SR 12-06-2016 7A (3)
Ci ty Council
Report
City Council Meeting : December 6, 2016
Agenda Ite m: 7.A
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To: Mayor and City Council
From: David Martin, Director, Planning and Community Development , Administration
Subject: Introduction for First Reading of Ordinances Modifying the Taxicab
Franchises of Bell Cab, Independent Taxicab Owners Association, Metro
Cab, Taxi! Taxi!, and Yellow Cab to Reduce the Number of Vehicles Allocated
Recommended Action
Staff recommends that the City Council introduce for first reading the attached
ordinances modifying the taxicab franchises of Bell Cab, Independent Taxicab Own ers
Association, Metro Cab, Taxi! Taxi!, and Yellow Cab to reduce the number of authorized
vehicles .
Executive Summary
The City of Santa Monica has received requests from all five taxicab franchisees in
accordance with Section 5 (f) of the franchise agree ment to reduce the number of
vehicles due to the market no longer requiring the franchisee to furnish taxicab services
with the number of vehicles authorized under the Franchise. Due to the continued
reduction in trips being served by taxicab companies, s taff is recommending that
Council approve the reduction in vehicles from 300 vehicles to the 199 total vehicles
requested by the taxicab companies. Staff recommends granting the taxicab
companies’ request to reduce their vehicle allocations as this is con sistent with the
decrease in demand for taxicab services.
Background
Existing State law requires every city or county to protect the public health, safety, and
welfare by adopting an ordinance or resolution in regard to taxicab transportation
services o perated within the jurisdiction for vehicles designed to n ot carry more than
eight pe ople , excluding the driver . This must include a policy for licensing the taxicab
businesses, rates, and a mandatory controlled substance and alcohol testing program.
On July 28, 2009 the Council established a taxicab franchise program, and on October
12, 2010, granted franchises to five taxicab companies by ordinance to Bell Cab
Company, Inc. (Bell Cab); Independent Taxi Owners’ Association (ITOA); Metro Cab
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Company, LLC (Metro Cab); TMAT Corp., dba Taxi! Taxi! (Taxi! Taxi!); and L.A. Taxi
Cooperative, Inc., dba Yellow Cab Company (Yellow Cab).
At its November 24, 2015 meeting, Council modified and extended the franchise
agreements for two years to December 31, 2017 by or dinance for all five companies
(see Attachment A). At this meeting, Council approved maintaining the level of 300
authorized taxicabs to operate in the City and approved other changes to the taxicab
franchise program that were requested by the taxicab com panies.
One of the key changes approved by Council was to grant taxicab companies the ability
to “park” a taxicab, which would allow the taxicab company to remove the vehicle from
its insurance plan, saving the company money during slower periods. To “park” a
vehicle is simply to not operate the vehicle. This provided companies with a means by
which to manage their fleets based on demand. However, taxicab companies are still
required to pay the $1,100 Vehicle F ranchise F ee and $250 Business License Ta x for
each authorized vehicle.
Section 5 (f) of the taxicab franchise agreements 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 t he number of vehicles authorized
under this franchise.” On October 10, 2016, Taxi! Taxi! notified staff of its request to
reduce the number of vehicles authorized to operate . On October 17, 2016 staff
informed the other four taxicab franchisees of Taxi! Taxi!’s request so they could also
request a reduction to their authorized vehicles if desired . On October 31, 2016 all four
remaining companies, Bell Cab, ITOA, Metro Cab, and Yellow Cab (i.e. the “Taxicab
Coalition”), notified staff of their requests to reduce their number of vehicles.
Subsequently, in accordance with the requirement set forth in the franchise agreement,
the franchisees submitted a written application to the City Clerk requesting a reduction
in the size of their taxicab fleets. Taxica b companies were informed by staff of the
requirement in the franchise agreement to also post notice for at least 15 days prior to
the Council meeting of their request to reduce their fleets.
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If Council approves the request to reduce the number of autho rized vehicles from 300 to
199 the vehicle franchise fees due for the 2017 franchise year will decrease
accordingly.
Discussion
In November 2015 Council extended the taxicab franchises for all five taxicab
companies as well as various other changes to the program rules and regulations. One
of the changes allowed taxicab companies to “park” vehicles by removing them from
service. The companies were required to notify the City when they “parked” a vehicle.
Since the beginning of the 2016 franchise year, taxicab companies have parked a total
of 5 7 vehicles reducing the number of vehicles in service to 24 3 from 300. It is
important to note that the $1,100 V ehicle F ranchise F ee and Business License Tax is
still due for each vehicle that are authorized by C ouncil even when the vehicle is
“parked ”. The following chart shows the breakdown by taxicab company , of the total
number of “parked ” vehicles:
Company Current
Authorized
Vehicles
“Parked” Operating Percent
Change
in Total
Vehicles
Bell Cab 58 8 50 -14%
ITOA 58 13 45 -22%
Metro Cab 63 17 46 -27%
Taxi! Taxi! 63 17 46 -27%
Yellow Cab 58 2 56 -3%
Totals 300 57 243 -19%
All five taxicab companies have requested a formal reduction in the number of
authorized vehicles due to the systemic decrease in dem and . Included as a ttachment B
is a copy of the requests . As noted in the 2015 report, although it is not possible to
know specifically the cause of the decline, it clearly coincides with the arrival of and
ensuing surge in popularity and consumer demand for Transportation Network
Companies (TNC); Uber officially launched in Los Angeles on March 8, 2012. Reducing
the number of vehicles would not likely reduce service levels since demand is also
down. The year over year the number of calls for service res ponded to within 15
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minutes for each taxicab company has not changed significantly even with the number
of vehicles that the companies have removed from service on their own by “parking”
them. Companies with licenses in other jurisdictions (Bell, ITOA, an d Yellow) continue
to have lower response times than Taxi! Taxi! and Metro Cab, with Yellow cab
historically having the lowest at 80% of requests for service being responded to within
15 minutes (compared to 83% in 2015). The following chart provides a comparison
between 2015 and 2016 year to date through September.
Average Percent of Calls Responded to within 15 Minutes
Jan -September 2015 and 2016
Company 2015 2016
Bell 89% 87%
ITOA 90% 87%
Metro 94% 91%
Taxi Taxi 93% 94%
Yellow 83% 80%
News reports have consistently reported on the disruptive nature of TNCs and its impact
on the taxicab industry. In a recent suit filed by Flywheel Taxi of San Francisco, the
company has sued Uber in U.S. District Court claiming that Uber has used its signific ant
venture capital funding to undercut competitors with predatory pricing, losing money on
rides in San Francisco “with the expectations of reaping extraordinary future returns”. It
is the continued competitive pressure on the taxicab industry and the sh ift in consumer
demand from taxicabs to TNCs which appears to have led to the reduction in taxicab
trips and ultimately the need for fewer taxicabs. If Council approves a reduction in
vehicles, it is also unlikely that there would be a material impact on circulation or
parking, as the demand for vehicles for hire have not decreased, only the type of
service being used. The total number of taxicab vehicles operating in Santa Monica
may be decreasing, but the number of Uber and Lyft vehicles has increased
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c onsiderably over the same time period. However, there would be a lower demand for
taxicab stands.
If Council approves the request the number of authorized taxicabs would decrease from
300 to 199 . Following is a breakdown by taxicab company:
Company Cur rent
Authorized
Vehicles
Vehicle
Reduction
Requested
Remaining
Authorized
Vehicles
Percent
Change in
Total
Vehicles
Bell Cab 58 -1 5 4 3 -22%
ITOA 58 -28 30 -48%
Metro Cab 63 -20 4 3 -29%
Taxi! Taxi! 63 -23 40 -37%
Yellow Cab 58 -1 5 4 3 -22%
Totals 300 -101 199 -32%
If Council were to approve the reduction of 101 vehicles the companies would no longer
be required to pay a franchise fee , vehicle renewal fee, or business license tax for these
vehicles. The combined reduction of 101 vehicles would resul t in a total reduction in
revenue to the City of $142,111 broken down as follows:
Fee Fee
Amount
Total
Reduction
Per Vehicle Franchise Fee
$1,100 .00 -$111,100 .00
Per Vehicle Renewal Fee
$57.04 -$5761.04
Per Vehicle Business License Tax
$250 .00 -$25 ,250 .00
Staff recommends granting the taxicab compan ies’ request to reduce their vehicle
allocations as this is consistent with the staff recommendation in 2015 which was based
on the significant decrease in demand for taxicab services. Following refl ects the
number and percentage change in trips serviced between 2013 and 2015 :
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Company 2013 Trips 2015 Trips Percent
Change
2013 to 2015
Bell Cab 69,806 26,913 -61%
ITOA 156,279 73,145 -53%
Metro Cab 179,289 83,088 -54%
Taxi! Taxi! 277,293 120,860 -5 6%
Yellow Cab 93,196 68,786 -26%
Totals 775,863 372,792 -52%
There was also a 44% drop in trips from 2015 (Jan -Sept) to 2016 (Jan -Sept). This puts
2016 on target to see a total drop in trips from 372,792 in 2015 to 2 20,056 in 2016, or
41 %, and a 72% d rop since 2013.
The draft ordinance modifying the franchise agreements are attached as follows:
Bell Cab Company, Inc. - Attachment C
Independent Taxi Owners’ Association - Attachment D
All Yellow Taxi (dba Metro Cab) - Attachment E
TMAT Corp., (dba Taxi! Taxi!) - Attachment F
L.A. Taxi Cooperative, Inc (dba Yellow Cab) - Attachment G
Other Requests from the Taxicab Coalition
The Taxicab Coalition has also requested that the franchise fees for the companies be
reduced by 50% and that the Bus iness License T ax be eliminated. If Council approved
both the request to reduc e vehicles to 199 and the reduction in fees and taxes , the
additional reduc tion in revenues to the City would be $62,250 broken down as follows:
Fee Fee
Amount
New Fee
with 5 0%
Reduction
Total
Revenue
Reduction
Company Franchise Fee
(5 Companies)
$5,000 $2,500 -$12,500
Per Vehicle Business License Tax
(199 Vehicles)
$250 $0.00 -$49,750
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Currently the City does not collect business license taxes from drivers even when th ey
are independent contractors. The companies did not request any reduction in fees for
vehicle franchise fees, driver permits , or vehicle permits. The current fee structure is
provided as attachment H .
If both requests are approved, the total reducti on in revenue would be $204,362
($142,111 for the reduction in vehicles to 199 and $62,250 for the elimination of the
B usiness License fees and reduction of Company Franchise fees by 50%). This would
be a 46% reduction in revenue when compared with FY2015 /16 revenue of $443,451.
Staff does not recommend that Council adopt the requested changes in fees and taxes
and instead wait until staff returns with any additional changes to the program prior to
the expiration of the existing agreements on December 31, 2017. Repealing the
business license requirement would require a change to the San ta Monica Municipal
Code (SMMC); and then , reinstating the business license tax on taxicab companies
would require approval by the voters.
Financial Impacts and Budget Actions
Staff anticipates revenues to decrease by approximately $1 11 ,1 00 in Vehicle Franchise
Fees , $5,761 in Vehicle Renewal Fees, and $2 5 ,2 50 in Business License Fees due to
the reduction of 101 vehicles, leaving the remaining authorized vehicles at 199 . Staff will
monitor revenues and any changes will be reflected in the FY 2016 -17 mid -year budget.
Prepared By: Salvador Valles, Assistant Director of PCD
Approved
Forwarded to Council
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Attachments:
A. November 10, 2015 Staff Report (On November 24, 2016 Action)
B. Franchisee Requests for Reduction of Vehicles
C. Bell Ordinance
D. Independent Taxi Ordinance
E. Metro Cab Ordinan ce
F. Taxi Taxi Ordinance
G. Yellow Cab Company Ordinance
H. Taxicab Franchise Fee Schedule
November 7 , 2016
Ayman Radwan
Manager, Taxi Taxi
Dear City Clerk
City of Santa Monica
1685 Main Street
Santa Monica, California 90401 ,
Due to the dramatic drop in Taxi demand and the financial distress along with it caused
by TNC’s, please accept our letter as formal request to reduce the number of our cabs.
We would like to return 23 (Twenty Three) Taxicab permits to the City and to waive all
future fees associated with them. If the City approves the reduction, we will uphold the
same level of service expected with the remaining 40 (Forty) taxicabs.
We appreciate your consideration of our request and look forward to a favorable
response in the near future.
Sincerely;
Ayman Radwan
Attachment B
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Salvador Valles
To:Cheryl Shavers
Subject:RE: Request for Reduction of Taxicab Fleet s from Bell Cab, Independent Taxi Owners
Association, Metro Cab, and Yellow Cab of Santa Monica
From: Marco Soto [mailto:msoto@layellowcab.com ]
Sent: Monday, October 31, 2016 9:05 AM
To: Cheryl Shavers
Cc: Simon; Kia Tehrany; ali@allyellowtaxi.com ; andrey@lataxi.com
Subject: Request for Reduction of Taxicab Fleets from Bell Cab, Independent Taxi Owners Association, Metro Cab, and
Yellow Cab of Santa Monica
Dear Ms. Cheryl Shavers,
Re: Request for Reduction of Taxicab Fleets
In accordance with Section 5 (f) – Request for Reduction in Taxicab Fleet, four of th e franchised fleets (Bell
Cab, Independent Taxi Owners Asso ciation, Metro Cab, and Yellow Cab of Santa Monica), would like to
request a modification to the number of vehicles perm itted in the City. The retail taxicab business in Santa
Monica has decreased for all of the fl eets and we need to make adjustment s to our operations in the city to
remain competitive. In the near future , within two to three months, we will be submitting a plan to the City that
will address changes to our call centers, dispatchi ng procedures, competitive pricing, lease structure
modifications for drivers, a nd customer service changes.
For this upcoming year, Bell Cab, Metro Cab, and Yellow Cab of Santa Monica would like to request to reduce
the number of permitted taxicabs to 45 for each company, for a total of 135 taxicabs operated by those three
companies. In addition, Independent Taxi Owners Asso ciation, would like to requ est a reduction of permitted
taxicabs to 30. Collectively, we would operate 165 taxica bs. This change is necessary to control of operating
costs, while having a large enough fleet to meet the ex isting demand and anticipated growth for this upcoming
year.
In June of this year, the cities of Los Angeles and We st Hollywood, reduced the franchise fees for the taxicab
companies by 36%. The reductions were considered by their city councils and approved based on a
corresponding drop in business across all of the franchised fleets in the cities. The business for our four fleets,
has dropped by more than 65% in the City of Santa M onica over the past 5 years. We would respectfully
request that one of the options propose d to the Council in the staff report, is a franchise fee reduction, with an
option of a 50% reduction, the elimination of the busin ess license fee, and our proposed fleet size changes.
Thank you for your consideration of this request. Please let us know when this item will be discussed by the
City Council.
Sincerely,
Bell Cab
Independent Taxi Owners Association
Metro Cab
Yellow Cab of Santa Monica
Planning and Community Development Department
Code Enforcement Division
Taxicab Franchise Program
P. O. Box 2200
Santa Monica, California 90407-2200
Email: taxi@smgov.net
Phone: 310 -458 -2224
Santa Monica Taxi cab Franchise
Fee Sc hedule
Effective July 1, 2016
Franchise Fee s:
Annual base franchise fee per taxicab company $5,000
Annual franchise fee per vehicle in taxicab fleet $1,100
Vehicle Permit Fees:
New vehicle permit fee $112 $125.26
Transfer vehicle perm it fee $112 $125.26
Renewal vehicle permit fee $ 51 $ 57.04
Replacement vehicle permit fee $ 36 $ 40.26
Vehicle re -inspection fee $ 28 $ 31.31
Taxicab Driver’s Permit Fees:
New and renewal taxicab driver’s permit application fee $218.08
Taxicab drive r’s permit re -examination fee $ 69.34
Taxicab driver’s permit transfer fee $ 69.34
Taxicab driver’s permit replacement fee $ 28 $ 31.31
Santa Monica Police Department Live Scan fee * $ 68.23
Notes:
1.Franchisee and Vehicle Franchise fees are due on January 1 st of each year.
2.Vehicle permit renewal fees are due on or before December 31 st of each year.
3.Driver permit renewal fees are due between November 1 st and December 31 st
of each year.
4.New driver permit application fees include two taxicab driver tests. If an
applicant fails the first two tests and chooses to test a third time, a re-
examination fee is due. If an applicant fails the test a third time, the
application is denied and the applicant must submit a New Taxicab Driver’s
Permit Application.
5.If a due date falls on a weekend day or holiday, the due date is the next City of
Santa Monica business day following the due date.
*Live Scan fee established by the Police Department.. Additional fees may be required by the Police Department if FBI search
is required.
Attachment G