Note: Following this report is an array of news articles, editorials, and letters to the editor, all relating to this report.


Taxi Regulatory Reform

New City of Ottawa

In 1999, the province of Ontario, in recognition of great difficulties managing the "city" of Ottawa, Canada’s Capital city, as a consequence of 12 municipalities, 12 Heads of Council, 12 City Managers, and 84 elected representatives, proposed new legislation:

BILL 25, FEWER MUNICIPAL POLITICIANS ACT, 1999

The Province of Ontario proposed that the "city" of greater Ottawa be amalgamated into a single New City of Ottawa, having 1 Mayor, 1 City Manager, and 22 elected representatives. Bill 25 received Royal Assent 22 December 1999. The New City of Ottawa will emerge 1 January 2001.

To facilitate the transition, the Province of Ontario created an Ottawa Transition Board, with a mandate to ensure a smooth and seamless transition to the new City of Ottawa. During the transition, the Board will oversee decisions by the current municipalities and local boards that could have a significant financial effect on the new municipality. It will develop business plans for the new municipality to maximize tax savings and save taxpayers as much as $75 million per year. The Board will also put in place the basic structure for the new City of Ottawa. For further information about the Ottawa Transition Board, visit its web site (English and French) at:

www.ottawatransition.com

Among its many responsibilities, the Ottawa Transition Board established the Taxi Project Team to evaluate and report on the opportunities to enhance the quality of taxicab service within the new City of Ottawa and ensure effective regulation and enforcement. The Team is mandated to provide a seamless regulatory transition for January 2001 for the for-hire transportation sector including taxis, limousines, shuttle buses and other similar services to ensure that those services are able to meet the needs of the community members and visitors to the new city.

The Taxi Project Team has drafted a draft discussion paper and presented it to the Ottawa Transition Board, which has not yet accepted it. The report proposes a number of reforms, including the creation of a single taxi operating area, age limits on taxis and a removal of the limits on the number of licensed taxis.

What follows is the DRAFT report, accompanied by an Executive Summary as presented to the Ottawa Transition Board 8 September 2000.

Readers are cautioned that this document has no official status on TAXI-L. It is offered here solely as a convenience to its participants.


Taxi Regulatory Reform

New City of Ottawa

EXECUTIVE SUMMARY

Date: September 8, 2000

To: Ottawa Transition Board

From: Taxi Project Team

INTRODUCTION

The Ottawa Transition Board established the Taxi Project Team to evaluate and report on the opportunities to enhance the quality of taxicab service within the new City of Ottawa and ensure effective regulation and enforcement. The Team is mandated to provide a seamless regulatory transition for January 2001 for the for-hire transportation sector including taxis, limousines, shuttle buses and other similar services to ensure that those services are able to meet the needs of the community members and visitors to the new city.

The Taxi Project Team is comprised of members of the community including a representative of the Tourism and Hotelier industry and the local Airport Authority. The team has undertaken an analysis of the history of the taxi industry within Ottawa-Carleton and has examined the regulatory framework within other cities to develop a preferred model with two implementation options for the Board’s consideration.

The team completed public consultation to engage the community and various stakeholders on specific issues of concern to both the industry and the community. Industry groups were invited to participate including: taxi drivers and plate holders; brokers; OC Transpo/Para Transpo; accessibility groups and the limousine industry.

RESULTS OF ANALYSIS

Currently within Ottawa-Carleton, six municipalities regulate the taxi industry through specific by-laws. Part of the focus of the current regulation relates to the enforcement of artificial zones based on municipal boundaries and the limitation on the number of taxicab licenses (plates) available. Though the industry is significantly regulated, it has a wide range of service levels, an aging taxicab fleet and deteriorating service standards. These same challenges facing regulators in Ottawa-Carleton plague the industry across North America.

The problems facing the taxi industry are decades old. The last attempt at substantial reform of the industry within Ottawa-Carleton occurred in 1989 with an attempt to regionalize the regulation of the industry. That effort culminated in some modest improvements including a mandatory entry-level course for drivers, the development of larger zones through municipal cooperation and more standardized by-laws throughout Ottawa-Carleton including uniform meter rates. However, without sweeping change, the industry has continued to decline.

The Taxi Project Team, headed by Andy Haydon, former chair of the Regional Municipality of Ottawa-Carleton, recognizes the unique opportunity it has to make change which will result in a much-improved taxicab industry, comprised of committed drivers, well-maintained and safe vehicles, with clearly improved service to the public. After consultation with the industry, the public and affected stakeholders, the Taxi Team came to the conclusion that the taxi industry within the new City of Ottawa is not adequate and its quality is continuing to erode. Major changes to the existing taxi operations throughout Ottawa-Carleton are needed if the new city is to best serve the foreseeable needs of its citizens.

The Taxi Project Team first determined what type of regulation would encourage the development of a taxi industry that would be a credit to our community. Improved service to the public and safe and reliable vehicles topped the list of requirements. The Team then examined the current regulation in place in the area municipalities. The team developed a set of regulatory reforms and standards that would create substantial improvements to the industry. They are as follows:

Regulatory Reform

· Creation of a Taxi Commission, a non-political body, complete with dedicated enforcement staff to oversee implementation of changes and enforcement of new standards. Further evaluation of the costs associated with the commission is required;

· Creation of visible and accessible complaint mechanisms (taxi hotline);

· Merging of all existing zones to one zone, encompassing all of the geographic territory of the new city;

· Limited licensing requirements for limousines and further evaluation on the regulation of shuttle buses;

Enhanced Standards

· High standards for new and existing drivers including more substantial driver training, language abilities and deportment;

· Higher vehicle standards including vehicle age and quality;

· More effective enforcement of taxi regulations throughout the new city, with mandatory twice-annual inspections and additional random inspections focusing on safety and regulatory compliance;

· Improvements to meter operations, including automatic receipt print-outs and credit card acceptance;

· New vehicles entering taxicab service required to be yellow;

· Implementation to be effective as of January 1, 2001.

Finally, the Team developed two fundamental different approaches through which reform of the industry can be undertaken. The two approaches are:

· Closed entry, continue to limit plates to those currently held, enforcing new standards for drivers and vehicles although the new city’s ability to enforce its regulations and achieve significant improvement in the operation of its taxi industry would be severely limited; or

· Open entry1, elimination of the artificial and counterproductive barrier to entry by allowing entry to the industry of applicants meeting high new standards of driver qualifications, vehicle quality and safety (elimination of artificial restrictions on numbers of vehicle licenses (plates) issued). The new municipality’s ability to control the industry would increase with the rate of entry of new plate holders.

It is the considered opinion of the Project Team that the second option offers the best and most feasible opportunity to attain improved customer service to the public in the form of better, safer vehicles and more highly trained and qualified drivers.

OTHER ISSUES

Accessibility Issues

The Taxi Project Team heard presentations indicating that there is a great and unmet need for accessible taxicabs within the new City of Ottawa. The City of Ottawa has recently issued twelve non-transferable taxi licences for accessible taxicabs. The Taxi Project Team recognizes the need for accessible vehicles and notes that the twelve new licenses will not be adequate to meet the demands. The team recommends that this issue be evaluated by the Taxi Commission as a priority.

Licensing of other for-hire transportation

The for-hire transportation industry in Ottawa includes more than taxi service. Shuttle and limousine services provide further transportation options to the public. Both the shuttle and limousine sectors have specific markets and provide pre-arranged service to their customers. In general, shuttle services are offered at a flat rate which is lower than a regular taxi fares and pool service to various customers. Limousine services provide a higher level of service for an increased fee.

These industries are not as intensively regulated as the taxi industry. Currently, shuttle buses must obtain permission from OC Transpo to operate within the Region of Ottawa-Carleton. Two area municipalities regulate limousines.

The Taxi Project Team believes that the limousine industry should have a minimum level of regulation to protect public safety. Limousine drivers will be required to be licensed and pass a background check as required of taxi drivers. Vehicle licenses will also be required to ensure the vehicles can be considered luxury vehicles, are safe and appropriately insured, and the limousine business will be required to obtain a business license.

To operate legally within the Region of Ottawa-Carleton, a shuttle bus operator must obtain permission through the Ottawa-Carleton Regional Transit Commission. It is unclear at this time whether OC Transpo will continue to regulate this industry or whether this should more appropriately be a function of the Taxi Commission. Further evaluation will be required.

COST/BENEFIT ANALYSIS

The current resources allocated to the regulation of the taxi industry are 8.9 FTE’s and a revenue stream of $754,336. Further evaluation of the administration costs associated with the reform of the industry is required.

The Board will require enabling legislation from the Province of Ontario for the establishment of a Taxi Commission.

Submitted by
Taxi Project Team


DRAFT

Taxi Industry Reform

Report for the

Ottawa Transition Board

Taxi Project Team

September 11, 2000

 

 

Taxi Project Team

Chair

Andrew Haydon

Members

Charles Armstrong
Paul Benoit
Graham Bird
Ken Kelly
John Jarvis
William Jones
Hugh Mullington
Victor Ferreira (alternate)

Project Coordinator
Project Assistant

Stephanie Machel
Lisa Wellman-Patterson

Table of Contents

1. Forward

2. Recommended Model

3. Introduction

3.1. Mandate of the Taxi Project Team
3.2. Opportunity for Change

4. Background

4.1. History of the Taxicab industry
4.2. Existing Legislation
4.3. Regulation of the industry within Ottawa-Carleton
4.4. Experience within other municipalities

5. Climate for Change

5.1. Level of service to the public
5.2. Concerns raised through public consultation

5.2.1. Industry Members
5.2.2. Stakeholders

6. A New Start

6.1. A Model Industry

6.1.1. Regulatory Body (Taxi Commission)
6.1.2. Zone
6.1.3. Enforcement
6.1.4. Vehicle License
6.1.5. Driver License
6.1.6. Dispatch License
6.1.7. Meter Rates

6.2. Options for Achieving our Goals

6.2.1. Closed Entry
6.2.2. Open Entry

6.3. Licensing of other for-hire transportation

6.3.1. Limousines
6.3.2. Shuttles

6.4. Accessibility Issues

6.5. Implementation Plan

7. A New Start 7.1 A Model Industry 7.1.1. Regulatory Body (Taxi Commission)
7.1.2. Zone
7.1.3. Enforcement
7.1.4. Taxicab Vehicle Standards
7.1.5. Driver Standards
7.1.6. Dispatch License
7.1.7. Meter Rates
7.2. Options for Achieving Our Goal 7.2.1. Closed Entry
7.2.2. Open Entry
7.3. Licensing of Other For-Hire Transportation 7.3.1 Limousines
7.3.2. Shuttle Buses
7.4. Accessibility Issues
7.5. Implementation Plan


2. Forward

The amalgamation of the eleven area municipalities into the new City of Ottawa will create a world class city in terms of both territory and population. The challenge for the architects of the new city is to ensure that the result is an unqualified improvement without additional cost to the taxpayer.

This is particularly the case with the taxi industry. Ottawa and its surrounding municipalities share the same poor standard of service with many other Canadian cities. In fact, there is a great deal of evidence to suggest that the current levels of service are continuing to decline. Cities like Halifax, Toronto and Vancouver have already taken steps to reform their respective systems. Although an attempt was made in 1989 to effect significant improvements to taxi service within Ottawa-Carleton, only marginal reforms were achieved at that time.

The Taxi Project Team was determined to use this opportunity to develop a model of how the taxi industry should function. The Team heard evidence of a poor and eroding level of service within the boundaries of the new City of Ottawa, both for community members and visitors alike. The first priority of the Team was to ensure that any recommendations they proposed would improve service to the public. The taxi industry is the first and last impression of our community for many visitors.

The Taxi Project Team envisioned a taxi industry where drivers are well-trained, committed members of the industry who can act as Ambassadors for our tourist industry. Drivers who are committed to the industry should have the ability to make a living being a taxi driver. Their vehicles should be well-maintained, safe, and comfortable. Fares should be reasonable, once the Team determined what the taxi industry should look like in the new City, we began to look at how to achieve this goal and create a regulatory framework that will ensure a world-class taxi industry.

There has been great – even militant – historical resistance to change to the taxi industry in this area. The reasons are manifold and complex. The evidence can be seen every day on the streets. In Ottawa itself, more than 90% of the taxicabs are eight years of age or older and 52% are over 11 years of age. This fact alone gives rise to questions of safety and reliability, two vital characteristics of a sound taxi industry.

Why is this so? The Taxi Project Team, during the course of its public consultations, heard that municipal licenses for taxicabs – which are issued by municipalities for a moderate annual license fee – are now trading hands for amounts as high as $125,000 and that people have paid as much as $47,000 for the right to lease a license plate. This would normally suggest that it is so lucrative to operate a taxicab in this area that people will pay almost any price for the opportunity to do so.

Yet, there is no evidence to suggest that taxi drivers are making windfall profits. Indeed, the Project Team heard arguments to the effect that drivers are obligated to work 12-14 hours a day, for six or seven days a week to support their families. The holding of a license, either through transfer or lease, does appear to guarantee the holder a job as a driver. However, the debt service incurred in order to achieve control over a license plate imposes a burden on taxi operators that negatively impacts their ability to provide a safe, comfortable and reliable vehicle to their clientele.

In 1990, a study conducted by Hara Associates conservatively estimated that 10% of the meter rate was attributed to the plate. That percentage is likely much higher now as plate values have risen by approximately 100% percent in the past decade.

Contrary to the industry's practice, taxi plates (licenses) belong to the individual cities. Although commonly considered to have value, that value is artificial and has been created because of the finite limit on the number of plates issued. They have no asset value because they are not assets. Any person who "buys" a plate does so with considerable risk just as any business involves a degree of risk.

The holder of the taxi 'plate' has been able to convince a prospective "buyer" that the plate is a valuable asset. The prospective buyer has ignored the fact that the holder of a taxi plate is not the owner. The person leasing a plate is in the same situation vis-a-vis the holder of a taxi 'plate'. That person is paying valuable rent for a commodity not owned by the holder of that taxi plate.

The Project Team believes that it is important to seize the opportunity to reform the taxi industry. The Taxi Project Team, in formulating its recommendations, has sought to improve the industry by eliminating artificial and counterproductive barriers to entry. Historically, these barriers have been a 'cap' on the number of licenses issued which in turn has resulted in escalating 'plate' values.

The Taxi Project Team advocates allowing entry to any individual who meet our stringent driver training requirements and has obtained a suitable vehicle. The Taxi Project Team recommends the creation of a Taxi Commission to facilitate expeditious change to the industry and ensure that new, higher standards of vehicles and drivers are achieved. Through these means we can create a quality taxi industry comprised of committed taxi drivers and a quality taxicab fleet.

3. Recommended Model

The Taxi Project Team, headed by Andy Haydon, former chair of the Regional Municipality of Ottawa-Carleton, recognizes the unique opportunity it has to make change which will result in a much-improved taxicab industry, comprised of committed drivers, well-maintained and safe vehicles, with clearly improved service to the public. After consultation with the industry, the public and affected stakeholders, the Taxi Team came to the conclusion that the taxi industry within the new City of Ottawa is not adequate and its quality is continuing to erode. Major changes to the existing taxi operations throughout Ottawa-Carleton are needed if the new city is to best serve the needs of its citizens.

The Taxi Project Team first determined what type of regulation would create a taxi industry which would be a credit to our community. Improved service to the public and safe and reliable vehicles topped the list of requirements. The Team then examined the current regulation in place in the area municipalities. Finally, the team developed a set of regulatory reforms and standards that would create substantial improvements to the industry. They are as follows:

Regulatory Reform

Creation of a Taxi Commission, a non-political and self-financing body, complete with dedicated enforcement staff to oversee implementation of changes and enforcement of new standards. Further evaluation of the costs associated with the commission is required;

Creation of visible and accessible complaint mechanisms (taxi hotline);

Merging of all existing zones to one zone, encompassing all of the geographic territory of the new city;

Limited licensing requirements for limousines and further evaluation on the regulation of shuttle buses and other for-hire transportation services;

Enhanced Standards

Finally, the Team developed two fundamental different approaches through which reform of the industry can be undertaken. The two approaches are:

Closed entry, continue to limit plates to those currently held, enforcing new standards for drivers and vehicles although the new city's ability to enforce its regulations and achieve significant improvement in the operation of its taxi industry would be severely limited; or

Open entry2, elimination of the artificial and counterproductive restrictions on numbers of vehicles (plates) issued by allowing entry to the industry of applicants meeting high new standards of driver qualifications, vehicle quality and. The new municipality's ability to control the industry would increase with the rate of entry of new plate holders.

It is the considered opinion of the Project Team that the second option offers the best and most feasible opportunity to attain improved customer service to the public in the form of better, safer vehicles and more highly trained and qualified drivers.

4. Introduction

4.1. Mandate of the Taxi Project Team

The Ottawa Transition Board established the Taxi Project Team to evaluate and report on the opportunities to enhance the quality of taxicab service within the new City of Ottawa and ensure effective regulation and enforcement. The Taxi Project Team is mandated to provide a seamless regulatory transition for January 2001 for the for-hire transportation sector including taxis, limousines, shuttle buses and other similar services to ensure that those services are able to meet the needs of the community members and visitors to the new city.

The Taxi Project Team is comprised of members of the community including a representative of the Tourism and Hotelier industry and the local Airport Authority. The team has undertaken an analysis of the history of the taxi industry within Ottawa-Carleton and has examined the regulatory framework within other cities to develop a preferred model with two implementation options for the Board's consideration.

The team completed public consultation to engage the community and various stakeholders on specific issues of concern to both the industry and the community. Industry groups were invited to participate including: taxi drivers and plate holders; union representatives, brokers; OC Transpo/Para Transpo; accessibility groups and the limousine industry.

4.2. Opportunity for Change

The taxi industry provides an essential transportation service to a diverse population including tourists to the National Capital Region, business travelers and members of our community. Taxicabs provide a necessary complement to the public transit system for people who either choose not to or cannot access the public transit system.

Currently within Ottawa-Carleton, six municipalities regulate the taxi industry through specific by-laws. Part of the focus of the current regulation relates to the enforcement of artificial zones based on municipal boundaries and the limitation on the number of taxicab licenses (plates) available. Though the industry is significantly regulated, it has a wide range of service levels, an aging taxicab fleet and deteriorating service standards. These same challenges which face regulators in Ottawa-Carleton plague the industry across North America.

The problems facing the taxi industry are decades old. The last attempt at substantial reform of the industry within Ottawa-Carleton occurred in 1989 with an attempt to regionalize the regulation of the industry. That effort culminated in some modest improvements including a mandatory entry-level course for drivers, the development of larger zones through municipal cooperation and more standardized by-laws throughout Ottawa-Carleton including uniform meter rates. However, without sweeping change, the industry has continued to decline.

The Taxi Project Team has before it a unique opportunity to enact some substantive change to the regulatory framework which governs the industry. The amalgamation of the eleven municipalities which comprise the new City of Ottawa affords the team an opportunity to make changes which will create a much improved industry comprised on committed drivers, well maintained vehicles and improved service to the public.

5. Background

5.1. History of the Taxicab Industry

Hackneys (horse drawn coaches for hire), the predecessors of today's taxicabs were regulated shortly after they appeared on the streets of London and Paris between 1600 and 1620. In 1635, Charles I ordered that London hackneys be licensed so as "to restrain the multitude and promiscuous use of coaches"3. Some short nineteen years later, the British Parliament adopted a regulatory regime which limited the number of hackneys. The London Hackney Carriage Act of 1831 (as amended in 1843) was the first comprehensive taxicab regulation.

In North America, although some attribute comprehensive regulation of taxicabs to the 1920's, it was the Great Depression that promoted regulation in earnest. In the 1930's, the growth in unemployment and unsold automobiles produced a drastic increase in the number of taxicabs. While fewer people could afford to ride a taxi, the number of taxicabs skyrocketed while occupancy rates and revenues per taxi declined. Capacity and demand were moving in opposite directions.

A Washington Post editorial published in 1933 illustrated the public's perception of the chaotic state in which the taxicab industry found itself:

 

"Cut throat competition in a business of this kind always produces chaos. Drivers are working as long as sixteen hours a day, in their desperate effort to eke out a living. Cabs are allowed to go unrepaired... Together with the rise in the accident rate, there has been a sharp and concomitant decline in the financial responsibility of taxicab operators. Too frequently the victims of taxicab accidents must bear the loss because the operator has no resources of his own and no liability insurance. There is no excuse for a city exposing its people to such dangers." 4

Excessive competition among numerous small operators decreased carrier efficiency and increased consumer costs. The United States Department of Transportation well summarized the tenor of the times: "The excess supply of taxis led to fare wars, extortion and lack of insurance and financial responsibility among operators and drivers"5. Public officials and the press in cities across North America cried out for control over the taxi industry.

The response was municipal control and regulation over fares, licenses, insurance and other aspects of taxi service to ensure safe and reliable public transportation. Virtually all municipalities engage in taxi industry regulation under state or provincial legislation requiring or permitting such regulation. In recent years, there has been an impetus toward deregulation. We are all familiar with those initiatives in other modes of transport – airlines, motor carriers, railroads and intercity bus companies.

Deregulation emerged in a comprehensive ideological movement dedicated to free market capitalism which abhorred governmental pricing and entry controls as manifestly causing waste and inefficiency, while denying consumers the free choice of the range of price and service options they desire.

Governmental restraints on the freedom to enter into a business or retraining the competitive market to set the price seemed to be fundamentally at odds with immutable notions of economic liberty. Market failure in the early 20th century gave birth to economic regulation of infrastructure industries, however, today we live in an era where the conventional wisdom is that government is incompetent and the market and private sectors can do no wrong.

Despite this passionate and powerful political – economic ideological movement, one mode of transportation has come full circle from regulation through deregulation and returning to regulation. United States cities began to deregulate the taxi industry in the 1970's. However, the experience with taxicab regulation was so profoundly unsatisfactory that virtually every city that initially embraced it has since jettisoned it in honour of resumed economic regulation.

The spatial nature of the industry inhibits price shopping thereby creating an inelastic demand phenomena. The irony is that the free market private taxis simply do not act like entrepreneurs in a free market. It is indeed the paradox of market failure.

The fundamental question is not whether taxis should be regulated but how they might best be regulated to best serve the public.

5.2. Existing Legislation

The Municipal Act allows municipalities in Ontario to issue taxi licenses and continue to hold the property interest in the issued licenses. The scope of their powers include:

The municipality may limit the number of licenses issued which in turn will create a street value if they are privately transferred

The municipality can prohibit the transfer of licenses

The municipality is under no obligation to take the street value in consideration when making regulatory change

The municipality need not compensate license holders if street value is reduced or eliminated by virtue of regulatory action

The municipality may also reduce the number of taxi licenses which they issue by renewing a lesser number of licenses than were issued in previous years

There is no legal obligation to pay the street value of any taxi license by virtue of regulatory changes such as prohibiting transfer or by culling back the existing number of licenses.

5.3. Regulation of the industry within Ottawa-Carleton

The City of Ottawa, through the Police Commission began issuing taxi licenses in the 1950's. Other area municipalities followed suit between 1970 and 1973. Originally taxi licenses were transferable although when the City of Ottawa took the function over from the Police Commission in 1969, they prohibited owner transfers in their first by-law. However, a short two years later they reversed their decision and began to allow transfers of the vehicle licenses (plates) again. The other area municipalities licensing taxicabs followed suit. An unintended side effect of this action has resulted in an artificial street value attached to the plates. The effect of permission to transfer has been compounded by the limitation of the number of plates available. As a result, the street value of the plates has risen to anywhere between $30,000 for Kanata to over $100,000 for Ottawa plates.

Beginning almost thirty years ago, there have been repeated attempts to amalgamate the taxicab industry within Ottawa-Carleton. In 1974, a staff report to the Regional Executive Committee of the Regional Municipality of Ottawa-Carleton recommended the creation of a region wide licensing body. The Region met with opposition from area municipalities who wanted to maintain control over licensing although there has been strong and consistent support from the City of Ottawa. Many of the same issues which plague the industry today were prevalent and exacerbated by differentiation of the regulations between the various municipalities.

In 1975, the MacKenzie Report, which recommended the regionalization of taxicab licensing, was presented to Ottawa City Council and in 1976 the Ottawa-Carleton Review Commission recommended the same. However, neither report resulted in any changes in the licensing of taxicabs.

In 1989 the most substantive effort of regionalization of the taxicab industry was attempted. The Regional Municipality of Ottawa-Carleton prepared an exhaustive report detailing the industry and containing a number of significant recommendations including the:

creation of an independent regional Licensing Commission reporting to Regional Council,

development of a regional taxicab by-law, creation of two interim zones,

creation of a compensation fund to reduce the street value of the plates so that the Region could eventually move to one zone, and, development of a uniform education program for new drivers.

The report required enabling legislation from the province to accomplish its objectives. The provincial Ministry of Municipal Affairs refused to grant the legislation because of concerns over the creation of the compensation fund.

However, area municipalities made some improvements to the licensing of taxicabs in the early 1990's as a result of the regional report. In 1992 an Inter-Municipal Taxi Licensing Committee was established. In 1993, the Algonquin College Taxi Driver Training Course was created and funded through the area municipalities, Algonquin College and the Taxi industry. Between 1993 and 1997, the area municipalities standardized area by-laws and enshrined a requirement that new drivers participate in the training course provided through Algonquin College.

It is important to note that the current municipal regulations are almost completely standardized within the six municipalities. All of these municipalities regulate a number of specific issues. They regulate the taxicab driver, the taxicab license owner and taxicab brokers (individuals who provide a dispatch service and usually own a number of taxicab licenses (plates)).

5.4. Comparisons with other municipalities

The Taxi Project Team obtained the services of a consultant to complete a comparison of the taxi industry and regulations within Canada. The entire report is attached as Appendix 1. The report provided a summary of lessons learned relating to quality of service, entry control and driver training. The most relevant lessons learned are as follows:

Driver training is key to good service

Enforcement of taxi regulation needs to be around the clock to be effective

Effective follow-up on complaints requires good rules for making taxi and driver lD visible and for posting of a complaints telephone # clearly within the taxi

Dispatch companies can exist and compete without owning their own fleet vehicles.

Entry to the industry can be regulated effectively through driver and vehicle standards

Other jurisdictions are considering requiring current drivers to return for refresher courses

For an effective municipal follow-up on complaints from both passengers and others who share the road with taxis, clear posting of ID marks and a telephone number are required

Tighter driver supply leads to higher driver incomes

Plate/population formulas are difficult to administer accurately

6. Climate for Change

6.5. Level of service to the public

In Ottawa-Carleton, the local tourism industry and airport have long complained about the low standard of taxi service, the poor quality of vehicles and the attitude of some drivers. One straightforward indicator of the health of the industry is the age of the vehicles. The industry average within North America is a maximum vehicle age of 8 years. In the City of Ottawa, more than 90% of the taxicabs are eight years old or older, 52% are 11 years or older. These vehicles are most often poorly maintained and have literally traveled hundreds of thousands of kilometres. This is an unacceptable situation leading to less consumer satisfaction and clear dangers relating to public safety and security.

Another indicator of the health of the taxicab service is the number of complaints received by the municipalities, although it is important to note that the majority of complaints are directed to the dispatch operators rather than to the municipality. For 1997, the last year for which the City of Ottawa has complete records, the City received 198 founded complaints regarding taxi service out of 320 complaints in total. The most common complaints were for driver rudeness, fare overcharge or poor vehicle condition. Although the City has penalties including fines and suspension/revocation of license, the lack of dedicated enforcement staff and effective regulation have hampered their effectiveness.

Service levels have continued to erode in spite of a high degree of government regulation. In fact, a large part of the systemic problem with the industry is as a result of this regulation. Taxicab licenses (or plates) were originally issued to ensure that the vehicles were safe and ensure the quality of service provided. The number of licenses issued was limited to ensure that an appropriate number of taxicabs were available. Municipalities throughout North America then began to allow the transfer of the plates. The ability to transfer combined with a limit on the number of plates aided in the creation of the implicit (some say black-market) values that now accrue to taxi plate holders. By establishing a ceiling on the number of plate owner licenses, without a limitation on the number of taxicab driver licenses that are issued, a driver who wishes to operate a cab in such a mismatched supply versus demand environment is faced with a natural advantage that accrues to the holder of the limited plates.

The distribution of income in the closed taxi system is skewed heavily toward plate holders who do not necessarily add any value to the delivery of service. The ceiling on plate issuance contributes to a monopoly value that favour plate holders at the expense of drivers because the drivers are only able to participate in the taxi business via plate holders. Currently, the industry considers a taxicab plate to be a financial asset and the price of any financial asset is the present value of its future cash flow earnings stream. The holder of a taxi plate can "sell" it to another person wishing to be a plate holder via the implicit market valuations. Holding of a plate confers a right to the owner to lease or rent the plate to another and earn a regular income stream. A monopolistic system with a fixed number of plates creates an unfair lease/rent pricing dynamic that benefits owners and forces drivers to work hours that are not commensurate with their fixed costs.

There are a number of absentee owners who play no role in improving the taxi trade and are strictly using the structure as a financial investment - owners are distanced from their investments with no real interest but to collect their cheques. Most of those absentees who hold the licenses do not drive. The lease and rental system has removed these people from the industry. This reduces the compensation available to the taxicab drivers further increasing dissatisfaction with the industry and eroding the quality of service provided.

6.6. Concerns Raised Through Public Consultation

The Taxi Project Team held a series of public consultation meetings in May and June 2000. Special meeting were held to hear the views of industry members including taxicab drivers, union representatives, plate holders, brokers and other stakeholders. In total, the Taxi Project Team has received over 50 submissions and letters and has heard from over a hundred members of the industry and the public.

The Team held meetings with the intent of gathering the concerns and solutions from users of taxicabs as well as from participants in the industry.

6.6.1. Issues Raised By Members of the Industry

There was an apparent and significant dichotomy in the views from the various participants within the industry. The committee heard extensively from single plate holders and taxicab drivers, they received presentations from representatives of the Ontario Taxi Union and heard submissions from the Ottawa Taxi Owners and Brokers Association and other taxi brokers from Ottawa-Carleton.

There was substantive discussion on several key issues including zones, driver earnings, holding of plates and potential compensation. On the issue of zones, drivers operating a taxicab or holding plates within the suburban areas (Kanata, Nepean, Gloucester and Cumberland) favoured one zone while individuals operating within the City of Ottawa preferred a three-zone system.

The vast majority of taxi drivers who spoke to the committee expressed concerns about their inability to generate enough funds for an adequate living while also paying all of the associated costs (dispatch fee, plate lease and costs of the vehicle and maintenance). Without exception, every taxi driver who was not a plate holder, cited the ownership of the plates as the single largest impediment to their success within the taxi industry and as the most important issue to be resolved by the Taxi Project Team.

Both the taxi drivers and single plate owners expressed a marked preference for a single plate holder/single driver system. However, the Brokers Association and other taxi brokers noted the importance of dispatch, both for customer service and enforcement, and expressed concerns regarding the profitability of dispatch services without the revenue from the leasing of the plates. One of the broker companies that also owns its fleet of vehicles noted the importance of having access to a number of vehicles to ensure adequate service to its clients especially in off-peak hours. The Brokers Association advocated more stringent requirements for vehicles and drivers.

6.6.2. Issues Raised by Other Stakeholders

The Taxi Project Team also heard from other stakeholders including Algonquin College, the Ottawa-Carleton Limousine Association, the Ottawa Tourism & Convention Authority, Para Transpo and a representative of the City of Ottawa's Disability Issues Advisory Committee.

Issues ranged from the necessity for the tourist industry in Ottawa to have a high standard of taxi service to the requirement for more wheelchair accessible vehicles. Para Transpo discussed the potential for supplementing their service with taxi service through a pilot project. The representative of the limousine industry indicated that the industry has not historically required regulation and would like to ensure that their industry is not heavily regulated.

7. A New Start

7.1. A Model Industry

The Taxi Project Team has developed a model for the new City which will result in a world-class taxi service that will provide substantial benefits for the business community, tourism industry and community at large. Adoption of the model will create substantial improvements to the taxi and for-hire transportation industry within Ottawa-Carleton. That model provides the means to ensure that the drivers who are in the industry are highly trained and committed to the industry, the vehicles they drive are safe, reliable and comfortable and the industry is regulated through a Taxi Commission, set arms-length from municipal government, and responsible for the issuance of new licenses. The creation of a Taxi Commission is a necessity to ensure the substantial change within the industry. A description of the key elements

7.1.1. Regulatory Body (Taxi Commission)

A Taxi Commission is an intrinsic part of accomplishing meaningful change of the regulation of the for-hire transportation industry. The substantive changes to the regulation of the industry advocated in this report will require an implementation process occurring over a period of several years. Without a separate taxi commission complete with dedicated enforcement, meaningful change will be much more difficult to accomplish.

A Taxi Commission would accomplish two important objectives. First, the Commission would provide an effective body to oversee the transition to a new system of taxi regulation and adjudicate regulatory infractions, and second, the Commission would operate at an 'arms-length' relationship with municipal government.

The Commission would be self-sufficient and funded entirely through license fees collected from the industry. The combined resources currently allocated to the regulation of the taxi industry within the new City are 8.9 FTE's and revenues of $754,336. It is telling to note that currently only $425,000 is used to regulate the taxi industry.

Many municipalities across Canada use Taxi Commissions to regulate their taxi industries. The most successful taxi commissions are those that have a very limited relationship with City Council and no representation from the industry on the commission. The taxi industry is well-organized and able to present its views succinctly while taxi users are frequently not members of the community and are unsure of to whom service complaints should be provided. The effect of the constant messaging from the industry versus the silence from the public can have the unintentional result of skewing the regulators.

The Taxi Project Team believes that its model for reforming the industry will require clear and even enforcement over a period of time and this is best accomplished through a Taxi Commission populated with community stakeholders who are committed to improving our taxi industry. The Commission would ensure the enforcement of regulations governing taxis, limousines and associated businesses but would not cover such services as OC Transpo, light rail and other contracted transportation services. The commission will also be responsible for the approval and issuance of all taxi licenses (driver, vehicle and dispatch).

The Taxi Commission would be comprised of seven (7) members appointed through a nominating committee comprised of the Mayor of Ottawa, Chair of the Airport Authority, President of the Ottawa-Carleton Tourism Authority, Chair of the Transit Commission, and the Chair of the Taxi Commission. An honorarium of $8,000 per year per member and $12,000 per year for the Chair will be set. The first term of the commission will be for five (5) years, and subsequent terms will be for three (3) years. The membership of the commission would rollover to ensure continuity.

The commission will have in-house dedicated enforcement staff, administrative staff, a General Manager and a resource person dedicated to policy. The commission may have opportunity to 'lease' some services from the City including finance and over-the-counter services.

7.1.2. Zone

The Taxi Project Team recommends the creation of a single city-wide zone, creating one service area encompassing all of the territory of the new City of Ottawa. No change is proposed to any existing arrangements between private property owners (which include but are not limited to the airport and area hotels).

The Project Team received many submissions on the issue of zoning. Almost without exception, taxi interests serving the Ottawa core and the Macdonald-Cartier International Airport urged the retention of zones; those from outside of the present City of Ottawa urged the adoption of a single zone. The establishment and enforcement of zones, which serve really only to protect monopoly rights – whether modified from the existing system or otherwise – would necessitate significant and continuing administrative costs. Moreover, to perpetuate the current zone system would create at least two classes of taxis in the new city: those permitted to operate freely in the downtown core and those who are not. Nor is such a result logically compatible with the objective of an amalgamated new city, conferring – as much as feasible – equality amongst all of its citizens. It is important to consider that a city the geographical and population size of the new City of Ottawa would not require zones for any rational reason. Zones in Ottawa-Carleton only serve to enforce municipal boundaries.

Similarly, the Project Team heard from several rural taxi operators through public presentations and written submissions. Neither the firms nor the drivers based in outlying areas of the Ottawa-Carleton Region have been licensed by their respective municipalities. Most have operated for several years in their communities, providing a necessary service within their areas and into the urban core and/or the airport. Each of them, in their comments to the Project Team, made it clear that they intended to continue serving their traditional markets after the amalgamation of municipalities into the new Ottawa and do not intend to solicit business in the urban areas, except to take advantage of potential backhaul opportunities.

The Project Team regards it as imperative that taxi services continue to be provided on a reliable basis to the rural areas of the new city. Accordingly, the Team recommends that a concession be given to rural operators through a significant reduction in the annual taxi license fee to remain in effect only as long as such taxicabs continue to base their operations in their present locations. Any relocation, merger or sale which would result in a change in venue would – subject to a review by the proposed taxi commission – call for the revocation of the license.

It is also the view of the Team that, while some business may be lost by rural operators to urban taxicabs obtaining backhaul traffic into the core or the airport, it will be offset by similar opportunities being achieved by the rural operators.

Although some taxi operators will perceive that they will have "lost" advantages that they now enjoy through the current multi-zone system, all taxis within the new city will be able to make pick-ups throughout a much larger service area than has hitherto been the case, significantly improving opportunities for backhaul fares and thus potentially improving operating efficiency.

Stand arrangements which are generally tendered on a competitive basis by the airport, the train station and major hotels in the area will be unaffected by the elimination of zoning, except insofar as there will be an enlarging of the population of taxi operators able to compete for such service locations.

7.1.3. Enforcement

Enforcement requirements for the taxi industry are quite different from the other licensing requirements within the new City and require enforcement officers who have in-depth knowledge of the industry. As such, the Taxi Project Team believes a dedicated enforcement staff is a crucial element to reform of the industry. Enforcement staff will regulate taxicab drivers and vehicles. They will ensure that all taxicabs meet the regulatory standards through twice-yearly inspections and random, on-demand inspections. As well, enforcement staff will have the authority to suspend drivers for grounds.

The Taxi Commission will establish a hotline to allow the public recourse for complaints.

7.1.4. Taxicab Vehicle Standards

The Ottawa International Airport has set minimum vehicle standards that should incorporated into the standards for the new City including requirements for vehicle size, trunk capacity and cleanliness. Each vehicle will be required to have a functioning credit card machine capable of accepting all major credit cards as well as sealed, tested and functional fare meter. No additional charge will be permitted for payment by credit card.

Additional standards will be imposed to develop a better quality taxi fleet. As of June 30, 2001 all licensed taxicabs will be air-conditioned. As of January 1, 2002, all vehicles will be 8 years old or less and as of January 1, 2003, all vehicles will be 7 years old or less, will have clear glass windows and be equipped with standardized meters capable of issuing printed receipts.

New entrants to the industry will be required to meet all the vehicle and driver standards (including meter type and vehicle size) in order to gain entry into the market. New entrants will also be required to provide a vehicle no more than one (1) year old. New entrants are defined as individuals who were not operating a taxicab within the boundaries of the new City of Ottawa before January 1, 2000.

Vehicle standards will be enforced through twice yearly full inspections as well as random inspections held on demand.

7.1.5. Driver Standards

Taxicab drivers will have the responsibility of meeting the following standards above and beyond the standards currently imposed by area municipalities. Noncompliance with the standards may result in the loss of a taxicab driver license. The standards include language proficiency, dress code and training. As well, the successful completion of a background check will be a requirement for the annual renewal of a taxicab driver license.

Language Proficiency: All drivers will be required to meet a higher standard of language proficiency, including oral communication skills, in either official language. Current drivers who do not meet the requirements will have a two year time period to obtain the required proficiency.

Dress Code: Taxicab drivers must wear appropriate business dress with seasonal variations and will be required to meet minimum presentability requirements.

Education: An upgraded course, similar though more extensive than the current course offered through Algonquin College, will be required of all new drivers entering the industry. To ensure that the levels of service are comparable between existing drivers and new drivers, all drivers must pass refresher courses every three years. Current drivers will be required to pass their first refresher course by December 31, 2004.

New entrants to the industry will be required to meet all driver and vehicle standards (including language proficiency and education) in order to gain entry into the market. New entrants are defined as taxi drivers who were not operating a taxicab within the boundaries of the new City of Ottawa before January 1, 2000.

7.1.6. Dispatch License

Taxicab brokers, those holding multiple vehicle licenses, have historically provided dispatch services within Ottawa-Carleton. A separate broker license has been a requirement for providing dispatch service. The Taxi Project Team recommends that the Taxi Commission issue a Taxicab Dispatch License regulating the provision of dispatch service to ensure that appropriate records are kept and to ensure that the dispatcher provides an appropriate level of service.

7.1.7. Meter Rates

Currently, the meter rates are harmonized within the boundaries of the new City of Ottawa. The Project Team recommends that a standard drop and distance meter rate apply to all taxis operating within the new municipality, effective 3anuary 1, 2001, and that the Taxi Commission review meter rates for all cabs operating within the new City of Ottawa once annually. Nothing in this recommendation would preclude additional reviews by the Commission should they be necessitated by economic developments. No increase is proposed as a result of changes to the regulation of the industry.

7.2. Options for Achieving our Goals

Although the main effect of the licensing of taxicabs has been to limit their absolute numbers and thus to protect the income earning potential of those who operate such vehicles, licensing can also be a lever for reform of the industry. For this objective to be achieved the licensing body has to have the ability to impose sanctions for noncompliance.

While not directly analogous, the experience of the Ottawa Macdonald-Cartier International Airport is worthy of note. In that case standards of vehicle size and age, much tougher than apply elsewhere in the region, were imposed as a condition of the contract award for the airport stand. As a result, the fleet that now serves the airport is comprised of some of the best quality and best-maintained cars in local taxi service. The airport was able to achieve that level by forcing the issue through limitation of access to its facility.

At present, none of the area municipalities have the means to achieve a similar objective. By permitting the transfer of licenses (plates), the municipalities have limited their right to enforce higher standards on the industry since the ultimate sanction – withdrawal of the plate for failure to comply – could involve an arguably excessive penalty to the license holder.

In fulfilling its mandate the Project Team concluded that there were really only two fundamental approaches that could be taken. Both options share common elements including one zone and licenses extended to rural operators which have been previously detailed in section 6.1.The two options are:

7.2.1. Closed entry

The first option involves the least significant change. The most important change results from the merging of the current three zones into one zone and the inclusion of rural operators within the single zone. Plate holders in one or more of the current municipalities might experience moderate increases or decreases in the artificial market value of their investment in licenses as a result of the elimination of zones. The total finite number of plates would only marginally increase to allow for the licensing of rural operators. Although the new City would adopt more rigorous standards for drivers and vehicles, taxi operations would be relatively unchanged from the current norm. The Commission could increase the number of plates in relation to the population growth of the City. The new city's ability to enforce its regulations and achieve significant improvement in the operation of its taxi industry would be severely limited because its sanctions would be mostly confined to moral suasion.

7.2.2. Open-entry

The second option allows for open entry for those applicants prepared to meet enhanced licensing requirements with regard to training, quality and age of vehicle and driver standards. The option is similar to the "Ambassador Cab" policies recently introduced in cities like Halifax, Montreal, Toronto and Vancouver. In those cities access to the major hotels and airports is restricted to complying vehicles. Our model would allow the issuance of licenses to new entrants who meet our high standards for driver training and vehicle quality, including the provision of a vehicle no more than one (1) year old. The new licenses issued would be non-transferable and would be subject to recovery by the municipality on retirement or for poor performance. The new municipality's ability to control the industry would increase with the rate of entry of new plate holders.

It is the considered opinion of the Project Team that the second option offers the best and most feasible opportunity to attain improved customer service to the public in the form of better, safer vehicles and more highly trained and qualified drivers.

7.3. Licensing of other for-hire transportation

The for-hire transportation industry in Ottawa includes more than taxi service. Shuttle and limousine services provide further transportation options to the public. Both the shuttle and limousine sectors have specific markets and provide pre-arranged service to their customers. In general, shuttle services are offered at a flat rate which is lower than a regular taxi fares and pool service to various customers. Limousine services provide a higher level of service for an increased fee.

Other for-hire transportation services which are not defined as taxicabs, limousines or shuttle buses will also be regulated by the Taxi Commission. Further evaluation of those services will be required.

These industries are not as intensively regulated as the taxi industry. Currently, shuttle buses must obtain permission from OC Transpo to operate within the Region of Ottawa-Carleton. Two area municipalities regulate limousines.

7.3.1. Limousines

The limousine industry has expanded over the past decade as the level of service provided by the taxi industry has declined. Sedan limousines are now an entrenched part of the marketplace and a preference for many business travelers. Unlike the taxi industry, the limousine industry operates within a true competitive market and better service equals enhanced profitability. The success of the individual operators is dependent on providing a high level of service, and as a result, no public concerns have been raised. The existing regulation was intended to ensure a distinction between limousine and taxi service, and to protect both the taxi and limousine markets.

The Taxi Project Team believes that the limousine industry should have a minimum level of regulation to protect public safety. Limousine drivers will be required to be licensed and pass a background check as required of taxi drivers. Vehicle licenses will also be required to ensure the vehicles can be considered luxury vehicles, are safe and appropriately insured, and the limousine business will be required to obtain a business license. However, the Taxi Project Team does not believe more significant regulation is required. Currently, the limousine industry generates no public complaints for service and the Project Team believes that dedicated enforcement of higher standards within the taxi industry will provide a better competitive environment between the limousine and taxi industry. Public safety and security will be protected through a minimum of regulation.

7.3.2. Shuttle Buses

To operate legally within the Region of Ottawa-Carleton, a shuttle bus operator must obtain permission through the Ottawa-Carleton Regional Transit Commission. It is unclear at this time whether OC Transpo will continue to regulate this industry or whether this should more appropriately be a function of the Taxi Commission. Further evaluation by the Taxi Commission will be required.

7.4. Accessibility Issues

The Taxi Project Team heard presentations indicated that there is a great and unmet need for accessible taxicabs within the new City of Ottawa. The City of Ottawa has recently designated twelve new non-transferable taxi licences for accessible taxicabs. The Taxi Project Team recognizes the need for accessible vehicles and notes that the twelve new licenses will not be adequate to meet the demands. The Taxi Project Team recommends that this issue should be evaluated by the Taxi Commission as a priority

7.5. Implementation Plan

The Project Team believes that implementation should begin with the creation of a Taxi Commission, equipped with the legislated authority to make the changes described above, effective January l, 2001. The public discussion of the Team's report and the announced decisions by the Transition Board of whatever recommendations it chooses to adopt will serve as sufficient notice to the industry and the interested public that changes are imminent.

The Taxi Commission, once created and legally mandated and staffed, would immediately begin to implement those recommendations accepted by the Transition Board. Assuming that the preferred option described above is adopted, the Commission would:

References:

1 Accomplished by the removal of the limitation in the total number of licenses to be issued in the new city.

2Accomplished by the removal of the limitation in the total number of licenses to be issued in the new city.

3 U.S. Dept. of Transp., Taxicab Regulation in U.S. Cities 5(1983). Via Dempsey, Taxi Industry Regulation & Reregulation; The Paradox of Market Failure. Transportation Law Journal, Vol.24, No 1, Summer 1996

4Taxicab Chaos, Washington Post, jan.25, 1933. Via Dempsey, supra note 1

5US. Dept. of Transp, supra note 1

6Accomplished by the removal of the limitation in the total number of licenses to be issued in the new city.


Note: Following is an array of news articles, editorials, and letters to the editor, all relating to this report. Continue scrolling down the items, arranged in date order.


Ottawa Citizen
(Ottawa, ON, Canada)
28 Sep 2000

Editorial

FULL SPEED AHEAD ON TAXI CHANGES

If Ottawa-area taxi drivers want to strike, let them. Regardless of their pressure tactics, this taxi industry must be opened up to competition. We must end the outrageous practice of plate-holders extracting fat rents from drivers. And the creation of the new City of Ottawa is the perfect time for such changes.

The taxi demonstration downtown Tuesday was loud and annoying for anyone trying to get around. It changes nothing, though.

The cabbies are split in their views of a reform package proposed by Andrew Haydon's taxi project team. Cabbies who hold plates in Ottawa oppose the reforms because they will dilute or eliminate the value of their plates. Drivers who hold no plate -- and hand over much of their monthly income to some broker sitting at home who owns the plate -- are coming around to support for the reform package.

There are two key points:

- The changes would not bring just a new version of the existing system. The proposed system is open-entry, meaning that anyone who passes a training program, and has a new car, can get a licence. The fee for that licence will be nominal. This allows drivers to go into business for themselves with a new car, rather than spending $500 a month or more just to rent a plate.

- Current drivers still get a break under the reforms. They don't have to go through a driver refresher course until 2004. And they are allowed to keep running older cars, while new drivers must meet the training standards right away and have a car that is less than one year old.

The "grandfathering" of current drivers will go some distance toward offsetting the loss in the value of taxi plates under these changes. Plate holders are pushing for compensation for the plates, which were bought and sold after the City of Ottawa limited the number of plates to 586 (thereby creating a lucrative market for their sale).

But why should taxpayers pay cab drivers for a municipal work permit? Even if the new city council, in some extraordinary move, wanted to pay the plate holders tens of millions of dollars, the province would almost certainly veto such a use of the public's money.

There is one area of the Haydon reform package that could be changed by the Ottawa transition board before being implemented. The city could refund part or all of the licence transfer fee some drivers paid. Plate holders have recently paid $5,800 for each transfer of a taxi licence, but the city has never offered a sound reason for such a large tax.

In the 1990s, there were about 20 transfers a year. Through that decade the city took in $1.1 million in these fees. People who paid those fees in the last few years bought into a system that the City of Ottawa was perpetuating, but have not reaped financial benefit from that system.

It's not unreasonable to give them their money back, though even that will be a small consolation to many plate holders.

Mr. Haydon is correct to say that the cab drivers who spent $100,000 or more for a cab licence recently were making a bad investment. The new city won't be taking anything away from these taxi operators: They can keep their plates. It's just that lots of other people can now get plates as well.

The idea that the new City of Ottawa should perpetuate the current archaic taxi-licensing system is no longer on the table. What's on the table is the clear-headed plan by Mr. Haydon and his group to open the industry.

So let the plate holders go on strike. Hundreds of other drivers will be happy to work extra hours and make more money. The public will be happy to have more choice.

The plate holders can try to take court action: A threat of legal action can be made against any change of policy in government.

That doesn't mean we should put the brakes on sensible policies, such as expanding the supply of taxicabs in this booming city.


Ottawa Citizen
(Ottawa, ON, Canada)
28 Sep 2000

NEW TAXI RULES NEED MORE BITE

Taxi commission must be more involved in industry

BY RON Le SAGE

Andrew Haydon’s plan for taxi service in the new Ottawa is headed in the right direction, but it needs even more teeth.

The meat of the proposals advanced by the Ottawa transition board’s taxi project team, headed by Mr. Haydon, is that easy access to new non-transferable plates will stimulate competition, and free taxi drivers of dubious plate-leasing fees currently paid to multi-and single-plate owners. This idea already has every car-renting and plate-leasing taxi driver salivating at the prospect.

Increasing competition among taxi drivers? No public benefit will result from the feeding frenzy which will occur if the taxi population increases dramatically in the next three years. Securing a taxi is not like bidding at a celebrity auction.

It must be conceded that the committee's open-entry tactic has strategic merit, in that it does provide drivers with an escape from the clutches of the current system's system of hegemonic multi-plate ownership. Whether this compels multi-plate owners and brokers into doing business in a manner more rewarding to the public, and the drivers who pay them fees for services, remains to be seen.

The retraining of taxi drivers? The public must not be deceived into thinking that grabbing taxi drivers by the scruff of the neck, and hurling them into reindoctrination pits is either just or useful. Taxi drivers know their jobs, and speak far more English than it takes to get you home. This questionable and misguided measure is the fruit of a societal mood disorder, and is one surely to be applauded by the annoying xenophobics among us who regularly soil the pages of our local newspapers with their misdirected anger.

Will the public like its taxi drivers any more five years from now? For as long as the nagging public debate on this subject has frustrated us, not enough has been said about the employer/employee climate in the industry, which has undermined cheerful customer service, and made impossible the essential co-operation managers and employees in any venture need to earn the respect of its customers.

This is an issue which could continue to sabotage the industry's modernization.

This industry has historically fed on unstimulated market demand. The new taxi commission should seriously consider setting licence fees at a level to give it the resources to take a leadership role in service innovation and marketing.

The proposed taxi commission already seems determined to more heavily involve itself in three fundamental aspects of company operations: personnel, training, and the quality of the rolling stock. Something must be done to offset the risk of the above mentioned over-supply possibility.

If the transition board insists on adopting the proposals put forward by its committee, then it can improve the likelihood of their success by incorporating in that same package the following taxi commission policies:

Placing limits on what fees multi- and single-plate owners can collect for plate leases, and placing the onus on taxi companies to negotiate truer dispatch fees in collective bargaining.

Compelling all single-plate owners to drive taxi, or sell out. There are former taxi drivers now driving at OC Transpo, who also collect plate lease fees from taxi drivers.

Placing a moratorium on the issuance of plates to new entrants until there is an assessment of how many current drivers can satisfy the conditions of the new plate proposal.

Arranging for it to viably insure loans to taxi drivers for new vehicles. The need to keep one's job would make that car payment a driver priority.

Forbidding multi-plate owners from forcing their plate lessees to work under their company dispatch. The current system greatly restricts the freedom of drivers to work for whom they choose. Blue Line is in a position to merge their Ottawa, Gloucester, Nepean and Kanata components into a dominating entity solely able to cover the entire city. Competition at this level deserves to be dealt with by the transition board.

The transition board must consider the above recommendations in order to strengthen it own proposals.

Shiny new cars and taxi drivers with naively imposed attitude adjustments may not be enough.

Ron Le Sage lives in Ottawa and has been driving a taxi for 30 years.


Ottawa Citizen
(Ottawa, ON, Canada)
28 Sep 2000

Letter to the Editor

AUCTION NEW TAXI LICENCES TO KEEP SYSTEM FAIR

I am shocked by the Ottawa transition board's report about taxi reforms. I have talked to a few people and have a little more information on what the real issues are.

Why does the City of Ottawa consider a taxi business different from any other business? All businesses need licences, given by the city for a prescribed fee. Thereafter, market conditions govern the net worth of that business in a free market.

Has the city ever interfered with the resale of other businesses? If not, then why do so with the poor cabbies?

I have seen the word "black market" used to describe the way plate ownerships change. This is a very unfortunate use of the word, since the taxi business is not the only one in which the licence or plate has a certain market value.

What about radio stations, TV stations, cable systems and other telecommunications systems such as cellular phones? Here the licences are granted to a limited number of companies and these licenses are worth millions of dollars, and they do change hands.

A better way of dealing with the issue is to do what regulatory authorities are now doing with the telecommunications industry. Recognizing the value of these licences, telecommunications regulators now auction these licences rather than giving them out for free.

Keep a limit on the number of plates through some formula (one plate for so many residents, for example), but auction new plates when necessary. Use this money for regulating and training drivers or for other improvements to the industry. Under this scheme, the existing plate owners will also not be cheated out of their hard- earned investment.

Imagine if telecommunications operators found their licenses were worthless. There would be political turmoil. The city is just behaving like a big bully for the poor plate owners, many of whom are first-generation immigrants with a limited voice or none at all.

I also heard that the city is going to merge all existing taxi zones into a single zone. Why would cabbies work in an outlying area, like the west end or east end, when they know they will get more business in the city core?

What plans does the city have to make sure that all areas are adequately served?

Inderjit Singh Sambi
Nepean


CBC Ottawa NewsWire
(Ottawa, ON, Canada)
27 Sep 2000

COMPENSATION FOR CAB LICENSES WON'T FLY

The man who tried to reform Ottawa-Carleton's taxi industry in the 1980s says cab drivers shouldn't expect to be compensated for the value of their taxi licenses.

Doug Cameron tabled a massive report in 1989 on how to reform the industry. He says new proposals to revamp the industry are on the right track.

But those changes could cost many cab drivers tens of thousands of dollars.

The high prices for licenses were created by the city's decision to stop issuing any new licenses more than 25 years ago.

"The gist of what you must attack is the limit on the number of plates and their ability to be bought and sold privately," says Cameron. Otherwise, he says it's a "waste of time."

In 1989 Cameron recommended compensating cab drivers for the lost value of their taxi licenses. But no longer.

Cameron says politicians in Queen's Park would strike down any compensation package now, as they did then. But he says the reforms must go through even if taxi drivers suffer.

"There's no easy time ever to do that. So you might as well get it over with. It will never be any easier than it is today," says Cameron.

The Ottawa Transition Board is expected to vote on the issue next month.

Cab drivers have threatened a class action suite if they aren't compensated for the lost value of their plates.


CBC Ottawa NewsWire
(Ottawa, ON, Canada)
27 Sep 2000

DRIVERS PROTEST AGAINST TAXI REFORMS

Taxi drivers in the region mounted a massive protest Tuesday afternoon against changes to their industry.

More than 400 taxis clogged the streets of downtown Ottawa for two hours, blowing their horns all the way from the bus terminal to the offices of the Ottawa Transition Board.

Emotions ran high when they arrived at the board's offices on Lisgar Street. There they rallied against reforms they say will destroy their livelihood.

The board is considering an overhaul of the taxi industry, including lifting the 26-year-old cap on issuing new taxi licenses.

Cab drivers, some of whom have paid over $100,000 for licenses, say that will destroy the value of their investments.

And they say a proposal to open up the new city of Ottawa to all cab companies in the region will make competition too intense.

The drivers demanded, and got, a meeting with transition board representatives, who took their concerns under advisement.

But Andy Haydon, the man who wrote report, says he doesn't plan to change any of his recommendations.

The cab drivers say they are considering strikes, and a class action lawsuit against the city if their concerns aren't addressed.


Ottawa Citizen
(Ottawa, ON, Canada)
27 Sep 2000

ANGRY CABBIES BLOCK ELGIN STREET

350 taxi drivers hold up traffic in bid to get attention
of transition board

Graham Hughes
The Ottawa Citizen

About 350 horn-honking cabbies tied up Elgin Street traffic yesterday to protest the fact that their licences -- some purchased for as much as $120,000 -- may soon be worthless.

A taxi reform report released two weeks ago recommended making Ottawa's taxi industry more competitive by granting a licence to anyone who meets tough new regulations.

The proposal would push out "single plate owners," those cabbies who mortgaged their homes and went to the bank to finance the purchase of one of a limited number of plates for as much as $120,000.

Andy Haydon, who headed the taxi reform team, said yesterday's protest didn't change his mind.

The drivers have made made a bad investment in the plates, Mr. Haydon said. Compensating the drivers for that investment -- a move that would cost the new city millions --should not be an option, he said.

"You can't perpetuate what's become a terrible, terrible situation."

Yesterday's protest, held mostly by Blue Line drivers who are single plate owners, dragged on for more than three hours, holding up downtown traffic.

Afterwards, three members of the drivers' union presented their demands to Pierre Tessier and Edward Mulkins, two member of the transition board.

"They know now where we're coming from," said Chahid Zeidan, chairman of the Blue Line drivers' union. "We have families, we have kids and we have to survive."

Mr. Zeidan said the drivers will give the board a week to 10 days to agree to meet with them. The drivers are threatening a mass walkout or strike lasting anywhere from a half day to a week if the board refuses to meet them.

The board will receive comment until Friday at 5 p.m., but there has been no commitment to meet with the drivers.

Mr. Haydon dismissed the threat. "I think that's going to work to their disadvantage, but, of course they're grown people and they're going to make their own judgments on those issues."

The commerce in plates, done through brokers, has often been called a black market. The city stopped issuing new licences in 1976. By then, savvy entrepreneurs had hoarded plates. The plates are currently rented from the city for $418 a year, then leased to drivers for $500 a month, or "sold" for tens of thousands of dollars.

The drivers who paid high prices for their plates have already threatened to sue the City of Ottawa. The city knew about the plate industry and collected thousands in taxes from the transfers, the drivers maintain.

But reform advocates argue that would-be taxi drivers shouldn't be hamstrung by a licensing system that forces people who want to enter the business to "buy" plates for exorbitant fees.

Under reform, a new seven-member taxi commission independent of city council would have the power to issue plates to anyone who passes a driver examination, has a year-old car, and meets other requirements, such as a background check. The task force recommended that six fare zones in the region should become one, allowing cabbies to roam the city to pick up fares.

The cars must be equipped with meters that issue printed receipts and credit card machines, the report said. By June next year, all cabs should be air-conditioned, the report recommended. The drivers want this to be a requirement only when buying a new vehicle.

Drivers should be proficient in either English or French, the report said, and there should be a dress code and a new colour for the cabs -- yellow. The latter requirement drew universal condemnation yesterday from cabbies, who noted that drivers often use cabs as private vehicles in off-duty hours.

"Who would want to turn up at a wedding with a garish bright yellow car?" asked Susan Khouri, who drives a cab with her husband.

Updating and painting cars and installing new meters would cost $15,000 to $20,000, said driver Fadi Fares.

It's the old story, Mr. Haydon said.

"When there's reform, you hear from all the people who are going to lose by reform. The people who are going to win by reform kind of sit back and say 'we've heard all this noise before and it's never happened, but we hope it's going to happen.'

"Are they coming and yelling in my ear? No," he said. "But sometimes you've got to listen to the silent majority."


Ottawa Sun
(Ottawa, ON, Canada)
27 Sep 2000

CABBIES EYE WALKOUT

Drivers try to put brakes on proposed changes to taxi biz

By JACKI LEROUX
Ottawa Sun

OTTAWA will be without taxi service if the megacity transition board implements radical changes to the taxi industry, furious drivers vowed yesterday.

"For sure, we will walk," said Blue Line taxi union chairman Chahid Zeidan, who echoed the sentiment of some 400 drivers outside the board offices on Lisgar St. "It's in their hands. I expect to hear from them in a week to 10 days. If I don't, we'll have another mass demonstration."

The drivers caused a noon-hour traffic gridlock in the city's core as they took part in a protest against the recommended changes, which they say will ruin their livelihoods. The convoy of honking, blue cars snaked from the Greyhound bus station on Catherine St. to 111 Lisgar St.

HUGE LINE

From the board offices, the cars stretched north as far as the eye could see to the top of Elgin St. They then parked in three long lineups along Lisgar, where they got out of their vehicles and gathered in front of the building.

"Nobody can steal the blood from my children," driver Amrikh Singh said through a bullhorn to the crowd who then cheered.

Earlier this month, the team in charge of amalgamating taxi industry regulations for the new city recommended leasing an unspecified number of new plates for the first time in more than 20 years.

However, to avoid the existing problem where owners lease the municipally-owned plates for huge profits, the team wants the new licences to be non-transferable. According to a board report, plates are leased by six area municipalities -- for less than $500 a year in Ottawa -- and then passed on to others for as high as $125,000 to own, or $47,000 to lease.

FIGHT FOR JOBS

Owners who paid these inflated prices to operate their own businesses believe new plate owners who will be able to operate a cab for so much less will put them out of business.

Zeidan had about 10 minutes with two transition board members to present the drivers' case.

The key author of the recommended changes, Andy Haydon, sees no reason to change the report.

"We are doing the right thing. We're making the industry fairer and more competitive," he said.


Ottawa Citizen
Ottawa, ON, Canada)
26 Sep 2000

Editorial

TAXI REFORM GIVES US ALL CHOICE

by Andrew Haydon

There has been a great deal of public discussion about our taxi project team's proposed changes to the local taxi industry. As chair of the team that made these recommendations to the Ottawa transition board, I want to clear up some of the misconceptions about both the industry and the proposal we have put forward.

An important thing to keep in mind is that a taxi licence is just that: a licence. The holder of a taxi licence is permitted to operate a business driving a cab: no more and no less. It should be no different than holding a restaurant licence, which is the property of a municipality and is renewable each year for a nominal fee. The municipality maintains the right to revoke that licence at any time if specified performance standards are not followed and respected. That's the way it works in the restaurant industry. But when it comes to the taxi business in Ottawa-Carleton, the situation is very different. To start with, consider that local municipalities have issued only a handful of new taxi licences for the last 25 years, and none in the City of Ottawa.

Imagine if you lived in a city where the municipal government had arbitrarily decided to limit the number of restaurant licences to 586. Imagine that for the last 25 years, no new restaurants had been allowed to open and compete with existing restaurants. Imagine, in a market devoid of competition, how similar these restaurants and their menus would be. Finally, imagine if you were prevented from ordering food from a restaurant in another municipality, even though you preferred that establishment's food and service to those in your own city.

I think it's fair to say the public would not tolerate that situation. Yet, this is how the taxi industry has been operating in Ottawa-Carleton over the last three decades. As a result of the absence of real competition in the local taxi market, members of the public axe at a clear disadvantage because they are not permitted to make a choice based on who will provide them with the best service. It also means that poor service can thrive and potentially hazardous vehicles are allowed to stay on the road.

However, it is not only the public who suffers from the sorry state of the taxi industry. During our project team's extensive public consultations over the last few months, we heard over and over again from taxi drivers and union representatives that the current system simply isn't fair. They told us drivers are being forced to work long hours in order to make ends meet. The result, they said, is that drivers suffered, their families suffered and the public suffered.

They lamented the fact it was virtually impossible to get a taxi licence and that drivers had no option but to work for other people. We heard testimony suggesting the only way to improve service was to give the people who actually drive the taxis the opportunity to hold their own licences, provide their own cars and run their own business. They made it clear that pride of ownership was the key to success. Members of our project team listened carefully to these drivers and we agreed with them.

The taxi brokers, who hold numerous plates and lease them to other drivers, told us that in order to stay in business they would have to be able to operate a fleet of cars. This, they said, would enable them to guarantee service in off-peak hours and allow them to bid on contracts with private stands such as the airport, local hotels and at government buildings. Their arguments also made good sense to us.

So our project team had to strike a balance between the interests of the public, the taxi drivers and brokers. In the end, I sincerely believe our team's recommendations to the transition board have achieved that balance.

Here's how: We are proposing the new City of Ottawa issue new taxi licences in order to create an environment where healthy competition can exist. For taxi drivers, it means they would have the freedom to start their own taxi business and be their own boss if they so choose. For multiple licence holders such as Blue Line Taxi and Capital, it means they could continue to hold more than one plate and still meet their contractual obligations, as well as operate a dispatch service.

Our proposal means everyone has choices: the choice to start their own business or to work for someone else in the industry. It means the best drivers will do well. Those who ignore the new standards will not. An important point to remember is that our taxi project team's proposal will in no way take away anything from anyone. In fact, many new opportunities will emerge in the industry as a result of these proposed changes.

Much has been said about the people who paid many thousands of dollars to operate a cab. It is the view of our project team that people who made this investment knew they were investing in something that did not belong to them – a taxi licence belongs to a municipality and should not be treated like a commodity on the stock market. Those who assumed this situation would be allowed to continue indefinitely were wrong. On Jan. 1, things are going to change.

To those in the industry who feel the proposed system will take away their livelihood, consider this. In the coming months, some municipal employees will lose their jobs due to amalgamation. Taxi drivers will not lose their jobs: They will be able to hold on to their licences and continue to operate a cab if they choose to do so.

Right now, the limited number of taxi licences means the bulk of the income earned by drivers is put toward renting the licence. Essentially, they are paying for the right to have a job. That isn't fair or right, and it means most of their income is tied up in operating costs. The opening of the market to anyone who meets the new high standards (a new car, improved driver training and testing) means drivers will have the option not to rent. They will have the option to buy their own car. In most cases, their monthly car payments will be smaller than the amount they now pay someone else for the right to drive a taxi. In the majority of cases drivers will be ahead financially.

In all the recent media coverage about this issue, one point you seldom hear is that some drivers want to be able to have their own car but don't want to have to compete with anyone else. Many of the drivers we consulted also asked us to take the licences away from the brokers an hand them over to them. That isn't the solution: if some drivers new feel they are treated like slaves by some licence holders, it won't be any better to allow these drivers to do the same to other drivers who will enter the industry in the future.

Finally, when you hear someone requesting compensation for the taxi licence(s) they hold, ask yourself, "Who will pay?" The answer is simple: it is you and I, the taxpayers of the new City of Ottawa, who would pay. In fact, if the municipality were to compensate taxi licence holders, it would probably eliminate the entire amalgamation savings the transition board is attempting to identify. It could even result in a tax increase.

Our team does not support this: course of action. What we do support is building the foundations for a world-class taxi industry, which will provide the public with a clean, safe and top-quality service in the new City of Ottawa This is a golden opportunity we cannot miss.

Andrew Haydon, regional chairman from 1978 to 1991, is chair of the Ottawa transition board's taxi project team.


Ottawa Sun
(Ottawa, ON, Canada)
26 Sep 2000

CABBIES DRIVE TO FIGHT
BOARD'S REGULATION CHANGES

By JACKI LEROUX
Ottawa Sun

Traffic chaos is expected today when an estimated 200 furious cabbies take to the streets to protest radical changes to the taxi industry.

Blue Line taxi union chairman Chahid Zeidan said the drivers will gather in their cabs at the Greyhound bus terminal on Catherine St. at noon and make their way to the megacity transition board offices on Lisgar Ave.

The drivers are angry that the board is considering allowing the new city to, among other things, sell more non-transferable licences and eliminate service boundaries.

"This is going to make our plates worthless," said Zeidan.

Earlier this month, the team in charge of amalgamating taxi industry regulations for the new city recommended leasing out an unspecified number of new plates for the first time in more than 20 years.

However, in order to avoid the existing problem where owners lease the municipally-owned plates for huge profits, the team wants the new licences to be non-transferable.

According to a board report, plates are leased by six area municipalities -- less than $500 a year in Ottawa -- and then passed on to others for amounts as high as $125,000 to own, or $47,000 to lease.

But not all cabbies are opposed.

Pat Walsh said many drivers are refusing to take part in the rally because they approve of the changes.

"It's a feudal system that's completely unfair," he said. "There are huge amounts of money we're paying to rent city property. They want to keep that grip on our necks."


Ottawa Citizen
(Ottawa, ON, Canada)
25 Sep 2000

Letter to the Editor

REFORM OUR TAXI SYSTEM,
BUT DON'T OPEN IT TO ALL

I am a taxi driver for Blue Line. I rent my plate.

According to the report prepared by the taxi project team for the Ottawa transition board, drivers like myself are obligated to drive 12 to 14 hours a day, six to seven days a week. This sounds like indentured labour in some Third-World country.

I rent the plate and drive cab out of my own free will. I am free to find another job, just like any other Canadian, if I feel it is so bad driving a cab. No one has ever forced me to drive a taxi. I work longer hours because I make more money doing so.

JDS Uniphase recently said it would be hiring 3,000 more people. The economy right now is fairly good. However, I intend to keep driving a taxi because I make better money and have the option of working longer hours.

What disturbs me most is not the rent I pay for the plate, it is the proposed open entry. Under this proposal, I am afraid there will be too many drivers, including part-time students and others skimming the fares in the rush hours. If this happens, I most likely will have to find another job.

The report also mentions that drivers cannot afford better cars. This is an untested assumption since there has never been any regulation requiring the use of newer cars. The City of Toronto requires newer cars within the closed system and drivers have adjusted. Having a newer car is not necessarily bad economics -- the car is cheaper to maintain with fewer repairs.

I think the proposed improvements can be easily implemented within the closed system, rather than going to the open system, which will be terrible for all drivers.

Major Singh
Nepean


Ottawa Citizen
(Ottawa, ON, Canada)
20 Sep 2000

Letter to the Editor

TAXI CHANGES WILL HELP
CUSTOMERS AND DRIVERS

In the debate regarding proposed changes to the taxi industry, focus should be kept on the central issues, which are customer service and fairness to the ordinary taxi driver.

The proposed changes will definitely produce the desired results. They will change the taxi industry from a business of speculating on the gain in value of a taxi licence to the business of providing transportation services to travellers.

The central proposal is to allow anyone meeting strict but reasonable performance standards to enter the industry. In practical terms, what this will mean is drivers who currently rent a plate for $1,000 to $1,400 a month will be able to buy a new, properly equipped vehicle and get into business for themselves. From cash flow, drivers will be able to afford car payments, insurance and, if they choose to work under a roof sign, even the stand rent. Presently these are all additional expenses above and beyond the plate rental.

It is difficult to understand assertions that drivers will be harmed. For example, Latif Dadshani's comments are particularly confusing ("Team urges open market for cabs: Licences worth $100,000 would become worthless," Sept. 12). As the proposal is to hand over plates to people who actually drive, one must assume Mr. Dadshani is advocating taking away plates from current owners and handing them over to a different or new group of people. This merely sets the stage for exchanging one group of plate owners for another group of plate owners. Two wrongs do not make a right.

His comment that current drivers should be able to buy plates from the owners makes no sense either. One can only conclude Mr. Dadshani is currently a plate owner. If he were not, he should be happy the new proposals would give him a plate at no cost -- exactly what he purports to advocate.

Further, the fact the city owns all the current plates is conveniently forgotten. The notion anyone can buy or sell the right to work by virtue of control of a plate is, as the report states, a questionable business decision and is the central problem plaguing the industry.

Concerns that the market will be flooded with new drivers are ill- founded. Considering the investment required, new stakeholders with a vested interest will indeed join, but hardly a flood. The free market will limit participation. Businesspeople (owner-operators) will quickly decide whether an investment of $40,000 is justified.

Taxi drivers have always been an independent and clever bunch. They always have followed and always will follow the business wherever it is, be that downtown or the airport or Kanata. Highly visible yellow vehicles will simply aid prospective fares in finding a cab. If there's no money in it, they will leave.

In general, good drivers will abandon absentee (or non-driving) plate and vehicle owners and get into business for themselves. Owners of dilapidated vehicles and plate renters, those who add no value to the industry, will lose their drivers. The free market will clean out the deadwood. Brokers will finally get back into the dispatch business.

Current plate owners, especially the big ones, have nothing to complain about. The existing system has enabled them to capitalize their initial modest investments (as little as $7,500), turning them over many times into very successful businesses with substantial assets (beyond the plates). No one should condemn this; it was business and a very successful one at that. However, the time has now come to give the little guy, the independent owner- operator, an opportunity to make a business of it.

As to anyone who invested in a plate recently, they are on the same footing as anyone else in business who must evaluate a risk and draw the consequences, good or bad. At current plate values, anyone who made this decision in the past five or six years faces an economic hardship. The more recent their foolish investment, the greater the hardship.

This group's interests are hardly the basis for allowing the taxi industry in the national capital to continue its decline.

Frederick A. Schwilgin,
Ottawa


Ottawa Citizen
(Ottawa, ON, Canada)
19 Sep 2000

TAXI REFORM PUTS CABBIES ON DEFENCE

Drivers who paid thousands for plates consider suing city
if competition destroys their value

by Mohammed Adam
Ottawa Citizen

A group of Ottawa taxi drivers may sue the City of Ottawa if licence plates costing up to $100,000 become worthless under taxi reform.

Some cabbies, known as single-plate owners, have paid brokers thousands of dollars to buy one of a limited number of plates.

Now, proposed taxi reform suggests making Ottawa's taxi industry more competitive by allowing anyone who meets stringent new regulations to drive a cab. Within a few years, the plates would become worthless.

The term "black market" has often been used to describe the way the plates are bought and sold.

But the cabbies say they bought the plates with the express knowledge and blessing of the city, and they have deeds to prove the sale was legal and that the city collected thousands of dollars in profit from the sale.

"Poor people like us worked hard to do something for ourselves. Now they want to take it away from us. This report is meant to destroy us. It is going to ruin people," single-plate owner Amrik Singh said.

Mr. Singh, who has been driving for 16 years, bought his plate from an individual for $97,000 in 1997.

He took a bank loan, using his home as security. He still owes about $26,000 and worries that once the market is opened it will be so flooded it will be difficult to break even. The value of his plate will quickly evaporate and since no one will buy it, it could be the end of him.

Mr. Singh is one of about 250 Ottawa cabbies who spent thousands of dollars to buy rights to taxi plates that they hoped would secure their future.

They borrowed or spent a lifetime of savings to buy the plates under a system validated and encouraged by city politicians and bureaucrats. Before the city sanctioned any transfer, it asked for the purchase document and used the price as a base to levy a $5,800 transfer fee, even though a plate holder pays $418 to renew it.

The single-plate owners say they are innocent victims of reform and they want compensation. They are hoping to raise $400-$500 each to finance their case.

The Ottawa taxi union will also hold a meeting today to discuss mass demonstrations against the proposal.

"We will not let this go without a fight," said Mr. Singh.

The cab industry is controlled by a few individuals who have horded municipally owned plates over the years and dished them out at exorbitant fees.

Operators renewed the licences every year because the city still owned them. As the population grew and demand for cabs increased, some began to hoard the licences.

When the city stopped issuing new licences in 1976, a new class of taxi barons was born. Those who had licences were allowed to keep them. But the city failed to make it clear that they could not be transferred or traded for profit.

Seizing an opportunity, the holders began to lease them or sell the rights to other drivers, raking in millions of dollars.

Since former regional chair Andy Haydon's report on taxi reform was released last week, Ottawa cabbies like Mr. Singh have spent sleepless nights wondering how they can avoid bankruptcy and ruin.

The Haydon report is aimed at dealing with three fundamental problems of the industry: skyrocketing licence plate prices, less than stellar service and restrictions on the free movement of taxis in the city.

The task force has proposed a free market, opening up the entire city to all drivers and introducing higher standards for drivers and cars.

Prahlad Singh Bobal, a University of Ottawa-trained engineer turned to the taxi business after he lost his job with a Burlington energy firm in 1984.

After failing to find a job in Ottawa, his wife, a public servant, took a loan through CS Co-op and the couple bought a plate for $93,000 in 1993. Their home was used as security.

"The city allowed the brokers to sell, (and) approved it by issuing a transfer and charging us a $5,800 fee. My wife is still paying the loan and if we default, we could lose our home. Now, this plate could be worth nothing," Mr. Bobal said.

"If they want to do reform, it shouldn't be on our backs. Where's the city's responsibility?"

"In 20 years I paid $17,800 to the city alone for the privilege of driving a taxi and now I may not have anything to show for it," said Farokh Valizadeh.

"I don't have a pension plan, I don't have a dental plan, I don't have any kind of social benefit. All I have is the plate I bought so that when I retire, I will have something to rely on."

Mr. Valizadeh borrowed money from the Royal Bank in 1987 to buy his plate for $55,000. He doesn't understand why he should lose that investment.

"I have a wife, I have children. Now after 20 years in the business, I will have nothing. What's my use?"

Malkiat Atwal did tough, back-breaking work in the restaurant industry for 12 years to save enough money to buy a plate for $68,000 in 1990. He did it as a way of owning a small business, something he could rely on later in life.

"Now I am old. I don't have anything. The plate is my only investment and I can't sell or transfer it," he said.

Twenty-year veteran Wilson Dinkha contemplates how difficult life would be holding a worthless plate he bought from Diamond Taxi for $51,000 in 1989 with a loan from the Royal Bank.

With the city deeply involved in the transaction he felt confident he was making a wise investment. Now, it just can't walk away scot- free, he says.

"The city charged 10-per-cent transfer fee. The city recognized and accepted the street value. It was part of it," Mr. Dinkha said.


Ottawa Citizen
(Ottawa, ON, Canada)
14 Sep 2000

Editorial

THE METER FINALLY TICKS ON TAXI REFORM

Ottawa's taxi industry is like an old car wreck no one wanted to clean up -- until now. But former local politician Andy Haydon, who heads a task force examining the issue, this week called for greater competition and higher standards in the industry.

This taxi industry's problem, in a nutshell, is a feudal licensing system that saw the City of Ottawa freeze the number of taxi plates issued. This led plate-holders to rent their plates out for hundreds of dollars a month, which in turn led to plates being sold for as much as $100,000. The absurdity of city regulators creating and maintaining such a distortion in the market has been clear for years.

It also helped create a pretty dreary cab service in Canada's capital city. Anyone who uses taxis in Ottawa knows that it's hit and miss. One day you get a clean, new car driven by a knowledgeable driver; the next, you're in some old, stinking Caprice police car from the 1970s, driven by someone struggling just to pay his monthly plate fees. Mr. Haydon's taxi industry project team points out that more than half of the cabs in Ottawa are at least 11 years old. To make matters worse, a Nepean cab delivering a fare downtown can't pick up a fare for the return trip.

Mr. Haydon's group suggests an open-ended taxi industry with high standards for vehicles and training, such as language standards and a dress code. It also calls for a single zone, to eliminate border squabbling and allow more efficient use of cabs on the road. The number of cabs and drivers would be whatever the market would support.

The new rules would be phased in, with current drivers given three years to meet the training standard. They could also take advantage of a phase-in on the new-vehicle requirement. By the end of 2001, no cars older than eight years old would be on the road. By the end of 2002, the oldest cars would be seven years old. New taxi drivers, however, would have to meet the rigorous training standards right away, and enter the business with a car only one year old.

It's not clear that such tough rules are needed (is, say, starting off with a two-year-old car so offensive?), but the reform plan is a worthy proposal. The troubling point is how to fairly wind down the old system. A driver who simply leases his cab will be in a good position: He can walk away, buy his own car and get a licence, likely for a reasonable fee. Instead of paying rent to a plate owner, he'll make car payments.

But what about the drivers who literally bought into the old system, those people who borrowed $100,000 to buy a plate? Must they lose everything? The existing system is one that Ottawa Council and regional council, to their shame, have not had the courage to reform for 30 years. The City of Ottawa levied a $5,800 fee on every transfer of a cab licence, but it has not done a good job of policing the industry. It allowed people to sell plates as if these were private property. City leaders didn't have the guts to say that absentee plate-holders should lose their ownership right.

The taxi team is to be congratulated for trying to put the brakes on this system. The issue is economic freedom for both the public and the service-provider, the former to have some choice about taxi transport, the latter to offer a professional service. The crying need is competition. In fact, better cabs in our city would undoubtedly lead to more business for the drivers because more local people would use them. A really good taxi service is an absolute must in a capital city. Will our politicians finally make it happen?


Ottawa Citizen
(Ottawa, ON, Canada)
12 Sep 2000

TEAM URGES OPEN MARKET FOR CABS

Licences worth $100,000 would become worthless

by Mohammed Adam
The Ottawa Citizen

After three decades of bumbling and missed opportunities, Ottawa is on the verge of the most radical overhaul of the taxi industry in the country.

An Ottawa transition board task force is proposing a new, open, free-wheeling taxi industry in which anyone who can meet stringent new standards can get a licence and drive a cab anywhere in the new city.

If approved by the board and the new council, the policy could flood the market with new, yellow cabs and virtually dilute the street value of plates that have impoverished drivers and turned a few brokers into millionaires.

The new policy could kick in by the end of next year.

"The distribution of income in the closed taxi system is skewed heavily toward plate (licence) holders who do not necessarily add any value to the service. A monopolistic system with a fixed number of plates creates an unfair lease/rent pricing dynamic that benefits owners and forces drivers to work hours that are not commensurate with their fixed costs," the report says.

"The debt service incurred in order to achieve control over a licence plate imposes a burden on taxi operators that negatively impacts their ability to provide a safe, comfortable and reliable vehicle to their clientele."

Despite "great, even militant historical" resistance to change, the task force says the industry must be reformed for the good of the public. Task force chairman Andy Haydon says the proposed changes will dramatically improve the Ottawa service and make it one of the best in North America.

"The taxi industry is really the first and last impression of our community for many visitors and our job is to have a system in place that will give the best possible service to the public," said Mr. Haydon, a former regional chair.

"This is a great opportunity for many entrepreneurs to enter the business. It is an opportunity for an individual to become part of a good business that could be one of the best in North America."

The report by the seven-member "taxi project team" is as radical in its proposal to end the abuse of municipally owned plates by brokers as it is in proposing new tough regulations for drivers.

Calling it a "new start," the task force says the Ottawa cab industry should be completely open. That means that no one who wants to be a cabbie should be hamstrung by a licensing system that forces drivers to "buy" plates at hugely inflated prices from holders who rent them cheap from the cities. An Ottawa plate that a holder renews for about $418 a year is leased for $500 a month or "sold" for about $100,000.

Mr. Haydon says in five years, the "open-entry" system should create enough new drivers to "level the playing field."

"The brokers will say the value of the plates will diminish but the value is artificial anyway. They've taken advantage of the situation, they've had 30 years of profits but the world has to change," he said.

A new regulatory body, a seven-member taxi commission independent of city council, would have the power to issue plates to anyone who passes a new driver examination, has a one-year-old car, and meets other requirements, such as passing a background check. The number of plates the commission can issue will not be capped.

Mr. Haydon says there should be "as many new drivers as can qualify."

As well the task force says the six fare zones now in place should be scrapped in favour of one. A cabbie should have the freedom to roam the entire city to pick up fares. The airport, hotel and other private concessions, such as the Corel Centre, would not be affected by the changes.

And to address the issue of sloppy drivers and ratty cars, the task force is proposing everything from new tests to a dress code and a new colour for the cabs.

By June next year, all cabs should be air-conditioned and by 2003, only cars that are less than eight years old can be used as cabs. The cars must also be equipped with meters that can issue printed receipts. As well, they would be required to install credit card machines. New cars entering the business would have to be painted yellow.

All drivers would be required to pass an annual background check and they'll have to take a much tougher training course than the one currently provided by Algonquin College.

A higher standard of language proficiency in either English or French, to be determined by Algonquin, would be required. New drivers would have to pass the new tests before getting a licence. Current drivers who do not meet the higher test standards would have two years to polish up.

Drivers must take a refresher course every three years. Current drivers must pass a refresher course by the end of 2004. All drivers who do not meet the stringent requirements would lose their licences. A new dress code will require all cabbies to wear decent attire, described as "business casual."

The taxi commission would be appointed by council on the recommendation of a selection team, including the mayor and the heads of the tourism authority and the transit commission. The commission would have a general manager and staff who would run day- to-day affairs.

Executives at Blue Line, the region's largest carrier could not be reached for comment. But Debbie Sjirtes, a broker and co-owner of Westway Taxi was aghast at the possibility of a flood of new drivers entering the market. She likes the idea of one zone across the city and approves of the stringent new requirements for drivers. But opening up the business to all comers, she said, would be a bad idea.

"It's crazy. There's going to be too many people out there and that will not be good for the drivers. They should put a cap on it," Ms. Sjirtes said.

The report has also divided the drivers down the middle. While both Ottawa and suburban drivers agree that a massive overhaul is needed in plate licensing, their solidarity collapses over the question of zones.

Suburban drivers, eyeing the lucrative Ottawa market, love the idea of one zone because it gives them a free ride in the city core. But Ottawa drivers who buy rights to plates for as much as $125,000 apiece worry that suburban drivers whose plates cost about half as much will steal their business and cost them money.

"There is nothing here for us. They kept everything for the owners. The owners will continue to own the plates. They didn't listen to anything we said," protested Chahid Zeidan, the Ottawa Blue Line union president.

Latif Dadshani, a Gloucester Blue Line driver, also criticized the report as a missed opportunity. Mr. Dadshani said the task force should have faced the issue of plates head on by handing the plates to people who actually drive. The "open-entry" system, he says does nothing for current drivers who are the ones who have been slaving for years.

"There should be one plate for a driver. Drivers should be able to buy the plates from the owners for a reasonable price," he said."

"The open-entry system will lead to too many drivers and the drivers won't make money. And if they don't make money the service will suffer."

But Martha Boyle, Ottawa's licensing manager and the city's foremost taxi expert says open entry, if fully implemented, will be the answer to the region's taxi problems. At the heart of the taxi mess is the "outdated and costly" licensing system, and the task force proposals nails down the problem.

"The licensing system is really the poison tree from which the fruits have fallen. Everything you see in terms of service is fruit of the licensing system and the notion of open entry attacks this poison tree," she said.


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