Memorandum
City of Lawrence
City Manager’s Office
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TO: |
David Corliss, City Manager |
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FROM: |
Brandon McGuire, Assistant to the City Manager |
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DATE: |
March 2, 2015 |
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RE: |
Taxicab licensing fee change justification |
Taxi Permit Fee Overview
The City Clerk’s Office administers the City’s taxicab business licensing function. The following taxi permit fee justification is based on the permitting procedures of the City Clerk’s Office and the recommended changes to the Taxi Code, Chapter 6, Article 6 of the City Code.
Cost of Service
Approximately 40 percent of the City Clerk’s Office resources are dedicated to licensing and permitting services. That results in a direct cost to the City Clerk’s Office budget of $111,637 per year. Spread over the number of licenses and permits administered by the Clerk’s Office (681 in 2014), the Office incurs approximately $164 per license/permit. The cost estimate is conservative as the costs for general overhead and interdepartmental support is not factored into the City Clerk’s Office budget. Direct and ancillary cost drivers are detailed in the following section.
Service, Purpose and Users
Direct Services: The permitting service includes the following administrative and regulatory services which result in direct costs to the City Clerk’s Office general fund budget.
· Customer service: Advising applicants in person, over the phone and through email regarding the City Code and the permit approval and appeals processes; examining applications for completeness and compliance with the City Code, and following up with applicants as needed.
· Administration: Tracking the permit application and coordinating the review and approval process, which includes: coordinating background checks; coordinating interdepartmental reviews as needed (e.g. Legal, Planning, Police); creating, printing and providing the physical permit documentation; servicing changes to the permit throughout the year (e.g. insurance changes); maintaining a registry of current permits and notifying permit holders in advance of expiration dates; and, coordinating the permit renewal process.
· Compliance: Ensuring applicants comply with the City Code and maintaining a record of insurance certificates.
· Financial administration: Receiving, recording, and refunding application fees.
Ancillary Services: Although not exhaustive, the following list details cost drivers from general overhead and ancillary support functions. These costs are not captured in the City Clerk’s Office budget and are not included in the $164 cost per permit that is calculated in the previous section.
· Information Technology (IT) Department support: enterprise resource planning system’s financial and community development modules; phone system; Microsoft Office Suite and supporting servers; and internet service.
· Finance Department support: cash management, accounts receivable services, and accounting services.
· Additional support: includes facilities, utilities, personnel administration, benefits administration, and risk management.
Purpose: The City regulates taxi operators in order to provide for consumer confidence and public safety. The permitting process ensures that each taxi vehicle is appropriately insured to protect against damages to property and people in the event of an accident. Background checks are performed on applicants for taxi operator permits to ensure the applicant does not have an outstanding warrant and has not been convicted of a felony, DUI, crime of dishonesty or driving with a suspended license. The taxi permitting function enables the City to objectively and fairly enforce the taxi regulations established by the City Code which creates a level playing field for all participants in the local taxi market.
Users: The taxi licensing service primarily benefits local taxi operators because it objectively ensures that all taxi operators compete under the same regulatory conditions. Permit holders also benefit from the consumer confidence that results from the City’s regulatory role. As a benefit to taxi customers, the City evaluates license applicants based on the requirements of the Taxi Code, including conducting a criminal background check and certifying that taxi vehicles are appropriately insured.
Cost Recovery
Cost recovery goal: The Clerk’s Office goal is to recover 100 percent of the cost to provide permitting/licensing services.
Customer demand and utilization: in 2014, the Clerk’s Office maintained 681 licenses/permits. As of the date of this memo, the Office maintains 32 taxicab vehicle permits issued to eight taxi cab company operators.
Current cost recovery ratio: Approximately 40 percent of the City Clerk’s Office general fund budget is dedicated to the provision of licensing and permitting services. This results in a direct cost of approximately $165 per license/permit to the Clerk’s Office general fund budget. The direct cost to the Clerk’s Office general fund budget for administering all taxi licenses is $5,280. These are costs are for personnel, contractual services (e.g. printing) and commodities (e.g. paper).
The proposed changes to the taxi code will increase the cost to permit taxi cabs due mainly to the additional resources required to conduct background checks and to create, print and provide permit cards. Additional one-time startup costs will result from implementing the new requirements and bringing current permit holders into compliance.
The current taxi permit fee schedule is $100 for the first vehicle, $50 for the second and third vehicles and $25 for each additional vehicle after the third. The Clerk’s Office recorded $1,650 in fee revenue from the 32 taxi cab permits in 2015. The difference between the cost and fee revenue is $3,630. The licensing/permitting function as a whole is fully cost recovering when considering only the direct costs to the Clerk’s Office budget. This means that $3,630 of the cost to administer taxi licensing is subsidized by fees paid for other permits.
The proposed changes to the taxi code include a change in the fee schedule. The proposed code would change the taxi vehicle permit fee to a flat fee of $50 and it would establish a $100 annual taxi business operator fee. The change would result in additional fee revenue of $750. The impact on existing permit holders is detailed in the tables below.
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Current Taxi Permit Fee Schedule |
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Permits |
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Business |
Total Permits Issued |
First ($100) |
Second & Third ($50) |
Fourth & additional ($25) |
Fee Total |
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Ground Transportation Services LLC |
12 |
1 |
2 |
9 |
$425 |
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Freestate Transportation |
4 |
1 |
2 |
1 |
225 |
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Lawrence First Class Transportation |
6 |
1 |
2 |
3 |
275 |
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Redy2Party LLC |
3 |
1 |
2 |
0 |
200 |
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Turner, Christopher E |
1 |
1 |
0 |
0 |
100 |
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Yo Taxi LLC |
1 |
1 |
0 |
0 |
100 |
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Affordable Limousine Services Inc |
4 |
1 |
2 |
1 |
225 |
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Sehon, Ben J |
1 |
1 |
0 |
0 |
100 |
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Total |
32 |
8 |
10 |
14 |
$1,650.00 |
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Proposed Taxi Permit Fee Schedule |
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Permits |
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Business |
Total Permits Issued |
Business Operator ($100) |
Taxi Vehicle ($50) |
Proposed Fee Total |
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Ground Transportation Services LLC |
13 |
1 |
12 |
$700 |
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Freestate Transportation |
5 |
1 |
4 |
300 |
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Lawrence First Class Transportation |
7 |
1 |
6 |
400 |
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Redy2Party LLC |
4 |
1 |
3 |
250 |
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Turner, Christopher E |
2 |
1 |
1 |
150 |
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Yo Taxi LLC |
2 |
1 |
1 |
150 |
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Affordable Limousine Services Inc |
5 |
1 |
4 |
300 |
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Sehon, Ben J |
2 |
1 |
1 |
150 |
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Total |
40 |
8 |
32 |
$2,400 |
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Comparisons
A review of the taxi permit types and associated fees imposed by other cities in Kansas is provided in the following table. The proposed fees would generally align with the rates imposed by the cities in the Kansas City metropolitan area but would be greater than the fees imposed by Topeka and Emporia.
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Comparison of Other Cities’ Taxi Permits and Fee Schedules |
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City |
Permit Type |
Permit Fees |
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Lawrence (current) |
Taxi vehicle |
100 for the 1st cab, $50 for the 2nd and 3rd cabs, and $25 for each additional cab |
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Lawrence (proposed) |
Taxi company |
$50 per cab |
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Taxi vehicle |
$50 per cab |
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Shawnee |
Taxi company |
$100 per cab |
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Lenexa |
Taxi company |
115 per company |
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Overland Park |
Taxi vehicle |
$25 per cab |
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Olathe |
Taxi company |
$100 for 1st cab, $50 for 2nd cab, and $25 for each additional |
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Taxi driver |
$5 per driver |
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Topeka |
Taxi company |
$20 per cab |
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Taxi driver |
$10 |
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Emporia |
Taxi station (dispatch facility) |
$10 |
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Taxi vehicle |
$10 per vehicle |
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Taxi driver |
$5 |
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Stakeholder input
A stakeholder meeting was held on February 24, 2015. In attendance were representatives from Jayhawk Taxi, Ground Transportation Services, First Class Transportation, Lawrence Go Green Taxi, and OraWynema Enterprises. Stakeholders were presented with the recommended changes in advance of the meeting, the changes were explained at the meeting, and the stakeholders provided supportive feedback. The proposed fee changes did not appear to be problematic for the stakeholders.
Other fee reviews
Current Fee: The taxi permit fee is authorized by City Code 6-108.17. The date of adoption of the current fee schedule and the last date the fee schedule was reviewed are not known. The next fee review will occur five years from the date of approval of the proposed fee change.
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Other fee reviews |
When did the City set the current rate? |
Unknown |
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When did the City last review the fee? |
Unknown |
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When does the City plan to review the fee next? |
Pursuant to the City’s User Fee Policy, the fee will be reviewed five years after approval of the proposed fee change (approximately March 2020) |
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Authority |
What part of the City Code or other legal authority guides the fee? |
City Code sections 6-108.17, 6-608 |
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Fee Collection Method |
How will the City collect the fee. |
The City Clerk’s Office accepts cash, check, or credit card payment at the time of license application. |