unsafe and uncomfortable to stand in the street “waving down” a cab. That process has left me stranded many times.
Why are you sacrificing the quality of life that easy, safe, and affordable (Uber) transportation offers to your citizens? Especially as a female – you are cutting the legs out from under us women who rely on Uber as safe transportation anytime anywhere. Oh, excuse me, except in Seattle.
You will not be re-elected.

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