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Council looks at regulating rideshare services

Monday, March 11, 2013 by Michael Kanin

Council members continued to grapple Thursday with the proliferation of potentially unregulated rideshare services. The heated atmosphere turned what might otherwise have been a mere formality into a discussion riddled with accusations from the local branch of the taxi industry.


At issue was a resolution brought forward by Council Members Chris Riley, Laura Morrison, and Bill Spelman that called on City Manager Marc Ott to explore ridesharing conditions in “peer cities” and report back to Council by June 1. However, Yellow Cab Austin president Ed Kargbo took the opportunity to outline the dangers he saw in even entertaining that thought.


“(The ridesharing firms) are engaging in and promoting criminal activity that threatens public safety,” Kargbo said.


Ridesharing is an amorphous term that, according to the assistant director of the City of Austin’s Transportation Department, Gordon Derr, can hold a range of definitions. “We don’t define currently rideshare in the city code,” said Derr. “There is a whole spectrum of rideshare from you and the neighbor going to the store to a system that you pay into like Capital Metro vanpooling.”


The issue of what the term means and if any variation of it can be legal came to Council in the wake of online ridesharing efforts from a company formerly called Heyride. That firm offered a Smartphone-based ride share service that city transportation department head Robert Spillar eventually deemed illegal.


Though Spillar issued a cease-and-desist letter to Heyride CEO Joshua Huck, the company was eventually purchased by Sidecar, a like-minded competitor based in San Francisco. There is still no formal resolution of the legal issues surrounding the firms.


Among other issues, Kargbo said people who profit from offering such rides forfeit their insurance coverage and he implied that Sidecar would be in that category. Mayor Lee Leffingwell took Kargbo’s opening and proceeded to lay out problems he saw with ridesharing services in the city.


“If the driver’s insurance is invalidated by using it for this purpose, the people in the car might be at risk too because they would not be eligible to be covered by insurance either,” he said. “If the City of Austin has sanctioned this whole process we are at least in part, it would seem to me, responsible in case there were an accident (and) people could not recover their hospital bills, et cetera as a result of not being covered by insurance.”


“Mayor Leffingwell, I believe that to be 100 percent correct and it is a significant part of the reason why the transportation industry itself is regulated, so that the city can confirm that those safeguards are in place,” returned Kargbo.


Leffingwell continued, “So to take it to the next step, if you were to address that problem, and say ‘Okay, so these have to be considered commercial vehicles now in order for their insurance to cover what they are doing then they would in fact be cabs, wouldn’t they?,” he asked Kargbo.


The response came with a chuckle. “Yes sir, they would be.”


Leffingwell finished the thought. “And that’s another process that is scary to contemplate,” he said invoking the ever-touchy subject of the city’s complicated taxi franchising system. 


Riley tried to clarify the intent of his resolution. “I think Mr. Kargbo is absolutely right, there is a real risk of miscommunication and misunderstanding around the kind of services that we’re talking about here, and we know that a lot of that misunderstanding has already occurred,” he said.


“The purpose of this resolution is not to take a position on one side or the other on the debate as to whether ridesharing should be allowed. It simply recognizes that it is an issue that we need to tackle, because ridesharing is currently being promoted nationally…Austinites are currently sharing rides using these apps, (and) Austin’s transportation code does not currently explicitly address and regulate ridesharing,” he concluded.


Resolution sponsors eventually accepted two language tweaks that sought to illustrate that, even with the exploration, the city was in no way condoning the idea of ridesharing in exchange for any sort of fiscal remuneration. However, those changes were not enough to win the votes of Council Members Kathie Tovo and Mike Martinez.


“I appreciate the amendment because I think it adds strength to (the resolution) and our intent but I don’t want there to be something in here that gives a sign to any of the companies that may be doing ridesharing for compensation that what they are doing is permissible,” said Tovo.


Still, the resolution passed on a 5-2 vote. Ott will be back with staff findings on June 1. In the meantime it appears as though Derr and the city’s transportation staff will attempt to offer a more clear definition of the term ridesharing.

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