It’s official. San Diego now has an open taxi market.
The Metropolitan Transit System Board of Directors Thursday approved in a 12-3 vote a proposal to lift the cap on the number of taxis on San Diego streets. Beginning in April, anyone who meets minimum requirements can apply for a permit to run a taxi business in the city.
The vote comes after years of contentious debate over how to reform the industry.
“I feel so happy,” said Jose Humberto Arevalo, who’s driven taxis for 25 years. “I feel like a different man because I’m so happy with the city, with the decision and what we’re going to have in the future.”
Arevalo, like most cabbies on the road, pays a fee to drive a taxi owned by someone who already has a permit. Drivers, their representatives with the United Taxi Workers of San Diego and San Diego State researchers say the leases have gotten so high – Arevalo pays about $500 a week – drivers are unable to take home a living wage.
Permit holders contest claims drivers take home as little as $4.45 an hour after expenses and have argued lifting the cap will put nearly 600 permit holders out of business. It might dry up their investments; many paid more than $100,000 to obtain their permit, which they could sell on a shadow market. It would also let drivers abandon their leases and work for themselves.
Both sides have flooded City Council chambers and the MTS boardroom multiple times since 2013 to make their case.
Thursday’s meeting was little more than tying a bow on a measure led by Councilwoman Marti Emerald and passed by the City Council in November. The city sets taxi policy and MTS just administers it.
Still, there was concern on the board and in the audience the move could drive pay further down by flooding the market and disrupt services in nearby cities by luring taxis to the more profitable streets of downtown.
“No one – and I mean no one – has a clue how this will impact the current industry and future industry,” said Michele Anderson. He represents permit holders in the San Diego Transportation Association and urged the board to further study current demand for taxis.
“Hotels, motels, the tourism industry, they’re not beating down MTS’s door for more taxis,” Anderson said. “And there are no customer complaints about wait times.”
But supporters of opening the market point to an exodus of customers and drivers to mobile rideshare companies like Uber and Lyft as proof there’s demand and a need for more competition.
San Diego Councilwoman Lorie Zapf, Santee Councilman John Minto and County Supervisor Ron Roberts voted against the measure saying a permit free-for-all could result in unfair competition. City Attorney Jan Goldsmith said state law would prevent that.
“We will watch this carefully,” Goldsmith said. “The moment someone steps over that line, we will take action.”
San Diego currently has 993 taxis. Starting in April it will grant permits to applicants who have driven cabs for at least six months, have published a fictitious business name, own a vehicle that meets California Air Resources Board standards on emissions and is compliant with the Americans with Disabilities Act, belong to a radio dispatch service, and can demonstrate they have facilities to store and maintain their vehicle.
Santee, Lemon Grove, Imperial Beach and El Cajon already have open taxi markets. Milwaukee opened its market last year to address competition from rideshares.