City's Favored Taxi Co. Allowed to Sell Its Franchise

Ranked first among five companies selected about a year ago by the City Council to operate exclusively in Santa Monica, Metro Cab Co., LLC is now in debt with plans to sell its assets for $2.8 million, city officials say.

Moving the sale forward, the City Council on Tuesday night approved the transfer of all Metro's franchise rights—for a total of 66 cabs—to All Yellow Taxi, a company that currently holds franchises in several South Bay cities but that, until Tuesday night, was not allowed to operate in Santa Monica.

"It's kind of surprising one year later that we would lose one," councilman Robert Holbrook said of Santa Monica's new franchisees.

Metro Cab's fallout raised questions about the city's bidding process for taxi franchises. Strong business plans and financial viability were among the criteria city staffers looked at in evaluating companies for the new system it launched in March of 2011.

Companies that submitted bids were required to show paperwork on equity funding, debt funding, balance sheets, cash flow statements, income statements and the like.

Metro Cab "was a No. 1 scoring proposal," said Michael Kalin, general manager of Bell Cab Co., one of the five franchisees. "Maybe someone should look into how scoring was done."

Sal Valles oversees the taxi franchises for the city of Santa Monica and said on its face, Metro's business plan was sound and the company provided financial statements that showed it boasted a healthy track record.

But, it "did not adhere to its business plan," Valles said. "The company was probably in over its head a little."

Additionally, Metro Cab was more competitive in the bidding process because its office is located in Santa Monica on Pico Boulevard. With the exception of its dispatching operations, that office will now be home to All Yellow Taxi.

All Yellow will also maintain the current Metro Cab color scheme and retain Metro's phone numbers. No employees are expected to be laid off under the sale.

On Tuesday, other companies asked the City Council to reopen the bidding process for Metro's franchise, but allowing the transfer to All Yellow was a "seamless way to move forward," councilman Terry O'Day said.

The vote to approve the transfer was 5-1, with Bobby Shriver dissenting.

"I don’t feel we’ve adequately explored what else we could have done, and I hope we can explore them in the future," he said.