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Santa Monica Officials Search for Answers to Taxi Industry Crisis
Santa Monica Real Estate Company, Roque and Mark
Roque & Mark Real Estate
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Santa Monica, CA 90404
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Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica

By Jonathan Friedman
Associate Editor

December 12, 2016 -- City Council members unanimously voted last Tuesday to reduce the number of taxicabs allowed in Santa Monica from 300 to 199.

But residents likely won't notice a change because it is rare that there are nearly that many cabs operating in the popular beach city at one time.

The taxicab industry is facing a crisis in the age of Uber, Lyft and related options. This crisis will possibly--and some observers say likely--conclude with the industry disappearing.

Local statistics highlight how bad the situation is.

Taxi trips from January to September of this year were down 44 percent when compared to the same time frame a year ago, according to City staff.

If the pace continues, there will be 72 percent fewer trips this year than there were in 2013.

"We're saying goodbye to something that was a part of American life for almost a century," said Councilmember Kevin McKeown, who said he spoke with "a heavy heart" about a situation that was "sad and difficult."

Mayor Pro Tem Ted Winterer added, "This is a rapidly evolving situation where the business model is frankly deteriorating. But we do clearly want to keep cab franchises in this city for those people who are elderly and uncomfortable using their smartphone."

The local taxi companies had requested the vehicle reduction because it means they have to pay fewer fees to the City. The government will take a $142,111 hit, which is not a significant amount in a City with a $1.1 billion biennial budget.

A representative for one of the five companies with a City franchise agreement asked for further assistance via a 50 percent reduction in the franchise (currently $5,000) and business license fees (currently $250 per vehicle).

He said the fees are covered by the drivers, so the reduction would help the employees and not the company. The council did not act on this request, and it will be part of a larger discussion next year.

"I'm very sympathetic to what we've been asked tonight about reducing fees, but I have to note fees cover the cost of doing the franchising," McKeown said. "That's not magic money from our end either, that's taxpayer money.”

Winterer said the City could consider reducing the number of companies with franchise agreements.

"Maybe we just choose the best companies and reduce the number of competitors out there," he said.

The franchise system was created in 2010 as an attempt to reduce the unregulated number of cabs in the city during a very different era before the introduction of companies like Uber and Lyft (“Taxi Franchises Approved, Racial Discrimination Alleged in Selection,” November 11, 2010).

The current franchise agreements expire at the end of next year, a long time frame when one observes how the fast the situation is changing.

"The future's going to look a lot different," McKeown said. "And I'm just hoping we can make the transition as good in terms of service to residents as possible and as painless and sympathetic toward the plight of the drivers as we can."

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