A bumper-to-bumper crop of cabs

  • Article by: ERIC ROPER , Star Tribune
  • Updated: May 9, 2012 - 10:35 AM

Some Minneapolis' taxi drivers say lifting limit on licenses has swamped the market.

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Taxi cabs lined the streets at taxi waiting areas in downtown Minneapolis on Friday, May 4, 2012 in Minneapolis, Minn. The number of cabs has doubled since 2007.

Photo: Renee Jones Schneider, Star Tribune

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Frustration spills from the front seats of Minneapolis taxis these days. With few fares in the back seats, some drivers have plenty of time to vent about an influx of cabs in the city.

Around the corner from the downtown Hilton Hotel one recent afternoon, a neat row of cabs waited hours for what could be a $5 fare. Said Ali Said was parked last in line, lamenting that his dispatcher hadn't radioed a call in two hours.

"I don't blame them," he said. "I blame the business. And I blame the city. Because they put too many cabs on the street."

The Minneapolis taxi industry has undergone a period of remarkable growth since the city lifted a longstanding cap on the number of licenses in 2006, with benefits for consumers and frustrations for drivers who now face unprecedented competition to make a buck. In the past five years, the number of licensed cabs in Minneapolis has more than doubled from 373 to 799.

"To the delight of the Convention Center and the government downtown, it's pretty easy to grab a taxi in Minneapolis," said Zack Williams, owner of Rainbow Taxi, one of the city's oldest companies. "But it's not so good for the guy trying to make a living behind the wheel."

Don't expect the city to jump in with a regulatory solution. Just like the number of restaurants, city business licensing manager Grant Wilson expects that the market will eventually determine how many cabs is appropriate -- the number has already fallen slightly from last year. If they don't make money, drivers will hang up the keys and do something else.

"We expected a peak, and then we expect this to gradually decline," said Wilson, who thinks the total number will likely settle around 700.

Council Member Gary Schiff, who pushed for the 2006 ordinance, noted it has eliminated the steep cost of obtaining a license under the old system and also has been a boon for smaller companies and minority entrepreneurs. The number of licensed cab companies in Minneapolis has grown from 14 in 2007 to 32 today.

Plus, Schiff said, "usually the result of more competition is a better quality product and people trying to meet the needs of customers better."

New vs. old

Luis Paucar is one of those entrepreneurs. The Ecuadorian immigrant's struggle to get licenses under the old system was championed by the Institute for Justice, a libertarian legal advocacy group, and Paucar found himself profiled in a nationally syndicated column by George Will.

The limit on the number of licenses created a secondary market that made them worth as much as $25,000 each, too high a price for a small business owner such as Paucar. The City Council passed an ordinance that would gradually lift the limit and eliminate it altogether in 2011. Several taxi companies, including Williams', sued the city to keep the limit. Paucar intervened, with lawyers from the Institute for Justice, and won.

He now has 17 Minneapolis taxi licenses.

"I like the competition," Paucar said, taking a break from working the phones at his tiny second-floor office in Richfield.

He has focused on building a customer base in the neighborhoods of south Minneapolis, however, because "right now you have no space in downtown."

Back at the Hilton, a traffic-services vehicle pulled up behind Said and honked for him to move -- he was parked beyond the limit of the stand. He quickly pulled away to avoid a ticket -- sometimes $40 -- which would weigh on his balance sheet.

Said pays $100 a day to lease his cab and another $60 for gas, which means he sometimes goes home with only $20 or $30 in his pocket. "Even if I find a job for $7 or $8 an hour, it's better than this one," said Said, who said he plans to turn in the car.

In front of him, Farah Jama relaxed in his front seat and noted that doormen often give the better fares to limousines, which pay $10 for the privilege. He said business has fallen off dramatically in recent years, exacerbated by the Hiawatha light rail.

"This is my daily life, brother. The cab stand -- that's where I feed my five kids," Jama said, noting that cruising around town for fares wastes gas.

There are more cab stands to choose from these days. The city has added 25 stands since 2007, most of which are geared toward entertainment districts and bar closings.

Regional affect

The new rules for Minneapolis taxis also regionalized the Twin City cab business. Wilson said the city used to prevent taxis licensed in Minneapolis from obtaining licenses in other jurisdictions, except for the airport.

No longer. Cab drivers can now obtain multiple licenses and pick up passengers around the region. And it means St. Paul cabs can hop over to Minneapolis for bar closing, for example.

Minneapolis, St. Paul and the Metropolitan Airports Commission are now studying a regional model of taxi regulation with help from the Met Council. Wilson said that could mean a future when taxis need only one license for the seven-county metro area.

"That concept is just being explored," Wilson said.

Eric Roper • 612-673-1732 Twitter: @StribRoper

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