City Council
Report
City Council Meeting: November 14, 2017
Agenda Item: 7.A
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To: Mayor and City Council
From: David Martin, Director, Transportation Planning
Subject: Introduction for First Reading of Ordinances Extending the Taxicab Franchises of Bell Cab, Independent Taxi Owners’ Association, Metro Cab, Taxi! Taxi! and Yellow Cab for one year; Extending City Taxi Cab Driver permit expiration dates to December 31, 2018; and adopting a resolution setting reduced taxicab driver permit fees
Recommended Action
Staff recommends that the City Council introduce for first reading the attached ordinances 1) extending the franchises of Bell Cab, Independent Taxi Owners’ Association, Metro Cab, Taxi! Taxi!, and Yellow Cab for one year; 2) extending City Taxi Cab Driver permit expiration dates to December 31, 2018; and 3) adopting a resolution setting reduced taxicab driver permit fees.
Executive Summary
The City’s taxicab franchise system, established in March 2011 and renewed from time to time, is currently set to expire on December 31, 2017. The taxi industry has been in decline in recent years concurrent with the rise of Transportation Network Companies (TNCs) such as Uber and Lyft across the country. California State Assembly Members have been proposing revised taxicab regulations during recent sessions in response to these challenges. The most recent iteration, AB 1069, was signed by the Governor on October 13, 2017. While some AB 1069 regulations will take effect on January 1, 2018, the most impactful changes will not take effect until January 1, 2019. Most notably, by January 1, 2019, taxicab permitting will move from the current patchwork of various local requirements to a countywide system that only requires taxicab drivers and companies to obtain a permit in the jurisdictions that they are “substantially located.” A number of implementation questions remain to be resolved with the new regulations, including the interpretation of the “substantially located” requirement and which agencies will assume the role of countywide taxicab regulation. Staff will work with 2 of 9
surrounding jurisdictions and agencies and provide Council with an update on AB 1069 implementation by July 2018.
In the meantime, staff is recommending 1) a one-year extension of the original five-year franchise, which expires on December 31, 2017; and 2) extension of all existing City Taxi Cab Driver Permits until the end of 2018. The extensions, through December 31, 2018, will coincide with the implementation of AB1069. Since approval of AB1069 was unknown at the time of the staff report preparation, staff went through the process of seeking input from the taxicab companies regarding the franchise regulations. Staff received requests from all five taxicab companies to reduce the annual vehicle franchise fee and eliminate the per vehicle business license fee as well as other changes. Given the pending change to the whole regulatory system, Staff recommends the continuation of all regulations for the remaining one-year franchise period but requests a reduction in taxicab driver’s permit application and renewal fees.
Background
On July 28, 2009, the City Council established the taxicab franchise to regulate taxicab transportation services operated within the City, including practices for licensing the taxicab businesses, rates, and mandatory controlled substance and alcohol testing. On October 12, 2010, the Council granted franchises to five taxicab companies. The original franchise was granted for five years through December 31, 2015.
On November 24, 2015, Council modified and extended the existing franchise agreements for two years to December 31, 2017 for all five taxicab companies, and maintained the number of authorized vehicles at 300. Council granted taxicab companies the ability to “park” a taxicab, which allows the taxicab company to remove the vehicle from its insurance plan, saving the company money during slower periods.
On October 10, 2016, Taxi! Taxi! submitted a request to reduce the number of taxicab vehicles authorized to operate. Section 5(f) of the taxicab franchise agreement allows a franchisee to request a reduction in the size of their fleet if the “public convenience and necessity no longer requires Grantee to furnish taxicab services with the number of vehicles authorized under this franchise”. On October 31, 2016, the four remaining 3 of 9
taxicab companies, Bell Cab, ITOA, Metro Cab, and Yellow Cab (i.e., the “Taxicab Coalition”) submitted requests to reduce the number of vehicles. At its December 6, 2016 meeting, the Council approved the taxicab companies’ request and reduced the number of authorized vehicles from 300 to 199.
Discussion
The taxicab industry has been in a steady decline since the arrival of TNCs, including Uber and Lyft, in 2012. From 2013 through 2016, taxicab trips in Santa Monica have declined 68% and the gross revenue of the franchises has declined 54%. It is estimated by the end of 2017 gross revenue will decline by 64% and total trips by 79% since 2013. The following chart shows the decline in gross revenue and trips for each year compared to 2013:
YEAR GROSS REVENUE DOWN SINCE
2013 YEAR TRIPS DOWN SINCE 2013
2013 $14,875,472 2013 750,555
2014 $11,355,224 24% 2014 571,037 24%
2015 $7,897,532 47% 2015 352,614 54%
2016 $6,858,816 54% 2016 238,648 68%
2017* $5,309,870* 64% 2017* 159,130 79%
A total of 199 vehicles have been authorized by Council, and currently 128 vehicles are dedicated (providing taxicab services only in Santa Monica), of those 9 are ‘parked’ and removed from service, and 41 provide Access Services. When taxicab vehicles provide trips through the County’s Access program, they are not available to respond to calls in the Santa Monica area. In August 2017, 108 (54%) of the 199 authorized vehicles provided trips in Santa Monica.
STATUS OF AUTHORIZED VEHICLES
Company Authorized
Vehicles
Dedicated
Vehicles
Parked
Vehicles
Access
Vehicles
Vehicles
Providing
Service In
August
Bell Cab 43 3 2 0 25
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ITOA 30 18 0 0 18
Metro Cab 43 43 7 21 10
Taxi Taxi 40 40 0 0 39
Yellow Cab 43 24 0 20 16
TOTAL 199 128 9 41 108
Since 2015, the number of calls for service responded to within 15 minutes for each taxicab company has not changed significantly even with the reduction of authorized vehicles and vehicles removed from service by “parking”. Taxicab franchises with licenses in surrounding cities (Bell, ITOA, and Yellow) continue to have lower response times than Metro Cab and Taxi! Taxi!. The following chart provides a comparison between 2015, 2016, and 2017 year to date through August.
AVERAGE PERCENT OF CALLS
REPONDED TO WITHIN 15
MINUTES
JANUARY – AUGUST 2015,
2016 AND 2017
Company 2015 2016 2017
Bell Cab 89% 87% 87%
ITOA 90% 87% 85%
Metro Cab 94% 91% 90%
Taxi! Taxi! 93% 94% 94%
Yellow Cab 83% 80% 74%
Taxi Regulation
The taxicab industry has been hit hard by the emergence of TNCs (Uber and Lyft) as an alternative in the vehicle for hire transportation market. For the past two years, California Assembly Member Low has introduced bills to attempt to level the playing field between taxicabs and TNCs. In 2015, Low introduced Assembly Bill 650 which attempted to modernize the regulation of taxicab transportation services in order for 5 of 9
taxicabs to better compete with all for-hire modes of transportation. Governor Brown vetoed this bill in September 2016.
In February of this year, Low introduced Assembly Bill 1069 to again modernize the regulation of taxicab transportation services and it was signed by Governor Brown in October. AB 1069 is effective January 1, 2018, though the bulk of its impactful changes will not become effective until January 1, 2019. Senate Floor analysis of AB 1069 is provided. (Attachment A)
Beginning January 1, 2018, taxicab companies and taxicab drivers are required to collect and report trip data for 12 months in order to determine where taxicab companies and taxicab drivers are substantially located.
Beginning January 1, 2019, AB 1069 removes the existing broad and relatively unrestricted taxicab permitting authorities from local jurisdiction. It further requires all local jurisdictions to permit and regulate taxicab drivers and companies that are “substantially located” within their jurisdiction. Substantially located is defined as the jurisdiction “where the primary business address of the company or driver is located” or “in which trips originating in that jurisdiction account for the largest share of that company or driver’s total number of trips within [the] county over the past year.” AB1069 further grants permitting authority to certain joint powers authorities and transit agencies. These grants of authorities will need further review by staff.
Even after 2019, AB 1069 still allows local jurisdictions to adopt operating requirements unrelated to permitting or business licensing for taxicab companies and drivers, regardless of whether such companies and drivers are substantially located within their jurisdictions. Such authorized operating requirements include limits on the use of taxi stands or street hails.
Approval of AB1069 was not anticipated given local agency opposition. Staff has begun to look at what the bill means for Santa Monica’s franchise based on current trip making patterns. Preliminarily, it appears that Metro Cab and Taxi! Taxi! would be considered 6 of 9
substantially located within Santa Monica. Other taxicab companies, given their regional reach, may not be substantially located in Santa Monica.
Staff will continue to analyze the bill, meet with other jurisdictions over the next several months to determine how this bill will be implemented and its affect on our City’s taxicab service. Staff will provide an update to Council on AB 1069 by July 2018 and return to Council with any necessary changes to the taxicab franchise by November 2018.
Taxicab Franchisees – Requests
Since approval of AB1069 was unknown at the time of the staff report preparation, staff solicited input from the five taxicab companies as part of developing the franchise extension recommendations. The existing franchisees provided two letters, one individual letter from TMAT Corp. (dba Taxi! Taxi!) and one joint letter from Bell Cab Company, Inc., Independent Taxi Owners’ Association, All Yellow Taxi (dba Metro Cab), and LA Taxi Cooperative (dba Yellow Cab Company) (Attachment B). Below is a summary of the primary requests and responses. Given the impending substantial change to taxicab regulation, staff is recommending continuation of current regulations and practices until the new regulations take effect.
Taxi! Taxi! requests to increase number of authorized vehicles to 63 o Data does not support increasing the number of Taxi! Taxi! authorized vehicles as trips are continuing to decline.
Cancel Weights and Measures Certificate
o The County of Los Angeles Department of Agricultural
Commissioner/Weights and Measures Bureau is responsible for the regulation of taximeters. We require that taxicab vehicles have meters and that the meter be inspected.
Reduce the annual franchise fee per vehicle and cancel the business license fee;
o Staff recommends maintaining the current regulations and only change the taxicab driver’s permit application fee in addition to the permit 7 of 9
renewal fee for the remaining year of the current franchise, until the impact of the new State legislation is fully evaluated. The cost of the taxicab driver’s permit (new or renewal) would be reduced from $112.86 to $48 for 2018.
Cancel printed waybills and use the digital record
o In November 2015, the Taxicab Rules and Regulations were updated.
Each franchisee shall maintain waybills and make them available for inspection for up to 1 year from the date of the trip.
No monthly reports, only on demand
o Staff recommends that the franchises continue to submit monthly reports. Timely monthly reports allow staff to analyze data, report findings, make recommendations and ensure administrative efficiency.
Driver Permits
In November 2015, Council approved a two-year pro-rated taxicab driver permit as requested by the taxicab companies. Pro-rating the driver permit fees enables drivers to pay for only the proportion of months remaining in the year at the time of application. All two year permits expire at the end of the current franchise period on December 2017.
Consistent with the proposed one-year Franchise extensions, Staff recommends extending the driver permit expiration date to the end of 2018. Staff also recommends that taxicab driver’s new and renewal permit application fees be reduced to $48 and prorated monthly based on the number of calendar months remaining until the permit expires in accordance with Santa Monica Municipal Code Section 6.49.070(e). Staff believes that this reduction is necessary in light of the heavy competition that City permitted taxi drivers face from Transportation Network Company drivers.
Next Steps for Taxicab Program
1. Work with county jurisdictions on the implementation strategy for AB1069
2. Provide Council with an update regarding implementation of AB1069 before July 2018, and return to Council with any necessary changes to the taxicab franchise program by or before to November 2018.
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Financial Impacts and Budget Actions
Staff anticipates revenues to decrease by approximately $16,410 in Taxi Driver Permit Fees due to the proposed reduction in permit fees. Staff will include consideration of budget impact with updates on the implementation of AB1069 during the FY 2018-19 Exception Based Budget.
Attachments:
A. Senate Floor Analysis of AB 1069
B. Franchisee Requests
C. Bell Cab Ordinance
D. Independent Taxi Ordinance
E. Metro Cab Ordinance
F. Taxi! Taxi! Ordinance
G. Yellow Cab Ordinance
H. Ordinance Modifying SMMC Chapter 6.49
I. Fee Resolution
Prepared By: Cheryl Shavers, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. Senate Floor Analysis AB 1069
B. Franchisee Requests
C. Bell Cab Ordinance
D. ITOA Ordinance
E. Metro Cab Ordinance
F. Taxi Taxi Ordinance
G. Yellow Cab Ordinance
H. Taxi Permit Ordinance
I. Taxi Fee Resolution
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J. Powerpoint Presentation