Honolulu is moving closer to imposing the city’s first set of regulations on the ride-hailing industry, which has operated under a free market since entering the isles.

A draft of Bill 36, introduced by City Councilwoman Ann Kobayashi, was advanced Wednesday by the Honolulu City Council’s Budget Committee. Kobayashi said the bill will go before the Council on Aug. 3 for final passage.

“If there are any really pressing things anyone has, please speak to us before Aug. 3 and we’ll try to incorporate your concerns. Otherwise, we’ll just be moving along,” Kobayashi said.

The bill requires taxicab and ride-hailing drivers to obtain, for a fee, a city-issued certificate, which would become part of a database. It stipulates drivers must submit to a third-party, nationwide criminal background check that goes back seven years. The measure implements new identification requirements for ride-hailing drivers. And it shifts most of the burden for certification to the companies themselves.

It’s a compromise to Bill 85, which was previously introduced by Kobayashi and Council Chairman Ernie Martin. Bill 85, which was deferred, would have required Uber and Lyft cars to be equipped with dome lights and taximeters, and would have prohibited drivers from using GPS to calculate distance and determine fares.

Harry Campbell, who operates therideshareguy.com blog and podcast, said Bill 85 was one of the most stringent measures that ride-hailing companies have faced nationwide. Campbell said Bill 36, which adopts some of the framework used by ride-hailing companies, has far fewer teeth.

It’s one of “the least onerous regulations” ride-hailing companies are facing, Campbell said.

Kobayashi said Bill 36 is a good compromise because “both sides don’t like it.”

Dale Evans, owner of Charley’s Taxi, said the bill favors ride-hailing giants Uber and Lyft. But both companies counter that Bill 36 appears to have been tailored for traditional taxis.

“We support a common-sense regulatory framework that prioritizes public safety and consumer choice, and cannot support the bill in its current version,” said Lyft spokeswoman Mary Caroline Pruitt. “We will continue to work with city leaders toward a collaborative solution that preserves Lyft’s safe, affordable rides for the people of Honolulu, as has been accomplished in 35 states and dozens of cities across the country.”

Lyft’s senior public policy manager, Timothy Burr Jr., testified that the company “has serious concerns about future operations with the current draft.”

Uber spokeswoman Taylor Patterson said that “the bill in its current form would force Uber to cease operations in Honolulu and Maui.”

Patterson said the bill’s database and physical exam requirements violate driver privacy. The company, whose 5,500-Hawaii drivers are mostly Honolulu-based, said requiring certificates would strain city and company resources. Patterson said requiring drivers to have a Hawaii driver’s license excludes many of Uber’s drivers, who are military personnel.

Howard Higa, owner of TheCab, Hawaii’s largest taxicab company, supports the bill, although he’d like to see it go further. According to Higa, Bill 36 should address ride-hailing surcharges.

Allowing ride-hailing companies to operate under a laissez-faire model hurts consumer safety and pocketbooks, Higa said. He maintains that unmarked cars allow drivers to make illegal pickups at the airport and at places where taxicab companies have negotiated exclusive contracts. Higa added that taxicab companies have been disadvantaged by regulations that only apply to them.

Higa said predatory pricing puts taxicab companies at similar risk. “For City Council to allow a company to come in and wreck an industry that has been here 50-something years, to me that’s disgraceful,” he said. “We’ve lost 20 percent of our drivers.”

Sheri Kajiwara, city director of customer services, said ride-hailing companies should be fare-regulated. Kajiwara supports the intent of the legislation, as does Mayor Kirk Caldwell. But she said her department would need more personnel to handle the bill’s demands, which coincide with new moped requirements.

“We continue to seek a level playing field between taxis and transportation network companies such as Uber and Lyft,” Kajiwara said. “A level playing field means creating an environment where both business models can operate under an equal set of rules. Our concerns relate to clarification of the driver certification process, cost factors and timeline for implementation.”

Kobayashi said some concerns could be addressed legislatively prior to January 2017, when the bill would take effect, and others could be tackled administratively through Kajiwara’s rule-making powers.

David Jung, owner of EcoCab, urged the committee to move Bill 36 forward, although he thinks it fails to create a level playing field.

“The journey of 1,000 miles begins with the first step. This is a great first step,” Jung said.