Minneapolis joins other cities regulating Lyft, UberX

Minneapolis became the sixth jurisdiction in the country Friday to legalize Lyft and UberX, following a near-unanimous City Council vote that came amid concerns from the taxi industry.

Lyft drivers wearing pink shirts bumped fists in the hallway outside the council chambers after final passage, which capped months of haggling between the California-based companies, the taxi industry and city regulators.

Lyft and UberX, now known as "transportation network companies, essentially allow people to act as chauffeurs of their own vehicles, connecting with passengers through smartphone apps. They cannot pick up passengers who hail them on the street, but unlike taxi companies are free to raise rates.

"This ordinance takes some excellent steps towards adding to the cornucopia of transportation options that we have," said council member Jacob Frey, the ordinance sponsor, adding that more options will help people give up their cars.

The new ordinance distinguishes the companies from taxicabs, creates a process for them to become licensed and specifies what insurance they must carry. Insurance is a particularly complicated issue for the services, since they typically use hybrid plans that complement a driver's personal policy.

But taxi industry representatives weren't happy with a two-tier fee structure that will charge major taxi companies significantly more than transportation network companies. Others have concerns that changes to the wheelchair-accessible vehicle requirements could backfire.

Minneapolis follows California, Colorado, Seattle, Chicago and Baton Rouge in passing legislation to specifically regulate the services; St. Paul is crafting its own version, while other cities have interim agreements.

"We can't shy away from progress simply because a few other cities haven't done it yet," Frey said. "Minneapolis is a great city and Minneapolis can lead damn well."

The lone 'no' vote on the council, Council Member Blong Yang, said the proposal would mean "that the livery industry will be changed forever." In particular, he felt the city should not enable the companies for operating illegally.

"The story is Lyft and UberX came to town, they are currently operating unlawfully, and basically it seems like we're seeing that's fine we'll make laws that favor you," Yang said. "And there's something wrong about that."

Yang also expressed concern about the licensing fee structure, which charges transportation network companies a flat fee of $35,000 while cab companies could pay upwards of $80,000 depending on how many vehicles they have. The city's business licensing manager, Grant Wilson, said this is because regulating the taxi industry consumes much more staff time.

Another point of contention related to how a proposed incentive program for wheelchair-accessible vehicles will work. The city will fund it using a $10,000 surcharge, which replaces an existing requirement on companies to provide the vehicles themselves (which never acheived compliance).

"I dont think there's a taxicab company that will do it," said Waleed Sonbol, owner of Blue and White Taxi, following the vote. That concern that no one will bid on the program was reflected in a letter earlier this week from disability advocates.

Frey said the new system will actually work better, however. "If you're an individual with disabilities and you need transportation, you call one number and you will get service that is fully ADA accessible," Frey said. "And we aready have four or five different companies that are chomping at the bit" to provide that service.

Council Member Cam Gordon, who expressed concerns Thursday with the disability provisions, said the entire process convinced him that the Twin Cities should be tackling transportation regulations as a region.

"This whole process has only reaffirmed for me my conclusion that having the city regulate this industry is no longer necessarily appropriate," Gordon said.

Cabs got several breaks in the new law. New regulations spearheaded by council member Abdi Warsame allow non-city facilities to inspect vehicles, extends the maximum age of vehicles by five years and gives drivers more parking privileges.

"What we have in front of you is the wish list of the taxi companies," Warsame said.

"Minneapolis is a city that innovates," he added. "It's a city that moves ahead. It's a city that advances. I think introducing Lyft and Uber, as well as the deregulation of the taxi industry, will improve the transportation in the city of Minneapolis."

Photo: Two sides at the City Council chambers during public hearing on the ordinance this April