City Council
Report
City Council Regular Meeting: November 10, 2015
Agenda Item: 7.E
1 of 23
To: Mayor and City Council
From: David Martin, Director, Planning and Community Development, Planning and Community Development
Subject: Introduction for First Reading of Ordinances Amending Chapters 6.48, 6.49, and 6.50 of the Santa Monica Municipal Code Modifying Provisions of the Vehicle for Hire Regulations, Taxicab Franchise Regulations, and Definition of Pedicab; Ordinances Extending the Taxicab Franchises of Bell Cab, Independent Taxicab Owners Association, Metro Cab, Taxi! Taxi!, and Yellow Cab; Adopt a Resolution Establishing Taxicab Franchise Fees, Permit fees, and Taximeter Rates; and, Direct Staff to Research Options that Would Consider Changes to the Taxicab Franchise Program that Would Make Companies More Accountable to Market Forces Rather than City Regulations.
Recommended Action
Staff recommends that the City Council:
1) Introduce for first reading the attached ordinance amending Chapters 6.48, 6.49, and 6.50 of the Santa Monica Municipal Code modifying provisions of the vehicle for hire regulations, taxicab franchise regulations, and definition of pedicab (Attachment K);
2) Introduce for first reading the attached ordinances modifying and extending the taxicab franchises of Bell Cab, Independent Taxicab Owners Association, Metro Cab, Taxi! Taxi!, and Yellow Cab (Attachments L, M, N, O, P); 3) Adopt the attached resolution modifying taxicab franchise fees, permit fees, and taximeter rates (Attachment S); and
4) Direct staff to research options for changes to the taxicab franchise program that would make companies more accountable to market forces rather than City regulations.
Executive Summary
On March 1, 2011, the City implemented a new taxicab franchise system in response to concerns with the open licensing system. The current franchises expire on December 31, 2015. Due to the disruptive nature of Transportations Network Companies (TNCs) on the vehicle for hire market, staff is recommending changes to regulations to assist with competing with TNCs, a reallocation of taxicab vehicles to more accurately represent the needs, impacts, and service delivery, and extension of the five existing franchise agreements for two years. Staff is also recommending clarifying the definition 2 of 23
of vehicle for hire operations that operate solely in Santa Monica and adding minimum insurance requirements on all non-taxi vehicle for hire operations; and clarification of the definition of pedicabs to include motorized pedicabs.
Background
Based on the recommendations of a 2008 study by Nelson\Nygaard Consulting Associates (see Attachment A) of taxicab operations in Santa Monica, on July 28, 2009, Council adopted an ordinance establishing a franchise-based system for the regulation of taxicabs (see Attachment B), which required the program to be self-supporting through franchise, vehicle permit, and driver permit fees. In compliance with the ordinance requirements, a Request for Proposals (RFP) for citywide taxicab franchises was issued on January 14, 2010.
On November 23, 2010, the Council awarded franchises by ordinance to Bell Cab Company, Inc. (Bell Cab); Independent Taxi Owners’ Association (ITOA); Metro Cab Company, LLC (Metro Cab); TMAT Corp., dba Taxi! Taxi! (Taxi! Taxi!); and L.A. Taxi Cooperative, Inc., dba Yellow Cab Company (Yellow Cab) (see Attachment C). The ordinances established the terms and conditions of the franchise for each company, which set the effective date for the franchise for January 1, 2011. The terms and conditions were subsequently agreed to by each company. On January 11, 2011, and October 11, 2011, Council adopted amendments to the terms and conditions to increase the fleet size for each franchisee and to adjust the permit year from a fiscal year to a calendar year (see Attachments D and E respectively). On May 22, 2012, Council transferred the taxicab franchise of Metro Cab Company, LLC to All Yellow Taxi dba Metro Cab (Metro Cab) (see Attachment F).
In preparation for the expiration of the Taxicab Franchise agreements on December 31, 2015, staff held a study session with Council at its March 17, 2015 meeting on the taxicab franchise and the impact of Transportations Network Companies (TNCs), such as Uber and Lyft, on the transportation market (see Attachment G). Council directed staff to review changes to the regulatory program to assist taxicab companies in light of the arrival of TNCs.
3 of 23
Discussion
Due to the disruptive nature of TNCs on the vehicle for hire market, staff is recommending changes, as outlined in this report, to the taxicab franchise program.
Staff is also recommending that the franchises for all five companies be extended for two years with some modifications. The two year agreement will allow for an incremental approach to changes to a highly volatile market and will allow more time to evaluate the impacts of the arrival of Expo in 2016.
Staff is also recommending that:
1. Minimum insurance requirements be established for vehicles for hire that operate solely within Santa Monica and that are not regulated by the State of California, and
2. A minor clarification be made to the pedicab definition to include pedicabs with small motors, similar to a motorized bicycle.
Taxicabs - Outreach
In preparation for the March 17, 2015 study session, staff met jointly with all five taxicab franchisees on January 8, 2015. All five companies where encouraged to provide their recommendations to regulatory changes to assist with competing with TNCs. Four of the existing franchisees, Bell Cab Company, Inc., Independent Taxi Owners’ Association, Metro Cab Company, LLC, and L.A. Taxi Cooperative, Inc., dba Yellow Cab Company (“Taxicab Coalition”)1 submitted a joint letter with detailed recommendations on both regulations and vehicles for staff and Council to consider (see Attachment C of Attachment G of this report). Taxi! Taxi! submitted its own letter with its recommendations on vehicles (see Attachment D of Attachment G of this report). During the study session, Council directed staff to consider options for reducing taxicab regulations to assist companies with competing with TNCs and to consider if regulations were necessary for in-city vehicles for hire.
1 . For simplicity, these four companies will be jointly referred to as the “Taxicab Coalition” in this report. 4 of 23
On August 17, 2015 staff sent letters to each franchisee outlining a draft summary of the proposed changes to the current taxicab regulatory scheme (see Attachment H).
Franchisees were encouraged to schedule individual meetings with staff to discuss the proposals. The primary area of concern with the draft proposal expressed by each taxicab company in these meetings was the proposed reduction of taxicabs from 300 to 182, and the subsequent allocation of those vehicles between the five companies. The Taxicab Coalition argued for more taxicabs and Taxi! Taxi! recommended fewer taxicab vehicles and fewer franchisees. The taxicab companies were asked to submit written responses to the draft recommendations. As before, the Taxicab Coalition submitted a letter for its four members (see Attachment I) and Taxi! Taxi! submitted a letter on its own to staff and to Mayor Kevin McKeown with a petition from drivers (see Attachment J). The companies outlined their positions on the total number of vehicles that should be authorized and why. With the outline of staff’s recommendations below, alternatives are presented based on the recommendations offered by the Taxicab Coalition and Taxi! Taxi! for Council’s consideration.
Taxicabs - Long Beach Taxicab Regulatory Changes
The Long Beach City Council recently adopted new regulations in response to a request from Yellow Cab Long Beach (now Yellow Long Beach) to address the competitive pressures of TNCs. Long Beach is also currently served by only one taxicab company (i.e. Yellow Cab). According to a May 13, 2015 Los Angeles Times article, Long Beach Mayor Robert Garcia said that the new regulations to help taxis stay competitive was not a knock on TNCs, but a way to protect a "community partner" that provides a service for tourists, the elderly and the disabled.
The city removed price floors on rates (which allows Yellow Cab to offer lower rates and coupons) and approved the addition of 24 new taxis to the fleet, bringing the total to 199, even though there was a reported decline of approximately 15% in business with the 175 taxis already licensed. Long Beach also approved new rebranding for Yellow Cab with a new name Yellow Long Beach, a new logo, and a mobile app called Ride Yellow, which appears to be a rebranded version of their app called Curb, which was formerly called TaxiMagic.
5 of 23
The company claims that the lower rates would increase the demand, however this would not directly assist drivers, unless the company absorbed the cost of the discount.
The addition of more taxicabs provides for an opportunity for the company to lease more vehicles regardless of whether or not taxicab drivers have access to more customers.
Taxicabs - Proposed Amendments
The staff recommendations for taxicabs are outlined later in two sections of this report:
Regulations - Rules and procedures for how the program is implemented. Vehicles - The total number of vehicles authorized to operate and the allocation of those vehicles
Franchise and Permit Fees
Taximeter Rates
The recommended changes to the regulations are based mostly on the specific recommendations made in a January 27, 2015 letter jointly signed by the “Taxicab Coalition”.
In addition to minor administrative changes to the taxicab programs rules and regulations, such as minor changes to address technological changes in the marketplace, staff proposes the following material changes to the program. These changes are governed by Chapter 6.49 of the Santa Monica Municipal Code (SMMC), the Taxicab Franchise Agreement, and the Taxicab Rules.
The draft ordinance amending Chapter 6.49 of the SMMC is included as Attachment K and the draft ordinances extending the franchises are attached as follows:
Bell Cab Company, Inc. - Attachment L
Independent Taxi Owners’ Association - Attachment M
All Yellow Taxi (dba Metro Cab) - Attachment N
TMAT Corp., dba Taxi! Taxi! - Attachment O
6 of 23
L.A. Taxi Cooperative, Inc (dba Yellow Cab) - Attachment P Because of the rapidly changing vehicle for hire market in California, staff is proposing an incremental approach, instead of a full revamping of the program, to assist taxicab companies in competing with TNCs while still advancing the City’s priorities.
Staff is recommending that the franchises of all five taxicab companies be extended for two years to allow for consideration of further changes in the near future to the program as the market adapts, as well as to allow time for impacts to the local Santa Monica vehicle for hire market from the arrival of Expo. This recommendation is not based on the performance of the companies. Instead staff is recommending that this decision be delayed for two years. The expiration date of the two year franchise agreements would be midnight December 31, 2017. This date is also consistent with when the City of Los Angeles franchise agreements expire.
Regulations
Following are regulatory changes to the program proposed by staff. The taxicab companies have not expressed any significant disagreement with these proposals which are in in most cases based on the recommendations from the taxicab companies.
Later in this report, under the section of vehicles, staff outlines recommendations for the total number of vehicles to be awarded and how these vehicles should be allocated among the five franchisees.
7 of 23
Proposed Regulatory Change Governed By
SMMC Franchise
Agreement
Rules
1 Establish two types of vehicle permits: Full Time
Permit and a Part Time Permit. A full time vehicle
permit allows a company to dedicate the vehicle to
Santa Monica. The full time vehicle may not be
permitted to also operate in the City of Los Angeles;
however, full time vehicles may be permitted in other
jurisdictions with approval. A part time vehicle
permit requires the vehicle to also be permitted by
the City of Los Angeles. A Part Time vehicle counts
as 50% of a vehicle when calculating Full Time
Equivalency (this is discussed further in the Vehicle
section below).
x X
2 Vehicle Flexibility - Allow each of the franchises to remove from service vehicles based on demand.
This would allow companies to suspend auto
insurance on the vehicle while it is out of service.
This would allow them to reduce costs by not having
to pay for insurance during slower demand periods,
allowing the fleet to “ebb and flow”. The Taxicab
Coalition requested that they be allowed to remove
25% of their fleets from service. Staffs proposal
does not include a limit.
X X
3 Pricing Flexibility - Remove pricing floors. Maximum
rates would still apply. The change would allow
companies to establish promotional pricing including
flat rates, package deals with groups, employers, etc.
This proposal does not change the existing ban on
companies establishing exclusive deals with hotels.
The Taxicab Coalition requested this change. An
additional provision has been added to make it illegal
for a company to charge discounted or flat rates
other than that which has been advertised or agreed
to in advance with the passenger.
X X X
8 of 23
Proposed Regulatory Change Governed By
SMMC Franchise
Agreement
Rules
4 Driver Permits - Change the permit period from one
year to a prorated permit that would expire at
midnight on December 31, 2017. The proposed
permit would be prorated so that a driver paid an
amount equal to the number of months remaining in
the franchise agreements. The Taxicab Coalition
requested a two year driver permit. Staff has no
objections to a two year permit, which is consistent
with Los Angeles, however, since the proposal is for
a two year franchise, all driver permits must expire at the end of the franchise period, so providing a
prorated permit fee would accomplish the same goal.
Permit fees are based solely on cost recovery, so the
permit fees would be the same, with standard CPI
increases or changes based on fee studies. Drivers
pay the driver permit fees. If Council should extend
the franchises beyond two years, driver permit
expiration dates would be adjusted accordingly.
x X
5 Transfer rule making authority from the Police
Department to Planning and Community
Development (PCD). All other aspects of the
Taxicab program have been transferred to PCD,
such as permitting and enforcement. Transfer of the
rule making authority would complete this transition.
x
6 LADOT Smartphone App - Allow participation in any
Los Angeles Department of Transportation electronic
hailing Smartphone app and reciprocity program that
may be launched.
x
7 Carpooling - Clarification of “full use of taxicab” to allow for carpooling or ride sharing types of services
by taxicabs.
x
8 Delivery of Goods – Ban taxicab companies and
drivers from providing non-passenger delivery
services (e.g. food, gods, marijuana).
x
9 of 23
Other Requests
The Taxicab Coalition requested that the City waive the business license tax fees, claiming that no other city requires a payment of franchise fees and business license tax and that the City’s franchise fees are the highest in the region. The Taxicab Coalition claims that the franchise fee is based on the value that the franchise brings to the franchisee. In their letter dated September 23, 2015, the coalition states “[W]here our business is drastically down due to the encroachment of unregulated businesses who pay no fees to the City, the value of our franchises have dropped considerably.” Because of the incremental approach to the changes that staff is proposing, staff does not recommend a waiver to the business license fee of $250 per vehicle at this time. A waiver could be considered in a future modification to the program with any franchise fee changes.
All five companies have requested that the processing time for permits be reduced.
Most of the processing time is for background checks and driver testing. Staff will review options for driver testing to reduce the amount of time it takes to obtain a permit however, staff is not recommending the elimination of testing at this time. Background checks are dependent on both the California Department of Justice to process fingerprints and the Police Department to complete a thorough background check. It has been requested by the taxicab industry to provide provisional permits until the background check has been completed. Staff does not recommend any changes to the background check requirements or the implementation of provisional driver permits at this time.
Rules
Attached is a redline version of the rules with changes that staff expects to make pending adoption of the attached amendments to Chapters 6.48, 4.49, and 6.50 of the SMMC and the Taxicab Franchise Agreements (see Attachment Q). 10 of 23
Vehicles
Taxicab Trips Originating in Santa Monica
Santa Monica taxicabs have experienced a 27% reduction in trips in 2014 when compared to 2013. See Chart A below.
Chart A
2013 Trips 2014 Trips
Percent Change
Trips
2013 to 2014
Market Share
2015
Bell Cab 69,806 48,987 -30% 9%
ITOA 156,279 115,127 -26% 20%
Metro 179,289 129,139 -28% 23%
Taxi! Taxi! 277,293 197,835 -29% 35%
Yellow Cab 93,196 76,325 -18% 13%
All Taxicab Companies 775,863 567,413 -27% 100%
The industry continues to report declines in overall trips in 2015 with a 51% reduction in the first seven months of calendar year 2015 over the first seven months of calendar year 2013. See Chart B below.
Chart B
2013 Trips
Jan-Aug
2015 Trips
Jan-Aug
Percent Change
Trips
2013 to 2015
Jan-Aug
Market Share
2015
Jan-Aug
Bell Cab 46,381 18,315 -61% 7%
ITOA 107,030 52,910 -51% 20%
Metro 118,794 54,947 -54% 21%
Taxi! Taxi! 193,195 93,391 -52% 35%
Yellow Cab 83,203 47,542 -43% 18%
All Taxicab Companies 548,603 267,105 -51% 100%
11 of 23
Since flag downs are considered by some companies to be an unreliable reflection of the number of trips a company completes, even when excluding flag down trips, and instead only considering dispatched trips through the companies dispatching systems reported by the companies, there has been a decrease in requests for service calls of 57% from January to August for 2013 to 2015. Chart C below shows a breakdown by company of the decrease in reported dispatched trip, which also demonstrates a clear decline in trips.
Chart C
2013
Dispatched
Trips
Jan-Aug
2015
Dispatched
Trips
Jan-Aug
Percent Change
2013 to 2015
Dispatched Trips
Jan-Aug
Market Share
2015
Jan-Aug
Bell Cab 13,813 6,832 51% 6%
ITOA 15,833 7,058 55% 6%
Metro 53,220 28,292 47% 24%
Taxi! Taxi! 135,210 65,248 52% 55%
Yellow Cab 60,432 11,274 81% 9%
All Taxicab
Companies
278,508 118,704 57% 100%
Although it is not possible to know specifically the cause of the decline, it clearly coincides with the arrival of Transportation Network Companies (TNC); Uber officially launched in Los Angeles on March 8, 2012. It is also unclear if other factors may be contributing to the decline.
Determining the Number of Vehicles
The current number of vehicles authorized to operate is 300. However, the allocation of vehicles did not take into account whether or not a vehicle serves Santa Monica on a full time basis or on a part time basis. The 2008 Nelson/Nygaard Taxicab study recommended 210 Full Time Equivalent vehicles, meaning that a factor should be taken into consideration in establishing the authorized number of vehicles based on whether 12 of 23
or not vehicles are operating in Santa Monica on a full time basis or part time basis.
Therefore taxicab companies have full discretion to determine if a vehicle is operating in Santa Monica on a full time or part time basis. The Taxicab Coalition has requested that they maintain this discretion. Staff is recommending that vehicle allocations be awarded specifically for full time or part time vehicles to ensure greater control over the total number of vehicles that impacting local streets.
Staff is recommending that Council authorize no more than 182 full time equivalent taxicabs based on factors outlined in Attachment R which has taken in to account the number of full time leases, dedicated vehicles, and market share of the company. The analysis is based on 2014 trip data, the most recent full year of data available.
Vehicle Allocation by Company
For the purpose of this discussion, Full Time Equivalency (FTE) is the amount of time a vehicle operates in Santa Monica as compared to a full time basis. FTE distinguishes between vehicles that are spending 100% of their time serving Santa Monica and those that are license in both Santa Monica as well as Los Angeles, thereby serving a much broader market. These vehicles are present in Santa Monica far less than vehicles that are only permitted by Santa Monica but would be authorized to operate in Santa Monica during peak periods. For example if a taxicab company is authorized to operate 100 FTE vehicles, the taxicab company could be issued 50 full time vehicle permits and 100 part time vehicle permits for a total of 100 FTE Vehicles. The formula would be:
50 F/T vehicles + (100 P/T vehicles x 50%) = 100 Full Time Equivalent Vehicles The use of 50% as the part time factor is used for convenience since it is difficult to determine how much time a vehicle that is permitted in both Santa Monica and Los Angeles actually operates in Santa Monica. Additionally, many Los Angeles permitted vehicles are also permitted in other jurisdictions, such as Beverly Hills, West Hollywood, Culver City, and Los Angeles County. Staff is recommending that companies continue to have the discretion to offer 12-hour or 24-hour leases in any mix it chooses. 13 of 23
The following chart outlines the proposed Full Time Equivalent vehicles and breakdown by Full Time and Part Time permits. Column E represents the actual number of vehicles that would be permitted to operate.
Company
(A)
Proposed
Full Time
Equivalent
Vehicles
(B)
Proposed
Full Time
Vehicle
Permits
(C)
Proposed
Part Time
Vehicle
Permits*
(D)
Actual
Proposed
Total
Vehicles
Permitted
(E)
Bell Cab 16 2 28 30
ITOA 38 32 12 44
Metro Cab 42 32 20 52
Taxi! Taxi! 62 62 0 62
Yellow Cab 24 2 44 46
Totals 182 130 104 234
*Vehicles in this category are also permitted to operate in the City of Los Angeles for Bell Cab, ITOA, and Yellow Cab. For Metro Cab these vehicles are permitted to operate as Access vehicles outside of Santa Monica.
Based on this proposal, the total change in the number of vehicles would be reduced by 66 or 22%. The actual change to the current allocation is minimal considering the significant drop in vehicle trips and when compared to the original number of FTEs recommended by Nelson/Nygaard in its 2008 study. The key change is that by adjusting the permitting to include specific full time and part time vehicle permits, the allocation will provide more control than the current system over how many vehicles are dedicated to operating only in Santa Monica and is more consistent with the original recommendations by the 2008 Nelson/Nygaard study recommendations.
The following chart provides a comparison of the change in vehicle allocation to the current allocation:
14 of 23
Company
Current
Authorized
Vehicles
Current
Full
Time
Proposed
Full Time
Current
Part
Time
Proposed
Part Time
Proposed
Total
Authorized
Vehicles
Change in
Total
Vehicles
from
Current
Allocation
to
Proposed
Allocation
Percent
Change
in Total
Vehicles
Bell Cab 58 12 2 46 28 30 -28 -48%
ITOA 58 47 32 11 12 44 -14 -24%
Metro Cab 63 43 32 20 20 52 -11 -17%
Taxi! Taxi! 63 63 62 0 0 62 -1 -2%
Yellow Cab 58 43 2 15 44 46 -12 -21%
Totals 300 208 130 92 104 234 -66 -22%
Taxicab Coalition - Vehicle Allocation Alternative Proposal As noted earlier in this report, the taxicab companies were encouraged to provide written responses to the proposals outlined by staff in the August 17, 2015 letter sent to each company. The recommended allocation by the Taxicab Coalition was originally to maintain the current level of vehicles with no changes to allocation. In response to the August 17, 2015 letter and subsequent individual meetings with each company, the Taxicab Coalition of four companies have proposed reducing the total number of vehicles to 266 (32 more than staff’s proposal) with a total of 213 FTE vehicles (31 more than staffs proposal). The recommendation also proposes a distribution of vehicles that does not take into account market share, but instead proposes essentially a numerically an equal division of vehicles between companies.
The chart on the next page shows the breakdown recommended by the Taxicab Coalition.
15 of 23
Taxicab Coalition Recommendation
Company
Proposed
Full Time
Equivalent
Vehicles
Proposed
Full Time
Vehicle
Permits*
Proposed
Part Time
Vehicle
Permits*
Actual
Proposed
Total
Vehicles
Permitted
Bell Cab 33 15 35 50
ITOA 41 32.5 17.5 50
Metro Cab 48 38 20 58
Taxi! Taxi! 58 58 0 58
Yellow Cab 33 15 35 50
Totals 213 158.5 107.5 266
*Fraction resulted due to the proposal containing percentages instead of actual numbers. The final numbers would need to be rounded to reflect a whole number.
Taxi! Taxi! - Vehicle Allocation Alternative Proposal
Taxi! Taxi! made several recommendations in its response to the August 17, 2015 letter and subsequent individual meeting with the company. Taxi! Taxi!’s original request was to reduce the number of franchisees to two and to reduce the total number of vehicles to 125 with no distinction between full time and part time vehicles, which is 57 fewer taxicabs than recommended by staff. The two charts below provide a breakdown of Taxi! Taxi!’s proposals. The first is based on market share and proposes a total of 125 vehicles; the second is based on performance and proposes a total of 121 vehicles.
Both of Taxi! Taxi!’s proposals assume that the companies would determine how many vehicles would be full time or part time; however, only Bell would have the ability to make a vehicle part time. If Council were to choose to adopt Taxi! Taxi!’s proposal to reduce the number of vehicles to 121 and only grant franchises to Bell Cab and Taxi! Taxi, since the total number of vehicles would be very low, staff would have no objections to allowing Bell Cab the flexibility to determine how many vehicles in its fleet were full time vs. part time. For example, even if Bell Cab opted to make all of its vehicles full time, the total number of full time vehicles would still be less then staffs current proposal of 182 full time equivalent vehicles.
16 of 23
Taxi! Taxi! Proposal – Based on Market Share
Company
Proposed
Full Time
Equivalent
Vehicles
Proposed
Full Time
Vehicle
Permits
Proposed
Part Time
Vehicle
Permits
Actual
Proposed
Total
Vehicles
Permitted
Bell Cab n/a n/a n/a 8
ITOA n/a n/a n/a 8
Metro Cab n/a n/a n/a 26
Taxi! Taxi! n/a n/a n/a 63
Yellow Cab n/a n/a n/a 20
Totals n/a n/a n/a 125
Taxi! Taxi! Proposal – Based on Performance
Company
Proposed
Full Time
Equivalent
Vehicles
Proposed
Full Time
Vehicle
Permits
Proposed
Part Time
Vehicle
Permits
Actual
Proposed
Total
Vehicles
Permitted
Bell Cab n/a n/a n/a 58
ITOA n/a n/a n/a 0
Metro Cab n/a n/a n/a 0
Taxi! Taxi! n/a n/a n/a 63
Yellow Cab n/a n/a n/a 0
Totals n/a n/a n/a 121
Franchise and Permit Fees
Staff is recommending that there be no changes to fees at this time except for vehicle franchise fees for part time vehicles. Staff recommends that full time vehicle franchise fees be consistent with the current franchise vehicle fee and that part time vehicles be reduced to 50% of current vehicle franchise fees. Driver and vehicle permits are based on cost recovery so these fees are not impacted by the two-year driver permit or part 17 of 23
time vehicle permit. Any increase in permitting fees would be adjusted in accordance with standard CPI increases.
The fee structure is outlined below and the proposed Resolution is provided as Attachment S.
Franchise Fees:
Annual base franchise fee per taxicab company $5,000
Annual franchise fee per Full Time vehicle in taxicab fleet $1,100 Annual franchise fee per Part Time vehicle in taxicab fleet $ 550 (new) Vehicle Permit Fees:
New vehicle permit fee $119.86
Transfer vehicle permit fee $119.86
Renewal vehicle permit fee $ 54.58
Replacement vehicle permit fee $ 38.53
Vehicle re-inspection fee $ 29.97
Taxicab Driver’s Permit Fees:
New and renewal taxicab driver’s permit application fee $208.69 Taxicab driver’s permit re-examination fee $ 66.35
Taxicab driver’s permit transfer fee $ 66.35
Taxicab driver’s permit replacement fee $ 29.97
Santa Monica Police Department Live Scan fee* $ 67.00
*Live Scan fee established by the Police Department. Additional fees may be required by the Police Department if FBI search is required.
Rates
Staff is recommending that no significant changes be made to the existing rate structure. If Council approves removal of the rate floors by allowing companies to provide discounts beyond just airport flat rates, no changes are needed at this time since the companies will have the flexibility to lower rates as needed. By maintaining the existing maximum rates taxicab companies would not be able to implement price surging, as TNCs such as Uber has. This provides more predictability for passengers.
A passenger may pay less than the existing rates, however, it would be illegal to charge more than the base rates. Additionally, the proposed rate schedule would allow the taxi companies to negotiate different rates (higher or lower than the set rates) with another 18 of 23
entity to provide specialty prearranged transportation services for events, such as weddings, employee shuttles or carpooling services.
The current rates are outlined in the chart below and the proposed Resolution is provided as Attachment S.
Mileage Rates
$2.85 flag drop (first 1/9th mile)
$0.30 for each additional 1/9th mile ($2.70 per mile)
$0.30 for each 37 seconds waiting/delay ($29.19 per hour) Airport Flat Rates
North of I-10 to Los Angeles International Airport $35 maximum South of I-10 to Los Angeles International Airport $30 maximum Santa Monica to Bob Hope Airport $75 maximum
Senior and Disabled Discount
Senior citizens (persons age 65 and older) and persons with disabilities (including persons with a Los Angeles County Transit Operators Association Metro Disabled Identity Card) receive a ten percent (10%) discount.
Custom Rates
A taxicab company would be able to establish flat rates to any destination; however, the flat rate may not exceed the maximum that would otherwise be paid at the mileage rate established by this resolution. A taxicab company would also be able to set mileage rates, flat rates or other negotiated rates pursuant to an exclusive arrangement with any business establishment that is for the specific purpose of providing prearranged transportation services for events with multiple participants, employee shuttle services, carpooling services, or other arrangements. These rates must be filed with the City five business days prior to their implementation.
Driver Working Conditions and Income
The current business model used by the taxicab industry in Los Angeles is based on a franchise system with the local jurisdiction where companies lease vehicles to individual drivers. The taxicab company’s revenues are from vehicle leases and other services provided to the drivers, and in some cases advertising on the vehicles. The taxicab companies classify the relationship of the driver with the taxicab company as independent contractor. Lease agreements include language that the driver agrees they are self-employed and that the companies only provide vehicles and other services to 19 of 23
them. Taxicab companies also claim that they are not able to exercise “control” over drivers because of the independent contractor status, such as directing drivers where and when to work.
Under the existing system drivers do not have access to statutory benefits including, unemployment insurance, short-term disability insurance, workers compensation, or legal protections against discrimination and a minimum wage.
Staff proposes to evaluate potential changes to the taxicab program that would create a more direct connection between the taxicab companies and fare paying customers, as well as evaluate structures that could potentially allow companies to be more directly responsible to market forces instead of City regulations. By being more directly responsible to the market, it is possible that the City could eliminate the need to set vehicle limits, since companies would be incentivized by market forces to deploy only the number of vehicles that the market would support. This approach has the potential to make taxicab companies more directly responsible for customer service, safety, and working conditions.
Staff recommends that Council direct staff to research options that would consider changes to the taxicab franchise program that would make companies more accountable to market forces rather than City regulations.
In-City Vehicle for Hire Regulations
Staff recommends only minor amendments to address in-city vehicles for hire, including clarifying the definition of in-city vehicles for hire, prohibiting in-city vehicles for hire from providing non-passenger delivery services (e.g. food, goods, etc…), and establishing application approval/denial conditions for in-city vehicles for hire. In-City vehicles for hire operate only within the City of Santa Monica city limits and are not regulated by the CPUC. The draft ordinance amending Chapter 6.48 of the SMMC is included as Attachment K.
20 of 23
Pedicabs
California Vehicle Code (CVC) 312.5 defines "electric bicycle" as a bicycle equipped with fully operable pedals and an electric motor of less than 750 watts. It establishes the following three classes of electric bicycles:
1. “Class 1 electric bicycle,” or “low-speed pedal-assisted electric bicycle,” is a bicycle equipped with a motor that provides assistance only when the rider is pedaling, and that ceases to provide assistance when the bicycle reaches the speed of 20 miles per hour.
2. “Class 2 electric bicycle,” or “low-speed throttle-assisted electric bicycle,” is a bicycle equipped with a motor that may be used exclusively to propel the bicycle, and that is not capable of providing assistance when the bicycle reaches the speed of 20 miles per hour.
3. A “class 3 electric bicycle,” or “speed pedal-assisted electric bicycle,” is a bicycle equipped with a motor that provides assistance only when the rider is pedaling, and that ceases to provide assistance when the bicycle reaches the speed of 28 miles per hour, and equipped with a speedometer.
Class 3 electric bicycles are prohibited by the CVC from operating on bicycles paths or trails. The City has the authority to prohibit, by ordinance, the operation of a class 1 or class 2 electric bicycle on a bicycle path or trail, equestrian trail, or hiking or recreational trail within its jurisdiction.
Staff recommends including CVC 312.5 defined electric bicycles as pedicabs to ensure that any pedicab operator that utilizes a motor to assist the pedicab driver is subject to all pedicab regulations. Pedicabs are currently prohibited on the beach bike path when operating for hire due to due to the safety issues related to the size of the pedicab in relation to the beach bike path.
The draft ordinance amending Chapter 6.50 of the SMMC is included as Attachment K.
Next Steps for Taxicab Program
1. Implement the administrative changes to the taxicab program.
2. Issue administrative rules no later than December 31, 2015. 21 of 23
3. Monitor changes to the vehicle for hire market, particularly TNCs.
4. Prepare an analysis of driver working conditions and income as it relates to the current taxicab business model, which relies on lease revenue, as opposed to fares.
5. Return to Council by March 2017 with a status of the program and recommended changes to the taxicab franchise program that would make companies more accountable to market forces rather than City regulations, including the potential of barring Taxicab companies from using independent contractors as drivers.
Alternatives
1. Extend the franchises, maintaining the existing franchise system as it exists with no changes to the regulatory scheme or the number of vehicles authorized. This option would not address concerns related to competition with TNCs or the total number of vehicles authorized.
2. Extend the franchises, maintaining the existing franchise system with minor changes to the regulatory scheme, including allowing companies to remove vehicles from operation at their discretion to allow for flexibility and to remove price floors, with no changes to the number of vehicles. This option would be closer to the approach that Long Beach took addressing in a small way concerns related to competition with TNCs, but would not address the total number of vehicles authorized.
3. Extend the franchises of only two companies, maintaining the existing franchise system with minor changes to the regulatory scheme, including allowing companies to remove vehicles from operation at their discretion to allow for flexibility and to remove price floors, with no changes to the number of vehicles.
This option addresses in a small way concerns related to competition with TNCS and would reduce the total number of vehicles authorized. 22 of 23
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action as a result of the recommended action. Staff will return to Council if specific actions are required in the future. Staff anticipates an ongoing revenue reduction in the amount of $144,389 beginning in FY 2015-16 due to the reduction in the number of authorized vehicles and the reduced vehicle franchise fees for part time vehicles, and an additional reduction in the amount of $68,659 in revenue in FY 2016-17 due to the implementation of a two year driver permit. Revenue changes are included in the FY 2015-16 Adopted Budget and the FY 2016-17 Budget Plan.
Prepared By: Salvador Valles, Assistant Director of PCD Approved Forwarded to Council
Attachments:
A. 2008 Taxicab Study (weblink)
B. Taxicab Franchise Adopted (weblink)
C. Public Hearing & Award of Taxicab Franchises (weblink) D. Increase of Vehicles to 300 (weblink)
E. Amendments and Clarifications (weblink)
F. Assignment of Taxicab Franchise to All Yello Taxi, Inc., dba Metro Cab (weblink) G. March 2015 Study Session (weblink)
H. August 2015 Letter to Taxicab Franchises
I. September 2015 Letter from Taxicab Coalition
J. September 2015 Letters from Taxi Taxi with Addendum and Petition K. Chapters 6 48 6 49 6 50 AMENDMENTS
L. Taxicab Franchise Terms and Conditions BELL CAB AMENDMENTS 23 of 23
M. Taxicab Franchise Terms and Conditions ITOA AMENDMENTS N. Taxicab Franchise Terms and Conditions METRO CAB AMENDMENTS O. Taxicab Franchise Terms and Conditions TAXI TAXI AMENDMENTS P. Taxicab Franchise Terms and Conditions YELLOW CAB AMENDMENTS Q. Taxicab Rules Eff 1-1-2016 DRAFT AMENDMENTS
R. Vehicle Allocation Criteria
S. Taxicabs Fee Resolution final
T. Taxi Presentation - Council November 10, 2015