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Council vote could bring changes to taxi franchise system

Friday, May 28, 2010 by Michael Kanin

After months of pitched debate over the issue, the Council agreed Thursday to five-year extensions for the city’s franchise agreements with Austin Cab and Yellow Cab. With the action, Council members took the first steps toward aligning the deals that those firms and Lone Star Cab hold with the city.


When that happens in 2015, the city will be able to make major changes to the way that they execute those contracts. However, with the additional approval of a resolution penned by Council Member Bill Spelman (see In Fact Daily, May 25), new rules may come as soon as January of next year.


Spelman was less successful in his attempt to cut 54 permits from the Yellow Cab roster.


At the first and second readings of the franchise renewals, Spelman voted against approval. His resolution, he told In Fact Daily this past week, made it “a lot easier” for him to “go along” with the idea.


Still, Spelman tried to inject more immediate controls into the system. To do so, he unearthed provisions of the code that stated that no cab firm could hold more than 60 percent of the permits. “If we’re serious about holding the line for the total number of permits…than that means that Yellow Cab is in excess of 60 percent,” he said.


He argued that, though the city could “add…permits to the system” to make up for the incongruence, the added pressure of a coming fare hike would likely produce a drop in demand for cab services. “If we increase the number of permits…by something like 13 percent…that’s going to put 13 percent more drivers out there chasing a slightly fewer number of passengers and all else equal that means that each of those drivers is going to be making 13 percent less money,” he added. 


The solution, he said, was to drop the number of Yellow Cab permits to make up the difference.


Mayor Pro Tem Mike Martinez, who was on that Council, countered that the 2007 City Council that approved the language that Spelman cited did so knowing that Yellow Cab already had more than 60 percent of the available permits. “The Council may have contemplated…60 percent to not monopolize it,” he said, “but they clearly voted…for the amount of permits that Yellow has in their hands right now.”


Council member Sheryl Cole, also a member of the 2007 Council, then offered background on Martinez’ comments. “One of the big concerns, because Roy’s (Taxi) had (gone) out of business was ‘how do we maintain the market place, how do we maintain…competition?” she said.


“So that’s basically where the 60 percent but leave (Yellow)…at 69 came from.”


With Spelman off the dais to catch a flight to a National League of Cities conference, no one attached a reduction of permits to the Yellow Cab renewal. It passed on a 6-0 vote.


The Austin Cab renewal passed 4-0, with Council members Chris Riley and Laura Morrison temporarily absent.


Spelman’s resolution, which instructs City Manager Marc Ott to work with a stakeholder group already established by the Council to “develop recommendations on: taxicab key performance indicators; capping fees charged by franchises to the drivers, including but not limited to terminal fees, to a maximum percentage each year; and (a) revised methodology for authorizing franchise agreements,” passed unanimously.

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