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City leaders are putting the brakes on those illegal ride-sharing companies operating in the Seattle area. New regulations will likely also mean the insurance of the first new taxi licenses in years.

Companies such as UberX, Sidecar and Lyft, (the cars with the pink mustache,) all operate illegally in Seattle. Taxi companies hate them because they’re unlicensed and undercut their business. But customers love them. They often utilize a cell phone app to connect driver and customer.

A city council committee resumed the debate Thursday over a proposed two-year pilot program to legalize, license and regulate the ride-shares.

Hundreds packed the council committee meeting considering the changes, chaired by city councilmember Sally Clark.

“This is a thorny issue for metropolitan areas all across the country,” said Clark, adding “everyone remains a little bit confused about exactly how this landscape is going to evolve over time.”

Among other things the regulations would require insurance, safety inspections and background checks on drivers. All things Brooke Steger, at UberX supports.

“What we do not support are the caps on the number of vehicles and the cap on the number of hours, at 16 hours per week, that each driver can drive,” said Steger. Let the best service win, she argued.

“To stifle that competition is just very backward.”

The city is trying to make the new regulations fair for all transportation-for-hire providers. It’s considering what Clark calls two tiers of regulation.

“You’re going to have one set of regulations for taxis and other drivers, themselves, who are really on the professional side, it’s their primary way of earning a living,” explained Clark. “I think, what we’re going to set up is a second tier, a lighter regulation tier for folks who are really doing this on the side.”

The city limits taxi licenses to 850 and has not expanded that number in years. As part of this reform, Clark expects to add new taxi licenses through a lottery.

“The way this usually happens is that if you’re a driver with a good driving record, you apply to be in that lottery,” said Clark. “If I had to guess, I think we’ll do maybe 75 new licenses this year, maybe 75 new licenses next year.”

An emerging issue for Clark and the council is one of insurance. Uber faces a lawsuit in California, where one of its drivers killed a child. But the driver did not have a fare at the time. A representative of the insurance industry will brief the city council Thursday during a 2 p.m. meeting. Expect a final vote on new regulations for the taxi, ride-share and limousine industry in the next few weeks.