Lobbying tactics questioned

If Secretary of State Mike Coffman ever wants to get a cab in Denver again, he might want to be careful how he handles a new complaint received by his office.

On March 30, the watchdog group Colorado Citizens for Ethics in Government (CCEG) filed a formal complaint with the Coffman’s office alleging that Yellow Cab manipulated its drivers into breaking state lobbying regulations by offering a drop in lease rates in exchange for phone calls to state legislators. The complaint alleges that drivers were given a script to read, in which they were to ask legislators to vote against HB 1114, which would have made it easier for independent taxi companies to open up shop by lowering certification fees.

“If these allegations are true, Yellow Cab has brazenly ignored Colorado’s lobbying laws, and even worse, induced its drivers to commit criminal acts,” said CCEG director Chantell Taylor.

Brad Whittle, the president of Yellow Cab, retorted, “These claims are baseless and false, and I believe that the timing was done to change the subject and take legislator’s minds off the real issue. These guys don’t want to focus on how deregulation will damage taxi service in Denver.”

Taylor said CCEG does not take positions on legislation, and that the only reason the group filed the complaint is because of their concern for lobbying regulations.

The bill, sponsored by Rep. Jerry Frangas, D-Denver, would allow small-time cabbies to run their own businesses instead of paying high lease rates — sometimes as much as $600 a week — to one of the three companies currently operating in Denver: Freedom Cab, Metro Taxi, or Yellow Cab. The bill would lower the cost of a taxi cab certificate to a one-time $10,000 fee and an annual $5,000 fee. Currently, it costs between $100,000 and $150,000 to apply for a taxicab certificate.

Secretary of State communications director Jonathan Tee said that once Yellow Cab receives written notification of the complaint, the company will have seven to ten days to respond, at which point the case will either be heard by the Secretary or by an administrative law judge. Possible penalties for those who violate the statute include fines up to $5,000 and 12 months in jail.

Even if the allegations are true, pointed out Yellow Cab lobbyist Bill Imig, Yellow Cab itself didn’t break the law — the cabbies who made the calls did.

“I think [the complaint is] going to be dismissed, because on its face, it doesn’t have any merits. It would be a violation of law only by the driver,” Imig said.

Yellow Cab did tell its drivers to call lawmakers and express their opinion if they disagreed with the bill, Imig said, but no incentive was offered.

Lawyer John Zakhem, who represents a conglomeration of cabbies in support of the measure, said he would only support an investigation so long as it didn’t target his clients.

“I don’t want to see some guy who thought he was protecting his job be prosecuted. I think they’ve got bigger fish to fry than a couple of cabbies,” he said.

Imig also pointed out that the single piece of evidence the complaint rests on is a lone affidavit from Mengisteab Abraha Desta, who became a Yellow Cab driver in 1992. The affidavit alleges that Yellow Cab’s Director of Driver Relations, Michael Rivera, provided him with a written script he should use to call lawmakers and said that in exchange for calls he would receive a rate adjustment for “a day or two,” worth between $50 and $110. He said he saw Rivera make the same offer to “four or five other drivers.”

“With the exception of the affidavit, there’s no evidence to support [the complaint],” Imig said.

He added, “I know for a fact that Yellow Cab did not pay any driver a penny. The guy who made the allegation, I’m positive, did not receive a penny.”

The script CCEG turned over to Coffman instructs its readers to tell lawmakers HB 1114 would result in an overcrowded market, that it would result in longer waits for cab rides to and from the airport, that deregulation has failed in other cities, that shorter trips will be ignored, and that “the current system works… please don’t fix something that’s not broken.”

That, however, was exactly Zakhem’s argument to the Transportation Committee.

“We made a very good case to the legislators that the system is broken,” Zakhem said, referring to the tales of disappointed customers who waited hours for a cab to arrive. “The service of the existing companies is insufficient.”

Regardless, the main thrust of HB 1114 was removed last week in a hearing of the House Transportation and Energy Committee. The bill was amended so that it “essentially gutted” the legislation, said Zakhem. What it did do was give new oversight powers to the Public Utility Commission, ostensibly to keep taxicab lease rates in check.

Far from becoming law, however, HB 1114 is now on its way to the House Appropriations Committee for further approval before a full House vote.

The rest of the bill was essentially delayed for a year due to a disagreement within the committee on how best to proceed. A task force headed by Rep. Alice Borodkin, D-Denver, will examine different alternatives and approaches this summer and come up with a recommendation for legislation next year.

Zakhem said he is confident the panel, as well as the Transportation committee itself, will come up with a viable solution that will pass in next year’s session.

“The committee members, from my read, are interested in tackling and improving the cab system,” Zakhem said.

He said he also believes the empowerment of the PUC will lead to reduced lease rates for cabbies.

“The lease rates that are being charged by these companies are outrageous,” Zakhem said. “Now [the PUC] can come in and say they can investigate the rates and say, that’s not a reasonable rate.”

Imig said the oversight won’t necessarily have an effect, though, because cabbies “already know what the lease rates are.”

“There’s a different price range in [the three companies]. If you want to pay the least amount of money, you go to Freedom. The problem is you don’t get as much in the way of services. Yellow has much more in the way of maintenance, phone call distributions, so a lot of drivers choose to drive for Yellow or Metro because they get a lot more calls,” Imig explained.

Imig also said that in numerous other cities that have tried deregulation, the policy has failed miserably.

“This has been tried in a number of other cities, over 20, and it’s never worked anyplace. In the taxi business, competition doesn’t work the way it works in a lot of other businesses,” Imig said.

What happens, he argued, is that without a good central dispatch system, there’s no method for organizing who takes care of which market, and so many drivers wind up unavailable for shorter rides (for example, seniors who want to go to the supermarket), opting instead to wait at the airport or pricy hotels for more profitable fares.

“It was kind of anarchy at the hotels and the airports,” Imig said of the cities that tried deregulation.

Zakhem again disagreed. He argued that a little healthy competition never hurt anyone, and that the taxi companies were simply trying to protect their monopoly.

“I have faith that free markets work, as do most of our citizens and most of our legislators,” Zakhem said. “There’s no reason why we have government mandating a monopoly.”