Taxis will proliferate in Portland under new, but controversial, rules

by: TRIBUNE PHOTO: CHRISTOPHER ONSTOTT - Portland officials are hoping to discourage cab drivers from waiting in line at the airport bullpen. Broadway Cab driver Dacho Geda is among those willing to wait as long as two hours for a ride.Portland has never been a taxi city. Streetcars, bikes and light rail have captured our interest much more than the idea of being able to run curbside, hold out a hand and flag down a crosstown ride on the spot.

Portland taxi drivers will attest to the “poor relations” attitude toward taxis in the Rose City. A study commissioned by the city this year revealed that taxi drivers on average make $6.22 an hour, well below the state’s $8.80 an hour minimum wage.

Mayor Sam Adams would like to see that change. He is supporting a sweeping set of proposals intended to remake the taxi industry in Portland. The proposals were presented to the City Council Nov. 7.

The idea is to improve working conditions and wages for the city’s taxi drivers, many of whom cannot find enough fares to pull their earnings up to minimum wage. Part of the proposed solution takes a very counterintuitive approach that has most of the current drivers up in arms — put more cabs on the street.

Portland permits 382 taxis, with one permitted taxi often shared between two drivers. Kathleen Butler, who oversees taxis as regulatory division manager in the city’s Revenue Bureau, says there are many more people who would like to be cab drivers. The hard-to-get permits don’t go directly to drivers, but instead are granted to companies (Broadway Cab is the largest) that hire drivers as private contractors. It’s a situation that has bred what Butler calls a “regulated monopoly,” with many of the problems monopolies seem to encourage.

A nearly endless supply of drivers — many are new immigrants — means the cab companies don’t have to worry about how much their drivers are earning, or any other work conditions, for that matter. The taxi companies are only required to provide dispatch routing, car insurance and an indeterminate amount of marketing for the right to hold permits. The companies require drivers to make a weekly contribution to what the industry calls “the kitty.”

On average, Butler says, drivers in Portland pay $500 a week toward the company kitty, which is one reason drivers’ take-home pay is so meager. Overall, drivers here are treated poorly, she says, and the city study backs her up. Nevertheless, she says, the city has never taken away a company’s permit for mistreating its drivers or passengers.

Butler’s solution is complex, but it is aimed at getting market forces to work. The idea is to permit more cabs and create some competition for drivers. “If there are more opportunities for drivers, then all the companies are going to try to create better conditions for drivers,” she says.

After a 4-0 vote at City Council last week, Butler’s bureau is issuing 78 new permits and will likely issue dozens more after that. In addition, Butler has proposed new regulations that would allow the bureau to get tough with companies that mistreat drivers and passengers. Getting tough might mean yanking taxi permits or not reissuing them once they expire.

More cabs mean more riders?

Stephen Kafoury, an attorney who represents Broadway Cab, says the city report on the taxi industry “has the appearance of something that was hastily put together.” Kafoury concedes that “drivers don’t earn as much as we’d like them to earn.” Most drivers can’t get health insurance or workers’ compensation, and Kafoury agrees that is a problem.

But the biggest issue is low wages for drivers, Kafoury says. That is why he calls the proposed city’s proposed solution “reckless.”

“It seems enormously backward to say drivers are not making enough money, so what we want to do is increase the number of permits out there. There is a law of supply and demand,” Kafoury says.

Butler is convinced, however, that more taxis on the street, properly managed, could lead to more demand. She cites one reported call that resulted in a two-hour wait for a taxi. Her own staff members occasionally call for taxis to test the system. One call from the Mount Tabor neighborhood resulted in a 30-minute wait; a call for pickup from Mall 205 took more than an hour, she says.

Red Diamond, a Broadway Cab driver who serves as the drivers’ representative to the Private for Hire Transportation Board, has lobbied for a system in which the city allocates the taxi permits directly to drivers, but he admits that’s not going to happen. Alternatively, he’s opposing the new permits with the zeal of someone who sees his small piece of an economic pie getting even smaller.

Diamond disputes bureau figures showing Portland has fewer taxis per capita than most other cities. He also says Portland’s efficient public transit and bike culture make it different than most of those cities anyway.

“It’s probably a wise thing our city is not overly dependent on taxis the way other cities are,” Diamond says.

Diamond’s competition is led by Kedir Wako, chairman of the board of Union Cab Co., which technically doesn’t yet exist as a taxi-running firm. Union, composed mostly but not exclusively of immigrants from Africa, has been promised the bulk of the new permits — 50 — and has assured the city it will run its operation with the goal of bettering drivers’ lives.

Wako, a 41-year-old father of three, has been driving for Broadway Cab 12 to 14 hours a day, seven days a week, since 1999. He says he takes home between $6 and $7 an hour after accounting for his weekly kitty contribution of $580.

In 2008, he says, after he woke up one morning with his face partially paralyzed and unable to speak, he needed to take a week off. He asked Broadway if he could be excused from paying the kitty for that week, but he claims Broadway refused.

Raye Miles, Broadway Cab president, says that typically the company will forgive kitty payments in cases of medical emergencies, but that it has no record of Wako making such a request.

After that, Wako says, a number of drivers organized so that if one got sick, the others would pitch in to pay his kitty. The drivers also agreed that if a fellow driver was in an accident, the others would help pay his or her car insurance deductible.

That organizing led to the proposal for Union Cab. Wako says with the 50 new permits, 100 drivers will be employed and none will drive longer than 12-hour shifts. The kitty payments won’t be more than $350 a week, and Union will find a way to obtain group health insurance and a retirement savings plans for its drivers.

Wako says Union Cab will advertise throughout the metro area neighborhoods and its drivers will be very visible, not waiting hours in line for highly valued pickups at the airport heading downtown. Calls to Union’s dispatch, he says, will get cabs to customers quicker.

“If you are visible, if you are cruising in the street, there is no reason that customers will wait 90 minutes,” he says.

Fees will rise with new rules

Portlanders might never develop New Yorkers’ attitudes toward taxis as part of the transportation infrastructure, says Frank Dufay, coordinator of the city’s private for-hire transportation program in the Revenue Bureau, but as more apartments are built without parking spaces and more people need to get to train or streetcar stops as part of their daily movements, calling and hailing cabs might become a more accepted part of the Portland urban culture. That’s where Adams is placing his bets, anyway.

“Part of the process is building that market,” Dufay says. “People will use more taxis if the service is better.”

Maybe, says a dubious Kafoury.

“It’s a build-it-and-they-will-come philosophy,” he says. “If they put out taxis in Sellwood and Lents, people will start using them. It might happen.”

If cost is a reason Portlanders don’t take cab rides, the proposed new rules aren’t going to make cabs more attractive. Adams’ plan includes increasing fees to the cab companies and increasing the meter rate charged to cab customers by 10 cents a mile. Some of that extra revenue will help fund inspectors to enforce the new rules.

Gary Blasi, a University of California Los Angeles law professor who has studied the taxi industry, is skeptical that putting out more cabs and providing a better taxi experience is going to grow the market significantly.

“I would want to see some empirical evidence that the difficulty of finding a cab is what stands in people’s way,” Blasi says.

Butler says the city would like to get fewer taxis waiting in the airport bullpen up to two or three hours for fares. But Blasi says there is a reason so many taxi drivers are willing to do that rather than hit the streets looking for fares. They might not be bringing in much income, but their expenses are lower.

“Taxi drivers out of the lot cruising around doesn’t make a lot of sense because they’re burning gas,” he says.

Ray Mundy, director of the Center for Transportation Studies as the University of Missouri, has studied taxi industries in a number of cities and says Portland officials are mistaken if they think better taxi service will lead to significantly more people choosing taxis on a regular basis.

“I have not known any city that has successfully grown its taxicab market, unless they’ve done things like eliminate a public transit route where people have no other alternative,” Mundy says.

In Mundy’s view, increasing the number of cab companies will mean more competition for the higher fares, such as those coming into town from the airport. Having more companies also makes it harder for a city to impose regulations, such as requiring drivers to pick up passengers in areas outside downtown and the airport. With fewer players, cities can more easily make deals.

“Their intentions are good, but no city has ever done this in terms of growing their marketplace,” Mundy says. “They’re going in the wrong direction. They probably should be shrinking the number of cab companies.”

City takes on valet payoffs with new rules

The rules intended to remake the Portland taxi industry include one change aimed at stopping an illegal practice that has frustrated city enforcers for years.

Portland cabbies and town car drivers have been locked in a battle on payoffs to hotel valets. Cab drivers have complained that some town car drivers — who were supposed to only take fares arranged by appointment — were secretly paying valets $5 or $10 for each hotel guest heading back to the airport. The bribe, or gift — or cost of doing business, as some town car operators saw it — meant the valet would steer the guest to a waiting town car rather than a taxi.

In 2009, city inspectors conducted stings, posing as departing hotel guests, to prove the practice was taking place. But that didn’t mean they could eliminate it.

In fact, cab drivers interviewed recently by the Tribune say the practice has increased. Now, the taxi drivers say, they also pay off the valets in a desperate move to get the most lucrative fares

The city’s solution is a new ordinance that will impose a $1,500 fine on drivers who pay hotel valets for rides and on valets who accept payment. Taxi dispatchers are also prohibited from accepting payments from drivers who want the most lucrative fares.

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