sr-052212-7aCity Council Meeting: May 22, 2012
Agenda Item: 7A
To: Mayor and City Council
From: Gigi Decavalles- Hughes, Director or Finance
Subject: Introduction and First Reading of an Ordinance to Approve the Request by
Taxicab Franchisee Metro Cab Co, Inc. to assign its Taxicab Franchise to
All Yellow Taxi, Inc., dba Metro Cab
Recommended Action
Staff recommends that the City Council introduce for first reading an ordinance
approving the assignment of Metro Cab's taxicab franchise to All Yellow Taxi, Inc, dba
Metro Cab, to provide taxicab services in the City of Santa Monica.
Executive Summary
On April 2, 2012, Metro Cab Co., Inc., ( "Metro Cab ") submitted a request to the City to
approve its transfer of ownership and the interest in its Santa Monica taxicab franchise
to All Yellow Taxi ( "AYT "). AYT began its operations in 1997 and currently has 108
vehicles deployed. The company holds franchises in the Cities of Hermosa Beach,
Torrance, Manhattan Beach, and Redondo Beach. The company is also currently
subcontracted by the Los Angeles County Metropolitan Transportation Authority ( "MTA ")
to provide Access Services to residents in Southern Los Angeles County.
AYT submitted a proposal to the City's request for proposals in 2010 to provide taxicab
services in Santa Monica, scoring the sixth highest score. The City ultimately awarded
five taxicab franchises. AYT does not currently have a City of Santa Monica taxicab
franchise.
Background
Based on the recommendations of a 2008 study by NelsonlNygaard Consulting
Associates of taxicab operations in Santa Monica, on July 28, 2009, Council adopted an
ordinance establishing a franchise -based system for the regulation of taxicabs, 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.
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Evaluation
On January 14, 2010, staff released an RFP for taxicab franchises and held a pre -
proposal conference on January 21, 2010. Thirteen proposals were received by the
RFP response deadline.
An interagency committee evaluated the 13 proposals that were submitted in response
to the City's request for proposals. The evaluation team included five members who
scored and rated all aspects of the proposal and included two representatives from the
Finance Department, one representative from the Office of Sustainability and the
Environment, one representative from the Police Department, and one representative
from the City of Los Angeles Department of Transportation Taxicab Regulation Division.
The evaluation team also included other experts who were consulted regarding specific
aspects of the proposal and included a representative from the Pier Corporation
(formerly the Pier Restoration Corporation), Downtown Santa Monica, Inc. (formerly
Bayside District Corporation), additional Police Department staff, and the Human
Services Division. The five raters evaluated the proposals based on the following
criteria contained in SMMC 6.49.040(b) and detailed in the RFP:
• Proof of financial viability, demonstrating ability to provide taxicab services in
compliance with City ordinances and regulations and the bidder's proposal.
(20 %)
• Experience in providing taxicab services during the last 10 years, including
demonstrated quality of service and safety. (20 %)
• Proposed business and management plan. (20 %)
• Fleet composition, including age and condition of taxicabs, annual minimum
number of vehicles meeting Ultra Low Emission Vehicle and Super Ultra Low
Emission Vehicle (ULEV /SULEV) and other low- emission standards. (15 %)
• Local preference. (8 %)
• Character of operator's owners /members /principals /partners, verifying
criminal /civil record, taxicab regulatory, franchising, licensing, insurance and
litigation history. (5 %)
• Proposed discount fares for senior and mobility impaired customers. (3 %)
FA
• Dispatch and communication system. (3 %)
• Driver training, testing, supervision and life /health /disability benefit plans. (3 %)
• Operator /driver financial relationships including leasing, fees, memberships and
all other relationships. (3 %)
The evaluators independently reviewed each proposal prior to convening over two days
to discuss and review the proposals in detail. During the discussion period, technical
expertise and input was provided by subject matter experts in areas including
environmental and accessibility factors. In a manner consistent with other City RFP
processes, notes and individual scores from each evaluator were not retained.
Each evaluator calculated a composite score for each company using the score sheet.
The final weighted composite score was entered into an Excel spreadsheet to calculate
the total composite score. The companies with the top five scores were awarded
franchises.
On November 23 2010, the Council awarded franchises by ordinance to Bell Cab
Company, Inc.; Independent Taxi Owners' Association; Metro Cab Company, LLC;
TMAT Corp., dba Taxi! Taxi!; and L.A. Taxi Cooperative, Inc., dba Yellow Cab
Company. 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.
AYT submitted a proposal to provide taxicab services in Santa Monica and scored the
sixth highest score with a difference of only 4.4 points (out of a total of 200 points
possible) from the fifth highest score.
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Discussion
On April 2, 2012, Metro Cab, through its legal counsel, submitted a request to the City
to approve a transfer of its Santa Monica taxicab franchise rights. On April 5, 2012,
Metro Cab then submitted an acknowledgement signed by the owners of both Metro
Cab and AYT confirming that Metro Cab had agreed to sell its assets, including its
franchise rights in connection with providing franchised taxicab services, upon approval
by the City of Santa Monica. Additionally, AYT submitted to the City on April 10, 2012,
a letter signed by the President of AYT, acknowledging that he had read and that he
fully understands all of the terms and conditions of the franchise granted to Metro Cab
and that AYT, its management, and employees are willing and able to comply.
All Yellow Cab, Inc.
AYT began its operations in 1997 and currently has 108 vehicles deployed. The
company holds franchises in the Cities of Hermosa Beach, Torrance, Manhattan Beach,
and Redondo Beach. It also provides taxicab services in the following jurisdictions
through a permitting system: Culver City, Lawndale, El Segundo, South Gate, Carson,
Hawthorne, Rancho Palos Verdes, Lomita, Huntington Park, Inglewood, Lynwood,
Gardena, and in the unincorporated portions of Los Angeles County.
In March of 2010, AYT submitted a proposal to the City in response to the RFP posted
on January 14, 2010, to seek qualified applicants interested in providing taxicab service
in the City of Santa Monica. AYT scored 65.46% when it was evaluated, the sixth
highest score. The City ultimately awarded five taxicab franchises to the five highest -
scoring companies, therefore AYT was not granted a taxicab franchise.
In response to the request from Metro Cab, the City requested and AYT submitted a
business plan with current financials. A review of these materials shows AYT as a self-
supporting operation with no debt funding. AYT and Metro Cab's legal counsel report
that AYT has raised capital from its current shareholders to purchase Metro Cab and
pay off its debts, with funds being placed into an escrow account. At the end of 2011,
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AYT had a low Debt/Equity ratio of .25 and a high Current Ratio of 3.36, which suggests
that the company is likely able to meet short -term liabilities.
AYT has experienced growth in gross income, gross profit, and net income from 2009 to
2011 and has also maintained positive working capital over those years. Although
working capital has decreased over the three year period by 56 %, that figure is still
currently more than double current liabilities, also suggesting that the company is likely
able to meet short term expenses. The company reported no long term liabilities. Staff
also conducted an onsite visit of the AYTs operations in Gardena on April 17, 2012.
AYT does not hold a Los Angeles Department of Transportation taxicab franchise and
will maintain a dedicated fleet in Santa Monica. The company is currently
subcontracted by the Los Angeles County Metropolitan Transportation Authority ( "MTA ")
to provide Access Services to residents that have been qualified as functionally disabled
(i.e. functional inability to use accessible public fixed route transportation). It has
provided Access services since 2001 and is the sole taxicab company that provides
such services to residents in southern Los Angeles County. All AYT drivers receive
additional driver training, including classes and workshops administered by an in -house
Transportation Safety Institute (TSI) certified instructor aimed at preparing drivers to
address the needs of passengers who are elderly or disabled. In addition to standard
AYT training provided to all drivers, AYT drivers who operate qualified Access service
wheelchair accessible vehicles are required to complete additional paratransit driver
training and are required to complete routine continuing education courses.
The company is currently contracted with Norton Medical Industries to provide Drug and
Alcohol monitoring of its drivers in compliance with the Transportation Workplace Drug
and Alcohol Testing Programs outlined in the United States Department of
Transportation rule 49 CFR part 40.
Operations
If approved, AYT indicates that it is positioned to transition all of Metro Cab's operations
within two weeks from the effective date of the ordinance granting AYT a franchise. If
the ordinance is introduced by City Council after the first reading, it then proceeds to a
second reading and would, if approved by Council, be adopted approximately 30 days
following approval. This includes the replacement of all dispatching, credit card, and
GPS equipment in all 63 vehicles to the company's existing integrated dispatching
system, Digital Dispatch System, Inc. ( "DDS "). On April 15, 2012, AYT provided the
City with written notification of its commitment to maintain all existing Metro Cab drivers
and to continue to contract with those drivers that fulfill AYT standards.
AYT proposes to do business within Santa Monica as "Metro Cab" and to maintain
administrative operations, driver training, and marketing for its Santa Monica operations
in the existing Metro Cab headquarters located at 3303 Pico Boulevard in Santa
Monica. The Santa Monica location would be staffed with a divisional manager to
oversee day to day driver and vehicle operations. However, the company does intend
to centralize its dispatching operations in its current dispatching facilities located at
17800 S. Main Street, Suite 101, in Gardena, California. AYT has indicated that it
intends to maintain the current Metro Cab color scheme and to comply with the
following approved fleet composition:
Vehicle Type
Number
Percent
SULEV
37
59 %0
ULEV
18
28%
ADA
8
13%
TOTAL
63
100%
N.
Alternatives
As an alternative to the recommendation proposed by staff, Council could consider
denying Metro Cab's request to assign its franchise to AYT and have Metro Cab
continue to operate. It is important to note that, based on Metro Cab's current financial
position, there is high risk that Metro Cab may be unable to continue fulfilling the terms
and conditions of the franchise. This could lead to suspension or revocation of its
franchise, or the company could cease as a going concern. Should Council choose this
alternative, it could also direct staff to conduct a review of what is an appropriate total
number of full time equivalent taxicabs needed to serve the City and what is the most
effective allocation of these taxicabs based on the one year of experience with the
program.
Financial Impacts & Budget Actions
There is no immediate budget/financial impact to the policy decision.
Prepared by: Salvador M. Valles, Business & Revenue Operations Manager
Attachments:
Forwarded to Council:
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Rod Gould
City Manager
A. Ordinance Transferring Metro Cab Company, LLC's Franchise to All Yellow Taxi,
Inc., dba Metro Cab
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City Council Meeting 05 -22 -2012
Santa Monica, California
ORDINANCE NUMBER (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA TRANSFERRING A
TAXICAB FRANCHISE FROM METRO CAB COMPANY, LLC, TO
ALL YELLOW TAXI, INC., DOING BUSINESS AS METRO CAB, AND
AMENDING ORDINANCE NO. 2331 (CCS), ORDINANCE
NO. 2341 (CCS), AND ORDINANCE NO. 2374 (CCS)
WHEREAS, on July 28, 2009, the City Council adopted Ordinance No. 2292
(CCS), establishing a taxicab franchise system in the City, in order to assure reliable,
safe, quality taxicab services in the City and to eliminate undue congestion and air
pollution, disorganization and hazards associated with the City's previous open -entry
regulated taxicab environment; and
WHEREAS, City staff completed a competitive Request for Proposals process and
evaluated the submitted proposals in accordance with criteria consistent with the Santa
Monica Municipal Code in order to provide Council with recommendations for the
award of franchises to taxicab companies; and
WHEREAS, All Yellow Taxi, Inc., submitted a proposal and ranked sixth in the
competitive process, and
WHEREAS, on October 12, 2010, Council adopted Resolution No. 10533 (CCS),
declaring its intent to grant taxicab franchises to Bell Cab Company, Inc.; Independent
Taxi Owners' Association (ITOA); Metro Cab Company, LLC; TMAT Corp., doing
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business as Taxi! Taxi!; and L.A. Taxi Cooperative, Inc., doing business as Yellow Cab
Company, and setting a public hearing; and
WH EREAS, on November 9, 2010, Council held a public hearing in accordance with
City Charter Section 1601, at which all interested persons were given an opportunity to be
heard on all matters relative to the proposed granting of taxicab franchises; and
WHEREAS, on November 23, 2010, Council adopted Ordinance No. 2331 (CCS)
granting a taxicab franchise to Metro Cab Company, LLC ( "Metro Cab "); and
WHEREAS, on January 11, 2011, Council adopted Ordinance No. 2341 (CCS),
amending Ordinance No. 2331 (CCS) to authorize Metro Cab to operate a maximum of 63
taxicabs in the City; and
WHEREAS, on October 11, 2011, Council adopted Ordinance No. 2374 (CCS),
amending Ordinance No. 2331 (CCS) to adjust the permit year from the fiscal year to the
calendar year, and thereby extend the expiration date for vehicle and taxicab driver's
permits from June 30th to December 31st; and
WHEREAS, on April 2, 2011, Metro Cab submitted a request to the City to
approve assignment of its interest in its Santa Monica taxicab franchise through a sale
to All Yellow Taxi, Inc.; and
WHEREAS, on April 5, 2011, Metro Cab submitted an acknowledgement signed
by the owners of both Metro Cab and All Yellow Taxi, Inc., expressing Metro Cab's
intent and agreement to sell its assets, including its franchise rights in connection with
providing franchised taxicab services in the City, upon approval by the City of Santa
Monica; and
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WHEREAS, Section 3(b)(2) of Ordinance No. 2331 (CCS), provides that Metro
Cab "shall not sell, lease, assign, hypothecate, or otherwise transfer or dispose of [its]
Franchise or any interest herein directly or indirectly, by operation of law or otherwise,
without the prior written consent of City, expressed by ordinance, and then only under
such terms and conditions as may be prescribed therein'; and
WHEREAS, based on the foregoing, Council finds that All Yellow Taxi, Inc.,
possesses the background, knowledge, experience, and expertise necessary to provide
efficient and effective taxicab services to the residents, visitors, and other members of
the community in the City, so as to support the assignment of Metro Cab's franchise to
All Yellow Taxi, Inc., upon the terms and conditions set forth herein.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. The City hereby consents to the assignment and transfer of Metro
Cab's taxicab franchise in accordance with Section 3(b)(2) of Ordinance No. 2331 (CCS),
to All Yellow Taxi, Inc., doing business as Metro Cab, subject to the terms and conditions
set forth in this Ordinance.
SECTION 2. All Yellow Taxi, Inc., hereby agrees to assume all obligations under
Ordinance No. 2331 (CCS), Ordinance No. 2341 (CCS), and Ordinance No. 2374 (CCS),
and to be bound by all the terms and conditions of the above specified ordinances,
including the taxicab rules and regulations and all applicable provisions of the Santa
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Monica Municipal Code, commencing as of the effective date of the adoption of this
Ordinance.
SECTION 3. It is expressly understood and agreed that this Ordinance shall not be
deemed to constitute consent to any subsequent sale, lease, assignment, hypothecation,
or other transfer or disposition of this taxicab franchise or any interest therein directly or
indirectly, by operation of law or otherwise. It is further understood and agreed that this
Ordinance does not relieve Metro Cab of its franchise obligations or any liability arising
under Ordinance No. 2331 (CCS), Ordinance No. 2341 (CCS), and Ordinance No. 2374
(CCS), or the taxicab rules and regulations or applicable provisions of the Santa Monica
Municipal Code, prior to the effective date of this Ordinance.
SECTION 4. Upon the effective date of this Ordinance, Metro Cab and All Yellow
Taxi, Inc., shall submit to the City a jointly executed instrument in writing that evidences the
sale of Metro Cab's assets and assignment of Metro Cab's franchise to All Yellow Taxi,
Inc., doing business as Metro Cab, addressed to Council and filed with the City Clerk.
SECTION 5. Except as expressly modified by this Ordinance, all other terms and
conditions of the taxicab franchise assigned to All Yellow Taxi, Inc., doing business as
Metro Cab, pursuant to Ordinance No. 2331 (CCS), Ordinance No. 2341 (CCS), and
Ordinance No. 2374 (CCS), shall be and remain in full force and effect.
SECTION 6. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court
of competent jurisdiction, such decision shall not affect the validity of the remaining
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portions of this Ordinance. The City Council hereby declares that it would have passed this
Ordinance and each and every section, subsection, sentence, clause, or phrase not
declared invalid or unconstitutional without regard to whether any portion of the ordinance
would be subsequently declared invalid or unconstitutional.
SECTION 7. The Mayor shall sign and the City Clerk shall attest to the passage of
this Ordinance. The City Clerk shall cause the same to be published once in the official
newspaper within 15 days after its adoption. This Ordinance shall become effective 30
days from its adoption.
APPROVED AS TO FORM:
MAR A J ES MOU' RIE
City orn y
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