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A City Council proposal that Lyft, Sidecar and UberX say would kill their rideshare operations in Seattle had taxi drivers smiling Friday.

That’s when the council’s taxi committee started discussing its first attempt to rewrite city law to limit and regulate
phone app-based passenger-service businesses.

When Lyft, Sidecar and UberX became more popular this year, their illegal and unlicensed operations unleashed the ire of competing taxi and for-hire drivers. For the past 10 months, the City Council committee has studied and deliberated how to better regulate all of them.

While Council President Sally Clark and Councilmember Bruce Harrell focused on fairness to current taxi and for-hire drivers who have been subject to licensing caps and hefty fees for decades, Councilmember Mike O’Brien questioned whether the city should even be in the business of capping how many people are in the passenger pickup service.

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“Going forward, I don’t know whether that makes sense or not,” O’Brien said.

The draft legislation proposes a pilot program that would limit phone-app-based companies such as Lyft to 100 drivers each and allow drivers to use their vehicles for no more than 16 hours a week. It would be a major hit to many of the drivers who have turned their Lyft, Sidecar and UberX gigs into their primary sources of income.

Lyft, Sidecar and UberX have never released exact driver numbers, but representatives say each has well over 100.

Clark said that because the companies’ operations don’t fit the state’s legal description of a rideshare provider — a term the companies have used heavily in marketing — the businesses would be known by a new term: transportation network companies (TNCs).

John Zimmer, co-founder and president of Lyft, said he felt blindsided Wednesday when he found out about the proposed restrictions, which he said would effectively end operations in Seattle.

“I thought there was going to be a focus on safety and consumer choice, but it was about protecting the market,” Zimmer said Friday.

“It’s very surprising, especially coming from Seattle, because I think Seattle is known for innovation and its desire to be a green city,” he said.

Zimmer said that as more consumers have become aware of the Lyft app, which allows passengers to arrange rides and then pay whatever “donation” they want via credit or debit card, ridership has consistently increased.

A study the city commissioned earlier this year found the same to be true generally of demand for app-based passenger services.

Seattle has not increased its number of taxi licenses since 1990 in an effort to preserve living wages for taxi drivers and operators.

But UberX spokeswoman Brooke Steger says companies such as hers can regulate their numbers of drivers and ensure they make a living wage as well. Steger says that’s exactly what UberX has done with UberBLACK, the limo service it operated long before launching its UberX rideshare alternative.

The limo industry, unlike the taxi and for-hire industry, is regulated by the state, which places no caps on the number of limo vehicles that can be in service.

“We don’t just keep on accepting new drivers — we turn that on and off as demand changes,” Steger said.

The city’s draft legislation also would require each TNC to pay a licensing fee of $50,000 to the city and acquire a $1 million “umbrella” insurance policy that names the city among the insured. No cap on the number of TNCs was mentioned in the draft, but council members discussed having a city monitor decide which could be licensed.

The draft also suggests the city has a right to check the records of all TNC drivers, who would complete some kind of city-mandated driver-safety course before receiving a TNC driver’s license.

To satisfy taxi and for-hire drivers who have waited decades for the city to offer more taxi licenses, the legislation would authorize up to 50 new taxi licenses to be issued by lottery.

As dire as the situation looks for their “rideshare” competitors, taxi and for-hire advocates weren’t completely happy with the council’s new proposals.

Samatar Guled, president of Eastside for Hire, called on the City Council to immediately issue a cease-and-desist order to the TNCs.

“What are you going to do today? Because that’s what we’re dealing with,” Guled said to cheers from several in the audience. “This is not some abstract idea we’re complaining about. We need action today.”

But the City Council committee will likely continue deliberating through January and February.

Zimmer, of Lyft, said he has spoken with City Council members not on the committee who are interested in keeping businesses like his alive on a wider scale because they are different from taxi or for-hire services.

His long-term plan for cities and states that legalize Lyft is to establish a base of consistent drivers, then persuade more people to rideshare regularly to cut down their transportation costs.

“If you want to think long-term, you’ll see this model is different in many ways,” said Zimmer. “It has the ability to become something bigger.”

Alexa Vaughn: 206-464-2515 or On Twitter @AlexaVaughn

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