Edmonton city council has approved a bylaw that will allow ride-sharing companies like Uber to operate legally.

Councillors voted in favour of the bylaw on Wednesday.

The bylaw, which takes effect March 1, includes two licences: one for ride-sharing companies, called private transportation providers, and the other for taxis.

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Mayor Don Iveson said the bylaw is a result of demand for more choice in the vehicle for hire industry.

The Alberta Taxi Group said it's disappointed with the vote, saying it fails to safety and consumer protection concerns.

Uber praised the city, saying it is the first Canadian jurisdiction to adopt regulations that "embrace" ride-sharing.

"While these newly adopted regulations contain concessions for ride-sharing service providers, the rules put in place a workable regulatory approach," said the statement from Ramit Kar, general manager for Uber in Alberta.

The taxi group said Uber has been allowed to operate illegally in the city up to this point.

"We fully expect the city to finally crack down on Uber if they are still operating without the minimum requirements, such as drivers with class four licenses and provincially mandated insurance," said Pascal Ryffel, the group's spokesman.

"There will be no more excuses to turn a blind eye to Uber's illegal activity."

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Under the bylaw, both taxis and private providers must charge a minimum of $3.25 for any trip pre-arranged through a mobile app or written contract.

Only taxis will be permitted to pick up street hails or use taxi stands.

"The regulatory framework in the new bylaw helps to answer citizen and business demand for more choice in the vehicle for hire industry," said Mayor Don Iveson. "It represents a significant evolution of the industry and creates a model that will enable the taxi business and private transportation providers to co-exist."

The city said drivers will be required to provide proof of the proper insurance and class of driver's licence, as outlined in provincial law. Criminal record checks and an annual vehicle inspection by a licensed garage and mechanic will also be required.

Fines for operating without a city driver's licence or city vehicle licence under the new bylaw will be $5,000, and regular enforcement of unlicensed vehicles for hire will continue.