San Fernando Valley taxi passengers, meet San Gabriel. San Gabriel Transit Co., that is, because as of Jan. 1 that is the company that will be one of two primary providers of taxicabs to the San Fernando Valley. And the odd man out is Valley Cab Co., which late last month officially lost its franchise to offer cab service to the Valley. In fact, out of nine Los Angeles taxicab companies up for the renewal of licenses for the first time in a quarter-century, Valley Cab was the only one to lose its franchise. The reason? Valley Cab officials would not return repeated calls from the Business Journal. They may be reluctant to talk about what happened Nov. 28 when the Los Angeles City Council passed out new franchises throughout the city, but others in the industry say the company’s demise is the end of an era and an end to a way of doing business. City taxicab administrator Thomas Drischler would only say, “Valley Cab was not as complete as the other companies in its proposal.” But Scott Schaffer, senior vice president of San Gabriel Transit (which will take over the taxicab authorization that Valley Cab once had), was not so reticent. “As peers, we know which operators take a minimalist approach” when it comes to service, Shaffer said. Howard Sunkin of Cerrell Associates, a lobbyist for L.A. taxicab franchise holders for the last 14 years, called Valley Cab a “throwback to the old days” and said the answer to its demise is very simple: “Service, service, service.” “They were licensed for 96 cabs,” Sunkin said, “but they never had more than 55 on the street. How do you serve 1.6 million people with 55 cabs?” San Gabriel Transit already operates 400 cabs in 50 cities in Los Angeles, Riverside and San Bernardino counties. It also supplies a number of “paratransit” services (like Dial-a-Ride) in those communities. Schaffer said he expects to add about 60 additional cabs and 100 drivers to San Gabriel Transit’s existing fleet to accommodate the move into the Valley. He expects about $3 million in additional annual revenue as a result, added to the $18 million to $20 million that San Gabriel Transit already brings in each year. Service isn’t everything Service complaints, however, may not have been the only thing Valley Cab had going against it. According to an L.A. Ethics Commission report released last week, almost $100,000 was spent on lobbying activities involving the taxicab franchise issue in the third quarter of the year. Earlier this year, operators spent about $180,000 on lobbying. United Taxi spent more than $31,000. What’s more, in 1999 United contributed $8,750 to the political campaigns of city council members, including an unsuccessful State Assembly campaign for Councilman Rudy Svorinich. San Gabriel Transit spent $1,500. Valley Cab, on the other hand, spent nothing on either lobbying or campaign contributions, according to the Ethics Commission. Lobbyist Sunkin said, “I was stunned that they didn’t stage a campaign. Instead, they hired a former district attorney to sue the city.” Former District Attorney Ira Reiner has filed a lawsuit on its behalf. Valley Cab had shared the franchise to the Valley with United Taxi of San Fernando Valley for more than two decades. United Taxi’s franchise was reinstated by the city council, with the proviso that it would make the same improvements to service that a new Los Angeles Taxicab Commission has demanded of operators all over the city: computerized dispatching and service monitoring, allowing passengers to pay with credit cards, and a gradual move toward vehicles that use cleaner fuels and offer wheelchair access. The computerized dispatching system costs about $2,000 per cab but the system, and most of the other improvements requested by the city, have been in place for some time at most cab companies. “Almost every firm was doing it before,” Schaffer said, “except for Valley Cab.” While Valley Cab never publicly refused to make those changes, its application for renewal of its franchise was so incomplete, there was never clear evidence it had a plan to do anything differently than it does now. According to both Sunkin and Schaffer, Valley Cab had far fewer cabs available for service (45 to 55) than it was authorized to have (96). In fact, Sunkin said, “Their response time was horrible because they only had 55 cabs.” “My client, L.A. Taxi (Cooperative Inc.), gets hundreds and hundreds of calls every day from the San Fernando Valley,” he said. However, according to current regulations, L.A. Taxi would then have to dispatch a cab “from the other side of the hill” rather than allow them to wait for calls in the Valley. Cash-free economy Valley Cab also did not offer customers the opportunity to use credit cards in an age when many consumers are well on their way to a cash-free economy. “How could you have the exclusive franchise to Universal Studios and CityWalk and not take credit cards?” Schaffer asked. While Valley Cab may have an old-fashioned way of doing business, it also apparently has a tried-and-true way of fighting back: taking the city to court. Reiner says city ordinances require a Public Convenience and Necessity study (PC & N;) before it can create a new franchise, something the city neglected to do this time. “The city attorney said you can discern a PC & N; and ultimately they’re going to argue they don’t need it,” Reiner said. “That’s what you say when you didn’t do it.” Schaffer, who said he has used Reiner himself when he needed legal help on taxicab issues, claims that this time the lawyer is fighting a losing battle based on technicalities. “He’s arguing semicolons at this point,” Schaffer said. “It’s analogous to what’s going on in Florida right now (referring to legal jockeying over the presidential election).” The new regime for Valley taxicab passengers is due to go into effect in early January. Reiner hopes to dash those hopes. He, however, confesses that he is not arguing the validity of the council’s decision, but the process by which it was made. Schaffer, noting that Reiner’s legal fees are likely to be higher than those of most attorneys, said, “If they’d ever spent $100,000 on their business, they wouldn’t have this problem.” The council decision last month is the end of a process that began two years ago when city officials decided reforms were required in the taxicab industry. Besides the first review of franchises since 1975, that process has meant an increase of 120 taxicabs on L.A. streets (to a maximum of 2,303), a 12-percent fare hike last May (the first since 1986) and the mandated upgrades in service. New regulations also allow taxi operators to accept passengers when flagged down on the street outside of their franchise area, assuming they are maintaining certain levels of service. Sunkin said that enhanced competition could mean better service for Valley residents. In the city process, potential franchise holders were evaluated in five categories. Of the three operators vying for the Valley franchise, Valley Cab scored poorest in four of the five categories, including the one that carried the most weight: Feasibility of Management Business Plan. “Some of their responses were not as complete as the others,” Drischler said.