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Santa Monica’s taxi industry is facing yet another significant disruption as changes to state law are forcing City Hall to update rules for taxis within city limits.

Under the set of proposed changes, taxi companies would gain more flexibility to set rates but some companies currently operating here would be banned from accessing the city’s official taxi stands.

Rideshare companies have wrecked the taxi industry. Of the five companies that were authorized to operate locally, one has already gone out of business. Metro Cab withdrew from the market in January of 2018 citing the impact of companies like Uber and Lyft.

Four taxicab companies remain Bell Cab, Independent Taxi Owners’ Association, Taxi! Taxi!, and Yellow Cab. Those companies have submitted applications to operate 137 cabs citywide but according to staff, the peak number of taxis in the city was around 94 last year.

According to the staff report, from 2013 through 2017, taxicab trips have fallen 80 percent and gross revenue has declined 64 percent. For January to July of this year, trips are down 24 percent year-over-year, and revenues have dropped 25 percent.

However, staff said there’s still a need for taxi service. About 150,000 trips use a taxi annually in the city. The bulk of those come from one of the franchised operations authorized by the city to take prearranged trips, pick up street hailed rides and use City taxi stands.

Changes at the state level are supposed to equalize the playing field for taxis and rideshare companies by streamlining regulations. The new rules will require the City to further refine its local regulations.

The first change limits a city’s authority to regulate taxis. Only companies “substantially located” in Santa Monica will be subject to the City’s rules, however, local municipalities retain the right to set maximum cab limits and limit access to pickups. According to staff, Taxi! Taxi! is the only company based here and will therefore be the only company covered under the City’s franchise rules. Taxi! Taxi! will be the only company able to use City taxi stands and pick up street hail passengers.

Other companies have asked the city to use a loophole that would preserve their access to the city’s taxi stands but staff said it would create significant administrative requirements and are recommending Council reject the request.

The state rules would allow any company to pickup passengers with prearranged trips. Customers that call, use a phone app or make other booking arrangements can use any taxi that’s authorized to operate in any city.

Prices are also subject to change by the state law. Currently, city rules establish cab prices but the new law lets companies set their prices and adapt prices based on demand. City Hall will be able to establish a maximum price but companies can adjust down from there at will.

Staff estimate the city will lose about $79,860 due to the changes as Bell Cab, Independent Taxi Owners’ Association, and Yellow Cab will no longer pay the franchise fees.

The recommendation to council is to extend Taxi! Taxi!’s agreement for five years while incorporating all the changes required by the state.

Council will meet on Tuesday, Oct. 23 in City Hall, 1685 Main Street. Closed session begins at 5:30 p.m. and open session begins no earlier than 6:30 p.m.

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