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28 (2) Public Comment From:Konstantinos Roditis < Sent:Tuesday, September 15, 2020 12:15 PM To:Public Comment Subject:Agenda Item # 28 - Taxi Cab Franchise Attachments:Konstantinos Roditis Public Comments - 09-15-2020 Agenda Item # 28.pdf Here are the public comments from Konstantinos Roditis representing 24/7 Taxi Cab in regards to tonight's taxicab franchise public hearing. 1 September 15, 2020 - Agenda Item 28 Mayor and City Councilmembers, my name is Konstantinos Roditis, and I represent 24/7 Taxi Cab. I wish I could be there today to speak with you regarding this matter, as well as having California Yellow Cab present to discuss and have a genuine public hearing on this taxicab franchise. Since we are unable to do that, I would like to make the following reasoned and appropriate recommendations, which I believe are the most advantageous for all parties involved. 1. Issue 24/7 Taxi Cab and 24/7 Taxi Cab alone 50 franchise permits at this time. 2. Allow CABCO and 24/7 Taxi Cab to increase their fleet from +/- 15% to +50%. 3. Allow CABCO to be exempt from their vehicle standard of five-year-old vehicles to OCTAP from their original franchise. Recommendation 1 As you may be aware, a court case has once again required the City of Anaheim to conduct an RFP for 50 franchise permits. Therefore, the City is required to act on 50 franchise permits. However, the City is not compelled to act regarding Yellow Cab's 155 permits. So being wise on how many franchise permits Anaheim should distribute is within the council's discretion. I ask you to use that discretion now and, therefore, consider our three recommendations. If you remember, Yellow Cab did not close down just because of the COVID-19 pandemic. As stated on July 14, 2020, in Item # 26 City Council Agenda, "due to shifting market trends in the taxi industry and the recent effect of COVID-19, Yellow Cab has decided to cease operations...effective May 31, 2020...". This is just one reason we advocated with the City on limiting the RFP to 50 franchise permits. This would be in line with the court's ruling, as well as allow the City to conduct a demand study in the future to help determine the appropriate number of taxicabs. In every prior RFP, a demand study was conducted, except for this RFP. It makes no sense to me to issue so many franchise permits when doing so would oversaturate the market and create an environment that increases the likelihood of having another taxicab firm cease operation. Since the closure of Yellow Cab, Anaheim has had only had 50 lawful franchise permits in place. California Yellow Cab is currently the only taxicab company in Anaheim. That means you have had only 50 legal franchise permits operating in Anaheim for the last four months. This point helps illustrate that a total of 255 franchise permits in Anaheim would be excessive. Case in point, there are not currently 255 taxicabs in all of Orange County. There are only 190 taxicabs in Orange County. Therefore, increasing the amount more than the market can now handle is not wise. Now, the number of taxicabs will increase because of 24/7 Taxi Cab. The vast majority of our fleet operates under our California Public Utilities Commission (CPUC) license. We perform thousands of non- emergency medical transportation trips throughout Orange County, including a large volume in Anaheim. We even are contracted and submitted a letter of recommendation in our RFP package from College Hospital of Anaheim. We operated our fleet under our CPUC license because doing so allows us to fulfill our contracts in Anaheim legally. Operating a taxicab in Anaheim without a franchisee violates Anaheim Municipal Code. By granting us 50 franchise taxicab permits, we can begin to shift our fleet and add more taxicabs to our fleet, while not sacrificing our contracts. It is more advantageous to operate our fleet as a taxicab because it gives us access to new clientele, which we previously did not have. For instance, under CPUC regulations, we cannot sit at a taxicab stand and receive customers at the convention center. Therefore, with our current contracts and fleet, adding 50 franchise taxicab permits to 24/7 Taxi Cab will not disturb the market place. In fact, it will give more stability to Anaheim and OCTAP. Also, we cannot ignore the reality of the COVID-19 pandemic. It will take time for conventions to be scheduled, businesses to open up, and tourism to come roaring back. There is no doubt that it will take time to get back to a pre-COVID-19 business environment. So the question is, would it be wise to limit the number of taxicabs for the duration of this franchise? I believe the answer is yes. With the requirement of two readings plus thirty days for this franchise to go into effect, we are looking at 19 months, as this franchise expires on June 28, 2022. This period is not very long, considering when this franchise goes into effect, Anaheim would have only had 50 lawful franchise permits in place for nearly five months (Yellow Cab ceasing operation of May 31, 2020, to approximately October 29, 2020). Therefore, we request the City Council use their discretion and vote to issue 50 franchise permits to 24/7 Taxi Cab and no new franchise permits to CABCO at this time. Recommendation 2 The RFP and AMC as stated on page six of the RFP: Franchisee must agree to abide by all applicable laws, rules, regulations, orders, and restrictions which are now in force or which may be hereafter adopted by the City, OCTAP, or any federal, state, or municipal government authority lawfully exercising jurisdiction over taxicab service in the City (emphasis added.) As the City is well aware, Assembly Bill 5 (AB5) has affected many businesses throughout the State of California. Therefore, as per the RFP, we were required to demonstrate how we comply with all applicable laws. As demonstrated in our RFP, 24/7 Taxi Cab is made of our two companies. One is a management company (Inc.), and the other is a driver-owned company (LLC). This structure and joint-venture, we believe, adhere to all applicable laws, including AB5. Pursuant to California Labor Code §§3351 and 3352, as amended by Assembly Bill 2883, effective January 1, 2017, the following may elect to be excluded from workers' compensation insurance coverage: • Officers or members of the board of directors must own at least 15% of the issued and outstanding stock of the corporation. Any officer or director owning less than 15% of the stock of the corporation must be covered by workers' compensation insurance. • The ownership listed must be identical to the information filed with the Secretary of State in the Statement of Information. The above portion applies to corporation. CABCO is a corporation. Therefore, drivers that are owner- operators would not be considered exempt from employee requirements like worker's compensation. They must own at minimum 15% of the corporations stock, as listed in the statement of information. CABCO Inc. therefore could only have six (6 *15% = 90%) corporate owning drivers, if not under the new application of AB5 they could be required to provide employee benefits, healthcare for full-time drivers, and worker's compensation coverage. I have not examined CABCO's RFP package (Sealed), but looking at their corporate structure, I doubt they comply with AB5. This brings up two possible issues that the City may face. If the City grants additional franchises to CABCO and they are in violation of AB5 and have not adequately demonstrated that they comply with AB5 in their RFP, this would be a violation of the RFP. Therefore, granting additional franchisees, we believe, could have legal implications for the City as they are showing bias and favoritism towards CABCO. The other issue is if the State of California or a private individual claimed to have been an employee under AB5 and brings a suit against CABCO, it could result in CABCO shutting down, and the City faced with a situation of losing another taxicab company. Since this is a real possibility, I believe it is wise to allow CABCO to address this over the next 19 months. Then come back in 2022 for additional franchise permits once they have demonstrated they comply with AB5. So, therefore, why +50%. The RFP allows us to put 50% of our fleet within six months of being awarded the RFP, and then work with the City with the rest after that. So in a sense, we are being granted -50%, but only +15% on the positive side. By increasing it to +50% and adjusting CABCO's 2012 franchise from 50 franchise permits at 85% minimum to 115% maximum, to a maximum of 150%, this would increase CABCO's useable licenses to 75, without issuing another franchise to CABCO. Before a court order removed 25 permits from CABCO when they were operating 75 licenses, according to an Anaheim public record request, CABCO had 68 Anaheim franchise taxicabs on March 6, 2020. This is thirteen days before Governor Newsom's Executive Order N-33-20, which began shutting down the state because of COVID-19. So at the time, CABCO's 75 permits were adequate to service its clientele. CABCO was not fully utilizing its 75 permits +15% but did lose some permits when they dropped from 75 to 50. Therefore, this recommendation would, in effect, give CABCO 25 more permits. By granting 24/7 Taxi Cab and CABCO -50% on this franchise over the first six months and possibly beyond that, I believe it is reasonable to make it +50% for each company as well for the duration of this franchise. Therefore, this recommendation would authorize up to 150 franchise taxicabs in Anaheim over the next 19 months. These 150 permits do not include special use permits as permitted by the franchise. Thus, I believe this would be an adequate amount of taxicabs and more than fair to CABCO and 24/7 Taxi Cab. The other issue I find with the TAC recommendation is that it creates a monopoly. The City Council Agenda Report states: The TAC recommendation to provide licenses to both service providers is based, in part, on the desire to maintain an element of competition and avoid a monopoly in the taxi marketplace to encourage a high quality of service to taxicab customers. I agree there shouldn't be a monopoly, but TAC's recommendation would result in a monopoly. TAC's recommendation would create the following scenario, 205 taxicab franchises for CABCO and 50 taxicab franchises for 24/7 Taxi Cab. That means CABCO would control 80.4% of the taxicab franchise permits, and 24/7 Taxi Cab would control 19.6%. This percentage of allocation, I believe, would still be considered a monopoly. According to the US Department of Justice: Competition and Monopoly: Single-Firm Conduct Under Section 2 of The Sherman Act: Chapter 21 states: Following Alcoaand American Tobacco, courts typically have required a dominant market share before inferring the existence of monopoly power. The Fifth Circuit observed that "monopolization is rarely found when the defendant's share of the relevant market is below 70%."2 Similarly, the Tenth Circuit noted that to establish "monopoly power, lower courts generally require a minimum market share of between 70% and 80%."3 Likewise, the Third Circuit stated that "a share significantly larger than 55% has been required to establish prima facie market power"4 and held that a market share between seventy-five percent and eighty percent of sales is "more than adequate to establish a prima facie case of power."5 24/7 Taxi Cab requested 100 taxicab permits in our RFP. Therefore, having a more equitable split and not creating a monopoly would be the fairest and legal thing to do. By following TAC's recommendation, I believe the City would be showing bias and favoritism towards the incumbent firm by allowing them to create a monopoly. 1 https://www.justice.gov/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman- act-chapter-2 2 Exxon Corp. v. Berwick Bay Real Estates Partners, 748 F.2d 937, 940 (5th Cir. 1984) (per curiam) 3 Colo. Interstate Gas Co. v. Natural Gas Pipeline Co. of Am., 885 F.2d 683, 694 n.18 (10th Cir. 1989) (citation omitted) 4 United States v. Dentsply Int'l, Inc., 399 F.3d 181, 187 (3d Cir. 2005). Id. 5 at 188. Therefore, by granting 24/7 Taxi Cab, 50 franchise permits, and adjusting franchise permit allocation from 85-115% to up to 150%, you will not be creating a monopoly, as well as not issuing a franchise to a taxicab firm that may be in violation of AB5. Finally, giving a monopoly to CABCO would be devastating to 24/7 Taxi Cab. TAC is supposed to be an independent body, and even include input from residents. Unfortunately, TAC is not, which concerns us. When the 2012 RFP came out, you had Larry Slagle of Yellow Cab on the Convention Center Board, later becoming Visit Anaheim, which was grading our RFP. Larry Slagle was, at one point, the president of the Anaheim/Orange County Visitor & Convention Bureau. At the same time, you had Paul Sanford, who was with the Anabella Hotel, who also sat on the Visit Anaheim Board. Anabella Hotel, via the Wincome Group, received $225 million in TOT subsidies from the City. Larry Slagle was also the co-chair of Save Our Anaheim Resort (SOAR) PAC along with Todd Ament from the Anaheim Chamber. These groups advocate political policies, which they are more than entitled to do. Yet, if you do not know, at one point in the past, Yellow Cab had received exclusive operating rights from Disneyland and the hotels at the Convention Center. Therefore, Yellow Cab essentially created a monopoly from his political friends and allies. Unfortunately, these same people/groups are connected to or sat on TAC. We believe this will happen once again. Larry Slagle is now with CABCO. He was on the mandatory conference call on behalf of CABCO. With 205 permits to CABCO and the history of the taxicab industry in Anaheim, I implore the council to use discretion and wisdom. Later in this document, I will point out areas we believe TAC got utterly wrong, and rightfully so, we are concerned with bias since TAC has shown bias in the past. For instance, back in 2009, an RFP for A Taxi Cab's 50 franchise permits came out for bid. TAC recommended those 50 to go to Yellow Cab. 24/7 Taxi Cab and A Taxi Cab demonstrated the false statements and conclusions of the TAC report. It was so evident that the City Council voted to extend the franchises of all the incumbents and reject TAC's recommendation. In the 2012 and 2016 hearings again, TAC was filled with misstatements, falsities, and their recommendation violated the RFP requirements. Not to belabor the point, but one such instance was the ADA vehicle requirement. The RFP required a minimum of 5% ADA vehicles. Yellow Cab in their package stated they had five and would add up to eight if they were awarded the maximum of 255 permits. Yellow Cab was proposing up to 3.1% ADA compliance at best. TAC recommended 180 permits in 2016 based on Yellow Cab's 2012 RFP package. With five ADA vehicles, this means a maximum of 100 franchise permits. TAC recommendation meant 2.77% ADA compliance. TAC's statements about 24/7 Taxi Cab ADA was filled with misstatements that were easily debunked when I read excerpts of our package to the City Council. Unfortunately, in 2012 and 2016, TAC and the City Council showed a preferential bias to the incumbent firms and prejudicial bias towards 24/7 Taxi Cab. Even though the overall outcome of the 2009 RFP wasn't to our liking. The City Council did use their discretion by rejecting the TAC recommendation. We ask you to use this same discretion now. From what has transpired in Anaheim, I think it is reasonable for us to be concerned about being granted a franchise but then ultimately being squeezed out of the market. We even had a City Official once say to my father, "Go back to Greece, you'll never get a license." I say this to help show you some of the decades-long history that has brought us here today. Our concerns are real, and that is why I have brought this to your attention. With the City being required by court order to issue 50 and 50 RFP permits only, this recommendation would be in line with the court's ruling and help address some of our concerns of bias and prejudice against us. I believe this is a win-win situation for the City. It doesn't expose the City to any unnecessary litigation and authorizes 150 franchise permits (via this recommendation) over the next 19 months. I believe this is a wise and measured approach and would advise the City Council to use their discretion and allow the allocation of +50% of taxicab franchise permits. Then in 19 months, the City can adequately evaluate both incumbent firms' performance, and a more accurate comparison for allocation of franchise permits would be more appropriate. Recommendation 3 When Yellow Cab ceased to operate on May 31, 2020, and after the City of Anaheim revoked Yellow Cab's franchise stickers on July 14, 2020, we observed Yellow Cab vehicles with Anaheim franchise permits operating in Anaheim. For most of these vehicles, we observed a sticker saying, "Operated by California Yellow Cab" on the door. Making a public records request (PRR) of CABCO vehicles, we discovered a few things. First, these vehicles were not authorized to operate in Anaheim, and most of the vehicles listed as Anaheim franchise vehicles were older than five model years old. Two vehicle rosters were given to us from our PRR. The lists were identical, but 11 taxicabs were highlighted blue. Not knowing what the blue highlighted cabs indicate, we conclude that if we excluding those 11 vehicles, the Anaheim fleet for CABCO was as follows: Two (2) cabs that are model year 2012. Ten (10) cabs that are model year 2013. Thirty-one (31) cabs that are model year 2014. This means that 43 out of 57 vehicles, or 75.4%, of their fleet is unlawful and should not be operating under their current franchise. Taking into account, CABCO was operating taxicabs with revoked Yellow Cab franchise permits, is not only grounds to be fined but grounds to have their franchise permanently revoked. The City of Anaheim's actions toward revoking A Taxi Cab's franchise on lesser grounds has been established, and what I am suggesting is not unreasonable. Therefore, our third recommendation is to the benefit of CABCO. 24/7 Taxi Cab truly wants to be fair and a reasonable business partner in Anaheim. Because of CABCO's recent actions, I also can't entirely agree with giving them more franchise permits, especially a monopoly, after they blatantly violated the AMC and their franchise. Therefore, for the stability of the taxicab market and to be more equitable, it would be too much of a financial burden on CABCO to remove 75.4% of their fleet and replace it with five year or newer model year vehicles. This could bring them to financial collapse. Therefore, we recommend the City of Anaheim adjust CABCO's 2012 franchise to OCTAP vehicle year age standards. Since 24/7 Taxi Cab's franchise will be at OCTAP standards, I think the same rules that apply to 24/7 Taxi Cab should apply to CABCO. We believe this recommendation is fair and equitable for everyone and doesn't burden CABCO with replacing their fleet in these unprecedented times. Again, I hope you will consider our three recommendations. We are not looking to have an unfair advantage over CABCO. What I have proposed is equitable for all involved and quite reasonable. Thank you again for your consideration. Respectfully, Konstantinos Roditis Besides my three recommendations, I want to address some of the findings from TAC. I believe that some of these finds are incorrect, and even though TAC has recommended 50 franchise permits, I thought it would be helpful to clear the record. Company Experience: As stated in our RFP, our company has many contracts, including with the government. Our company has transitioned primarily from a taxicab company to a non-emergency transportation company. With clients living or going to medical facilities in Anaheim, we could not have serviced our contracts with our 24/7 Taxi Cab fleet. It is prohibited under the Anaheim Municipal Code. Now with the ability to operate in Anaheim, we will transition back to a taxi cab company. If we had received this franchise back in 2012, we would have never made the transition because we would have fulfilled those newer contracts as well as having access to the rest of Anaheim and the Resort Area. We did mention this transition and the time necessary to complete the transition. This transition is well within the Anaheim RFP requirements. Additionally, once the council makes its decision, 24/7 Taxi Cab will be purchasing our ADA fleet. The purchase of ADA is scheduled for Thursday morning, September 17, 2020. TAC mentioned our Oceanside franchise. I agree Oceanside is a different environment. We used it as an example that when we applied for an Oceanside franchise, the first time, we immediately were granted a franchise, and we fulfilled all the requirements of the franchise. We also wanted to highlight that we left the Oceanside market and have been strictly focusing our energies on Anaheim and Orange County. The previous TAC recommendation looked negatively upon our Oceanside and Camp Pendleton contracts because they believed we couldn't do both, which we very much disagreed with them. Still, we wanted to assure this TAC organization that this shouldn't be a concern for them any longer. When TAC speaks of Anaheim Standards, actually, our Veyo contract has higher service standards than Anaheim. This was mentioned in our RFP package. We provided a letter of recommendation from Veyo, and they are very satisfied with our service. Also, if you are not aware, 24/7 Taxi Cab is the predecessor of sorts to South Coast Cab. South Coast Cab operated under the permit system, and we had 117 licenses then. So compared to CABCO, 24/7 Taxi Cab's company experience in Anaheim is more significant than that of CABCO. They have only had up to 75 licenses. These mischaracterizations do affect our score and thus affects how many franchise permits we are being recommended for. So we want to bring these to your attention. Management Experience: TAC is concerned about who successful we will be in a big city like Anaheim. I specifically mentioned South Coast Cab and our experience in our RFP to show we have operated a large taxicab company in Anaheim. A company with even a more extensive presence than CABCO. Again they have had a maximum of 75 permits (now 50), but we had 117. Before we transitioned to our state license. 24/7 Taxi Cab was one of the largest taxi companies in Orange County. TAC also is concerned about our management. They state all our management is from the same family. Not all of our management is from the same family—about half of the upper management. With the new Anaheim managers, current accounts manager, and current fleet manager are not part of the family. This was clearly indicated in our organizational chart and job descriptions. I once again do not see how TAC could make this mistake. We have had issues of bias with TAC reporting, which the City is well aware of, and thus we are concerned that untrue and incorrect statements from TAC are once again hurting our overall score. TAC is concerned about our fleet size. Yes the initial part of our fleet is less than 50 vehicles. But we did give a fleet implementation plan. Additionally, I would like to highlight that CABCO doesn't have 205 vehicles either, and that is the recommended amount TAC has proposed for them. Yet, TAC does not mention this in their recommendation. Financial Capacity and Stability: TAC had two concerns about out financial capacity and stability. In our business plan, I listed part of our current fleet that we would begin to transition into taxicabs. I showed our cash-on-hand and the vehicles we would be purchased by heavily reinvesting profits to vehicle purchases. I also stated I have a dealership license, and that gives me access not only to vehicles below market value, but lines of credit which can be used. Additionally, we had very little time to put this RFP together. In the past we had months, this time we had about two weeks. With such limited time I could not get the proper paperwork together as I did in 2012 when I secured funding for 100 brand new CNG vehicles with over 4 million in a line of credit. As you can imagine, securing that type of line of credit takes time. Therefore, I used my home as evidence of funds that are available if it was needed to give TAC confidence that I have the financial wealth to fund this if needed. My home being in Anaheim Hills and completely paid off, and an ability to draw on it if need be was to give comfort to TAC that I have financial resources. If we had more time to put this package together, I would have been able to provide lines of credit for purchasing of vehicles. The second concern was about a recent settlement. This is what I wrote in the RFP concerning this case: "We have no open cases against 24/7 Taxi Cab. The last and only case was closed and settled on August 13, 2020. We were part of an action that did not directly involve us, but our insurance company decided to settle the matter because it was cheaper to settle than the legal fees to fight the case." The settlement papers from the court were provided. There is no possibility of additional fees. Like zero! So once again, I don't understand how TAC and the auditor could have arrived at this conclusion and concern. Management and Quality Assurance: TAC was concerned with the age of our vehicles, but the age of the vehicles will not be too old for the complete duration of the franchise. These vehicles have similar ages to CABCO's current fleet. TAC also stated no mention of quality assurance. The section was titled Quality Control in our package, and it was eleven pages of content. We also highlighted quality assurance throughout the package. I don't understand how TAC could completely miss this. Again, I am concerned with how they missed this and ultimately hurt our overall score. Facilities and Equipment: We have one full-time mechanic, but we do bring a part-time mechanic in when needed. Similarly, I didn't mention all our staff members like call-takers and dispatchers. The RFP was to highlight the upper management, not go into detail of all our employees. Also, TAC stated that our warehouse is old. I don't know where they got that idea. The building was built in 1987. CABCO's location was built in 1977. Our building is a private building with a contractors' yard; CABCO's is not. There is no basis for this claim by TAC. Zero! The opposite is true. CABCO has an older warehouse. Again, I am concerned with the language in this section and throughout this TAC report because it concerns me that TAC is biased toward us and lowering our score to keep us at 50 franchise permits while recommending an unlawful monopoly to CABCO. Fleet Sustainability: TAC brings up the notion of borrowing vehicles once again. We state nowhere in our package we are borrowing anything. I might borrow a friend's car to go to the store, but I don't borrow cars and make them into a taxicab. We clearly demonstrated how we are moving our fleet from our state license back to a taxicab and that we are going to be purchasing more vehicles and approximately when and how. As stated, we will be buying some of Yellow Cab's old Anaheim fleet from the dealer that took those vehicles in possession. Including Toyota Prius vehicles. Fleet Accessibility: I mentioned the five vehicles we would buy for our ADA vehicles and prices. As stated earlier, I am going Thursday morning to purchase these vehicles once the Council votes. TAC had an issue with us fully complying with the ADA requirement. We agree 5% is the minimum, which was not a standard held in the past with Yellow Cab. But since we are immediately purchasing these vehicles, it was essential to highlight that for TAC. Final Thoughts: Again we are excited to begin operating in Anaheim as your newest taxicab franchise. I wanted to highlight some of the inconsistencies in the TAC report and issues we found. As the City is aware of our concerns of bias against 24/7 Taxi Cab, we wanted to highlight these issues respectfully to make you aware of these errors. Debunking some of the statements made by TAC and showing their inaccuracy and, in some cases, bias or slanted language, which has hurt our overall score, is important; those inaccuracies would make you think we are not prepared to begin operations in Anaheim; but that is untrue. So with this brief explanation of TAC's report and our recommendations, we do hope you seriously consider our recommendation and vote on them. Thank you for your time and consideration.