Portland Livery Car Companies: Portland Taxi Laws Crippling, Don't Protect Customers

Big Business Finds A New Way to Kill Competition

Instead of a taxicab across town, you could take a clean, upscale Town car for the same price. But despite car services in many cities ready to take you, new regulations designed to protect big taxi companies are preventing them from doing so.

This is especially true in Portland, Ore., where regulators have waged an aggressive crackdown on car services, also known as livery drivers. A Portland city official told The Huffington Post that the only real purpose of the regulations is to target small and independent businesses, while protecting the city's taxi monopolies.

Like many cities, Portland distinguishes between limousine and executive sedan companies, and taxis. Livery services are often run by independent drivers with a single car, whereas taxis tend to have a larger, corporate framework. In comparison to the 382 legally licensed taxis in Portland, only around 160 executive sedans and 30 limos and party buses operate in the city.

In Portland, livery services must charge a minimum fare of $50, and receive reservations at least an hour in advance of pick-up. The law, which went into effect in 2009, also prohibits them from parking in front of hotels. Livery vehicles must charge a minimum rate 35 percent higher than competing taxi companies for any ride outside the city. The fine for violating the ordinance is $500 for the first offense, $1,000 for the second and suspension of permits for a third.

These sorts of regulations are usually passed in the name of consumer protection, even though they often result in consumers paying more for car rides. However, Frank Dufray, administrator for Portland's Private-for-Hire Transportation Program, which regulates both taxi and livery services, said the laws aren't intended to help consumers or the city, but to protect market share for the taxi industry.

"The main thing is that you don't want the Town cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry," he said. "That's why there's a minimum fare and a one-hour wait requirement."

But Red Diamond, the taxi representative to Portland's City Council, defends the law, saying taxis provide an essential community service that limousines do not. "What's the point of having them out there providing the same service at the same cost if they're ultimately not providing greater services to the community?" he said. "It undermines our abilities to provide broader service to the community, and the reason it's regulated is because our community depends on these services. The rules are there for very basic, common sense, practical reasons."

Transportation economist Sam Staley, who teaches urban growth and planning at Florida State University, said there's no reason why the law should favor taxis over town cars.

"Portland's anti-livery law is an inefficient, counterproductive and anti-consumer regulation that should be repealed," Staley said. "Taxi-type services are woefully underserved in American cities, as anyone who has visited international cities knows. The distinction between traditional taxis and livery services is a legal fiction to protect traditional taxi companies from competition. All Portlanders lose out as a result."

According to John Case, Portland's limousine representative charged with voicing livery concerns to the City Council, the main competitors are two companies in business since the 1930s.

"These two companies, between them, have the political clout to fundraise for elections, so the commissioners are pretty much in their pocket," he said. "Of course, the commissioners will say it's not true, but it is true. Time and time again, any time a taxi issue comes before the city council, there's always a majority vote for any taxi issue that is favored by those two large companies."

Portland City Commissioner Amanda Fritz denies the accusations. "Even though my colleagues are funded by traditional (campaign donations), they are very principled men and I don't believe they would be voting on the basis of who gives them money."

In September, two Portland livery companies were initially fined nearly a million dollars and faced losing their businesses for offering a promotion on Groupon, the popular online coupon site.

Fiesta Limousine and Pacific Cascade Towncar offered a Groupon for one-time limo or sedan rides at $32, well under the mandated minimum fare. After the offer went live, Portland taxi companies complained to the city. City officials responded with threatening letters to Fiesta and Pacific, and insisted that Groupon remove the promotion. The city then fined Pacific $659,000 and Fiesta Limousine $250,000, based on the number of Groupons sold. The companies were told that if they honored the Groupons, they'd lose their operating permits. Both companies escaped the harsh fines by refunding the Groupons, but each still paid a $500 fine for advertising services under the minimum fare.

Fiesta Limo and Pacific Cascade declined to comment, citing possible legal action.

Sinclair Rhoda, owner of Pioneer Towncar, said companies that protest the minimum fare get extra scrutiny from the Bureau of Transportation. "I try to be involved [with protesting the minimum fare] and heard, but not seen. Once you get into it, for some reason, you get on their blacklist and they nitpick you. They're just on your back all the time. I really feel like (they target people)." Dufray denies the allegations.

The new regulations have crippled the livery industry, Rhoda said. Since the implementation of the law in 2009, phone calls for service in the downtown area where the minimum fare is enforced most vigorously have dropped around 70 percent. Case, who has owned his own business for 38 years, said the effects are obvious. "There's been quite a shrinkage percentage-wise in what there was [in the livery business] 10 years ago. Quite a bit of that has been in the past two-and-a-half years when the $50 rule came in."

Portland's minimum fare regulations sharply affect how Rhoda and other livery vehicles advertise. "We have a certain radius in the downtown area where we have to charge $50, even if the client is just going a couple of blocks. If we advertised that to the downtown public, it sends the message to potential customers that these guys are expensive. If they are expensive in the downtown area, what are they going to be outside the downtown area?"

Case is pessimistic about the future of the livery market in Portland and said the system is rigged in favor of taxi companies. It always has been and it probably always will be," he said.

But Rhoda says he'll continue to fight. "I'm going to do everything I can to grow my business, whether the city helps me or not. That's the type of person I am."

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