A slightly edited version of the following column appeared as an In My Opinion column in the January 13, 1999 Oregonian newspaper.

Wednesday, January 13, 1999

End Portland's War on Private Transit

The current city taxi regulations hurt all customers by limiting competition, inflating fares and decreasing service

Why do many Portland public officials stand in the way of better transit? While supporting government-run transportation options, our public servants seem curiously determined to thwart private alternatives.

Take the case of Smart Cab. Its owners, former political prisoners in Ethiopia, faced an uphill battle from the moment they tried to start a taxi business in 1997. For over twenty years not one new cab company application had been approved by the Portland City Council. An ordinance required would-be entrepreneurs to prove consumer demand existed before they could start a cab company. Despite obvious population and tourist growth, Smart Cab's application was denied.

Happily, through the determined efforts of Smart Cab's owners, and support from The Oregonian, The Skanner and Cascade Policy Institute, Portland City Commissioners instructed the Taxi Board to delete the demand provision. The entrepreneurs were encouraged to reapply.

Finally, Smart Cab was granted 48 licenses -- with numerous strings attached. According to public documents, Smart Cab had to "have a minimum of 50% of their cabs in operation...and meet all other requirements 90 days after Council approval. Failure to do so will result in the loss of their company permit. 180 days after Council approval, the companies will have 100% of their fleet in operation or they will lose the unused permits." Fortunately, Smart Cab successfully cleared these and other hurdles.

The city also required that 20 percent of all taxis meet federal Americans with Disabilities Act (ADA) standards. This was a voluntary goal for years; established cab companies were able to build strong business foundations before that goal became mandatory in July 1998.

In contrast, Smart Cab had to meet the 20 percent rule immediately. Its first vehicle on the street had to be ADA-compliant before it could put four more cabs on the road. When they put their second ADA vehicle into operation, they would get four more regular licenses, etc.

ADA vehicles are more expensive than regular taxis; the retrofit itself can cost $15,000. This expense placed an immediate financial strain on the new company. Further, few area businesses retrofit vehicles to meet the ADA standards; hence, a waiting list exists, making government deadlines even harder to meet.

Next, Smart Cab could take riders to the airport, but couldn't legally pick up riders there. They were thus unable to compete with other companies on this lucrative run. After another protracted application process, the Port of Portland gave Smart Cab approval to pick up riders at the airport.

Finally, the city requires all cab companies to provide service 24 hours a day, 365 days a year, to all points in Portland. Tri-Met, the government's own monopoly bus system, doesn't even meet these requirements.

To put these onerous regulations into perspective, imagine you want to open a restaurant. First you must get city approval. To do so, you must prove enough people will eat at your restaurant. Next, the government determines how many locations you must have in your first three months; if you don't meet its quota, you'll be shut down. And, if you haven't reached your total allotted growth in your first six months, you'll have to reapply for permission to do any future expansion.

The city then requires you to hire one gourmet chef for every four short-order cooks. Further, your restaurants must be open 365 days a year, 24 hours a day, and located in all parts of the city. This is what entrepreneurs face if they want to start a cab company in Portland.

Current Portland taxi regulations harm all taxi customers in at least two ways. First, a low level of competition leads to higher fares. Second, less competition decreases service: fewer taxis means longer waits to get a ride. Several cities across the country, including Denver, Cincinnati, and Indianapolis, have opened their taxi markets over the past few years. The results are positive; increased competition has produced more options, better service, lower fares, and job opportunities.

The recent opening of Portland's taxi markets was little more than a political photo opportunity. Local officials who support better public transit should realize that entrepreneurs are part of the solution, and release their stranglehold on taxis and others in the transportation industry.