TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
Steve Charelian, Revenue Services Manager
SUBJECT:Title
Authorization to Negotiate New Five Year Taxicab Franchise Agreements (Finance Director Moe).
APPROVE
Line
_________________________________________________________
Recommended Action
RECOMMENDATION:
Staff recommends that City Council authorize staff to negotiation new five year taxicab franchise agreements with the existing franchisees: South Bay Yellow, Bell Cab, United Independent, and All Yellow.
FISCAL IMPLICATIONS:
The City's current taxicab franchisees operate 165 taxicabs generating revenues of $148,170 for the current year ($898.00 per taxicab). Franchise fees are adjusted annually by the U.S. Department of Labor Consumer Price Index (CPI).
BACKGROUND:
In 1998, the City instituted a franchise system in an effort to limit the number of taxicabs operating in Manhattan Beach. This was in response to concerns for public safety and welfare due to an excessive number of taxi cabs trolling the streets in search of fares, often operating in an unsafe manner.
In addition to placing limits on the number of cabs, the franchise system enabled the City to better control the manner and condition under which taxi service is provided. For example, the City has established certain standards for vehicles (age, fuel economy) and drivers (appearance) previously unattainable without the contractual franchise agreements. The franchise agreements allow authorized companies (and a limited number of vehicles) to pick-up fares within City limits. Non franchised cabs may only drop off fares initiated outside of the City; they cannot pick-up fares in Manhattan Beach.
In 1998, in order to select the initial franchise taxi cab companies, the City solicited proposals through a Request for Proposal (RFP) process. In February 1999, the City Council awarded franchises to two companies: South Bay Yellow and United Independent cab for a total of 100 authorized cabs. In subsequent franchise periods (2002 and 2005) RFPs were issued in order to select franchisees. From the 2002 RFP, the City Council awarded additional franchises, which resulted in contracts with what are now the existing four franchise companies: South Bay Yellow, Bell Cab, United Independent and All Yellow. Over the course of the past franchise awards, the number of authorized cabs has expanded to the current complement of 165 cabs. The most recent franchise award was in 2009 for a five year period.
In addition to the terms of the Franchise Agreement, franchisees must also adhere to the following City ordinances regarding taxicab operations in the city: Clean Air Vehicles (MBMC 4.108.21), Non Exclusive Pick-Up Agreements (MBMC 4.108.185), and Taxicab Stands (MBMC 14.44.080).
DISCUSSION:
With the existing franchises expiring, staff reviewed options for awarding new franchises. While a new RFP could be issued, staff believes that the City would be better served by negotiating continuation of existing franchises with the four incumbent cab companies. This is consistent with the last franchise award in 2009 when the City Council directed staff to negotiate with the existing four taxi cab companies. This direction was in recognition of the taxicab companies' past service, and for supporting the clean vehicle requirements the City was adopting for the taxicabs at that time.
Additionally, staff believes that an RFP process would likely result in no additional proposers, as was the case in 2005, the last time an RFP was issued. At that time, the same four companies were awarded franchises.
Further, the four franchisees are the same companies with which the neighboring cities of Hermosa Beach, Redondo Beach and Torrance also have franchises. Being able to accept calls from multiple contiguous jurisdictions makes it economical for the four incumbent cab companies. Conversely, it is likely not as economically feasible for a single cab company to operate in a single jurisdiction, which may explain why the City has not received proposals from other cab companies in the recent past.
Finally, staff also believes that all four companies have served the community well and deserve the opportunity to continue to operate in Manhattan Beach. Also, businesses and residents are familiar with and are accustomed to the four franchisees which have operated exclusively in the community for the past twelve years.
If City Council concurs with the staff recommendation to negotiate new franchise agreements with the four incumbent companies, staff will meet with each in an effort to obtain the greatest value possible for the City. The goal will be to present the City Council with the recommended new franchise agreements later this calendar year, with the new five-year agreements commencing January 1, 2015.
A competitive process for the franchises is not required by State law or by the City's Municipal Code. City Council may award franchises at their discretion.
Clean Air Vehicle Ordinance
In December 2008, the City Council adopted an ordinance requiring franchised taxicab companies to phase-in clean air vehicles. That ordinance set standards for vehicle miles per gallon. Staff is in the process of updating the ordinance to reflect advances in fuel economy. Those standards will be discussed with the cab companies during negotiations. A new Ordinance with higher standards will be presented for City Council consideration in the coming weeks.
CONCLUSION:
Staff recommends that City Council authorize staff to negotiation new five year taxicab franchise agreements with the existing franchisees: South Bay Yellow, Bell Cab, United Independent, and All Yellow.