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Committee suggests new Uber, Lyft regulations

Thursday, October 8, 2015 by Tyler Whitson

Transportation network companies such as Uber and Lyft may be on the way to stricter safety regulations and higher fees based on recommendations that the City Council Mobility Committee made on Wednesday.

The operating fee recommendations would establish a charge that is equivalent either to the annual fee that taxicab companies pay per license or to 1 percent of the TNC’s annual local gross revenue, depending on what the company chooses.

The public safety recommendations would require TNC drivers to submit to the same fingerprint-based background checks that taxicab drivers are required to provide and make sure that the background-check process for both types of drivers is conducted nationwide and has the same eligibility standards.

The committee also recommended that the Austin Transportation Department have the authority to contract with a third party to manage the fingerprinting and background-check process for all ground transportation companies so that it is “completed quickly and does not create barriers for onboarding drivers.”

Council members Sheri Gallo, Delia Garza and Ann Kitchen voted in favor of all of the measures, while Council Member Don Zimmerman opposed all of them.

The committee will make additional recommendations at its next meeting on Nov. 16, as it did not get to provisions relating to data-reporting requirements.

Even after that occurs, however, the process will be far from over, as Council will then have to consider the committee’s recommendations, pass a resolution directing city staff to draft an ordinance that would make the regulation changes and then consider that ordinance.

The city’s current TNC ordinance, passed by Council in October 2014, states that the companies are required to pay a fee to operate in the city but that the fee would be established in a separate ordinance, which has not yet occurred. As a result, aside from a fee that TNCs pay to operate at the airport, the city does not collect fees from either company.

According to Kitchen, who chairs the committee, the state of Texas allows cities to charge up to 2 percent of a ground transportation company’s annual local operating cost as a fee to both cover the administrative costs the city incurs in regulating the companies and recover the maintenance costs that result from companies operating on city streets.

While Kitchen originally proposed that the committee recommend Council set the fee at the 2 percent limit, Garza suggested dropping it to 1 percent. That amount is based on Austin Transportation Department Assistant Director Gordon Derr’s calculations about what would be most closely analogous to the costs that taxicab companies pay.

The city currently charges taxicab companies $450 annually per chauffeur’s permit, which allows one driver to operate.

Representatives from Uber and Lyft both said their companies are willing to pay an operating fee, though they did not specify how high.

Lyft Public Policy Manager April Mims said that a $450 fee “doesn’t meet the nature” of the company’s platform, partly because it employs so many part-time drivers.

Council Member Ellen Troxclair, who was observing the committee, expressed concerns that setting the proposed fees would raise the cost of service for riders.

Garza responded that enacting fees does not necessarily mean that the users would have to pay for them. “(The cost) can be passed on to the consumer, or the corporation can take a smaller profit margin,” she said.

A major sticking point relating to public safety was the fact that current regulations allow TNCs to run background checks through third-party companies that do not require fingerprints – so long as it allows the city to audit those background checks – while it requires drivers for all other ground transportation companies to submit fingerprint-based background checks.

Kitchen called fingerprinting an “appropriate and best practice” for criminal background checks because it physically links the individual undergoing a background check to the information that he or she is providing. “As a woman, I want to know that whoever I’m riding with has had that kind of safety check done,” she said.

Adam Blinick, Uber’s public policy lead, argued that providing fingerprints is just one out of many ways to access a database in order to perform a background check, and he defended the company’s means of running background checks. “We do believe that what we do, in totality, is extremely comprehensive; it is very safe,” he said.

“We reject the premise that fingerprinting is the only way to guarantee safety,” Mims said.

Both Mims and Blinick asserted that fingerprint background checks further marginalize people because fingerprint databases do not always provide a disposition, or final settlement, for a person who has been arrested but has not necessarily been charged or convicted of a crime.

Carlton Thomas, Transportation Department infrastructure operations division manager, responded to these concerns. “We do not make an assumption on the disposition – we require the applicant to provide the disposition,” he said.

Mims said that Lyft does not operate in cities that require fingerprint background checks, and Blinick echoed that stance, saying that – with the exception of Houston, which was an early adopter of a TNC ordinance – Uber has chosen not to operate in such cities. Afterward, Troxclair said that setting the requirement would create a “very good possibility” that the city would not have TNCs.

Kitchen responded. “To threaten to leave simply because we’re trying to protect public safety cannot be my determining factor,” she said, adding that there are other TNCs, and there will be more in the future.

Mims provided a response to the Austin Monitor after the committee took its votes. “I think the problem we have fundamentally is the idea that there needs to be any changes to the code right now,” she said. “We have a year track record. People aren’t complaining about our service – in fact they’re embracing it.”

Uber spokeswoman Debbee Hancock provided the Monitor with a written statement. “The city has yet to justify why we need to fix something that’s not broken,” she wrote. “The current ordinance has unleashed economic opportunity and countless community benefits.”

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