Lawmakers weigh limits on limousine numbers

Richard N. Velotta and Cy Ryan

Tuesday, April 6, 2004 | 10:48 a.m.

Limousine industry leaders and regulators say they expect legislation will be introduced at next year's legislative session to limit the number of limos that would be allowed to operate in Clark County.

A proposal to cap the number of limousines that can operate through an allocation system is expected to be hammered out by state lawmakers following a legislative subcommittee meeting in Las Vegas Monday at which a report by a University of Nevada, Las Vegas, business professor was presented.

The report by Keith Schwer, director of the Center for Business and Economic Research at UNLV, said that while there would be flaws in an allocation system, having one would be preferable to the existing situation.

Currently, Clark County's taxi industry is overseen by the Nevada Taxicab Authority, which has an allocation system in place for its cabs, while the Transportation Services Authority (TSA) regulates limousines and buses statewide and taxis that operate outside of Clark County.

The $20,000 study was commissioned by the 2003 Legislature, which had heard complaints that limousine drivers paid kickbacks to doormen at hotels to get fares and were guilty of other unscrupulous practices such as overcharging consumers.

In his report, Schwer said the limousine industry expanded by 9.1 percent since 2000 at a time when tourism was in decline, intensifying competition.

But at the same time, the taxicab industry showed a modest decline in passengers, but an increase in revenue. The difference, regulators said, is that the Taxicab Authority kept the right balance of cabs on the road and an adequate rate structure in place to keep all companies in operation during hard times.

The subcommittee, which is being led by Assemblywoman Vonne Chowning, D-North Las Vegas, must by its April 15 meeting make a recommendation to the Legislative Commission whether there should be an allocation system. The Legislative Commission by May 28 must make its recommendation to the TSA, which is required to announce by June 15 whether it will start drafting regulations for an allocation system.

If an allocation system is put in place, the Legislature would have to approve it and it could take effect sometime in 2005.

Brent Bell, president of Whittlesea Bell Transportation Co., the parent company of Bell Trans, a limousine operator, and two taxi companies operating in Clark County, said he would support an allocation system for limos.

"There were too many cars (limousines) on the road and it isn't conducive to a good operation," Bell said.

When companies began to struggle, some began to cut corners by overlooking maintenance needs and allowing insurance policies to lapse, Bell said.

Compounding the problem was the arrival of more competition in the form of unlicensed limousine operators who showed up in Las Vegas on busy weekends and cherry-picked fares while enforcement officers tried to catch them.

Taxicab Authority administrator Yvette Moore said limo drivers became more aggressive in their attempts to compete with taxi drivers. She said the proliferation of limousines in the county affected taxi drivers, who make their living based on a percentage of the fares they book and tips, while limo drivers are paid by the hour.

TSA Chairwoman Sandra Avants, who also knows the cab industry since she was the Taxicab Authority administrator for eight years, concurred that the limo industry in Clark County is "in distress because the market has reached saturation."

But not everyone is in favor of further regulation of the limousine industry.

The Washington, D.C-based Institute for Justice has taken up the cause of independent limousine drivers seeking to be licensed to operate in Nevada. The institute has challenged the TSA's limousine certification process in court and has defended independent drivers who were denied licenses to operate in the state.

Clark Neily, senior attorney for the Institute for Justice, which takes on free-market enterprise cases nationwide, said today it is too early to tell whether his organization would involve itself in the latest proposals.

"The limousine industry is no different than any other," Neily said. "It makes no more sense to freeze the number of limousines in operation than it does to freeze the number of coffee shops, doughnut shops or casinos."

The institute contends that the type of regulation practiced by the TSA puts a monopolistic lock on the market for existing companies and that allowing competitors to intervene in the certification process permits them to prevent competition from entering the market.

Also, in November, when lawmakers approved the allocation to pay for the UNLV study, Assemblyman Harry Mortenson, D-Las Vegas, was critical of regulation.

"I'm at a loss to understand why we regulate limousines or taxis," he said. "We don't make an argument there are too many restaurants and that results in tainted food."

Avants said that while most industry leaders agree that an allocation system is necessary, there is less consensus on paying for the administration of such a system.

The TSA estimated a cost of $584,979 to hire an additional six people for the allocation and oversight of the industry.

To get the money, $600 per vehicle would be added to the $100 now being charged. The authority said that would be a "bare bones regulation." There was a suggestion that there might be a "trip charge" imposed on passengers, much like is levying on those who ride in taxicabs to help support the Taxicab Authority.

"Our company is willing to pay for good regulation and that means good allocations," Bell said. "I don't think $700 is unreasonable. It would pay for itself."

But David Hartson, representing Ambassador Limousines, said "Additional fees may not be the right thing for the industry at this time." He said it "takes a lot of money" to keep the limousines operating and "the margin is quite small."

Hartson said insurance, workers' compensation and gasoline prices are all rising.