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Tina Paez

Reminder: Uber and Lyft aren’t legal yet in Houston

Drive for ’em at your own risk for the next month or so.

Uber

New entrants into Houston’s paid-ride market can’t be licensed to operate for another month, but the transition is proving problematic as the companies and drivers rack up citations and the city impounds vehicles.

Since Aug. 6, when the City Council approved changes to the city’s for-hire transportation rules, Uber and Lyft have received 1,046 citations – more than the 861 issued in the six months between the companies’ February launch and the council vote. The companies connect riders and drivers via smartphone apps.

“We are still enforcing all aspects of our ordinance daily,” said Tina Paez, director of the city’s regulatory affairs department. “We started impounding last Thursday.”

Inspectors pose as passengers and issue citations once the fare is charged.

As of Friday, four vehicles – one rogue cab, two vehicles affiliated with Uber and one with Lyft – have been seized by police. The authority to impound violators’ vehicles came with the rule changes in August, in part because many council members felt the city lacked leverage to keep Uber and Lyft in check.

[…]

Lyft

As taxi and limo companies urged the city to crack down on the companies, the new entrants pushed for regulatory changes the city already was considering. Ultimately, many of the changes sought by Uber and Lyft were adopted by the City Council, along with a procedure for permitting and regulating the companies and their drivers, who operate as independent contractors.

Council members provided a 60-day window to get the permitting process settled, meaning the city can start issuing permits on Nov. 4. On Monday, the city and companies can start working on details such as drug screenings, which can take place within 30 days of seeking the permit.

Based on what Uber has told city officials to expect, Paez said, thousands of permits could be issued in the first few weeks.

“We expect it to be greater than 5,000, and that’s just Uber,” Paez said.

See here for the story about Uber and Lyft being approved by Council, and note the bit about waiting 90 days to sign up for a permit. Go through the process, y’all – that’s what it’s there for, and that’s what all the shouting and wrangling was about. I have long said that I expect there to be demand for these services from people that don’t currently use cabs, and I fully expect the overall vehicle-for-hire market to grow, but I don’t know if it will be big enough to handle 5,000 or more new drivers, even if they’re mostly part-timers. Not at first, anyway. I hope someone is planning to do a study on the effect of the entrance of Uber and Lyft on existing cab companies and other services. I’d really like to have a better idea of how this worked out in a year’s time or so. The Highwayman has more.

The limits of lobbying

They do exist, as Houston’s cab companies recently discovered.

Uber

More than a year of intense lobbying by established cab companies and tens of thousands of dollars in campaign donations to City Council members were not enough to hold off a pair of upstart tech-taxi firms that now can operate legally in Houston.

In the end, city regulators made few changes to their original proposal revising Houston’s vehicle-for-hire rules. Of the two dozen amendments proposed by council members before they approved the item earlier this month, neither of the cab industry’s top priorities – capping the number of drivers who can sign up with the new companies and requiring them to carry round-the-clock commercial insurance – passed.

To the extent the proposal did evolve, the changes are unlikely to hamper new entrants, Uber and Lyft, or other firms that use smartphone applications to connect willing drivers with interested riders using the driver’s personal car.

Perhaps, said Councilman Michael Kubosh, a staunch opponent of the new rules, the vote simply reflected that the app firms have an idea whose time has come.

“I let the cab companies know right off when they came to talk to me, and I certainly told the cab drivers, ‘Guys, technology always trumps tradition. This is coming and you guys have to prepare yourselves for it,’ ” he said.

Lyft

[…]

Tina Paez, director of the city’s Administration and Regulatory Affairs Department that drafted the new rules, credited Yellow Cab with pushing for disabled access. The final ordinance requires at least 3 percent of vehicles for hire to be wheelchair accessible, that no one company can meet that goal, and that a task force will make further recommendations to City Council.

Paez pushed back on the other victories [Yellow Cab lobbyist Cindy] Clifford claimed, however, saying her department’s original draft was based on research, not suggestions from the cab industry or the new app companies.

The city always planned to place the same public safety rules on all companies, Paez said, though she acknowledged taxi lobbying forced the new firms to submit to city background checks and vehicle inspections rather than let third parties conduct them. And, Paez said, the language clarifying the effect of new entrants’ insurance policies changed the wording but not the content of the law.

“There was very, very little that changed from what we originally proposed to council, except for the disabilities part,” Paez said.

I think CM Kubosh summed it up pretty well. There’s clearly a demand for the type of service being offered by Uber and Lyft, and the main argument against them largely boiled down to “we’ve always done it this way”. Yes, there were legitimate concerns raised about insurance, background checks, and access for disabled folks, but there was never any reason those couldn’t be addressed. I’ve said before that I’d like to see the changes reviewed in (say) twelve months’ time because we don’t have any history to guide us with these changes and we don’t know what the long term effects will be, but again that’s no reason not to try to deal with the evolution of the market. I still think that much of the demand for Uber and Lyft will come from people who weren’t cab riders to begin with and that the existing cab business will be affected much less than they fear, but we’ll see. It’s my hope that we’ll look back on this in a year or two and say that the market has grown and that people have benefited from the expansion of their choices.

Vehicle for hire vote tagged

No surprise here. I had thought the ordinance was still in committee, but it went before the full Council yesterday. It was of course tagged – we weren’t going to have this vote only one week after the HERO vote, no way in hell on that. Most of the story recapitulates stuff we know, so let’s see what the Council members are saying about it.

“I’m not satisfied with what has been presented so far, and we need to make sure we have this covered properly with regard to people with disabilities,” said Councilman Robert Gallegos, who noted his brother is in a wheelchair.

Gallegos and Councilman Dave Martin both mentioned that the council last week passed an equal rights ordinance prohibiting discrimination against more than a dozen protected groups, including those with disabilities, and should be consistent.

Taxis must provide trips for disabled passengers, but the same demand is not placed on the so-called transportation networking companies, Yellow Cab lobbyist Cindy Clifford said.

Tina Paez, director of the city’s regulatory affairs department, told council members in a memo that the city plans its own tweaks to the ordinance, including one aimed at getting companies like Uber and Lyft to deploy wheelchair-accessible vehicles among 5 percent of their drivers.

Councilman Michael Kubosh was concerned that setting a goal to achieve accessibility would not produce access for the disabled.

“I have a goal to lose 100 pounds,” he said. “You can have a goal. No one is going to punish you if I don’t meet your goal.”

The council discussion also included mention of Uber and Lyft’s decisions to launch preemptively in February, despite city officials urging them to be patient.

Councilman Mike Laster said Wednesday that 160 citations have been issued to the companies for operating illegally, 142 to Uber and 18 to Lyft; none has gone to court, he said.

“That just goes to show you these operators are operating illegally,” Laster said. “Either we have ordinances that we enforce or we don’t, and I think that’s part of the discussion.”

Lyft is still making some noise about not liking the city’s background check criteria, saying theirs is more stringent. I expect that will get sorted out. The main thing I’m curious about at this point is what the headcount is for the ordinance. The only Council member that I am sure has taken a firm position is CM Costello, who announced his support for Uber and Lyft more than a month ago. Houston Mayors generally don’t bring ordinances to the table to get voted down, so my assumption is that this will pass, I just don’t have a good feel for who’s voting which way at this point. What are your thoughts?

One more point to make is that I got an email from Joshua Sanders on behalf of Lyft Wednesday night that disputed the claims made by Lauren Barrash, founder of The Wave, about Lyft. Specifically, they denied that Lyft drivers have no shift limits or rest requirements. A comment left by a self-identified Lyft driver also addressed this, saying “After each 12 hours of being in Driver Mode, the system boots you out for 8 hours to get some rest”. I offered to print a statement about this by Lyft spokesperson Chelsea Wilson, but didn’t hear anything further from them.

Your daily Uber/Lyft update

From the Tuesday Council committee hearing at which the draft ordinance was reviewed.

Despite having a newly-released draft ordinance in hand, City Council members spent a Tuesday committee hearing asking many of the same questions about regulating ride-sharing services as they did months ago.

Echoing concerns raised by taxi and limousine companies, council members grilled Parker administration officials about setting rules for emerging services that connect riders to willing drivers via smartphone applications.

Repeatedly throughout the three-hour hearing, cab and limo drivers stood up as council members asked questions that centered on their fears that new regulations would create an unfair business advantage for the new services and eat away at their livelihoods.

“What will the effect be on the public if the taxicab companies are no longer viable?” Councilman Oliver Pennington asked.

“The taxicab companies will continue to be viable,” said Tina Paez, director of the city’s Department of Administration and Regulatory Affairs. “They probably will lose some market share.”

[…]

The administration’s conclusion is that existing operators will adjust, pointing to studies from other cities that have chosen to regulate, rather than ban, the ride-sharing services.

“What we’ve seen, especially if you look at that Seattle data that just came out from last year with two years of operations … they’ve actually seen a growth in the number of trips and a growth in revenues,” Paez said. “It’s only 3 percent, but if they were having a significant impact where they were cannibalizing, you would have seen a significant decrease.”

Lauren Barrash, founder of The Wave jitney shuttle service, disagreed.

She said her business already has seen a decline because her target market is the same as Uber and Lyft, which have been operating in Houston since February.

Ahead of a City Council decision, both services had offered free trips until last week, when Uber said it would charge riders.

Critics, however, say the two have been charging customers for weeks.

“My April revenue is the lowest in 2014 and 2013,” Barrash said. “January is traditionally our lowest month. Currently, for April, we’re at half of what January 2014 was. … I might not be as big as Yellow Cab, but I will be impacted the quickest. It will put me out of business.”

That would be unfortunate if it happens, and I confess I hadn’t given much thought to non-cab operators like The Wave. With all due respect, however, Council is no more obligated to protect jitneys like The Wave than they are to protect legacy cabs. I’d hate to see The Wave go under, but I’d also hate to see Houston try to deny the existence of change in the business. The basic idea behind the draft ordinance, which will make Uber and Lyft comply with the same safety and inspection requirements as the cabs, seems like the right direction to me. I look forward to Council finishing the job. PDiddie, who is not a fan, Campos, who thinks the lack of representation by Uber/Lyft supporters at the meeting could upset the conventional wisdom about how this turns out, and The Highwayman have more.

Draft ordinance on vehicles for hire is out

Mayor Parker puts another item on City Council’s to do list.

A proposed Houston ordinance could legalize hundreds of for-hire drivers providing rides through smartphone applications, but would require those drivers meet the same permitting and safety requirements as taxicab and limousine drivers already regulated by the city.

Under the proposal by the city’s Department of Administrative and Regulatory Affairs, the ride-sharing services would have to meet the same standards for fingerprint-based background checks and vehicle inspections already required of cab and limo drivers.

Other city and state governments have allowed the companies to do their own record checks based on Social Security numbers, or loosened inspection rules.

The proposed ordinance also would set fees for the new services based on revenues, allow all for-hire drivers to charge for no shows, mandate all companies accept credit cards, eliminate a 30-minute wait requirement for “pre-arranged” pick-ups, and drop a $70 minimum limo fare originally designed to shield the taxicab industry.

“We see this as leveling the playing field,” said Tina Paez, head of the city’s regulatory affairs department. “Uber and Lyft will probably tell you we’re overreaching. If there is some compromise that council makes, I hope it’s one that still works for passengers in terms of public safety.”

[…]

Yellow Cab lobbyist Cindy Clifford said technological advancement does not preclude businesses from following existing law, nor should it weaken standards set in the proposed ordinance.

The city, she said, should set a cap on the number of licensed drivers and keep the $70 minimum limo fare intact.

“If you flood the market with drivers, it will be very hard for anyone to make a decent living,” Clifford said.

For example, she said, existing rules require cab and limousine companies to serve all neighborhoods at all hours, regardless of profit margins and overhead costs. Under the proposed ordinance, she said it appears Uber and Lyft could ignore low-profit calls.

“A lot of our business is taking people to the grocery store, to their doctor’s appointment,” Clifford said. “They’re not always lucrative trips. That’s balanced by the fact drivers have access to other trips.”

You can see the draft ordinance here. As you know, I don’t agree with the belief that the vehicle for hire market in Houston is zero sum. The market will definitely change when Uber and Lyft are allowed in, and those changes may well not be beneficial to the legacy cab companies, at least in the beginning, but I am persuaded that on balance these changes will be beneficial for customers. It’s interesting to me that the cab companies are now touting the Seattle solution, which suggests to me that they don’t think they can keep Uber and Lyft out all together. Falling back on limiting the total number of drivers seems to me to be their way to mitigate the damage. There may be some merit to this approach – I’m a bit dubious, but I am willing to give it six or twelve months to see what the effect on the market has been.

Anyway. I sent emails to spokespeople for Uber and Lyft to ask for their comment, as they hadn’t had much to say in time for the Chron story. This is what I got from Lyft:

The proposed ordinance marks a starting point to a thoughtful discussion around Lyft in Houston. The people of Houston have enthusiastically welcomed Lyft to the city for affordable, convenient and safe rides. We will continue working with city leadership toward a solution that prioritizes safety, innovation and consumer choice.

I didn’t get a response from Uber by the time this was published. If I get one later, I’ll add it. What do you think of the draft ordinance? Hair Balls has more.