Technology companies that have unapologetically disrupted vehicle-for-hire markets in cities across the country will be able to operate legally in Houston after the City Council on Wednesday ended 16 months of wrangling by approving new rules.
The council voted 10 to 5, with two absent, to open the heavily regulated paid ride market in Houston to new entrants, such as Uber and Lyft, that use smartphone applications to connect willing drivers with interested riders, using the driver’s personal car.
Mayor Annise Parker, who supported the rule changes but has made no secret of her desire to move on to other topics, said the months of delay were driven by the difficult issues at play, as well as the measure acting as a “full employment opportunity for lobbyists” as an entrenched, regulated industry fought well-funded, innovative startups.
“This is something that’s been a contentious issue in cities all across the United States,” Parker said. “I think we did the right thing and I think we did something positive for the citizens of Houston who rely on vehicles for hire to navigate the city without doing something I think would have a negative impact on existing providers.”
Yellow Cab President Roman Martinez said he also is happy the discussion is over so his contracting drivers can return to the streets. He said he does not see the vote as a loss, though he acknowledged the failure of an amendment to cap the number of Uber and Lyft drivers allowed to enter the market – by a 9-8 vote – was significant.
“We’ve always said we are not afraid of competition,” Martinez said, surrounded by colleagues in bright T-shirts. “We just wanted to make sure the playing field was level and that everybody was going to play by the same rules. Council had a little bit different opinion about what those rules are, but now we get back to work.”
Uber spokeswoman Lauren Altmin said the vote shows the power of citizen support for her company’s services, and said it shows Houston’s commitment to innovation.
“The ordinance passed today takes the first step toward … more options in the Houston transportation sector,” she said. “It gives residents and visitors access to a safer and more reliable ride that costs less. It puts more money into drivers’ pockets and gives them the opportunity to work a flexible schedule. And it will have ripple effects throughout the entire Houston economy.”
Lyft spokeswoman Chelsea Wilson thanked the council for creating rules that “recognize the unique service that peer-to-peer transportation provides.” She said, however, that requiring drivers to undergo physicals for their permits is inappropriate, and raised questions about how such medical information would be protected.
The nearly five-hour discussion Wednesday centered on some two dozen amendments offered by council members, most of them focused on protecting consumers, treating the established industry fairly and ensuring equal access for the disabled.
The most notable products of a two-day mediation among the major players, hosted last month by council members Larry Green and Brenda Stardig, were amendments on disabled access. In short, the amendments required that at least 3 percent of all vehicles for hire be wheelchair-accessible, that no one company can meet that goal for the others, and that an appointed task force made up of representatives of the disabled community and transportation firms will recommend changes to that percentage to the City Council. Those amendments passed.
“This is about doing what is right and what is fair,” Stardig said. “Everyone deserves access and options for transportation.”
Questions about insurance
Most of the debate boiled down to insurance, largely because Uber or Lyft drivers who give riders their personal cellphone numbers and operate outside the apps would not be covered by the firms’ commercial liability policies, raising questions about whether riders on those illegal trips would be protected by the driver’s personal car insurance policy in the event of a crash. Cabs are under commercial insurance policies at all times.
Ultimately, amendments clarifying when an app-summoned driver’s insurance is in effect passed and an item that would have forced Uber and Lyft drivers to buy round-the-clock commercial liability policies did not.
Councilman Mike Laster said that amendment’s failure “put the public in danger by not having a full scope of insurance available to them.”
Councilman Dwight Boykins worried that the requirement would have presented a barrier for individuals “trying to make additional revenue to live on.”
Laster and Councilman Dave Martin, who was absent for the final vote but opposed the proposed ordinance, tried to cap the number of Uber and Lyft drivers – first at 150 each, then at 250; that amendment failed 9-8.
Green brought up the effect on small cab companies, saying, “One year with an open market will destroy them.”
In opposing the ordinance itself, councilmen Laster, Jerry Davis, C.O. Bradford, Michael Kubosh and Jack Christie pointed to the lack of caps and round-the-clock insurance. Kubosh echoed Martinez’s comment about a level playing field.
“We’re not even close to the same rules,” he said. “It’s really lopsided. It really favors the transportation network companies; it doesn’t favor the cab companies at all.”
The mayor said drivers for Uber’s luxury sedan service, UberBLACK, can begin registering with the city immediately, while drivers for the taxi-style services Lyft and uberXmust wait 90 days to sign up.
That likely will not stop or slow down Uber or Lyft, given that they launched illegally in February and have kept operating despite more than 800 citations since then.
New rules for rides
Among the new rules in the city’s vehicle-for-hire ordinance:
- Establishes a fleet-wide minimum requirement for wheelchair accessible vehicles of 3 percent and forms a task force to recommend changes to that percentage to City Council.
- Gives the city the authority to impound vehicles-for-hire found operating without a permit.
- Eliminates the minimum limousine fare of $70.
- Requires all drivers to undergo criminal background checks and pass physicals before receiving permits.