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Council members delay action on controversial ridesharing business

Friday, June 7, 2013 by Michael Kanin

Austin City Council members delayed action Thursday on a series of code revisions that would strictly define ridesharing as a relatively uncompensated activity. Instead, staff will return in August after a review of options as part of a process that may yet provide an amicable solution to the lingering problem presented by such mobile applications as Sidecar.


In return, Graves Daugherty Attorney Michael Whellan, who represents Sidecar, told Council that his clients would shut off their application while staff conducts its study. “The great thing about getting a stakeholder group together to explore a way to pilot this is that we get more data,” Whellan said. “If we can just get up and running under our normal model, we’d get more data in a year and I think that would really help.”


The postponement came after attempts from Council Members Mike Martinez and Kathie Tovo to take immediate action on the code amendments failed. Martinez noted that, thanks to a pending lawsuit it remained unclear whether city staff could engage in conversations with Sidecar.


“It sounds like the ball is really in the court of Sidecar to remove the legal hindrance to have those conversations,” he said.


Council Members Martinez, Tovo and Laura Morrison all voted against postponement after a lengthy trip into the weeds over Roberts Rules of Order. That debate featured at least two references to online rules motion charts. It also appeared to represent the sort of bickering that has plagued the current Council for some time.


Ridesharing represents a complex issue for the city. The ambiguities left by current city code definitions bring no small amount of technical – or at least rhetorical – confusion over what, exactly, qualifies as a rideshare. That is further complicated by the growth of mobile applications that offer users an alternative to taxi use.


Sidecar is one of those applications. City officials have issued cease-and-desist orders to that company and others that they argue operate as unlicensed taxi drivers.


The move to postpone codification of the new rules came on a motion from Council Member Chris Riley. “From my standpoint I hope we can get clarification around the terminology associated with these services,” he said. “So long as drivers are being compensated beyond the cost of operating the ride – calling that ridesharing just confuses the matter.”


He continued. “Perhaps there is a business model that could be worked out…Maybe there’s some other franchise arrangement that could be figured out,” Riley said. “I don’t know what the right approach is, but I think it’s worth taking 60 days to see if there is something that could work – that would not upset our current regulatory framework.”


Council Member Bill Spelman requested that staff examine three basic categorization options for ridesharing. “One way of handling this might be to create a new set of regulations for Sidecar-like operations. Another possibility would be, of course, to completely discontinue Sidecar-like operations,” he said. “A third one…would be to bring Sidecar in as a franchise…and regulate it in a different way.”


The debate comes against the backdrop of a 30-page staff study of issues presented by ridesharing in other communities across the country. It concludes that East Coast cities such as New York, Washington, D.C., and Philadelphia “are each actively enforcing their vehicle-for-hire ordinances against what they believe are illegal taxis facilitated by new smart phone enabled dispatch applications.”


Despite concerns over ridesharing, New York City Mayor Michael Bloomberg was concerned enough about the cab industry in New York to level some harsh criticism of the reigning dynamic.


“It is a funny industry,” he told the New York Observer in 2012. “I don’t know if there’s any other place in the world where the city gives a license and the people that have that license can then trade it and resell it and the city doesn’t have any interest and any ability to share in the value going up. And the politics, because they support candidates – a normal market would just say: Well, we’ll just issue more taxi licenses. Wrong! Because they have bought the legislatures and stopped the ability to do that. It is one of the great rip-offs of the public any place I’ve ever seen.”


Meanwhile, the local report concludes that the situation in the West is something of a mess. “The State of California, through its California Public Utilities Commission… is debating whether or not the state has jurisdiction over these services. This has caused conflict with local communities such as San Francisco which believes it has authority over the regulation of such services within its jurisdiction.”


For its part, San Francisco reportedly considers ridesharing illegal taxi activity.


Still, the report finds some hope in an arrangement much closer to home. “Several of our peer cities such as Houston have active public private partnerships with nationally based ridesharing companies that promote car/vanpools within the context of their municipal regulations,” it reads. “These services often are financially supported by governmental grants, participation fees, or targeted advertising.”

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