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This U.S. City Is Subsidizing Uber—Here's Why

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Altamonte Springs, Florida's first-in-the-nation test may be a harbinger of how suburbs expand their transportation system

In many cities around the world, ride-sharing service such as Lyft and Uber are treated, if not with a degree of hesitation by city government, at least with some degree of ambivalence. In Altamonte Springs, a small city of 42,000 in Central Florida, City Manager Frank Martz isn’t just welcoming the app. Along with Mayor Patricia Bates, he’s helping spearhead a new initiative that will pay the ride-sharing behemoth up to $500,000 over the next year as part of a first-in-the-nation pilot program. And the system set up to pay for rides—a unique municipal subsidy that covers 20% of any ride that begins and ends in the city, 25% if it begins or ends at the local light rail station—has already gotten others cities in the surrounding Seminole County interested in replicating it, even though it just started running yesterday.

"Seemed to us, if you can order a pizza using your cell phone, or transfer funds with you cell phone, you should be able to order a transit trip," says Martz. "We were tired of waiting for Central Florida to move on transit, so we did."

The city’s new program, which creates a geo-fence around the 9.4-square-mile town and lets app users within city limits receive subsidized rides—they just enter the promo code ALTAMONTE in the appis part of a pioneering experiment in supporting multimodal transportation via ride sharing.

Martz says the inspiration came from previous attempts to simplify transportation in the city, located in the middle of the booming (and increasingly crowded) Central Florida region. When local commuter rail known as SunRail came to the region, connecting Altamonte Springs with cities in Florida, including Orlando 10 miles to the south, the suburb and others nearby wanted to find ways to increase ridership and make local transportation more efficient. Since the city is so close to Orlando, says Martz, that was a bit of a tough sell, since any method had to be easier than a relatively quick car ride.

Earlier in his tenure as City Manager, Martz supported plans to introduce a transport system called FlexBus. Meant to be a new demand-responsive bus that would transport citizens to and from the local rail station—summoned by an app or kiosk—the system was denied funding last fall by the Florida Transit Authority, which felt it wouldn’t be worth the $2 million investment.

Martz decided that if the state and other transport authorities wouldn’t help solve the problem, he’d enlist another partner. The city reached out to Uber in November to see if they’d be interested in a one-year pilot, and roughly four months later, they have a working system in place. According to Martz, who used the service to pick up lunch today, with multiple users riding the same car as part of the apps uberPool ridesharing service, it accomplishes much of what FlexBus set out to accomplish, at a lower cost.

"The FlexBus project was projected to cost $1.5 million for one year," he says. "We’ve budgeted $500,000 for Uber this year, and think it’ll cost less. We were conservative in case we were wrong and it’s a big success. Then we can invest more."

And Uber isn't the only ride-sharing company working on similar plans. A Lyft spokeswoman, Alexandra LaManna, noted that her company is in negotiations with "large-city transit systems about a variety of partnership opportunities, some of which would include subsidies for passengers." Many have theorized that ride-sharing, and eventually autonomous vehicles, may start becoming part of a multifaceted urban transportation system, while allowing cities to expand transport networks to help areas and customers who have traditionally been underserved.

"The coin of the realm is the rider," says Martz. "Transit will only be successful if it’s convenient."