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Long road ahead for TNC ordinance

Wednesday, November 12, 2014 by Tyler Whitson

Since City Council approved an ordinance in mid-October that would legalize transportation network companies like Uber and Lyft, city staff has been hard at work. Not only are they drafting contracts that authorize these companies to operate under the ordinance, they are putting together a report for Council with suggestions for a pilot program to replace it.

Though Council Member Chris Riley’s temporary ordinance went into effect Oct. 27, there are still a few more steps before TNCs — transportation companies that use smartphone apps to connect drivers and passengers for compensation — can operate legally. That includes signing an agreement with the city. Both companies, however, are already operating in Austin.

The Austin Transportation Department’s Gordon Derr told the Austin Monitor that staff is now accepting applications for agreements on the city’s website from TNCs. From there, staff will start with a base contract built from the ordinance and negotiate further details with each company before the parties sign a contract.

Transportation Department representative Samantha Alexander said that staff hopes to have the agreements signed by the ordinance’s late-November deadline. She noted that staff has yet to receive any TNC applications, though they have sent them directly to the TNCs and members of the TNC Working Group.

Council called together the TNC Working Group in a May resolution, assigning it the task of discussing potential policies for regulating TNCs in order to help guide staff. It had its final meeting in late October, after meeting several times throughout the summer and fall.

The working group consisted of Uber and Lyft representatives, taxi drivers and taxi company representatives, disability rights advocates, potential customers and others.

Dr. Kara Kockelman, a professor of transportation engineering with the University of Texas, participated in the group as an expert on the topic. She said that, though there were often disagreements, she was very impressed with its stakeholder representation and discussions.

“It was a difficult topic, but I learned so much from the others at the table,” Kockelman said. She added that working group members were delighted when Riley’s staff attended their meetings before he introduced the ordinance at a Council meeting.

As far as coming up with a more permanent solution, Derr said that staff plans to provide Council with a set of recommendations for a pilot program later this month that takes into account the working group’s discussions. Council will then decide whether to move forward on a pilot program before the end of the year or leave it to the new Council.

Derr said that staff is keeping a close eye on the cities and states across the country that have been scrambling to construct policies to regulate the new transportation mode. “We’re just watching everything nationally, and it’s pretty flexible week to week,” he said. “Things are changing, so we’re trying to come up with a balanced approach to provide to Council.”

Derr added that policies within the ordinances have varied widely, pointing out differences in background check and insurance requirements. “Hopefully, over the next six to eight months, the (policies) would somewhat get standardized around the country so we’re not all having to invent our own sets of rules,” he said.

Houston’s ordinance, which went into effect this month, is a prime example of that disparity.

Lyft has decided to pause operations in Houston on Nov. 20, writing in a letter to its passengers that the ordinance consists of “the most onerous ride-sharing requirements to date,” such as a “complex and redundant licensing process that includes installing fire extinguishers in your car along with forced medical exams.”

Uber, on the other hand, will continue operating in Houston. Uber’s Debbee Hancock told the Monitor that, though the company is concerned that “rules which require additional, duplicative onboarding steps will deter part-time partner drivers from partnering with Uber,” it will work with its drivers to ensure that they comply with the ordinance.

When contacted by the Monitor, neither company expressed concerns about Austin’s temporary ordinance. Lyft, in fact, wrote in its letter to Houston passengers that the ordinance — along with those in Chicago and Washington, D.C. — adopts “common sense rules that allow ride-sharing to grow while protecting public safety.”

Hancock said that Uber is working with the city “in good faith” and expects to have an operating agreement signed before the deadline.

Austin’s temporary ordinance requires that TNCs run, at their own expense, national criminal background checks for potential drivers through a third party that the Transportation Department has approved. It also requires that the TNC make the results of the checks available for audit by a “private, agreed-upon third party,” and that vehicles pass Texas inspection requirements.

Austin has followed California’s lead when it comes to insurance requirements, adopting a provision based on that state’s Assembly Bill 2293. It requires that the TNC provide limited insurance from the time drivers indicate they are available to the time they accept a ride, but leaves the door open for a new type of “TNC insurance” for companies to provide in the future.

The ordinance also requires that TNCs provide $1 million in primary commercial insurance from the time that a driver accepts a ride on the app to when the passenger exits the vehicle.

TNCs are also required to provide the city with quarterly reports, broken down by month, on their effectiveness in addressing transportation gaps in the city.

Riley told the Monitor that Austin’s ordinance is unique in its comprehensiveness. “We don’t know of another city that has been able to negotiate reporting like we have here.”

“We’ll get information on rider pickup and drop-off locations, peak ridership times, trip costs, the amount of time in surge pricing, trip lengths and how service for people with disabilities compares with other service,” Riley said, adding that he expects TNCs to “work toward an equivalent level of service for riders requiring wheelchair-capable vehicles.”

Surge pricing is one side of dynamic pricing, a component of the app that can increase fare rates during times of high demand to incentivize drivers and decrease rates during times of low demand to incentivize riders. Austin’s ordinance does not include a cap on increases, though it prohibits them during “abnormal market disruptions” such as extreme weather or power failures.

Riley’s policy aide, Leah Bojo, said that the city was able to negotiate an agreement that allows it to audit the data that a TNC collects through an agreed-upon third party, at the TNC’s expense. This, she said, gives the city the opportunity to verify the TNC’s data while keeping it private, as it would become public record if the city were to audit it directly.

Derr said that it is not clear, at this stage, exactly what kind of information TNCs will provide, but that he is curious. “I’m an engineer — I want to see data, I want to see what the system looks like,” he said. “It’s kind of nebulous right now, and that’s something we need to flesh out.”

This, he said, will be a major focus for staff going forward. “One of the things we want to do in the pilot program is to make sure we get data comparable to what we get from the taxi companies now, so that we can really compare and see how the systems work together.”

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