Prop. 1 goes down as activist proclaims: ‘Austin made Uber an example’

Austin voters on Saturday decisively rejected Uber and Lyft’s $8.6 million bid to overturn the city’s rules for ride-hailing apps, bringing a stunning conclusion to the most expensive campaign in city history.

The failure of Proposition 1 brought new threats that the ride-hailing giants would retreat from Austin as the neighborhood and labor groups that defeated them on a shoestring budget celebrated.

“Uber, I think, decided they were going to make Austin an example to the nation,” said longtime political consultant David Butts, who led the massively outspent anti-Prop 1 campaign, Our City, Our Safety, Our Choice. “And Austin made Uber an example to the nation.”

With all precincts in, Prop 1 lost by 12 points as nearly 56 percent of voters rejected the measure, figures from the Travis County Clerk show. Turnout was 17 percent.

The results keep in place the ordinance that the City Council approved in December, which requires drivers with ride-hailing apps to undergo fingerprint-based background checks by Feb. 1, 2017. The city’s ordinance also prohibits drivers from stopping in traffic lanes for passenger dropoffs and pickups, requires “trade dress” to identify vehicles for hire, and imposes a variety of data reporting requirements on the ride-hailing companies.

Following the results Saturday night, Lyft reiterated its threat to terminate service in the city as of 5 a.m. Monday.

“Lyft and Austin are a perfect match and we want to stay in the city,” said Lyft spokeswoman Chelsea Wilson, in a statement. “Unfortunately, the rules passed by City Council don’t allow true ridesharing to operate.”

That came just hours after Uber finally put a date and time to its pullout threat: 8 a.m. Monday.

“Disappointment does not begin to describe how we feel about shutting down operations in Austin,” Uber Austin general manager Chris Nakutis said in an emailed statement. He added: “We hope the City Council will reconsider their ordinance so we can work together to make the streets of Austin a safer place for everyone.”

Austin Mayor Steve Adler, who had urged voters to reject Prop 1 with the hopes of getting Lyft and Uber back to the negotiating table, held out hopes for more talks.

“We’re at a place right now where we welcome Uber and Lyft to stay in the community, and I hope that they’ll continue to talk with me,” Adler said Saturday night. “We need TNCs (transportation network companies) in this community so we have mobility choices, but how we’re going to do that and who we do that with, obviously, at this point, is something that we need to work on and work out.”

He said the city officials had begun discussing potential contingency plans should Uber and Lyft actually leave.

Uber’s election day pullout threat provided the coda to a raucous multi-million dollar campaign that featured ballot language the ride-hailing companies charged was confusing, an onslaught of mail and television ads that fact-checkers determined were misleading, the Austin Police Department quietly revising key data that had anchored the ride-hailing campaign, text message blasts that led to an FCC complaint and federal lawsuit, phone banks, push alerts, offers of free rides to the polls, and the hiring of former Mayor Lee Leffingwell to promote Prop 1.

It was spending on a scale that had never been seen in Austin politics, as Uber and Lyft singlehandedly funded the pro-Prop 1 campaign group, Ridesharing Works for Austin, to the tune of $8.6 million, campaign finance reports showed. That’s more than seven times the previous record of $1.2 million, which was set by Adler in his 2014 mayoral campaign.

“You can elect governors in other states for that much money,” Butts said. “We set an example for the rest of the nation: Stand up to these guys.”

Butt’s anti-Prop 1 campaign, which raised less than $200,000, was outspent nearly 50 to 1.

On average, Uber and Lyft spent $223.15 for each of the 38,539 votes they received.

The cost of a fingerprint-based background check is $40.

But the ride-hailing companies’ attention may have already turned away from City Hall and toward the Capitol. The companies in 2015 tried to pass a statewide ride-hailing regulation bill for Texas and could try again in 2017.

“We’re disappointed in tonight’s results,” Leffingwell said in a statement. “The benefits of ridesharing are clear: reduced drunk driving and economic opportunity. And we won’t stop fighting to bring it back.”

Uber and Lyft opened the money gusher in Austin as they attempt to beat back similar regulations in major cities across the country, including Chicago, Los Angeles and Atlanta. The giant sums left many observers convinced the companies were using the Austin referendum to send a message to those cities and others that might be eyeing tougher rules.

Ratcheting up the pressure further, Uber recently threatened to leave Houston, which requires drivers to be fingerprinted, drug-tested and undergo a physical before they can drive for the service — requirements far beyond those imposed by the Austin City Council in its December ordinance that Prop 1 would have overturned. Lyft does not operate in Houston.

“They’re operating at a much bigger scale than Prop 1 in Austin,” James Henson, the director of the Texas Politics Project at the University of Texas at Austin, recently told the American-Statesman. “This is not just about Austin, this is about how they assert themselves in regulatory markets in every market they’re in.

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