Durkan’s “Fare Share” Proposal Hinges on Future Success of Uber and Lyft

Kerem Levitas, Office of Labor Standards, Deputy Mayor Shefali Ranganathan, Mayor Jenny Durkan

Mayor Jenny Durkan announced Wednesday that she’s proposing a 51-cent fee on all Uber and Lyft rides, along with new minimum wage and benefit standards for drivers and a dispute resolution center for drivers who have been unfairly kicked off the platforms or underpaid.

The city estimates that by 2025, the fee will generate enough funding, $56 million, to fully fund the construction of the downtown streetcar, plus $52 million for affordable housing near transit stops and about $18 million for a new dispute resolution center for drivers challenging unwarranted removal from the ride-hailing platforms or unpaid wages.

The streetcar, which Durkan halted last year after the price to build and operate the project ballooned, faced a capital-funding shortfall of about $65 million. Earlier this year, the city council approved a $9 million interfund loan to restart work on the streetcar; that loan will be paid back with the proceeds from the Mercer Megablock sale.

“By creating a high-capacity alternative in the center city, [the streetcar] will provide an alternative for folks who are taking those short trips in and out of downtown.” – Seattle deputy mayor Shefali Ranganathan

Durkan’s proposal would also mandate that drivers be paid at least minimum wage, plus compensation for benefits and expenses, for all portions of every trip that begins or ends inside the city of Seattle, and increase the current 24-cent fee that pays for wheelchair-accessible vehicles and regulation of the ride-hailing industry.

After 2025, according to deputy mayor Shefali Ranganathan, the fee will “revert to funding transit, bike, and pedestrian projects across the city.”

In a press briefing yesterday, Ranganathan said the city expects that many people taking short trips in Uber and Lyft cars will switch to the streetcar for short trips once the Center City Streetcar is complete, citing a University of Washington survey that found that Amazon employees who use the car services would take transit “if there was quality transit available.”

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Ridership on the existing South Lake Union streetcar has been lackluster, falling 4 percent last year to just over half a million rides in 2018. On the First Hill segment of the line, ridership was up 31 percent last year, to nearly 1.2 million rides.

Ranganathan noted that about half of Uber and Lyft trips in Seattle originate or end inside the center city, which includes South Lake Union, Capitol Hill, and downtown. In a University of Washington survey of Amazon employees who take Uber and Lyft, “many of these folks …said that if there was quality transit available, they would take transit.”

“By creating a high-capacity alternative in the center city, [the streetcar] will provide an alternative for folks who are taking those short trips in and out of downtown,” Ranganathan said.

Whether the streetcar, particularly the South Lake Union segment, can ever be “quality” “high-capacity transit” remains an open question. One reason South Lake Union ridership is so low is that the streetcar, which runs on tracks in the street, is frequently stuck in traffic. As a result, on-time performance in the neighborhood is abysmal, and has been getting steadily worse, with just 39 percent of trips arriving within a ten-minute window (five minutes before and five minutes after) of the arrival time on the schedule.

Although the new Center City Streetcar would have its own dedicated right-of-way, that won’t address the existing problem of traffic backups in South Lake Union. And even if a significant number of people did decide to switch from Uber to the streetcar, it isn’t particularly high-capacity. Each streetcar has a maximum “acceptable capacity” of about 120 people, compared to nearly 600 for a three-car Sound Transit light rail train).

Uber responded to the mayor’s proposal yesterday by saying that it will increase the cost for riders and decrease the number of trips for drivers. In a statement, Uber spokesman Nathan Hambley said that Uber has “engaged in good faith with the Mayor’s office and labor leaders for several months on [the labor standards and wage] issue in hopes of reaching a compromise. We believe that any rideshare proposals should be developed based on broad input from the entire rideshare driver community in

The future of ride-hailing companies like Uber and Lyft remains uncertain, raising questions about whether cities should wager future funding for housing and transit on the continued success of their business model. Last month, Uber posted a $5.2 billion quarterly loss, sending shares plummeting. Meanwhile, the state of California just passed a law that would classify the companies’ drivers as employees entitled to minimum wage, overtime, and benefits, a change the companies say will upend their entire business model.

Durkan said Wednesday that the city is confident Uber and Lyft will stick around. “What you’re seeing globally is that the market for this is only increasing,” Durkan said. If Durkan’s proposal passes, the city will be making a five-year, $125 million bet that she’s right.

4 thoughts on “Durkan’s “Fare Share” Proposal Hinges on Future Success of Uber and Lyft”

  1. Note that Erica corrected Deputy Mayor Ranganathan on whether the Seattle Streetcar is high capacity. it is not. See chapter three of the Seattle Transit Master Plan. The Seattle lines use one-car trains and their stations are only long enough for one car. Both the current lines have reliability issues and will probably be unreliable forever; the SLU line crosses the Mercer Street I-5 interchange; the First Hill line is stuck in the single lane profile of Broadway and deviates to 14th Avenue South. The Murray-Kubly SDOT plan called for every trip of the CCC Streetcar to begin at one unreliable tail or the other. Note that five minutes early or late on a very short line is not a tough standard of lateness. Intending riders in SLU already have frequent service on routes 70, 40, C Line, and 62. All the bus routes penetrate through downtown Seattle; the SLU line stops at Stewart Street. the main cause for SLU line ridership to decline is that service on routes 40 and 70 and the C Line improved.

    The real questions are of opportunity cost and network design. What else could Seattle do with $56 million in new transit revenue? How much ridership would that improved network attract? It might build sidewalks on frequent transit arterials that lack them, build key segments of trolley bus overhead, and implement RapidRide lines faster. the plan is silent on filling the CCC Streetcar operating cost need.

  2. Shouldn’t the tax money go the drivers?
    The theory is that drivers don’t get paid enough so riders should be taxed.

    Durkan says:
    “And in this changing economy, workers who are not given adequate protections are ones that will be looking to cities for greater support. This is really about fairness to those drivers.””

    OK, then in that case give the drivers the money so they are paid the same as taxi drivers.

    No?

    1. Uber and Lyft will be charged the tax per ride, which they will no doubt pass on to their riders. That tax will compensate the community as a whole for the disadvantages these companies have brought including more traffic, etc., because the tax will produce what we need more of: other forms of transportation and housing. The two companies will also have to pay their drivers minimum wage, which in Seattle is $15/hour. So no, the drivers would not get the tax money.

      1. But the Mayor said that it’s about the drivers:
        “This is really about fairness to those drivers.”

        If it’s about fairness to the drivers then we should give them money directly.

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