Lyft, Uber drivers will have to pay new fees, follow new rules under Spokane City Council proposal

Drivers for the popular ride-hailing platforms Uber and Lyft in Spokane may be required to pay hundreds of dollars of new regulatory fees next year.

The move is intended to bring drivers of the two San Francisco-based tech companies in line with traditional cab drivers, who typically pay both fees already. A draft of the new legislation introduced last week would require Uber and Lyft drivers pay a $100 for-hire license fee and obtain a $113 business license beginning next year, though city lawmakers continue to talk with the companies about potentially adjusting those figures.

Requiring the drivers to obtain the licenses is just one of many changes city lawmakers will consider this month. The push for reform came largely from the taxi industry, which lobbied the council repeatedly to alter what they saw as more stringent regulations for their businesses than those born by the new drivers on the block. The law now puts drivers for Uber and Lyft, identified as “transportation network companies,” in the same class as taxi drivers, though there are still some differences in what is required of those picking up fares on a smartphone app and those who find their passengers the old-fashioned way.

“They’re going to have slightly less than what’s required of taxi drivers,” said City Councilman Mike Fagan, who helped craft the ordinance with Councilwoman Karen Stratton and drivers and representatives of both the taxi and ride-hailing industries.

Washington remains one of only a few states nation wide that hasn’t passed a regulatory framework for companies like Uber and Lyft. Fagan said the city was forced to pass its own laws by inaction at the state level targeting ride-hailing companies, which have been operating in Spokane under separate signed contracts since 2014.

Those contracts, in the past, have exempted the company’s drivers from the same regulations that govern taxi drivers, including some insurance and vehicle inspection requirements, leading to impassioned calls from cab drivers for the City Council to either ease their own rules or hold Lyft and Uber drivers to the same standard. The new law will make many of those regulations uniform for all people picking up passengers, including eliminating the dress code for taxi drivers and allowing vehicle inspections to occur at accredited private businesses, rather than mandated through City Hall.

“The taxi guys, we’re not scared of fair competition,” said Bill Boomer, owner and operator of the taxi company Bill’s Friendly Rides and a participant in the negotiations on the new law. “We just don’t like that it’s unfair.”

Both Uber and Lyft released statements via email in response to questions for this story, all of which indicated they were continuing negotiations with the city and did not address specific features of the new law.

“We’ve been in contact with the city over the past several months discussing how best to implement a more permanent regulatory framework for TNCs in Spokane,” wrote Nathan Hembley, a spokesman for Uber in the Inland Northwest, in an email in response to questions for this story. Hembley also said the company is continuing to work with the city on its ordinance and hadn’t seen a final version yet.

Uber sees itself as a technology company, and would prefer regulations that don’t require each individual for-hire licenses because each of its drivers keeps their own hours based on their need for income.

In response to questions for this story, Lyft released a statement through a spokeswoman.

“We are supportive of common-sense regulations that prioritize public safety and consumer choice, while still allowing innovative new industries like rideshare to grow and thrive. Given the expedited nature of this process, we want to be sure that there is a clear understanding that Lyft is different from traditional transportation options and that local regulation should reflect that,” the statement read.

Stratton said she’s heard some rumblings from the company in recent days, throwing into question whether the law will be up for a vote at Monday’s regularly scheduled council meeting as planned.

“They’re acting like this is a big huge surprise. That’s what concerns me,” Stratton said. “There has been a lot of opportunities to weigh in, a lot of conversations with both Uber and Lyft.”

Legal challenges?

The law also reinstates a 10-cent surcharge on any ride generated by a transportation network company. Such a per-ride premium had been previously written into the contracts with Uber and Lyft, but they were abandoned in contracts signed in 2017 in favor of lump-sum payments to the city. The new law not only imposes the surcharge, but also requires quarterly reports of how much is being paid in such surcharges by the two companies.

Both Lyft and Uber previously fought such disclosures, not only in Spokane but also Seattle, alleging the information constituted “trade secrets” that were not required to be disclosed publicly. Judges at both the local and state appellate level have dismissed those arguments.

Fagan said he did not anticipate any legal challenges from Uber and Lyft should the law pass. But he acknowledged there “may be some pushback when we get to the milestones in the ordinance,” including the quarterly report or audits of randomly selected drivers for inspection.

Boomer said he was considering legal action against the city himself, alleging that Spokane was turning a blind eye to some practices by ride-hailing drivers. But the passage of the ordinance would put such action on hold, Boomer said.

“It’s completely out of control and the city needs to clean it up,” Boomer said.

Much of the concern is focused on the east end of downtown, around closing time for several of the bars. Fagan and Stratton said if the ordinance passes, they’ll look to set up a pilot project in the area that would serve a similar function as the cellphone lot at the airport, allowing for-hire drivers to park and wait for their fares in a designated spot.

“That was a big concern, that there were clients who were drinking, then running across Division to get to their ride, because they couldn’t park in the taxi zones,” Stratton said.

What about the airport?

The other area where the competition between ride-hailing and cabs is fiercest is at Spokane International Airport, where taxis wait in an organized line just outside the terminal and Uber and Lyft drivers idle in the cellphone waiting lot a quarter mile away.

The new Spokane laws won’t immediately affect operations at Spokane International Airport, said Todd Woodard, a spokesman for the airport.

Still, those accepting ride-sharing fares at the transportation hub said they hadn’t heard the council was considering additional fees for their services. Those waiting for jobs in the cellphone lot on a chilly Thursday afternoon wondered whether the new fees might thin their ranks due to financial hardship.

“When I first started, it was easier,” said Benjamin Wharton, an Uber and Lyft driver waiting for a fare Thursday who said he’d been driving for about a year. “Maybe if they do, it will be better for me, because there will be fewer people out here.”

Robin Paullin bought a late-model Hyundai earlier this year just so he could continue picking up fares through ride-hailing apps. The retired school bus driver and Southwest Airlines worker watched “Frasier” re-runs to pass the time between rides that are few and far between at the airport on Thursday afternoon. As the clock ticked past 3 p.m., Paullin pulled up his app and said his last fare had come in 2 1/2 hours earlier.

“The people that come in and use this service appreciate the heck out of it,” Paullin said, noting that he’s picked up fares of people leaving work every day in Hillyard who don’t have cars and live in Spokane Valley.

Heather Moreau just started driving for Uber and Lyft last week. She’d yet to obtain a business license, she said, and noted that she was already paying $80 more monthly in insurance premiums just to continue to drive.

“It sucks,” Moreau said of the proposed system. “I got laid off, and now I’m driving Uber and Lyft just to supplement my unemployment.”

Fagan acknowledged that the cost might cause some drivers to reconsider whether they want to get a license.

“It might put some of these people that do it part-time in a bit of a pickle,” Fagan said. “Unfortunately, it is the cost of doing business.”

Stratton said the city needed to do something to address the conflicts between the two classes of drivers.

“It hasn’t worked in the past, we’ve had nothing but headaches between Uber and Lyft and the taxi drivers,” she said.

Fagan said he envisioned the fees collected being used to potentially pay for additional parking enforcement officers downtown to deal with the problems Boomer and his colleagues have identified. He also said he believed the new regulations and fees would lead to a more level marketplace, where customer service and advertising would determine who’s successful rather than two largely different sets of rules for each driver, as it stands now.

“Now you are a direct competitor, and we let free-market capitalism decide,” Fagan said.

The ordinance is scheduled for a City Council vote Monday at its regularly scheduled meeting beginning at 6 p.m. at City Hall, 808 W. Spokane Falls Blvd.