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Taxicab franchises set for final renewal under current system

Tuesday, May 25, 2010 by Michael Kanin

When the franchise agreements for Austin Cab and Yellow Cab are renewed at Thursday’s Council meeting, it will likely mark the last time those deals go through without major changes. That’s because Council members Bill Spelman, Laura Morrison, and Chris Riley plan to offer a companion resolution to begin a review process that would end in an overhaul of the contracts.


The resolution will instruct 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.”


Spelman told In Fact Daily that the resolution “makes it a lot easier for me to go along (with the franchise renewals).”


The resolution further directs stakeholders to “specifically explore” a set of prescribed performance indicators, including:

  • Performance measures currently collected by the Austin Transportation Department;
  • Use of biofuels, renewable fuels, or hybrid technology in franchise fleets;
  • Percentage of driver-owners in franchise;
  • Percentage of drivers leasing more than one permit;
  • Customer service data, including time between service calls and pick-ups;
  • Growth rate of fees charged to drivers by the franchises; and
  • Other indicators, as necessary.

According to Transportation Regulatory Manager Morris Poe, the city currently collects no performance data on any of its taxicab franchises. It does, however, ask for monthly travel statistics such as number of trips and total amount of fares.


As for the driver fee cap, it is likely to be set somewhere between 2 and 2.5 percent. That move would allow for an inflation adjustment, while not consuming an overly burdensome portion of the pending fare hike.


The stakeholder group will also be asked to look at the “methodology of franchise authorization”—in lay terms, the way that the city awards its franchise agreements. Specifically, the resolution directs them to examine: “various procurement options, including request for proposals; various agreement types that enable franchises and the city to achieve customer service, community value, and driver working conditions goals; and integration of key performance indicators as a standard for continued franchise authorization.”


A request for proposal component would add a competitive factor to what has become a rather staid process. With it, officials could see an increase in fleet environmental concern, and quality of service through the market-driven use of a bidding mechanism.


Though the concept of permit portability—the ability of drivers to transfer their hack licenses between companies—was batted around, Spelman decided that that issue was better left for next time. “Literally no city that has a franchise-based (taxi service) has figured out a way to do portability yet,” he said.


In the next franchise cycle, portability may be joined by a proposal that would hold 10 percent of a taxicab franchise’s allotted permits in reserve. Later, after performance factors are taken into account, that idea would have the city redistribute the reserve permit pool among the highest scoring firm or firms.


Though at least one Council member had tried to push for the reserve, they were told by city lawyers that such a concept would have to be enacted at the beginning of a new franchise agreement. With five years to go before franchise alignment, that would put the earliest date for such implementation at 2015.


However, the Law Department has told Spelman that action on the caps and performance indicators could be achieved through city ordinance—a factor that would allow regulation to take place outside of the existing franchise agreements. In that case, legislation could be ready by Jan. 1, 2011.

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