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Home My WebLink AboutIR 2251 .,.FORMAL REPORT TO CITY COUNCIL MEMBERS No. 2251 ,P r f A,®R— To the Mayor and Members of the City Council November 2, 1973 Subject: TAXICAB RATES e» On September 7, 1973, the Fort Worth Cab and Baggage Company addressed a letter to the City Manager requesting an increase in the rates charged for cab service. As directed by the Council, on September 24, 1973, the staff has analyzed the request and prepared this report RATE STRUCTURE The present taxi rate structure has been in effect since January 12, 1970. �I The following tabulation compares the existing rate structure with the requested new rate structure. Percent Current Rate Requested Rate Increase 1st 1/5 mile $.45 1st 1/4 mile $.75 66.7% Each additional Each additional 1/5 mile .10 1/3 mile 20 20,0% Additional pass- engers over one over 12 yrs. of age .10 25 250 ,0% Waiting Time* $.20/min. Active** 5.00/hour 6.00/hour 20.0% Special Trips or sight- seeing 5.00/hour 6.00 hour 20.0'/e *Requested by passenger **For any reason The requested new rate structure is the same as that approved for SURIRAN taxis without the Airport pickup charge of $> 75 FINANCIAL CONDITION OF CAB COMPANY The Company has submitted financial statements supported by a Federal Income Tax return and a pro-forma statement based on the requested in- crease. The detailed statements are attached and they are summarized below: ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS ,,-ORMAL REPORT TO CITY COUNCIL MEMBERS No. 2251 - Page 2 N., Tf F To the Mayor and Members of the City Council November 2, 1973 �ap V = 'TEXAy Subject: TAXICAB RATES (Year end 1-31) Pro-Forma 1970-71 1971-72 1972-73 1973-74 1974-75 Total Revenue 1,066,153 935,268 876,082 946,036 1,085,376 Operating Expense 922,776 801,148 775,060 826,098., 905,827 Administrative Expense 132,906 155,064 110,722 132,477 138,338 Total Expense 1,055,682 956,212 885,782 958,575 .1,044,170 Other Income (Expense) 2,140 (1,220) 4,618 --- --- Net Income (Loss) 12,612 (22,164) (5,082) (12,540) 41,207 (Before Taxes) Original Cost of Pro- perty Less Deprecia- tion Reserve 1611245 115,493 152,903 202,495 161,410 The single largest item of expense for the Company is wages and salaries (estimated at $540,000 for year ending 1-31-74) . Drivers are paid on a 42.5% commission basis and thus are directly affected by changes in fare structure and the volume of business. The Company is currently experi- encing difficulty in employing drivers due to the low earnings available to a driver. The second largest item of cost is fuel, tires, and vehicle maintenance (estimated at $152,000 for year ending 1-31-74) . It is generally well- documented that major cost increases have occurred and will continue in this category of expense. OPERATIONAL STATISTICS The Company owns and operates 98 cabs and employs 125 drivers. The ages of the cabs (all Checker brand) are as follows: Year Number 1969 50 1972 24 1973 24 During the past four years the number of miles driven is as follows: ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS ,ruKMAL REPORT TO CITY COUNCIL MEMBERS No. 2251 - 'a^c 3 f I qfC 0 0iV0 0 To the Mayor and Members of the City Council November 2, 1973 u �A i .rax'C. Subject: TAXICAB RATES Year Miles 1969 3,941,811 1970 3,218,.124 1971 2,865,974 F 1972 2,699,989 The volume of business is affected by the length of trips driven The percentage of business by trip length with the approximate fare increase in percent is shown below: Fare Length % of Total Trips In--rease Up to One mile 22 ,4% 35.2% One to Two miles 24.3% 29 6% Two to Three miles 18.2% 37 8% Three to Four miles 11,,4% 34 0% Four miles and over 23. 7% 28. 0% SERVICE LEVEL On September 29, 1973, the Mayor received a letter from Mr. G, K. Johnson, President cf the Tarrant County Hotel - Motel Association, Inc. , relating to the requested increase. The letter indicated that the Association passed a resolution supporting the requested increase based on discussionseof improved service they had conducted with ctie Company, The letter is attached to this report. Mr. Richard Aughinbaugh, Director of Consumer Affairs, reports that there have not been an excessive number of citizen complaints regarding taxi service in Fort Worth. Since the newspaper article appeared re- garding the requested rate increase, the Finance Director has received one telephone complaint about taxi service. One City Council member has forwarded to the staff a letter received from a citizen stating that a newspaper story indicating the requested increase was 20% was misleading since the percentage increase is much higher than 20%. The staff has had no other communications from citizens regarding the requested new rate. SUED BY THE CITY MANAGER FORT WORTH, TEXAS oNFORMAL REPORT TO CITY COUNCIL MEMBERS No. 2251 - Page 4 Fc0)?,I- To the Mayor and Members of the City Council November 2, 1973 .X A u i i "TeXPy' Subject: TAXICAB RATES FACTORS TO CONSIDER In evaluating a request for a rate increase- from a public service organ- ization, there are many factors to consider. The economic factors are comparatively easy to assess, but the overall community impact is diffi- cult to assess. 1 (a) Economic Verified financial statements indicate that the Company is not making a profit, much less an adequate rate of return on their investment. Drivers are not being paid competitive salaries for the type of work performed and thus quality of service is impa-ted, Operating costs are experiencing the same degree of inflationary increase that all other people and companies are experiencing and thus the losses can be Expected to increase. In the light of such factors, it is obvious that the Company cannot continue to operate without improvement in its financial condition. (b) Public Necessity There are several different classes of riders who use taxi service. Consideration must be given to each in establishing rates. The ouc-of-town business or tourist visitor may use taxis for basic transportation while in our City. Taxi service thus provides one of the impressions of our City for such visitors^ Service is probably more important than price to these users and an increase in price would probably have little impact on this business- There are many vocal residents who do not drive for varioLs reasons and they use taxis on a regular basis for going to work, to. the doctor, for shopping, to school and other basic needs. Many of these citizens have limited income and any in^xease in price will be detrimental to their standard of living- Based on past experience with rate increases, some of these riders will teduce their use of taxi service if a rare increase is granted and those who continue to use the service will have to make adjustments elsewhere to compensate for the additional cost. A third type of rider is the occasional local resident who finds it necessary to use a taxi only on unusual occasions. A change in fare structure will probably not have significant impact nor will it work any particular hardship on such custo- mers. +I L ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS — ,FORMAL REPORT TO CITY COUNCIL MEMBERS No. 2251_P'vc 5 aTo the Mayor and Members of the City Council flovember 2, 1973 Subject: TAXICAB RATES (c) Future Development Several events will occur in the near future that may impact the utili- zation and profitability of taxi service in Fort Worth: the opening of the new Regional Airport, the establishment of SURTRAN terminal down- town, and the operation of SURTRAN taxi service. Allof :these activi- ties are new and unknown, but it is generally agreed'they will impact the taxi business in Fort Worth. It is also generally agreed that the impact may be either good or bad, but there is no factual basis for estimating .the extent or direction of the impact. CONCLUSIONS Based on the review of the financial condition of the Company, it is the staff conclusion that some rate relief is justified. The pro-forma statement, however, shows that the requested increase would produce a rate of return that could be considered excessive. It should be noted however that the Company has sustained losses for several years and this condition cannot continue and that major changes may occur In the market because of the Regional Airport. The staff recommends that due to all of the unknowns in the external conditions regarding the effect of the airport, that an Interim rate increase be granted and that another review be made 90 days after the airport opens. At that time rates would be adjusted as appropriate- It is recommended that the interim rate be set at $. 15 for the first 1/4 mile, as requested, but that the mileage charge be maintained at $.10 per 1/5 mile, It is also recommended that the additional charge per passenger of $.25 and the $6.00 per hour waiting time be granted as requested. It is also recommended that the staff be authorized to coordinate with the Company, the Tarrant County Hotel - Motel Association, Inc , and the Chamber of Commerce to establish the appropriate service level for the downtown transportation center. It is suggested that this matter be discussed at the Council Meeting on November 5, 1973, and placed on the agenda for action on November 12, 1973. Respectfully bmitted, R. N. Line RNL:c City Manager Attachments ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS