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5 chapter one INTRODUCTION AND BACKGROUND This chapter introduces the synthesis topic and objectives, describes the study approach including the survey of transit agencies and case examples, and presents the organization of the report. Following the introduction, the chapter provides background information on the taxi industry. This includes a brief primer on the industry that highlights aspects such as the structure of taxi companies and taxi regulation, which provide context for issues raised in this report. INTRODUCTION This report provides a state-of-the-practice synthesis of taxi use by public transportation agencies in their efforts to serve people with disabilities and older adults. Many transit agen- cies use taxis as part of their required ADA paratransit service and to provide a same-day service that is not a formal part of ADA paratransit service. Same-day service may be provided for individuals who are certified as ADA paratransit eligible, as well as for older adults and individuals with disabilities who are not ADA paratransit certified. This synthesis captures information on uses of taxis by public transportation agencies through an online survey, and provides the detailed experiences and perspectives of five selected public transportation agencies that use taxis. Also included are the experiences and perspectives of two large taxi companies that provide ADA paratransit and same-day service to individuals with disabilities and older adults through arrangements with public transportation agencies. Objective The objective of the synthesis is to report on current practices, trends, advantages, and challenges of public transit agenciesâ use of taxis to provide service for people with disabilities and older adults. Public transit agencies are increasingly interested in the use of taxis to serve their riders with disabilities and older adults. Factors contributing to the interest in taxis include the high cost of more traditional small bus and van service particularly for ADA paratransit service, economic strain on public budgets, and the advancement of technology to moni- tor and verify subsidized taxi trips. As communities and their public transit agencies explore the use of taxis for public transportation, there are lessons to be learned from those who sponsor and subsidize taxi programs for people with disabili- ties and older adults. Methodology Efforts for the synthesis included a review of relevant litera- ture, an online survey of public transit agencies, interviews with a selected number of those public transit agencies that currently have taxi-based programs serving individuals with disabilities and older adults, and interviews with two taxi com- panies to obtain their perspectives on operating taxi-based programs for public transit agency sponsors. The objective of the survey was to obtain current informa- tion, insights, and perspectives on the use of taxis to provide transportation for people with disabilities and older adults. Survey questions were developed and reviewed by the syn- thesis panel, with several revisions made based on panel comments. The questions were then prepared as an online survey tool and the survey pretested with three transportation agencies. Forty-five transit agencies were selected as a survey sample. Thirty-nine of the 45 transit agencies responded and indicated use of taxis, a response rate of 87%. The interviews with the five selected transit agencies with taxi-based programs provided detailed descriptions of how those agencies use taxisâas providers of ADA paratransit service, as a same-day transportation option, or bothâand the policies and procedures they employ for those services. Several of the transit agencies have implemented tech- nology to support their taxi programs and provided use- ful insights for other transit agencies considering similar technology for their taxi programs. The agencies shared the advantages and challenges of using taxis as well as lessons learned. The interviews with the two taxi companies provide a counterpoint to the experiences and perspectives of the tran- sit agencies. Without the willingness of the taxi companies to partner with public transportation agencies, there would be no agency-sponsored taxi programs.
6 Organization of Report The synthesis report begins with a summary of the report which is then followed by five chapters: â¢ Chapter one provides an introduction to the report and background information on the taxi industry. â¢ Chapter two presents the literature review. â¢ Chapter three provides results of the online survey. â¢ Chapter four presents the case examples and interviews with taxi companies. â¢ Chapter five provides conclusions and suggestions for future research. BACKGROUND Taxis, in various forms and with various names, have been around for at least several centuries. Modern taxis generally are considered to have evolved from the horse-drawn carriages for hire in Paris and London in the mid-1600s (1). The early carriages, which were large and heavy, were replaced in the 1800s by a lighter-weight, two-wheeled ver- sion pulled by a single horse. This was called a âcabriolet,â from which comes the term âcab.â The term âtaxiâ came late in the 1800s with the German invention of the âtaximeter,â a device that measured the âtaxâ or fare for the trip (1, 2). By the early 1900s, New York City had gasoline-powered automobiles serving as taxis. Among these were vehicles painted yellow and operated by one of cityâs first taxi fleets; reportedly, yellow was used because it is most visible from a distance (2). Taxis are now ubiquitous in cities across the United States and the world. In the United States, a taxi typi- cally is defined as a vehicle and driver for hire, providing a trip from one point to another as determined by the passen- ger, who engages the vehicle and driver by hail, telephone, or in recent years through online booking. Even more recently, passengers have been able to use an application (âappâ) on a smartphone. The privately owned taxi industryâs role in public trans- portation has changed since its early years in the United States, with growthâas well as challengesâtracking major events in our countryâs history. Growth in the taxi industry in the post-World War I years, driven in part by the countryâs urbanization and growing economy, led to âchaosâ during the Depression years with too many taxi drivers competing for business. This led many cities to begin regulating taxis, with limits on the number of taxis licensed to operate. The taxi industry shrank during World War II as factories that previ- ously manufactured taxi vehicles retooled for the war effort. Once the war was over, many cities saw dramatic increases in unlicensed taxis, known as âvet cabs,â which were driven by servicemen who had returned from the war and entered the taxi business. The many cities that had established limits on the numbers of taxi licenses struggled to reconcile those limits with the political realities of veterans who, after serv- ing their country, had bought a car and started providing taxi service. This turmoil in the industry was eventually resolved, with regulations in many cities revised to accommodate vet cabs (1). More relevant for this synthesis was the beginning and growth in public subsidies for transit and human service trans- portation programs in the 1960s and 1970s, starting with the Urban Mass Transportation Act of 1964 followed by inclusion in the 1974 version of the transportation legislation of Section 16(b)(2)âthe predecessor to the Section 5310 program. Taxis were directly affected: the subsidized transportation programs, particularly for human service agencies, took business from the taxi industry. Seniors and people with disabilities who lacked their own transportation had been an important rider- ship market for taxis (1). Particularly in smaller towns and rural communities, taxis often had beenâuntil that timeâthe only local transportation resource for those without vehicles; such individuals often were older, of lower income, or had disabilities. By the mid-1970s, the term âparatransitâ entered the lexi- con as an innovative approach to public transportation, and shared-ride services, often called dial-a-ride, were imple- mented in some smaller cities and suburban areas with public funding support. In some communities, the local taxi com- pany was the service provider, either through a provider-side or user-side subsidy. Wisconsinâs shared-ride taxi program, which began in 1979 in one community to ensure trans- portation for elderly residents and grew to include more than 40 communities by 2000, provides just one illustra- tion of the role that taxis have served in providing public transportation (3). Passage of the ADA in 1990 and the growing demand and cost for ADA paratransit service through the mid-1990s and early 2000s brought new opportunities for the taxi industry, particularly in urban communities. A growing number of public transit agencies found that taxis could help provide the required ADA paratransit service at a lower cost than more traditional providers, such as the transit agency or a private contractor operating small buses and vans dedicated to the transit agency. This synthesis project is timely, providing a snapshot of how taxis are used by public transportation agencies to serve older adults and people with disabilities when there continue to be concerns about the demand, particularly for ADA para- transit services, and associated costs, with the limits of public budgets. The snapshot also captures how impacts on the taxi indus- try of the so-called ride-sharing services, more appropriately named transportation network companies (TNCs) or app-based
7 ride services, affect public transit agenciesâ arrangements with taxi companies. With the rapid pace of change and disruption to the taxi industry caused by TNCs in many cities across the country, findings of this project related to TNC impacts likely are only preliminary and will be superseded as TNCsâ services evolve and attempts to regulate them unfold. It may be that changes to regulations and policy as well as new offerings by TNCs transform these new ride services into an additional resource for transit agencies to consider for serving people with disabilities and older adults. A Brief Primer on the Taxi Industry Structure and Size The taxi industry in the United States has evolved over the years. Available information is dated, but what is available shows that taxi companies are predominantly organized as private corporations. The second most common organiza- tional structure is individual proprietorships or partnerships, although this form is somewhat less prevalent than it was in the 1980s. The taxi association or cooperative is even less common, serving as the organizational structure for less than 10% of taxi companies; however, the data show there were twice as many associations and cooperatives by the late 1990s than in the 1980s. Most taxi organizations are relatively small. In the 1980s, more than 75% operated fewer than 25 taxi vehicles. By the late 1990s, somewhat fewer, but still a majority at 60%, oper- ated fewer than 25 vehicles. A notable difference occurred with the increase of large taxi organizations. In the 1980s, 6% of taxi companies had 100 vehicles or more, but by the late 1990s, the percentage had increased almost three-fold to 17% (3). A significant change in the taxi industry over the years relates to the drivers. In the early 1980s, 42% of taxi drivers were employees. By the late 1990s, this had decreased to less than 10%, with more than 90% of taxi drivers working as independent contractors (3). A 2005 report on taxi drivers notes that the use of independent contractor drivers for the taxi industry is the âstandard business modelâ (4). The evolution of taxi organizational structure is sometimes depicted as a scale, from what has been termed the âfull ser- vice taxi company,â which provides comprehensive services that include 24-h dispatch, vehicle maintenance, and group liability insurance, to the single license holder, who is unaffili- ated with a company and operates the taxi as an owner-operator or leases it to a driver (5). This evolution of the taxi industry has relevance for public transit agencies that contract for service. With most taxi driv- ers now working as independent contractors, the taxi company has less control over such drivers than it does over employee drivers. A taxi company cannot mandate drivers to perform specified services, such as driving an accessible taxi or accept- ing only certain passenger trips. Such mandates would conflict with Internal Revenue Service rules that define independent contractors. Thus, rather than issuing mandates, taxi companies and transit agencies contracting for service look to incentives to help steer drivers toward the desired services. The differences in taxi company structure are also relevant. Because transit agency contracts typically require high liabil- ity insurance coverage and require some level of driver train- ing as well as drug and alcohol testing, the transit agency must ensure that the taxi company is sufficiently organized to pro- vide the needed services and support and also has the financial capability to meet the requirements (3). Taxi Regulation Taxis are regulated most frequently by local governmentsâ cities or countiesâalthough there are several states that regu- late taxis. Regulations typically address safety and economics. Safety regulations address service standards for vehicles and drivers, protecting the riding public. Safety regulations also include requirements for liability insurance coverage. Eco- nomic regulations focus on fares and the amount of taxi ser- vice provided, the latter often including controls to entering the market. Much of the interest and sometimes controversy regarding taxi regulation have focused on entry controls. Such controls may be established in different ways, often through a limit on the number of vehicles licensed or through franchising. Those who favor entry controls contend that such controls ensure the taxi industry stays viable and financially stable without becoming oversaturated with too many drivers competing for passengers, which leads to inadequate incomes for drivers and negative impacts on service quality. Those opposed to entry controls argue that the free mar- ket will lead to improved taxi availability and allow innova- tive services to develop. New York City and Philadelphia are cities with long-standing controls over entering the taxi market. On the other hand, Washington, D.C., has a his- tory of no market controls. This results in a large number of taxis (7,000+) licensed in the district, a majority of which are independent owner-operated. Some are affiliated with a company for dispatch service, but others just cruise for street hails without any relationship to a formal dispatch service. An additional aspect of taxi regulation concerns the market ability of the taxi licenses issued by the regulatory body. The taxi license, when there are controls over the num- ber of taxi licenses (also referred to as medallions), may be sold to a taxi company or a driver, and that license may be resold or re-leased by the owner. In other regulatory systems,
8 the regulatory body maintains ownership of the taxi license and leases it to the taxi company or driver. Leasing the license to an individual driver may also require the driver to affili- ate with a licensed company or approved association. There are also hybrid systems, with both licenses that have a market value and leased licenses, which may be called permits (6). Contracting with Transit Agencies Taxi companies have relied on contracts with various orga- nizations including transit agencies for many years. Data from the mid-1980s show that almost two-thirds of taxi companies had contracts with various entities, with 10% of those contracts for dial-a-ride services (3) funded through public transportation programs. The importance of public transportation contracts grew over subsequent years, with data from the late 1990s showing that almost one-third of taxi companies had transit agency contracts (3). Of these, voucher programs were reported to be the most common (61%), with ADA paratransit the second most common (40%) (3). What Recent Research and the National Transit Database Tell Us About Taxi Use Recent research conducted for the FTA on accessible transit services including ADA paratransit found that almost 18% of 187 transit agencies responding to the studyâs survey provide subsidized taxi service for their ADA paratransit riders (7). A larger data set is provided through the National Transit Database (NTD). Data on the use of taxis for the demand- response (DRT) mode (which is predominantly ADA para- transit) is captured by the NTD. According to data from the 2013 NTD report year, 83 urban transit agencies use taxis, typically as one of their demand-response providers or in some cases as the only provider. This represents almost 10% of the approximate 850 urban transit reporters that year. The Rural NTD identifies rural transit agencies that include taxis as one of their modes. According to the 2013 report tear for Rural NTD, 52 agencies indicated they use taxis. Interest- ingly, 37 of these are in Wisconsinâservices that are part of Wisconsinâs long-standing shared ride taxi program.