Lyft ride-share business is launched in St. Paul

City officials will allow the ride-share business but say it warrants more study. So far, it is prohibited in Minneapolis by taxi ordinances.

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Justin Riley next to his car, which sports the signature pink mustache of Lyft, a smartphone app based ride-sharing service, in West Hollywood, June 25, 2013. Los Angeles city regulators are siding with cab companies' opposition to the ride-sharing operations, ordering them to shut down immediately.

 

St. Paul has entered the new frontier of car sharing via a smartphone app called Lyft, connecting riders with private citizens who have cars and are willing to drive them — and all for a fee that’s not required but appreciated nonetheless.

It’s not a taxi service, which has sparked protests from cab operators in other cities where Lyft has set up shop and is prompting St. Paul’s licensing division to study whether a ride-sharing business should be subject to regulation.

The San Francisco-based company had representatives in town this week to inspect vehicles and train drivers. They also met with St. Paul officials to address concerns about safety and proper insurance.

“For St. Paul, is there anything prohibiting them from doing this? No, there isn’t,” said Ricardo Cervantes, the city’s safety and inspections director.

“We need to find out more about this. We’ll do research and analysis and come up with a proposal on whether to regulate or not,” he said.

The situation is more complicated in Minneapolis, where regulators say Lyft drivers and vehicles are required to be properly licensed and inspected under the city’s taxicab ordinances.

That clashes with Lyft’s business model, which relies on an easy sign-up process.

“They were saying, ‘We don’t believe we are taxicabs. We believe we are a ride-share, which is people in the community hooking up with people in the community,’ ” said Grant Wilson, Minneapolis’ business licensing chief.

Wilson’s take? “When you really look at their model, it is stranger hooking up with stranger for compensation, just like a taxicab,” he said.

Although Lyft isn’t operating in Minneapolis, it has been soliciting drivers on Facebook and other social media sites with promises of wages up to $20 per hour.

Ten U.S. cities now have Lyft, which marks its participating cars with a wide pink mustache across the grill. Its website says drivers must be at least 23 years old and pass a phone screening, in-person meeting and background checks.

Cervantes said that some cities have chosen to strike an agreement with Lyft rather than regulate it. The company has a 15-point vehicle checklist and requires personal vehicle insurance, but also provides a $1 million umbrella liability policy.

New definitions needed?

While existing Minneapolis ordinances would classify Lyft’s model as a taxi service, Wilson said he will recommend that the council modernize the code by redefining “ride share” and “compensation.”

In St. Paul, if a vehicle doesn’t have a meter, it isn’t classified as a taxi and therefore doesn’t need licensing.

Lyft’s model relies on a suggested “donation” that appears on the rider’s smartphone at the end of the ride and can be adjusted since it is “voluntary,” according to the website. When a driver picks up a rider, the company keeps 20 percent of the proceeds and the rest goes to the driver.

The rider may also rate the driver’s performance.

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