Transportation
6:53 pm
Wed July 2, 2014

How The Taxi Industry Became Legit In Miami

Credit Patrick Farrell / Miami Herald

About 56 years ago, in a county devoid of apps, smartphones and cars with pink fluffy mustaches, there lived a taxi industry that didn't rely on Miami-Dade County regulations.

That taxi industry without regulations is long gone, but ride-sharing apps Lyft and UberX are here -- and they're trying their best to stay. The smartphone-based companies connect users with drivers, and like Miami's old taxis, they don't rely on county regulations.

The taxi industry isn't too happy about this. 

“How would you like if suddenly somebody comes into your town and says, ‘I don’t care about your regulations, I’m going to do the same job you are and I’m not paying for anything,’” Diego Feliciano, president of the South Florida Taxicab Association, said in a previous interview.

Because Lyft and UberX don't have regulations, they're breaking the current county code by operating in Miami-Dade. But their predecessors did almost the same thing.

HISTORY

The old taxi industry wasn't run by Miami-Dade County. Taxis were owned by independent companies, like Yellow Cab of Miami and University Cabs, and operated through individual city permits. The county issued much cheaper permits, but only in unincorporated areas of Miami.  

At this time, taxi drivers couldn't pick up passengers outside of their city jurisdiction -- it was illegal. 

The late Sigmund "Ziggy" Zilbur, who was known for owning many of these city and county permits, did that anyway.  "Being a good driver, I'd pick up anyone," Zilber told the Miami New Times.  

In the late 1970s, Zilber instructed his taxi drivers (if they opted for it) to illegally pick up and drop off passengers outside their designated city jurisdictions.

Jackson Rip Holmes, a property broker from Coral Gables, was a taxi driver for Zilber-owned University Cabs while this plan was being enacted.

"[The cities were] against it, but they just did it. It was a campaign of civil disobedience to bring change," says Holmes.  

Holmes also says that if Zilber's taxi drivers were caught picking up fares from outside their assigned jurisdiction, Zilber himself would pay any fines -- much the same way ride-sharing app Lyft is doing for their drivers.

MEDDLING WITH MEDALLIONS

In 1981, Miami-Dade County gained control of the taxi industry. By 1998, county code had changed to say taxi drivers required "medallions" to operate, according to the Transportation Law Journal. Owning a taxi medallion was deemed "intangible personal property" and became a property right.

The medallions don't come cheap. The average price for a taxi medallion is $340,000, the Miami Herald reports. Medallions are issued through a lottery system and are in limited supply. Right now, there are 2,121 taxicab medallions in Miami-Dade County.

Currently, 11 of the 50 largest cities in the United States use medallions to regulate taxis. Miami is one of these 11 cities.

Sam Staley is a professor at Florida State University who has studied taxi regulation for 20 years. He says the medallion system severely restricts the supply of taxicabs, even when the supply is well below what the demand is. 

"[The medallion system] makes it easier for local government to regulate the taxi industry," says Staley. "It's typically used as a way to cancel out competition. There's little evidence that these regulations benefit public welfare."

"It's sort of the same thing as owning stock," says Staley. "It's not the physical paper that's valuable, it's the legal entitlement." 

Commissioner Dennis Moss, who sat on the Board when the 1998 legislation was passed, was unavailable for comment on why the county chose to use the medallion system rather than a different kind of regulation.

The Board of County Commissioner's aviation and transportation committee has told Lyft and UberX that unless they change their business model to accommodate for the current system, they won't be allowed to operate in Miami-Dade. So far, the County has issued roughly 36 fines and have impounded seven Lyft and UberX vehicles. 

Staley says that it wouldn't make sense for Lyft and UberX to adapt the medallion model because of the innovative nature of the smartphone-based companies. If Miami-Dade County begins regulating the companies the same way they regulate taxis, it will essentially make them unprofitable.

"They're just pure competition," says Staley.

A previous version of this article quoted Jackson Rip Holmes incorrectly. Before taxis were regulated by Miami-Dade County, cities were opposed to county-wide regulation.