A
pproved Date
8/17/2022
REPLACEMENT
SUBJECT: ORDINANCE REGULATING TAXICABS IN SAN JOSE
REASON FOR REPLACEMENT
T
he Police Department has updated the recommendation regarding color scheme requirements.
The permit fee comparison table and chart have been updated to reflect an annualized fee rate for a more accurate comparison to other cities. The Finance Department has provided a policy alternative with respect to the insurance requirements following a meeting with taxicab stakeholders on August 10, 2022.
RECOMMENDATION
M
aintain the permit fee schedule, increase the insurance requirements, and direct staff to only apply color scheme requirements to the trade name and vehicle markings on the taxicab.
OUTCOME
M
aintain cost recovery for permitting taxicabs, ensure the appropriate level of liability insurance, and limit the application of color schemes to the trade name and vehicle markings for taxicabs.
BACKGROUND
O
n October 20, 2021, the City of San José (City) Mayor Sam Liccardo and Councilmember Raul Peralez presented a joint memorandum1 regarding “Taxi Issues” to the Rules and Open Government Committee dated October 14, 2021, recommending staff review and respond to the issues and concerns raised by the taxicab industry, and directing staff to delay any new 1 https://sanjose.legistar.com/View.ashx?M=F&ID=9889956&GUID=03BFB8E9-A96A-4E8E-972A-029EDD33255B TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Anthony Mata
Julia H. Cooper
SUBJECT: SEE BELOW DATE: August 16, 2022
COUNCIL AGENDA: 08/23/22
FILE: 22-1 253
ITEM: 2.1 0
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
requirements imposed on the taxicab industry until the analysis is provided to City Council. This memorandum serves to provide the requested information, analysis, and staff’s recommendation.
The taxicab industry raised concerns to four items:
1. the increased permit fees for taxicab drivers and taxicab vehicles;
2. the increased insurance requirements;
3. the taxicab color schemes (paint colors); and
4. the requirement for taxicab meters in the vehicle.
ANALYSIS
The following sections contain staff’s recommended approach to each of the taxicab companies’ four concerns.
Permit Fees:
In the San José Police Department fee program, certain businesses and activities are subject to regulation. Fees are charged to offset the costs for processing permits and licenses that accompany the regulatory process, and to partially offset costs for related investigative work.
The 2022-2023 permit fee schedule for taxicabs
2:
Restricted Owner’s License $2,011 Per Company, Annually Taxi Company Application $7,520 Per Application
Taxi Company Renewal $504 Per Application (1 Year)
Taxicab Driver’s Permit – New $676 Per Initial Permit
Taxicab Driver’s Permit – Renewal $387 Per Two Year Renewal Taxicab Driver’s Permit – Missed/Retest $318 Per Retest Taxicab Vehicle Inspection/Re-inspection $233 Per Inspection/Re-inspection
The following is a chart and graph of taxicab permit fees from 2015 – 2021 for the City of San José.
3 2015 2016 2017 2018 2019 2020 2021
New Taxi Driver $333 $355 $384 $480 $550 $550 $623
Renew Taxi Driver $98 $104 $108 $135 $168 $168 $352
Retest $220 $171 $244 $315 $308 $307 $326
Inspection/Reinspection $98 $56 $82 $123 $150 $150 $195 Taxi perm it fees
2 https://www.sjpd.org/records/fees/permit-fees
3 https://www.sanjoseca.gov/your-government/departments-offices/office-of-the-city-manager/budget/budget-documents
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
$0
$100
$200
$300
$400
$500
$600
$700
2015 2016 2017 2018 2019 2020 2021
Taxi permit fees - San Jose
New Taxi Driver Renew Taxi Driver Retest Inspection/Reinspection
Below is the taxicab company fees from 2015 – 2021.4
Taxi Company Permit Fees
2015 2016 2017 2018 2019 2020 2021
Restricted Owner's license $1,747 $1,853 $2,164 $1,996 $1,952 $1,942 $2,063 Taxi company application $6,612 $6,938 $8,071 $7,464 $7,287 $7,242 $7,701 Taxi company renewal $1,586 $1,681 $1,972 $500 $490 $487 $517
4 https://www.sanjoseca.gov/your-government/departments-offices/office-of-the-city-manager/budget/budget-documents $0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2015 2016 2017 2018 2019 2020 2021
City of San José Taxi Company Permit Fees
Restricted Owner's license Taxi company application
Taxi company renewal
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
The table below summarized the survey results of major cities within California of taxicab permitting fees5:
City
Taxicab
vehicle
permit
Vehicle
inspection
Transfer
driver
permit
Taxicab
driver
new
permit
Taxicab
driver
renewal
application
Los Angeles $304 $174 N/A $98 $104
San Diego $350 $172 $200 $183 $154
San José $195 $195 $176* $311* $176*
Sacramento $90 $100 $100 $190 $195
Oakland $960 $495 $31 $251 $57
*Annualized
The taxicab permit fees listed in the above chart are found on each city’s public website for the fee schedule (see footnotes). The taxicab permit fees for drivers renew every 2 years in San José.
They are reasonably similar to other cities in California such as Los Angeles, San Diego, Sacramento, and Oakland, which are annual fees.6
5 Los Angeles: https://codelibrary.amlegal.com/codes/los_angeles/latest/lamc/0-0-0-164780#JD_71.06.1.
Oakland: https://cao-94612.s3.amazonaws.com/documents/Master-Fee-Schedule-FY-2020-21-28-Jul-20-Updated.pdf Sacramento: https://www.cityofsacramento.org/Online-Services/FeeChargeSearch San Diego: https://www.sdmts.com/business-center/for-hire-vehicle-administration/fees; https://www.sdsheriff.gov/i-want-to/get-a-permit-or- license/regulatory-licenses-and-fees
San José: https://www.sanjoseca.gov/your-government/departments-offices/office-of-the-city-manager/budget/budget-documents 6 San Francisco utilized a medallion system that was not comparable to San Jos é’s permit fees. $0
$200
$400
$600
$800
$1,000
$1,200
Taxicab vehicle
permit
Vehicle inspection Transfer driver
permit
Taxicab driver new
permit
Taxicab driver
renewal application
Comparison of Taxicab Permitting Fees for San Jose and
Other Major California Cities
Los Angeles San Diego San José Sacramento Oakland
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
Recommendation: Permit fees should remain in effect to provide adequate cost recovery for the processing of the permits. As outlined above, calculating fees for permits are based on those City staff involved with processing the permits and the number of hours for processing. The Permits Unit recently implemented an online application process and expects to shorten the processing time as staff becomes fully trained. A time task analysis will be completed by December 2022.
Insurance:
The City requires minimum levels of liability insurance as part of the taxi permit process to ensure that taxicab companies can meet their obligations to passengers and other third parties (such as other motorists, pedestrians, and bicyclists) in the event of bodily injury or property damage arising from a vehicle accident. The minimum limits of liability are intended to address the possibility of severe claims, such as a fatality(ies) arising from a vehicle accident.
Consistent with the insurance required of a charter-party carrier of passengers as defined by the California Public Utilities Commission
7, the City’s insurance requirements are set based on
vehicle seating capacity.
Vehicle Seating Capacity Amount of Coverage
Seven passengers or less $ 750,000
Eight passengers through fifteen passengers (inclusive) $1,500,000 Sixteen passengers or more $5,000,000
Presently, taxicab companies are exempt from the requirements for vehicles with seven passengers or less as the City requires taxicab companies to maintain auto liability insurance with at least $300,000 in combined single limits for bodily injury and property damage. The auto liability insurance requirement of $300,000 applies to permits issued to taxicab companies by both the Police Department. The Airport Department requires taxis meet downtown permitting requirements prior to issuing a permit to operate at the Airport. Benchmarking with peer agencies in the Bay Area indicates the following insurance requirements for taxicab companies.
Government Agency Amount of Coverage
City of Oakland and Port of Oakland8 $1,000,000
City and County of San Francisco9 $1,000,000 Temporarily Reduced to $ 300,000 City of Los Angeles10 $ 300,000
City of San Diego11 $ 300,000
City of Sacramento12 $ 500,000
7 https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M169/K870/169870310.pdf#115 8 https://library.municode.com/ca/oakland/codes/code_of_ordinances?nodeId=TIT5BUTAPERE_CH5.64TA_5.64.090INRE 9 https://www.sfmta.com/notices/temporary-modification-taxi-insurance-requirements-12-month-extension-1 10 City of Los Angeles Municipal Code Section 71.14
11 https://www.sdmts.com/business-center/for-hire-vehicle-administration/permits 12 City of Sacramento City Code 5.136.440 Automobile liability Insurance Required
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
In response to the impact of the COVID-19 pandemic on the San Francisco taxi industry, the San Francisco Municipal Transit Authority authorized a temporary modification of the auto liability insurance required of taxicab companies from a minimum amount of $1,000,000 to $300,000
13. The temporary modification, effective June 24, 2020, has been extended through June 30, 2023.
Recommendation: Staff recommends revising the auto liability insurance requirement applicable to taxicab companies from a minimum of $300,000 in combined single limits for bodily injury and property damage to a minimum of $750,000 combined single limit for bodily injury and property damage.
Increase in Claims Severity: Automobile liability limits of $300,000 are low and would not provide adequate protection for taxicab passengers or other third parties seriously injured in a vehicle accident caused by a taxicab company, particularly one that involved a fatality. Absent insurance, local taxicab companies would not have the financial resources to address a severe auto loss. Notwithstanding the reduction in vehicle miles traveled, vehicle accident fatalities have been increasing throughout the COVID-19 pandemic. The National Safety Council estimate of total motor-vehicle deaths for 2021 is 46,020, up 9% from 42,339 in 2020 and up 18% from 39,107 in 2019
14. Additionally, information from data aggregator Advisen indicates the median cost of a single-fatality loss has risen steadily since 2011, and increased another 16% to $5.1 million in 2019
15. According to data from the Center for Risk and Uncertainty Management at the University of South Carolina, commercial auto liability rates have increased since the start of the pandemic, driven by material increases in the severity of auto liability losses even though loss frequency has trended downward since the start of the pandemic due to reductions in the number of miles driven
16. Local taxicab companies have advised that an increase to the minimum insurance requirement for auto liability would raise the taxicab companies’ costs by $3,000 to $3,850 per vehicle per year as there is a limited amount of insurers available to provide auto liability insurance for taxicab exposures.
Consistency with Regulation of Passenger Carriers: Increasing the minimum limits requirement for taxicab companies from $300,000 to $750,000 would also provide consistency in the regulation of passenger carriers throughout the City. The minimum coverage requirements are also consistent with that of other jurisdictions such as the California Public Utilities Commission, the City of Oakland, and the City and County of San Francisco, though San Francisco has reduced the minimum coverage amount from $1,000,000 to $300,000 on a temporary basis.
Moreover, most taxicab companies are purchasing limits in excess of the new requirements.
Certificates of insurance for 22 taxicab companies that have provided the City evidence of insurance since 2008 show that 13 taxicab companies evidenced minimum liability coverage of $1,000,000.
13 https://www.sfmta.com/notices/temporary-modification-taxi-insurance-requirements-12-month-extension-682020 14 https://injuryfacts.nsc.org/motor-vehicle/overview/preliminary-estimates/ 15 https://www.advisen.com/tools/fpnproc/fpns/articles_new_1/P/362243669.html?rid=362243669&list_id=1 16 Overview & Outlook for the P/C Insurance Industry: Challenges and Opportunities in the Post-COVID Era pages 48 and 49
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
Color Scheme:
The taxicab color schemes are regulated by the San José Municipal Code.
Section 6.64.160 requires the applicant to provide “The applicant’s trade name and distinguishing vehicle markings, color or colors.”
17 Section 6.64.180 states a taxicab license application may be denied when the “applicant’s proposed color scheme or other marking, design or insignia, will tend to confuse the identification of taxicabs which applicant proposes to operate with those operated under existing taxicab licenses.”
18 Section 6.64.370 subsection (A) requires the trade name and distinguishing vehicle markings “contrast distinctly with the color of the body of the taxicab.” Subsection (B) requires, “The owner and the driver shall maintain the paint, color scheme, decals and lettering on the exterior of a taxicab in good condition and in the same condition as originally approved by the chief of police.”
19 Recommendation: The San José Municipal Code requiring unique and distinct color schemes should remain, but the color schemes should apply to the trade name and vehicle markings, not the body paint color. Staff will not require the taxicab company to maintain a specific vehicle paint color so long as the Police Department approved trade name and vehicle markings sufficiently contrast with the color of the body of the taxicab.
Vehicles should continue to have Police Department approved distinct markings, insignia, colors that are permanently affixed to the vehicle. The decals must be permanently affixed to their vehicles to clearly distinguish these taxis from other non-taxis or other taxi companies. The recommendation is consistent with ordinances San José Municipal Code sections 6.64.160 subsection (B), 6.64.180 subsection (D), and 6.64.370 subsection (B).
20 Taximeter:
San José Municipal Code section 6.64.090 states “A ‘taxicab’ is a passenger vehicle for hire, used to transport passengers on public streets. The charge for the use of a taxicab is determined either:
A. By a taximeter; or
B. As a prearranged fare/rate provided by app”
21 17 https://library.municode.com/ca/san_jose/codes/code_of_ordinances?nodeId=TIT6BULIRE_CH6.64TALISERE_PT4TALI_6.64.160AP 18 https://library.municode.com/ca/san_jose/codes/code_of_ordinances?nodeId=TIT6BULIRE_CH6.64TALISERE_PT4TALI_6.64.180GRDE 19 https://library.municode.com/ca/san_jose/codes/code_of_ordinances?nodeId=TIT6BULIRE_CH6.64TALISERE_PT4TALI_6.64.370IDTA 20 https://library.municode.com/ca/san_jose/codes/code_of_ordinances?nodeId=TIT6BULIRE_CH6.64TALISERE_PT1TAENPR 21 https://library.municode.com/ca/san_jose/codes/code_of_ordinances?nodeId=TIT6BULIRE_CH6.64TALISERE_PT2DE_6.64.100TA
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
The San José Municipal Code regulating ground transportation at the airport provides direction to providers regarding the need for a taximeter under section 25.08.730 (B):
“
Except for ground transportation providers operating a taxicab at a prearranged fare/rate provided by app as permitted under Chapter 6.64 of Title 6 of this Code, each ground transportation provider operating a taxicab using a taximeter shall ensure that its taximeter is accurate and shall charge passengers only pursuant to a properly working taximeter.” 22
Recommendation: Taxicab inspections had required a taximeter to be in the vehicle. Currently, some taxicabs use a software application or “app” to allow consumers to determine their rate, route taken, and estimated time of wait similar to the ones used by rideshare companies such as Uber and Lyft. Staff will no longer require a taximeter in the vehicle as long as the taxicab driver is utilizing an app to determine the fares.
CONCLUSION
The recommendation responds to the taxicab industry concerns regarding taxicab permits, insurance increase, color schemes, and taximeter requirements. The recommendation also strikes a balance with the City’s needs for regulating the taxicab industry and obtaining only the necessary fees to maintain its operation.
EVALUATION AND FOLLOW-UP
This memorandum will not require any follow-up from staff.
CLIMATE SMART SAN JOSÉ
The recommendation in this memorandum has no effect on Climate Smart San José energy, water, or mobility goals.
POLICY ALTERNATIVE
Alternative #1: Phase in the increase to the minimum insurance requirements for auto liability insurance by increasing the requirement to $500,000 as of October 1, 2022, and to $750,000 effective July 1, 2024.
Pros: Incrementally increases resources available for severe auto losses but allows the taxicab companies additional time to identify revenue sources to pay for the incremental insurance coverage.
22https://library.municode.com/ca/san_jose/codes/code_of_ordinances?nodeId=TIT25AI_CH25.08COAC_PT7GRTRPR_25.08.730GRTRPRESRE
HONORABLE MAYOR AND CITY COUNCIL
August 16, 2022
Subject: Ordinance Regulating Taxicabs in San José
Cons: This alternative does not address severe auto losses that occur in the interim period as well as the recommended option.
Reason for not recommending: Staff recommends increasing the requirement to $750,000 as the most practical change to balance the interests of the taxicab companies and third party stakeholders (such as taxicab passengers, other motorists, pedestrians, and bicyclists)
PUBLIC OUTREACH
The Police, Airport, and Finance Departments contacted taxi companies operating in San José for information and input for the memorandum, including a videoconference on August 10, 2022. This memorandum will be posted on the City’s Council Agenda website for the August 23, 2022 City Council meeting.
COORDINATION
This memorandum has been coordinated with the Airport Department, the City Attorney’s Office and the City Manager’s Budget Office.
COMMISSION RECOMMENDATION/INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-005, Adjustment to Fees, Rates and Fares without changes to or expansion of services.
/s/
ANTHONY MATA
Chief of Police
/s/
JULIA H. COOPER
Director of Finance
For questions about the taxi permit fees, color schemes, and meter requirements, please contact Lieutenant Jason Kidwell, San José Police Department, Permits Unit at [email protected]
. For questions regarding insurance, please contact Miguel Bernal, Risk Manager, City of San José Finance Department, at [email protected].