Small Business

Portland makes Uber, Lyft legal, for now

Uber's future in Portland
Uber's future in Portland

As transportation disruptors Uber and Lyft continue to clash with local governments, the city of Portland, Oregon, is testing the waters in a 120-day pilot program that allows the start-ups to operate legally.

The Portland City Council last week approved a program allowing app-based, ride-hailing services to operate in the city, despite objections from taxi drivers. Guidelines include background checks for drivers, access for disabled passengers and some easing of restrictions that usually are placed on traditional taxi and limo drivers, including fleet size limits and price caps.

Start-ups such as Uber and Lyft have been clashing with regulatory authorities over whether they are truly transportation companies, and subsequently are subject to similar regulations. Amid the friction, Uber and Lyft face legal actions in some cities. The lawsuits claim the start-ups are operating illegally, charges which the businesses dispute.

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Portland, meanwhile, is trying to "lightly regulate" Uber, Lyft and other app-based transportation upstarts.

"We are willing to go to the table—we took a tour of our regulations to see if we could adapt these old taxi cab regulations that we have in most cities to the reality of this new economy," said Portland Mayor Charlie Hales.

What's missing from Portland's efforts so far are tighter insurance regulations, which Uber in particular has spoken out against in states including New Jersey. Uber disputes the threshold of insurance some proposed city rules require.

Hales said the insurance issue is being reviewed at the state level, and could change in the future. Uber and Lyft drivers for now are required to have liability coverage.

Given Portland's vibrant community of start-ups, the mayor added he "intends to make it work" with Uber and Lyft.

As a result of the partnership approved by the city council, start-ups will share consumer data with Portland, information Uber and Lyft have not not shared with other cities where they operate, Hales says.

"We're going to get origin and destination data, data about volume and geography," the mayor said. "Where the hot spots are, what parts of the city have been getting neglected. Those are important social justice issues so we will keep a close eye on that."

Portland, Oregon
Terrence Leezy | Getty Images

The city is no stranger to welcoming the growing sharing economy that leverages technology, and peer-to-peer consumption of products and services. Portland was the first city nationwide to allow Airbnb to operate, and to collect and remit hotel taxes. Airbnb's platform features property owners offering short-term rentals.

"We appreciate the fact that Airbnb has been a good citizen and they've paid their taxes," Hales said. "They've also started a relationship with a local nonprofit called Central City Concern to help shelter people living on the streets.

"I would hope and expect that Lyft and Uber would not only work here and make money here, but also start becoming corporate citizens here like Airbnb," Hales said.

Lessons in a sharing economy

A Uber driver in New York City.
Scott Mlyn | CNBC

Not everyone is embracing the sharing economy, though. Portland taxi drivers protested ahead of the city council vote. Drivers said they're subject to background checks and regular vehicle maintenance.

However, Haley argues the app-based transportation start-ups are transportation companies in the end, even as local regulations evolve to catch up with the sharing economy.

"We see them as transportation companies," Haley said. "They obviously use technology, but come on, they're operating on a public right of way, taking people from point A to point B for money—that's a taxi by any other name."

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