The proposal, if passed, would allow for cab drivers to buy a permit, and operate the cab as a small business.
The permits, administered for the city by the Metropolitan Transit System and issued for a $3,000 fee, are being resold at higher prices in “an underground market in taxi permits,'' Emerald said.
“Because it's a limited supply, there's been this market of trading under the table, and the prices of permits have gone up in excess of more than $100,000,'' Emerald said, backed by a group of drivers. “And then these permit-holders pass on the costs to who? Their leased drivers.''
The number of permits issued in San Diego, currently 993, is derived through a formula based on the number of vehicle trips it would take to meet demand.
A study by San Diego State University and the Center on Policy Initiatives found that 90 percent of the taxi drivers lease their cabs from permit-holders, and have to work 70 hours a week to earn what a minimum wage worker makes in 40 hours.
They said drivers currently lease a permit and car from a cab company for an average $400 a week. After paying for leasing costs and gas, many drivers work 12-hour shifts, 6-7 days a week to turn a profit.
The study also determined that the system encourages drivers to work when tired or sick, creating a public safety hazard.
Sisay Bonsa, part of a group of permit-holders who oppose Emerald's plans, said there will be more taxis on the streets, meaning less income for taxi companies already buffeted by competition from unregulated social media- based companies like Lyft and Uber.
“It will hurt the business more than it will help the business,'' Bonsa said.
City Attorney Jan Goldsmith said lifting the cap was the best option from a legal standpoint. San Francisco tried to prohibit the trading of permits, but was subsequently sued, he said.
“The city has the legal ability to place a cap, and the city has the legal ability to remove a cap,'' Goldsmith said.
He said the permits mean that city standards for operating a taxi cab have been met, such as a driver who has been screened and a vehicle that has passed inspection.
“It's not a stock or bond to be invested in, but because of the cap placed by the city of San Diego since the 1980s, it has become a street value for in excess of what the true cost of a (permit) is,'' Goldsmith said.
According to Emerald, the proposal will come before the City Council's Public Safety and Livable Neighborhoods Committee, which she chairs on September 18. From there, it would need to be approved by the full City Council and ratified by the MTS board, she said.
Cab permit owners argue that eliminating the cap would create two big problems; dilute the system and make the cab industry more like Uber and Lyft, which are unregulated.
Ridesharing companies have made the marketplace for taxis more competitive in recent years by undercutting the rates of taxis.
“Everybody is going to be sitting around with a cab getting 2-3 fares a day. You have to be true to the market. There is a formula that MTS has and that formula today says we have 200 cars over the limit,” said the owner of a San Diego cab company.
People on both sides of the spectrum said they agreed that changes are needed for the taxicab industry in regards to leasing costs and meter rates.
“I don’t want to see anybody get hurt, the city should take the responsibility – they allowed this monopoly,” said taxicab driver Tarek Afifi.