City Council
Report
City Council Meeting: September 26, 2023
Agenda Item: 8.E
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To: Mayor and City Council
From: Anuj Gupta, Interim Director of Transportation, Mobility (DOT) Subject: Introduction and First Reading of an Ordinance Amending Santa Monica Municipal Code Chapter 6.49 on Taxicabs to Transition from Taxicab Franchises to Taxicab Permits
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) and a finding of Categorical Exemption pursuant to Section 15301 of the California Environmental Quality Act (CEQA) Guidelines.
2. Introduce for first reading changes to the attached ordinance, SMMC 6.49, Taxicabs, that transition the City from a taxicab franchise program to a permitbased program.
Executive Summary
Taxicabs and ride-hailing services are part of the City of Santa Monica’s multimodal transportation network. With the changing nature of the taxicab industry due in part to the rise in the use of Transportation Network Companies (TNCs) like Uber and Lyft for ride-hailing services, staff recommends that the City shift from a franchise program for regulating taxicabs to a permit-based system similar to a shift that the City of Los Angeles adopted in 2022.
The current Taxicab Franchise Program is scheduled to expire on December 31, 2023.
One operator, Taxi! Taxi! meets the requirement of being “substantially located” within the City as required by California state law AB 1069, Local Government Taxicab Transportation Services, which became effective on January 1, 2019. Being “substantially located” within a jurisdiction is defined as where the taxicab company or driver is located. Under the permitting system, any company that meets the criteria 2 of 8
under AB 1069 may seek a permit. Staff recommends that the City transition to a permit-based taxicab program to reflect the changing state of the industry.
To codify the transition, staff recommends amending SMMC Chapter 6.49 as follows:
• Amend SMMC Section 6.49.060 to eliminate the Annual Franchise Fee and • Delete references to franchise and replace them with references to a permitting system.
Background
Santa Monica’s taxicab franchise was established by City Council in June 2009 due to an influx of the number of taxicabs within the City and complaints of poor customer service from drivers; confusing and high fees; lack of discounted services for seniors and residents with disabilities; and “bandit” taxis. In 2007-2008, when Nelson/Nygaard conducted a taxicab study, 412 cabs were operated by 55 companies in the City. By June 2009, the numbers increased by 24%, and 511 permitted cabs operated by 55 cab companies served a resident population of approximately 91,000.
Since 2009, drastic changes have affected the taxicab industry, most notably the rise of TNCs and shifting user behaviors due to the COVID-19 pandemic. In November 2010, Council granted taxicab franchises to five companies: Bell Cab, Independent Taxi, Metro Cab, Taxi! Taxi! and Yellow Cab for a period of five years. Subsequently, Council granted a 2-year extension in 2015 and a 1-year extension in 2017 to all five taxicab companies.
In 2017, AB 1069 was signed into state law to revise taxicab regulations to address industry challenges due to the rise of TNCs. Most notably, by January 1, 2019, taxicab permitting moved from a patchwork of local requirements to a countywide system that only requires taxicab drivers and companies to obtain a permit in the jurisdictions where they are “substantially located.” Under the requirements of AB 1069, that meant only companies “substantially located” within Santa Monica could be eligible for the City’s taxicab franchise. At the time, one taxicab company, Taxi! Taxi!, met the requirements in AB 1069. At its November 13, 2018, meeting, Council provided staff direction to extend Taxi! Taxi!'s current franchise agreement by five years ending on December 31, 2023.
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In response to the staffing impacts of the Citywide restructuring, Council provided direction to staff at its July 28, 2020 meeting to explore other options associated with the taxi franchise, including but not limited to transitioning from a franchise model to a permit-based system.
Past Council Actions
Meeting Date Description
June 30, 2009
(Attachment A)
Introduction and first reading adding Chapter 6.49 to establish taxicab franchises
November 9, 2010
(Attachment B)
Introduction and first reading of five ordinances of the City of Santa Monica granting a taxicab franchise to Bell Cab, Metro Cab, Independent Taxi, Taxi! Taxi! and Yellow Cab
December 14, 2010
(Attachment C)
Introduction for first reading ordinances amending the taxicab franchises with Bell Cab Company, Independent Taxi Owners Association, Metro Cab Company, Taxi! Taxi!, and Yellow Cab Company to increase the maximum number of taxicabs per
company to sixty.
September 27, 2011
(Attachment D)
Introduction and First Reading of Six Ordinances Modifying the Taxicab Franchise and Permit Annual Renewal Dates and Make Other Clarifications and Changes to Santa Monica
Municipal Code Chapter 6.49
March 17, 2015
(Attachment E)
Taxicab Franchise Program Regulations, Non-Taxi Vehicles for Hire Regulations, and Curb Space Allocation to Non-Taxi Vehicles for Hire (e.g., Uber, Lyft)
November 10, 2015
(Attachment F)
Introduction and first reading of Ordinances extending the taxicab franchise of Bell Cab, Independent Taxi, Metro Cab, Taxi! Taxi! and Yellow Cab
November 14, 2017
(Attachment G)
Introduction for first reading of Ordinances extending taxicab franchises of Bell Cab, Independent Taxi, Metro Cab, Taxi! Taxi! and Yellow Cab for one year
November 18, 2018
(Attachment H)
Introduction for First Reading an Ordinance amending and extending the taxicab franchise of TMAT Corp., dba Taxi! Taxi!
July 28, 2020
(Attachment I)
Staff presentation about constrained staff resources and transitioning from a taxicab franchise system to a permit system
Discussion
On January 14, 2010, staff released a Request for Proposals (RFP) for Taxicab franchises with 13 applicants. On November 10, 2010, the City of Santa Monica granted a taxicab franchise to five companies: Bell Cab, Metro Cab, Independent Taxi, Taxi! Taxi! and Yellow Cab. In 2018, Council amended taxicab regulations in compliance with 4 of 8
California State law (AB 1069) and extended the franchise with one company that was substantially located in Santa Monica: Taxi! Taxi!. With the adoption of AB 1069, only one taxicab operator, Taxi! Taxi!, is “substantially located” within the City of Santa Monica. Currently, Taxi! Taxi! has a fleet of fewer than 10 vehicles and drivers, and the scale of taxi operations is drastically different than when the franchise was first established, when they were operating 59 taxicabs.
Regionally, many cities are transitioning taxicab management from franchise models to permit-based systems. In 2019, the City of Beverly Hills dissolved its taxi franchise. In 2022, the City of Los Angeles transitioned from a franchise to a permit-based system that regulates a variety of operators and fleets. City staff has been in regular communication with peer cities throughout the region to explore a regional permitting function and best practices for local regulation. Based on discussions with the City of Los Angeles, staff does not recommend moving forward with a regional permitting system at this time due to the extended timeframes and jurisdictional and operational challenges that would need to be resolved to establish this novel system.
Continuing the franchise beyond December 31, 2023, would presumably result in a sole source procurement process for one eligible applicant. Therefore, staff recommends the taxicab franchise be allowed to lapse on December 31, 2023. To provide staff and taxi companies ample time to transition to the permit system, staff recommends pro-rating permit fees for the first six months of the permit-based system and issuing new permits extending the City-issued 2023 vehicle and driver permits through June 30, 2024. On July 1, 2024, new permits will be issued, and the full annual permit fees will be due. To address staffing constraints in multiple departments, staff plans to transition the annual permits and fee collection from the calendar year to the fiscal year and streamline the fees overall.
Considering the current business model, the remaining taxi stands located throughout the City will be converted into short-term parking or dynamic loading zones for a variety of uses. The conversion will ensure that a variety of curbside uses have the space allocated to mitigate negative behaviors such as double parking or bike lane blockages.
Over the years and during the COVID-19 pandemic, taxi stands have seen less and less use and have been repurposed for a variety of uses such as Zero Emission 5 of 8
Delivery Zones, loading zones, and parklets. During a 2023 meeting with Taxi! Taxi! representatives, they indicated that the stands are of little use to their current state of operations.
As part of the transition, Mobility staff is converting the current franchise agreement and franchise administrative regulations language to permit administrative regulations to manage the program post-franchise.
Impact on Customers and Fares
Under the current franchise, Taxi! Taxi! is the only company that may utilize the current curbside taxi stands. Other taxicab companies that are licensed within the County of Los Angeles may provide taxicab service in Santa Monica on a pre-arranged basis only.
Staff proposes repurposing taxi stands to loading zones for a variety of uses or to metered parking spaces, depending on the adjacent land use context.
Under the permit-based system, and unchanged from the franchise system, taxicab companies other than those substantially located within Santa Monica can still conduct prearranged trips; however, no street hailing will be permitted by companies not substantially located within the City. Additionally, none will be permitted to stand and queue for passengers. Taxi companies who meet the requirements in AB 1069 and the Santa Monica permitting rules will be permitted to conduct street hailed trips.
Under the current franchise agreement, senior citizens (persons aged 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. The discount for seniors and persons with disabilities will be incorporated into the Administrative Regulations. As an alternative to taxi service, the City provides residents 65 years and older, or 18-64 with a disability, discounted Lyft and wheelchair vehicle rides through the Mobility on Demand Every Day (MODE) program. MODE’s service area is limited to the city’s boundaries and a few select destinations in Los Angeles. MODE operates on weekdays between 8 a.m. to 4:30 p.m. and Saturdays between 8:30 a.m. to 3:30 p.m.
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Taxi trips are often taken to/from Los Angeles International Airport (LAX). With the lapsing of the franchise and transition to a permit-based system, the City can continue to set maximum rates for fares. The new permit program will allow taxi companies substantially located within the City to be more competitive with TNCs and provide incentives or coupons to customers. Further, the City of Santa Monica provides a costeffective alternative for passengers who need to go to/from LAX: Big Blue Bus Route 3 which generally operates 5 a.m. to 11:45 p.m. on weekdays and weekends, and Rapid 3 which operates 7 a.m. to 7:30 p.m. on weekdays.
Additionally, since the creation of the original taxi franchise, Metro has made significant progress in LAX transit connectivity, with the Airport Metro Connector project directly connecting Metro rail and bus service to the new LAX people mover system currently scheduled to open in late 2024.
Environmental Review
The ordinance is categorically exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3) “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” The ordinance’s proposed changes to the taxicab franchise consist of programmatic changes and would not result in a physical environmental effect on the environment.
In addition, Section 15302 exempts Class 1 projects from CEQA, which include the “operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures [or] facilities, including streets, sidewalks, bicycle and pedestrian trails, and similar facilities.” The project consists of transitioning from a taxicab franchise to a permit-based model. The transition is a programmatic change and would not necessitate the construction of new vehicle travel lanes for operation.
Therefore, the ordinance for the taxi program qualifies as a Class 1 exemption.
Financial Impacts & Budget Actions
The City will no longer collect the following annual franchise fees associated with the program:
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• Annual base franchise fee per taxicab company: $5,000 • Annual franchise fee per vehicle in taxicab fleet: $452 (current fleet is 10 vehicles)
The estimated annual loss in revenue is $9,520 annually. Any revenue changes needed will be included as part of the midyear budget process. The remaining fees are streamlined and included in the 2022-2023 Franchise Fee Schedule and will undergo the same annual fee increases as all other fees issued within the City. A new fee schedule will be developed to reflect the shift from the permit issuance and payments at the beginning of the calendar year to align with the fiscal year. 8 of 8
Proposed Fees associated with the taxi program:
Business License Taxes $250.00 per vehicle
California State Mandated Fee (CASp) $4.00
New taxicab driver’s permit application fee $54.31
Renewal taxicab driver’s permit application fee $54.31
Taxicab driver’s permit re-examination fee $74.92
Taxicab driver’s permit transfer fee $74.92
Taxicab driver’s permit replacement fee $54.31
New vehicle permit fee $135.78
Transfer vehicle permit fee $135.78
Renewal vehicle fee $81.47
Replacement vehicle permit fee $43.45
Vehicle re-inspection fee $54.31
Prepared By: Barbara Jacobson, Transportation Planning Associate Approved Forwarded to Council
Attachments:
A. Attachment A. June 30, 2009 Staff Report
B. Attachment B. Nov 9, 2010 Staff Report
C. Attachment C. Dec 14, 2010 Staff Report
D. Attachment D. Sept 27, 2011 Staff Report
E. Attachment E. March 17, 2015 Staff Report
F. Attachment F. Nov 10, 2015 Staff Report
G. Attachment G. Nov 14, 2017 Staff Report
H. Attachment H. Nov 13, 2018 Staff Report
I. Attachment I. July 28, 2020 Staff Report
J. Written Comments
K. 6.49 Taxicab Permit Ordinance 09.26.2023 Final