Over the objection of some taxi and limo drivers, the city of Minneapolis appears poised to both loosen its taxicab regulations and create a separate set of rules for smart phone-based passenger pickup services such as Lyft and UberX.

The full city council will vote on both sets of rule changes on July 18. The rules are designed to regulate an industry that has already broken into the Minneapolis market without city approval.

When Lyft debuted in the Twin Cities in February, Minneapolis officials vowed to ticket and tow the pink mustache-decorated vehicles, which they called unlicensed and underinsured.

On Tuesday, the council's community development and regulatory services committee approved a series of ordinance amendments proposed by council member Jacob Frey to both welcome and regulate the new generation of drivers.

Smart phone-based "transportation network companies" would be required to give customers advance notice of rate surges during high-demand travel times, and their drivers would need additional insurance.

The rules would require smartphone-based companies to pay the city $35,000 per year, on top of a $10,000 surcharge for companies lacking cars that easily accommodate the disabled.

The incentive fund will subsidize a fleet of privately owned cars designed to pick up disabled passengers.

Drivers for smartphone-based companies act like private contractors, using their own cars and charging varied rates they set themselves.

Objecting to what they called an unfair advantage for their new competitors, several taxi and limo drivers told the committee that the travel rates cabbies charge are capped by city rules.

In response, council member Abdi Warsame proposed amendments relaxing a series of rules related to taxicabs, such as eliminating twice-annual meter inspections.

City officials said the cab rules hadn't been updated since the 1980s. Warsame's amendments passed the committee.

©2014 the Pioneer Press (St. Paul, Minn.)