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October 18, 2011
THE APPROPRIATENESS OF THE NUMBER OF TAXICABS IN TORONTO
By Andy Réti
PART I
Background;
From 1989 when The Toronto Taxi Owners and Operators were created, I acted as their Executive Director. I attended, reported and made deputations on practically every City Hall or Commission meeting that involved the Taxi Industry. I am attaching a report that was written in 1997 but it is just as valid today as it was then. The “The Issuing Formula” (as attached) should also be read in conjunction with Gerry Manley’s submission #12B.
Submission;
I am cautiously optimistic that the upcoming workshops will bring some positive results. In order to achieve those aims the regulator must ensure that the income of the taxi driver is enhanced.
Of the many solutions, one of the most prominent and easiest to achieve is to prohibit the illegal, unlicensed and out of town limos and taxis especially the ones from the Airport picking up in Toronto.
Although my topic is the “Issuing Formula”, I refer to the Airport permitted vehicles specifically because for over 40 years they were the cause of many problems. The Coopers and Lybrand report as far back as 1982 refers to the Airport arrivals, along with GO Train passengers and other useless “weighting factors” in trying to justify the number of taxi permits that were issued in Toronto.
The Toronto taxi industry was never allowed to pick up at the Airport! Yet, the airport numbers figured prominently in the issuing formulae. In the late 70’s and 80’s there was a reasonable amount of business originating in Toronto going to the Airport. Over the years that business has dried up and it’s practically non- existent today. YET, even after the mean-spirited Ambassador program was the “only game in town” (for issuing) the regulator was still justifying themselves by referencing the deliberately flawed formula (see details in submission).
With the creation of the Ambassador program there was not even any pretence to adhere to any issuing formula. The best illustration is when former Toronto Councillor Howard Moscoe wrote a memo to himself claiming a shortage of plates and proceeded to issue hundreds of additional Ambassador permits. The amazing fact was the sheep like behaviour of Toronto Council – it was just rubber stamped into existence without any further thought.
PLEASE UNDERSTAND, there was never any shortage of plates in Toronto, just the opposite – the Coopers and Lybrand report tailored to the needs of the Commission by creating an oversupply of cabs. This is best illustrated by the fact that in 1994 when three Toronto brokerages (over 1200 cabs) were
involved in an ugly strike with the union for almost three weeks. During this time not one complaint was received from the public for lack of service.
One additional item; under provincial law a review for all by-laws are supposed to be conducted every five years. It seems taxi by-laws are/were exempt.
Suggested solutions;
In order to ensure proper income for Toronto’s taxi industry, start enforcing the existing by-laws against illegal pick-ups in Toronto, especially the Airport limos (as per provincial regulations).
Prosecute all hotel doormen (as per existing by-law) who are accepting cookies (bribes) for provision of lucrative fares to illegal and unlicensed carriers.
Conduct an INEDEPENDENT, unbiased economic impact study in order to create a modern issuing formula. Do not even think about converting any Ambassador permit before you examine the need, based on the new issuing formula.
Perhaps the most positive and far reaching undertaking would be to create a Mississauga type Taxi Authority and have proper industry input**.
** Two major items of concern;
a) With the elimination of the Commission, the taxi portfolio became an exclusive political enterprise at City Hall. The five minute deputations made by Industry members were a complete nuisance to the politicians and were a total waste of everybody’s time. The decisions were made before the meetings even started. In all my years at City Hall, I have not seen a decision altered based on any deputation.
b) The occasional “workshops”, just like the one this submission is prepared for is also destined to be a political football. The reason for that is due to the existing system. The final report that will be submitted by staff will still be decided by the politicians at the Legislation and Licensing Committee. It is inevitable that some members of the Industry will disagree with some portions of the report. If they will exercise their democratic right at City Hall by making a deputation, based on past history it is most unlikely that the politicians will listen. Once the L&S Committee approves the report and “kicks it upstairs” to Council, it’s almost guaranteed that NO CHANGES WILL BE MADE.
As I stated at the beginning, I am hoping that this time it will be different. Call me an optimist or naïve.
PART II
THE ISSUING FORMULA
Background, notes and comments written and submitted by Andy Réti on Feb.12, 1997
CHRONOLOGICAL BACKGROUND
1953- Metropolitan Toronto amalgamates 13 area municipalities creating the “original” 1503 Metro license plates.
1957- Metro Licensing Commission is created. It functions independently and separately from Metro Council as an autonomous police services board.
1961-- Commission creates and issues new licenses for the first time.
1963- Commission allows sale of a plate for the first time for market value beginning of “problem” according to MLC thinking. This marks the creation of the “Approved Waiting List” pursuant to a by-law. (Total cabs 1700)
1965- Commission is showing concern with street (market) value of a taxi plate (trying to put Genie back into bottle)
**AR/2011** The mean spirited Ambassador program was a clumsy first step in attempting to devalue and deregulate the Industry.
1968- Three additional categories of a Waiting lists**are created for owners, based on an issuing formula according to population growth (1 cab for 975 population) (Total cabs 1950)
** It must be noted that between1961-68 only drivers received issues!
1969-- Metro Council takes over Commission (not really) and adopts the existing issuing formulae. This event certainly is a turning point in continuation of problems.
1969-76 Total chaos and possible corruption connected with plate issuances. The allocation ratio between the lists e.g. 50-50 between owners & drivers is changed a number of times. (Total cabs 2400)
1976-- Metro Council approves the elimination of two categories of Owners’ Lists and “freezes” the newly created “amalgamated” single owners list. (Both Goodman and Bartsiocas Court decisions state that this was illegal).
1982-- The first Coopers/Lybrand report specifically designed to change the issuing formula (more later)
1987--The second Coopers/Lybrand report
1988-- **The Industry challenges the finding of the Coopers & Lybrands report by way of the Laventhol&Horwath Report. (Total cabs 3200)
**1988--present; Industry vigorously opposes any new plate issues at every public meeting such as the Annual Taxi Review
1990--Goodman Decision
1993-- Bartsiocas Decision
1993-- Commission authorizes cab issues up to 3480 (but does not issue them all) the last issue was 3472 in December of 1996 leaving 8 to be granted**.
** It is a very interesting question, whether the Council imposed “Freeze” of Jan/97 is applicable to these “outstanding issues”?
1996-- Commission is recommending an additional 187 issues at the Annual Review
Nov/97-- Commission is recommending the issuance of 100 “lease only”** plates immediately and an additional 200 later.
** It must be noted that these would be a different class of plates from those that are on the market currently and would still be based on a 15 year old, outdated formula.
1997 Jan – Metro Council rejects the Commission’s report and “instructs” them to;
a) Not to issue any plates until the ongoing Task Force report on the restructuring of the Commission is completed.
b) The Commission is to bring back a new report.
**AR/2011 – Prior to the 1998 Reforms, in July 1996 Toronto Councillor Dennis Fotinos conducted a review and report of The Taxi industry. His report was reasonable and balanced. It was well received by the Industry. Needless to say it was “received for information”. Meaning - it went directly into the garbage.
The existing Situation;
First; We have to understand the role and function of the Commission. According to the Goodman Court Decision “It is to ensure public health and safety and to allow a fair number of licenses** to permit same”
** All by-laws relating to taxis must be approved by Council. The issuance of taxi licenses is the only exception! For over 40 years the Commission is allowed to issue plates without Council’s approval.
Second; Technically the Commission is not required to be concerned with the Taxi industry. However, it doesn’t mean that they can ignore us completely either. In fact, that is where or problem lie – the confusion as to the proper role and function of the Commission. It is obvious that Metro Council woke to this reality when they approved the Licensing Commission Restructuring Task Force in 1996/97.
For the last number of years the Commission lost 90% of all court challenges brought against them. Despite the numerous losses, they still don’t listen unless they are taken to court! The Commission is pre-occupied with controlling rather than regulating. Their involvement with financial aspects** is ultra vires (**as proven by the Christie Court decision). The flooding of the market with extra plates was designed to bring down plate values. For the first time, they actually put this in writing with the 11 page “study “of plate and lease prices. The study by Commission research analyst Evelyn Simpson was dated March 22, 1996. At a recent interview on Feb. 10/97 Commissioners Moscoe and Thomas admitted their ongoing concerns with plate values and lease prices to this writer.
**AR/2011 –Subsequent to this “first public admission” the Commission stayed the course culminating with the creation of the Ambassador program, which is strikingly similar to the system (plate had no value) in existence prior to 1963. Included in the 1998 Taxi Reform Report is the stated the goal to bring down plate values within the next ten years. This is further illustrated by the interview given at the time of public release of the report in the presence of this writer by councillor Minnen-Wong (co-creator of the Ambassador fiasco);
Q: Is your intention to drive down plate values? A: yes
Q: Can a plated still be leased? A: Yes but its value will be greatly reduced.
And my favourite part of the interview:
Q: Is your plan to reduce the number of drivers and increase the number of plates?
A: Yes, but we want to increase the value of the drivers**.
**AR/2011 – Around this time period the applicants for a taxi driver license were kept around 500/year with a waiting period of six months or longer to start their class, while having to pay the full fee (over $425) in advance. Personal musing: how do you put a value on a human being?
The issue;
The 1982 and 1987 Coopers & Lybrand Reports were requested by the Commission for some very specific purpose. The 1987 report is much clearer about their mandate (as shown later).
It must be noted that in 1997 the Commission is “recommending” to issue an additional 300 plates based on 15 year old formula which included such outdated items as:
* “the change in the total population of Metro Toronto and its contiguous municipalities”.
(despite the actual drop in the population of Metro Toronto and the fact that the affluent suburbanite drives his own car).
“the change in GO train ridership” (removed later)
“the change in the number of airline passengers to and from Metro Toronto”
(totally ignoring the fact that Toronto cabbies can not pick up the Airport and lost most of the business going to the Airport as well)
“ the change in the number of convention delegates visiting Toronto” (ignoring the proliferation of specialized Hotel Shuttle buses, “limos” and unlicensed bandits).
A most puzzling inclusion was (1982 executive Summary);
“an overall trend toward increased use of public transportation”
Regardless whether the consultants were referring to taxis as “public transportation” or The Toronto Transit Commission (TTC) the “trend” did not happen! In fact the TTC experienced a steady decline in their ridership during the last decade. It also must be emphasized that taxis are individual businesses totally unsubsidized, while the TTC is subsidized as much as 70% in certain cases.
The taxicab business also suffered a 40% decline due to the tremendous number of factors, including;
the great downturn in the economy, corporate downsizings, the increased use of fax machines, computers, couriers, unlicensed bandits and most importantly; the Commission is not protecting their own licensees and not enforcing their own rules against illegal, unlicensed and out of town competition.
The two Coopers and Lybrand Reports:
The 1982 Report is a lengthy technical document, written to confirm the Commission’s stated objectives. The recommendations were implemented with incredible hast within a few months after its release.
Perhaps the following heading (p. 16) is an indicator:
IV. A REVIEW OF THE TAXICAB INDUSTRY REVEALS ADDITIONAL OPPORTUNITIES TO REFINE POLICIES AND METHODS
A) The policy of excluding fleet-owners from new license issues appears to be in conflict with the objective to provide service.
It continues on p.17;…”Although it is outside the original terms of reference** (my emphasis) of our study, we considered it is important to share with the Commission our conclusion that efforts to provide a high level of service to the public would be enhanced by the inclusion of fleet-owners in the allocation of new license issues”.
**1) The terms of reference were not found in my copy of the ’82 report.
2) The 1976 by-law change excluded fleet-owners from grants. This act was the subject of the two above named court decisions. The Commission in 1997 is still not complying with the Court order.
The 1987 Report is much bolder. It does state in the introduction as one of their terms of reference;
“to recommend procedures to stabilize and/or reduce the selling price of taxicabs”. It continues on p.3;
“The consulting team’s analysis focused upon (see note 1); measuring the magnitude of rising plate prices and lease costs; the apparent impact of these increases on different segments of the industry; and the implications for the quality of service to taxicab passengers.
Based on this, recommendations have been developed to stabilize plate prices and lease costs, as well as improve service to the public.
Note 1 and other observations;
– Reflecting upon the last 10 years, we know that this did not happen.
- The Commission allowed leasing in 1974 but never made the necessary by-law changes to reflect the truth of the matter. According to current Commissioner Moscoe (front page Taxi News March 1995);
“The Metro Licensing Commission has been living a lie in regard to plate leasing and their responsibility for Toronto taxi plates”.
- The Commission as far back as 1975 was clearly told by the Courts that financial arrangements are ultra vires to them (Christie Tax Ltd. & Doran).
- The November 1996 Thomas Report goes much further than anything before by its recommendation of issuance and transfers that will eventually result in total destruction of plate values.
- In 1994 the Commission again attempted to devalue the plate and hired a Professor Chapman to author yet one more report. The following statistics were found in the report;
Montreal; 654 plates population/plate 388
Toronto; 3423 plates P/P 630 (see note2)
Mississagua; 472 plates P/P 1400 (There are 152 plates at the Airport if included then ratio drops to 982
Winnipeg 426 plates P/P 1502
Vancouver ; 442 plates P/P 1500
Note 2- The actual reduction in Toronto from 1;975 P/P in 1968 to 1;630 P/P between 1982-1987 resulted in flooding the market with as many as 1000 plates. At the same time a great number of fleet operations were forced out of business.
By eliminating the fleet operations and “the desire to favour” independent owner drivers the Commission achieved the exact opposite to their mandate of serving the public. The public is very poorly served by the low quality drivers, who in fact are lessee/entrepreneurs.
It also must be noted that in Montreal the authorities also flooded the market with extra plates and did drive the value of a licence to the $2000 range. Upon realizing the problems, they embarked upon a vigorous “attrition/buyback” program. In about 15 years approximately 2000 licenses were retired, which stabilized the market and brought the value up to its present $55.000 value. As a note of interest Vancouver is the only jurisdiction that has a higher plate value than Toronto.
Additional Notes and observations;
It is our understanding that the Commission once again hired a consultant (Feb/97).
It must be stated;
* The hiring of a consultant did not appear on any agenda.
* Metro Toronto has a very specific tendering process in their procedural by-law, which this latest hiring does not seem to confirm to.
* A very similar previous undertaking occurred with former Metro Solicitor George Rust’dye, whose $80, 000 work incidentally was never made public or utilized in any manner whatsoever.
* Taking into consideration the Commission’s proven track record and dogged determination to issue extra plates while obtaining extra revenue, this writer has serious doubt as to the outcome of this latest effort.
The instruction from Metro Council was quite specific – do not issue any plates till the Restructuring committee completes its work.
In view of the fact that the Commission will be restructured, why is the Commission going ahead with this new initiative?