Fare prof­its

GARY TARANTINO holds the most valu­able li­cence in B. C., worth more than $ 1 mil­lion. The high cost of li­cences drives the de­bate over the num­ber of cabs on the road and where they can go.

Vancouver Sun - - FRONT PAGE - JEFF LEE

You can’t just come in off the street and buy shares or a car. You have to have driven for a while, and be ap­proved by the taxi com­pany’s board of di­rec­tors.

CAROLYN BAUER

EX­EC­U­TIVE DI­REC­TOR OF THE VAN­COU­VER TAXI AS­SO­CI­A­TION

Gary Tarantino owns ar­guably the most valu­able taxi in Van­cou­ver, in an in­dus­try al­ready known for its breath­tak­ingly high li­cence val­ues.

Tarantino’s Li­cence 70384 could eas­ily com­mand more than $ 1 mil­lion in a busi­ness where the aver­age Van­cou­ver taxi costs $ 800,000. That’s be­cause he is the last hold­out of in­de­pen­dent taxi own­ers in an in­dus­try where all of the other 687 li­cences are held by the city’s four taxi com­pa­nies.

The Pas­sen­ger Trans­porta­tion Board, which gov­erns the taxi in­dus­try, lists Yel­low Cabs, Black­top/ Checker Cabs, Van­cou­ver Cabs and Ma­cLure’s, the city’s old­est, as the op­er­a­tors of 588 full- time taxi li­cences. They also have 99 other “tem­po­rary op­er­at­ing per­mits” for week­end and peak ser­vice, of which 65 are ac­tive. All of the per­mits are held in the names of the taxi com­pa­nies.

And then there is a sin­gle line in the PTB’s books for the holder of Li­cence 70384, Gary Al­bert Tarantino. It is an anom­aly left over af­ter all other in­de­pen­dent own­ers con­verted their li­cences into com­pany shares in or­der to fi­nance and con­sol­i­date a frac­tured taxi in­dus­try.

That con­sol­i­da­tion has helped sta­bi­lize a busi­ness buf­feted by high op­er­at­ing ex­penses and the sea­sonal va­garies of pas­sen­ger trans­porta­tion. It has also helped to put a sta­ble price on the right to drive a taxi, a job that — like any­where else in the world — tends to at­tract new im­mi­grants.

Stub­born­ness

But the high prices also have hard­ened op­po­si­tion against pleas from the sub­ur­ban taxi com­pa­nies for the right to pick up the lu­cra­tive late- night fares in Van­cou­ver’s down­town en­ter­tain­ment zone on Fri­day and Satur­day nights. Cur­rent rules al­low them to drop off only. And in a city where it can be tough to find a taxi at clos­ing time or in a rain­storm, there are lots who ar­gue Van­cou­ver’s taxis should have more com­pe­ti­tion.

For Tarantino, own­ing the last in­de­pen­dent li­cence — which he al­lows Yel­low Cab Co. to op­er­ate un­der its colours as Car 21 — is a com­bi­na­tion of nos­tal­gia and in- your- face stub­born­ness.

Tarantino bought Car 21 and its li­cence from his fa­ther Al­bert — a for­mer part- owner of Yel­low Cab — in 1978 for $ 100,000. Al­bert, in turn, had bought the li­cence from some­one else in 1950 for $ 5,000 as one of the new own­ers of an ex­pand­ing Yel­low. Tarantino said he bought his fa­ther’s li­cence to stop the pes­ter­ing his fa­ther was get­ting from other driv­ers to sell, and for the next four years Al­bert con­tin­ued to drive the taxi in peace. For 63 years, that li­cence has been op­er­ated by the Taranti­nos, nearly half of that time with Al­bert at the wheel. Gary Tarantino hasn’t driven it as a cab­bie for more than 30 years.

The unique­ness of the li­cence has made Tarantino pop­u­lar among wannabe taxi own­ers who pe­ri­od­i­cally call him up to see if he wants to sell. It has also put a pre­mium on the mar­ket value of the li­cence.

“Oh, it’s worth more than a mil­lion, when oth­ers are go­ing for about $ 800,000,” said Carolyn Bauer, the ex­ec­u­tive di­rec­tor of the Van­cou­ver Taxi As­so­ci­a­tion and also Yel­low’s gen­eral man­ager. “This is the last one. I’m still hop­ing Gary sells it some day.”

Con­vo­luted in­dus­try

In Van­cou­ver’s con­vo­luted and Byzan­tine taxi in­dus­try, there are non- own­ing driv­ers who drive for a share of the day’s re­ceipts, and own­ers of en­tire cars who drive one shift and hire some­one to take the other. There are driv­ers who take three- year leases, pay own­ers thou­sands in monthly fees and hope to make a profit from the dif­fer­ence. And there are driv­ers who, im­prob­a­bly, each own one half a car, one tak­ing the morn­ing shift and the other tak­ing the night shift.

But in all of this there are no ac­tual pa­per li­cences to be traded, ex­cept per­haps Tarantino’s should he ever de­cide to sell. The fees charged by the Pas­sen­ger Trans­porta­tion Board don’t sound like much — $ 200 an­nu­ally for an ap­pli­ca­tion fee and $ 100 to re­new a li­cence ( Van­cou­ver also charges $ 520 for a sep­a­rate op­er­at­ing li­cence). But the li­cences are ac­tu­ally worth their high- sixdigit ask­ing price be­cause of their in­trin­sic value as ti­tles to jobs. In a sys­tem where the num­ber of cabs is strictly con­trolled by govern­ment, a spe­cial­ized in­dus­try of banks, lawyers, ac­coun­tants and in­sur­ance agents ex­ists to ser­vice this trade in shares, part and whole own­er­ships of cars and the hun­dreds of mil­lions of dollars in in­vest­ments they rep­re­sent.

A com­plex busi­ness struc­ture is built around taxi com­pa­nies that own cen­tral dis­patch ser­vices, buy fleet in­sur­ance, properties and even re­place­ment cars. Yel­low Cab, for ex­am­ple, owns an en­tire block on Clark Drive, com­plete with re­pair bays, a body shop, dis­patch build­ing, park­ing lot and car wash. Own­ers have rights to op­er­ate by virtue of shares, with each car con­trol­ling two Class A shares. Many of those cars are owned by two own­ers. Those shares trade in a mar­ket re­stricted to trusted and known driv­ers. It’s as much who you know as what you know.

“You can’t just come in off the street and buy shares or a car,” Bauer said. “You have to have driven for a while, and be ap­proved by the taxi com­pany’s board of di­rec­tors.”

Buy­ing a taxi is no easy feat, ei­ther. Con­vinc­ing a bank to loan money for a share that doesn’t in­clude an ac­tual li­cense is such a fine art that in Van­cou­ver only two branches of two banks, the Bank of Mon­treal and Royal Bank of Canada, spe­cial­ize in this kind of illiq­uid fi­nanc­ing.

Taxi com­pa­nies, which con­trol the li­cences, act as fi­nan­cial guar­an­tors.

Many own­ers who bought their shares years ago for $ 60,000, $ 100,000 or even $ 200,000 now use the in­crease in eq­uity to fi­nance other busi­nesses, Bauer said.

“If you knew how much the taxi in­dus­try is re­spon­si­ble for in­vest­ments in this city you would be stunned. There are driv­ers who have used the eq­uity in their cabs to go on to buy Sub­way and Quiznos fran­chises, homes, small cof­fee shops and busi­nesses,” she said.

On the best days, driv­ers can pull in $ 500-$ 700 a night shift, but the aver­age is closer to $ 350. Day shifts aver­age closer to $ 225.

Tarantino says good driv­ers gross up­wards of $ 100,000 a year, from which they have to pay con­sid­er­able ex­penses. Non- owner driv­ers get 42 per cent of the day’s re­ceipts. Of the 58 per cent left, the own­ers pay dis­patch fees, in­sur­ance costs, fuel, taxes, de­pre­ci­a­tion of the ve­hi­cle and ben­e­fits and hol­i­day pay eat up al­most half the re­main­ing rev­enues.

On good week­end shifts, non- own­ers can make a few hun­dred dollars. But on the quiet week­day shifts, “ba­si­cally guys are go­ing hand to mouth,” Bauer said.

Open­ing up mar­ket

“This is ba­si­cally a right to a job, and ev­ery­body works very hard,” said Kul­want Sa­hota, the pres­i­dent of Yel­low, who owns a half- share of a car. “No­body is get­ting rich off this but they make enough to feed their fam­i­lies and put their chil­dren through school.”

The Van­cou­ver com­pa­nies hinted how much is at stake in a re­cent ap­pli­ca­tion to B. C. Supreme Court to stop the Pas­sen­ger Trans­porta­tion Board from is­su­ing 38 tem­po­rary op­er­at­ing li­cences to seven sub­ur­ban taxi com­pa­nies in Sur­rey, Delta, Burn­aby and the North Shore who want to use their ex­ist­ing fleets to pick up fares in Van­cou­ver’s en­ter­tain­ment dis­trict on Fri­day and Satur­day nights.

The sub­ur­ban driv­ers ar­gue there is pent- up de­mand from pas­sen­gers who suf­fer long waits af­ter pub­lic tran­sit shuts down.

In re­sponse, the Van­cou­ver firms said that the two banks that fi­nance the Van­cou­ver taxi in­dus­try hold more than $ 373 mil­lion in out­stand­ing share loans. An ex­pert opin­ion filed in court by Dan Hara, an Ot­tawa- based trans­porta­tion con­sul­tant, sug­gested that open­ing the Van­cou­ver mar­ket to out­siders would cause lost rev­enues of up to $ 23.7 mil­lion and se­ri­ously un­der­mine the fi­nan­cial sta­bil­ity of the share sys­tem. A ju­di­cial re­view of the PTB’s de­ci­sion will be heard Au­gust 20.

Last year the taxi com­pa­nies com­mis­sioned a study by Gar­land Chow of the Univer­sity of B. C.’ s Sauder School of Busi­ness that con­cluded there was room for an ad­di­tional 99 tem­po­rary op­er­at­ing per­mits but the pub­lic was gen­er­ally well served by the cur­rent sys­tem.

The threat of sub­ur­ban taxis get­ting a foothold in the Van­cou­ver mar­ket scares the Van­cou­ver Taxi As­so­ci­a­tion. “If we lose this ju­di­cial re­view, it could drop the share prices by as much as $ 150,000 a share, and that’s go­ing to bank­rupt some driv­ers who have loans with those banks,” Bauer said.

This is ba­si­cally a right to a job and ev­ery­body works very hard. No­body is get­ting rich off this but they make enough to feed their fam­i­lies and put their chil­dren through school.

KUL­WANT SA­HOTA

PRES­I­DENT OF YEL­LOW CAB

Im­mi­grant step­ping stone

The his­tory of Van­cou­ver’s taxi in­dus­try is a patch­work of lit­tle com­pa­nies that came and went as the in­de­pen­dence of driv­ers waned. It is also an in­dus­try highly in­flu­enced by im­mi­gra­tion.

“The taxi in­dus­try, over evo­lu­tion, has been an im­mi­grant step­ping­stone. At one time it was the Ital­ians who owned, or the Greeks or the Jews or the Chi­nese. It is a way of life. It is a start.

“Th­ese peo­ple are com­ing from noth­ing, a lot of them and it is a start in life for them,” said Tarantino, who jok­ingly says he’s prob­a­bly the last Ital­ian to own a taxi cab.

“Now it is the Indo- Cana­dian com­mu­nity and the Ira­ni­ans and oth­ers who are the driv­ers. Th­ese peo­ple are putting their kids through school, so it is still good enough. Most of th­ese guys are putting in a min­i­mum of 10 hours. They’re not mak­ing what a lot of other peo­ple make but they are mak­ing a liv­ing and they are their own boss.”

Tarantino’s foot­print in the taxi in­dus­try isn’t limited to Car 21. He first pumped gas for Yel­low when he was eight. In the early 1970s, he drove an­other cab. By 1974 he’d switched to driv­ing tow trucks and in 1976 formed Uni­tow, now one of the dom­i­nant tow­ing com­pa­nies in the prov­ince.

But he still had a han­ker­ing for the taxi busi­ness, and in 1979, just af­ter he bought his fa­ther’s li­cence, Tarantino and three oth­ers bought sev­eral li­cences and opened up Van­cou­ver Taxi.

They of­fered, for the first time ever, hand­i­capped and wheel­chair ser­vice. It was the last time a group of taxi li­cences was used to form a com­pany in Van­cou­ver.

It is also why, in the PTB’s books, Van­cou­ver Taxi has two sep­a­rate sets of li­cences, one for reg­u­lar taxis and 30 for hand­i­capped cabs. Tarantino has since sold his stake in Van­cou­ver Taxi.

The last amal­ga­ma­tion took place in the early 1990s, when Ad­vance Cabs, with its red and white liv­ery, joined Yel­low be­cause it was near bankruptcy and couldn’t match the mod­ern­iza­tion ef­forts of Yel­low and Black­top, which had jointly con­verted their voice dis­patch desks to a com­put­er­ized sys­tem.

Crit­ics of vested in­ter­est

Not ev­ery­one is a fan of the way Van­cou­ver’s taxi in­dus­try has de­vel­oped.

David Sey­mour, a pub­lic pol­icy an­a­lyst with the Man­ning Foun­da­tion in Calgary, ar­gues the cap­ping of li­cences ar­ti­fi­cially in­flates their value, which he says is bad for both pas­sen­gers and driv­ers.

In 2009 Sey­mour pub­lished a pair of stud­ies for Win­nipeg- based Fron­tier Cen­tre, a pub­lic pol­icy group, ar­gu­ing Canada’s taxi in­dus­try could ben­e­fit from dereg­u­la­tion.

He says the $ 800,000 cost of a cab has to be borne by some­one, and that’s likely the pas­sen­ger through higher taxi fares or driv­ers through lower wages.

“Be­cause you have a small group of peo­ple who have im­mense vested in­ter­est in keep­ing the prices high and the num­bers re­stricted, it is un­likely they will do a sober de­lib­er­a­tion ( about open­ing it up to com­pe­ti­tion),” he said. “That can’t be good ei­ther for the driv­ers or the pas­sen­gers.”

But Bauer and Tarantino say dereg­u­la­tion was tried in the United States with spec­tac­u­larly bad re­sults.

When fight­ing dereg­u­la­tion, the taxi in­dus­try holds up Seat­tle as an ex­am­ple. Af­ter the city stopped reg­u­lat­ing taxis in 1979, ser­vice de­te­ri­o­rated, cars were poorly main­tained, and fist fights even broke out among driv­ers at cab stands. Five years later the city re­versed it­self and re­in­sti­tuted con­trols.

The high bar­rier to own­ing a car in Van­cou­ver has also caused dis­sen­sion among lessee driv­ers, who com­plain the sys­tem is con­trolled by a car­tel of own­ers.

Re­cently an in­ves­tiga­tive re­port by free­lance writer Luke Brocki for Van­cou­ver’s on­line De­pen­dent Mag­a­zine looked at one an­gry Yel­low Cab lease­holder driver who joined the sub­ur­ban taxi driv­ers’ ef­forts to get ac­cess to week­end li­cences.

The driver com­plained he had to gen­er­ate $ 4,800 a month just to break even.

Bauer, who is also Yel­low Cab’s gen­eral man­ager, dis­misses the story as mis­chief- mak­ing.

Sa­hota said nearly two- thirds of the com­pany’s 325 share­hold­ers are owner- driv­ers, most of whom own just a half of a car.

The rest are lease­hold­ers or driv­ers who work just for a share of the day’s busi­ness.

Only a few peo­ple own more than one taxi, and even if they do, their vot­ing power is limited to a max­i­mum of two Class A shares. In other words, no one owner can cor­ner the Van­cou­ver mar­ket, he said.

Un­der provin­cial law, cars have to be re­placed ev­ery seven years, al­though Bauer said they usu­ally don’t last more than four.

High gas prices have forced the in­dus­try to move away from gas guz­zlers, and ev­ery com­pany in Van­cou­ver has be­come an en­thu­si­as­tic en­dorser of hy­brid ve­hi­cles.

Where the aver­age con­sumer might find a Prius or a hy­brid Toy­ota Camry a bit pricey, the Van­cou­ver taxi in­dus­try has dis­cov­ered the fuel sav­ings of­ten make the daily dif­fer­ence be­tween profit and loss.

Cab is a ‘ se­cu­rity blan­ket’

Tarantino, the out­lier in this en­tire in­dus­try, is some­what am­biva­lent about his li­cence. He doesn’t ex­pect it to make much more for him than cov­er­ing the cost of re­place­ment ev­ery four years.

When asked why he has never sold, Tarantino in­sists it’s sim­ply be­cause the car has been in his fam­ily for so long.

But Tarantino’s wife Stella, who also grew up in the taxi in­dus­try, thinks her hus­band has a more prag­matic rea­son.

“We al­ways man­aged to scrape through in the nick of time. In a way, for him, it is a se­cu­rity blan­ket. If all else fails, if my world blows up, I can still get in a cab. I still know how to drive and I like peo­ple, and I can still sup­port my fam­ily,” she said.

WARD PER­RIN/ PNG

Gary Tarantino with his No. 21 taxi owns the last in­de­pen­dent taxi li­cence in Van­cou­ver. Tarantino’s fa­ther bought the li­cence for $ 5,000 in 1950 and, to­day, it’s worth more than $ 1 mil­lion. All the 687 other li­cences are owned by the city’s four...

WARD PER­RIN/ PNG

Carolyn Bauer, ex­ec­u­tive di­rec­tor of the Van­cou­ver Taxi As­so­ci­a­tion, and Kul­want Sa­hota, pres­i­dent of Yel­low Cab, are fight­ing the Pas­sen­ger Trans­porta­tion Board’s move to is­sue 38 tem­po­rary li­cences to sub­ur­ban taxi com­pa­nies who want to pick up fares...

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