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San Diego Councilwoman Proposing A Taxi Permit Free-For-All

Above: San Diego taxi drivers hold signs and wave American flags at a press conference on Thursday, August 28, 2014 announcing a proposed lift on the number of taxicab permits.

Aired 8/29/14 on KPBS News.

There could soon be a lot more cabs serving San Diego. Councilwoman Marti Emerald proposed lifting a cap on taxi permits, but current permit holders say the move could dry up their investments.

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Speak City Heights is a media collaborative aimed at amplifying the voices of residents in one of San Diego’s most diverse neighborhoods. (Read more)

Councilwoman Marti Emerald and City Attorney Jan Goldsmith made a bold proposal Thursday: in essence, let the free market take the lead on solving the San Diego taxi industry's labor and Uber problems.

The pair announced a plan to remove an existing cap on the number of cabs serving residents and visitors to San Diego. The cap has held the number of taxicab permits, often called medallions, at 993.

Emerald's proposed policy, which she said she will bring to the Public Safety and Livable Neighborhoods Committee on Sept. 18, would change that.

"I notice some folks are holding signs saying 'Talk to Us,'" Emerald said, referencing taxi permit holders who stood in the crowd at the press conference announcing the proposal. "I've been talking for about four years now...The time for talking is over. The time for action has come."

The cap has made the permits a bit of a hot commodity. KPBS detailed a shadow market in which permit holders buy and sell the medallions for up to $150,000. They've passed the high cost down to drivers who lease cabs from them, giving rise to the long work hours for drivers and minuscule paychecks — problems Emerald has been trying to solve.

Lifting the cap could bring the underground value of those permits to zero, allowing many drivers to get out from underneath their leases and start their own taxi businesses. And yes, that should mean more taxis answering your calls.

It also would mean disruption for rideshare businesses Uber and Lyft, which have benefitted from a constrained taxi market. While the number of taxis has stayed the same, Uber has recruited thousands of drivers in the region, bringing its wait times down to a few minutes.

Ben Seifu, a representative for taxi drivers, said the proposed change feels "liberating" and said it would allow taxi drivers to better compete with ridshare companies.

"We've heard your concerns about the level of our service," he said. "We've heard your concerns about the safety of the vehicles. We've heard your concerns about the price of our meters. We are in control now. We can compete directly with these other ridesharing companies and give you the service that you deserve."

But what sounds like a blessing to compete with the newer ride services is anything but, said Michel Anderson, a representative for taxi permit holders.

"To lift the cap is at best illogical and at worst totally devastating to the taxi industry," said Anderson in advance of Thursday's announcement.

He said permit holders have sunk their life savings into buying medallions, and their investments are akin to having purchased a brick-and-mortar business. They were relying on the resale value to hold. Making permits available to everyone would dry up any equity on their investment.

A permit free-for-all also would drive down profits for drivers by oversaturating the market, Anderson said.

"Will (the number of cabs) triple? Will it quadruple? The more cabs you put on the streets, the more the business is going to be hurt for those cabs," he said.

The details of the plan, including any measures to safeguard investments, are not yet available. Most major cities cap taxi medallions, but many municipalities do not.

Goldsmith said the change is legally defensible.

"The city has the legal ability to place a cap and the city has the legal ability to remove a cap," he said. "And we will defend that, whether it be in court or in public."

Emerald sits on the Metropolitan Transit System board that oversees taxi regulation in San Diego and has been hearing from permit holders and drivers, many of whom advocated for an open market for quite some time.

A 2013 study by San Diego State University researchers detailed poor working conditions and pay below minimum wage for lease drivers, who are independent contractors. It signaled a call from United Taxi Workers of San Diego to overhaul the industry.

After several stall-outs, Emerald moved the first substantive change last month. The city's public safety committee, which she chairs, approved a proposal to limit the age of taxicabs. She also asked the City Attorney's Office to do some fact-finding on other reform measures, including opening the medallion market. But Anderson said he's surprised by the announcement.

"I was in total disbelief when I heard about this, because it runs counter to everything we’ve been doing to cooperate with city," Anderson said. "This was not on the table whatsoever."

KPBS reporter Claire Trageser contributed to this report.

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