Council: Third Try on Rides-for-Hire

For the third meeting in a row, the hot-button item on Thursday's agenda (Oct. 16) at City Council remains a proposed ordinance, sponsored by Council Member Chris Riley, that would define transportation network companies – such as Uber and Lyft – and enable them to enter into contracts with the city. The ordinance, first introduced during a late September session, has passed on two of its three readings – and now is scheduled for the third and presumably final reading. Even some of its most vocal critics expect the proposal to pass.

Approval of the ordinance on third reading won't mean that the companies, both of which have spent the summer operating illegally throughout the city, will certainly agree to contracts with City Manager Marc Ott. The chances of that happening will likely depend on the fate of an amendment proposed by CM Kathie Tovo at the last meeting, which would require TNCs to provide primary insurance coverage to drivers at any point in which the Uber and Lyft apps are active. Neither company provides primary coverage to their drivers at all times the app is on; rather, primary coverage is provided only when a driver is actually engaged in commercial activity (that is, between when a ride is accepted and when that ride's transaction closes out).

Both companies said two weeks ago that the amendment would be a deal breaker. Lyft Public Policy Manager April Mims said the company has "never entered into an operating agreement" with another city that requires such coverage. In all likelihood, if the proposal is approved with such language included, the two companies would continue operating under the table, as has proven quite successful. (Uber boasted having completed more than 100,000 trips through the two weeks of the Austin City Limits Music Festival).

Tuesday, after a Council work session, Tovo told the Chronicle she plans to continue pushing for the amendment, saying that she asked city staff to come back with more information about the ways in which using the app during times in which drivers aren't actively engaged in commercial activity could affect personal insurance coverage. Riley noted that CM Bill Spelman expressed interest in knowing California practices. He added that the companies are working with personal auto insurance providers to develop an insurance product that would allow a TNC driver to pay a larger premium to ensure personal coverage at points in which the app is on but a ride hasn't been accepted. "There would be a charge that you'd pay for," he said. "That way, there would never be any suggestion of fraudulence on the driver, because it would be a product bought for that express purpose."

Uber would neither confirm nor deny Riley's comments.

Aside from the insurance issue, both Tovo and Riley expect more discussion of "surge pricing" – the companies' ability to increase rates to whatever multiplier they wish in an effort to get more drivers on the road during times of high demand. Tovo had pushed for enforcement of a cap two weeks ago, and plans to present that argument again today.

"There's clearly not a political will to prohibit surge pricing, but I believe 2.5 [times the normal rate] is reasonable," she said, "and allows for increased incentives for drivers during our peak periods."