State ride-hailing legislation could drive Uber, Lyft back to Austin

Uber and Lyft may be coming back to Austin.

Uber and Lyft may be coming back to Austin.

Editor's Note: The print version of this article contained an infographic with statistics on the Austin ride-hailing industry. The print edition was sent to press before a Jan. 24 city memo was released updating many of those figures, which can be found here.

Ride-hailing giants Uber and Lyft could be back in Austin this year if one of a number of similar bills is signed into law following the 85th Texas legislative session.

It is probable that a new state law would undo the local ordinance the city of Austin has in place and eliminate mandatory fingerprinting, said Sen. Robert Nichols, R-Jacksonville, one of the authors of the pieces of legislation and chairman of the Senate’s Transportation Committee.

In May, Uber and Lyft’s alternative to the city ordinance, a ballot proposition that proposed looser regulations with voluntary fingerprinting, was defeated by voters. The two companies then followed through on their promise to voluntarily stop operations in the city because the stricter regulations remained in place.

Although he was against mandatory fingerprint-based background checks for ride-hailing company drivers, Mayor Steve Adler said that a state bill would indicate “some loss of local control.”

“The state regime might not reflect the priorities of this community,” Adler said.

Since the defeat of the May proposition, the mayor as well as other members of Austin City Council have held closed-door discussions with representatives from Uber and Lyft, according to a review of city emails provided in response to a Community Impact Newspaper public information request.

In a statement, Lyft spokesperson Chelsea Harrison said the company is pleased state lawmakers are recognizing the importance of consistent regulations for the ride-hailing industry

“We are eager to work alongside all stakeholders to implement reasonable rules that encourage economic opportunities and consumer choice,” Harrison said.

Uber representatives said they see the dialog with the city of Austin as positive. Trevor Theunissen, public affairs lead for the Texas region, said the conversations at City Hall have been constructive. He made it clear, however, that Uber will not return if mandatory fingerprint-based background checks remain in place.

He said Uber has asked council members whether they would be open to revisiting the ordinance.

Nichols’ Senate Bill 361 states that ride-hailing drivers must have insurance and must undergo criminal background checks, not including fingerprint-based verification.

Driving the security issue 2016 saw Uber and Lyft voluntarily leave Austin after mandatory fingerprint-based background checks for ride-hailing drivers were upheld in a referendum vote. The companies could return if a proposed state law overrides the mandate.[/caption]

New ride-hailing options

Following the May vote and Uber and Lyft’s subsequent departure, several smaller ride-hailing companies entered the fray in Austin: RideAustin, Fare, Fasten, GetMe and Wingz, among others.

Adler said those ride-hailing companies have quickly stepped in and filled the gap and pointed to an effective transportation network at Austin City Limits Music Festival without Uber and Lyft as an example.

“The number of rides that people are taking here in our city now is increasing every month,” he said. “I don’t think city is missing the services. Instead of being a three-and-a-half to four-minute response time, maybe it’s a five-minute response time. But I don’t see a material change.

He remains hopeful, however, the two companies will return. Although he said the local ride-hailing network has not suffered in the wake of Uber and Lyft’s exit, the two companies are investing millions of dollars in next-generation technology, such as autonomous vehicles, an industry sector in which Austin hopes to remain globally competitive.

“The citizens have established what they want in terms of their priorities. I would hope the legislators would respect that.”

– Council Member Ann Kitchen

District 5 Council Member Ann Kitchen, who leads the council’s Mobility Committee, said the regulations put in place at the end of 2015 and reaffirmed by the May vote have both leveled the playing field for so-called transportation network companies, or TNCs, such as Fasten and Fare, and traditional ride-hailing services, such as taxicab operators.

“What we were doing was listening to what the public wanted,” Kitchen said. “Then Uber and Lyft said no; they wanted to hear what the public wanted in the form of an election. The public came back resoundingly [with 55.72 percent of voters choosing to keep regulations such as fingerprint-based background checks].”

Kitchen said the Legislature would be setting a negative precedent if it were to go against the will of Austin voters.

“The citizens have established what they want in terms of their priorities,” she said. “I would hope the legislators would respect that.”

One of the chief complaints about the May referendum was the ballot language; constituents reported confusion over what they were voting on, and Nichols said he suspects voters did not understand the implications.

He said people who do not feel safe in a vehicle with a non-fingerprinted driver should simply not use their services.

Statewide legislation

At least two other bills have been filed that would achieve similar policy objectives. Sen. Charles Schwertner, R-Georgetown, and Sen. Don Huffines, R-Dallas, have both filed bills to regulate ride-hailing services.

“I think it’s got a pretty high probability of passing,” Nichols said. “I don’t know if I would want to throw out a percentage, but I’m optimistic that either mine, a modification of mine or somebody else’s will pass.”

Regarding the May vote, Theunissen said he and other Uber represenatives believe constituents were motivated more to combat “corporate bullyism” than to keep mandatory fingerprinting in place.

“We messed up,” said Theunissen, who moved to Uber’s Texas public affairs team after the election. “We want to be here. We think there is a real need for Uber in Austin, and we still think that.”

He said the ongoing conversations have aimed to determine a path for Uber to return to the city. But he made it clear that Uber prefers a statewide bill because of inconsistencies in city ordinances.

The efforts to create state legislation are not necessarily centered on rectifying Uber’s absence in Austin; the aim is to improve mobility in areas such as Dallas-Fort Worth where conflicting ordinances make transport in a TNC vehicle difficult among the cities.

“[A statewide bill is] not about undoing the Austin vote,” Theunissen said. “It’s about having consistent regulations across the state so that a driver can pick up in Austin, drop off in Houston; pick up in Houston, drop off in The Woodlands; [or] pick up in the Woodlands, drop off in wherever else. That allows for us to scale [our service] in major ways.”

This story is one update from The January Issue. View the full list of 10 things to look for here.



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