Taxi industry pours thousands into Austin council races

By • on June 15, 2011

Rush of donations comes amid dispute between drivers and city’s cab franchise owners.

By Ben Wear
AMERICAN-STATESMAN STAFF

Monday, June 13, 2011

With City of Austin taxi policies in flux, and a potential new taxi competitor awaiting city approval, the owners and top executives of cab companies with Austin franchise agreements have been generous this spring with donations to three council incumbents. Tensions between management and labor in the Austin taxi scene have sparked an official ethics complaint regarding the donations and unofficial charges of impropriety.

The taxi industry has plowed almost $30,000 into the campaign coffers of three City Council members and challenger Kathie Tovo, who has received all of her donations from drivers, not executives. Council Members Chris Riley and Laura Morrison won in the May 14 general election, and Council Member Randi Shade faces Tovo in a June 18 runoff.

The largest share of the cab industry donations — $17,500 , given to Shade, Riley and Morrison — came from nine owners and top executives with Yellow Cab and their spouses, most of whom live in Houston.

That includes $4,550 given to Shade during the runoff campaign and reported Friday.

Overall, Shade this year has received at least $10,350 from taxi interests, more than any other candidate.

Tovo’s $6,300 in taxi donations, including $4,500 for the runoff, has come mostly from Lone Star Cab drivers.

Some cab drivers want the council to issue permits directly to drivers with at least five years of experience — what the drivers call "legacy permits" — bypassing Austin’s three taxi franchise holders: Yellow Cab, Austin Cab and Lone Star. The change could cost cab companies control of the market — and the thousands of dollars they collect annually from each cabbie after paying the city just $400 for each permit.

So far, the council has declined to issue such permits. Tovo says she supports issuing legacy permits; Shade has said she does not.

Yellow Cab, said Ann Darbonne , president of the local cab drivers’ trade group, "has spent thousands of dollars in the last two years fighting us. Because it’s going to cost them a lot of money."

Separately, the council this spring delayed a vote on new rules to allow an electric cab company that would compete with conventional cabs .

Donation distribution

Donations to Shade, Riley and Morrison were "bundled" by Austin Yellow Cab General Manager Edward Kargbo and Yellow Cab lobbyist Joe Garcia .

Bundling involves an individual gathering donations from other people and forwarding them to a campaign.

The bundler, limited in the case of Austin to a maximum individual donation of $350, in effect gets fundraising credit with the campaigns for the larger, aggregate bundle. City code requires that campaigns list any outside parties that solicit donations on the candidate’s behalf and then designate which individual contributors were involved in each bundle.

Greater Austin Transportation Co. , the Yellow Cab franchise in Austin, is a subsidiary of Texas Taxi Inc. , which also owns the Houston and San Antonio Yellow Cab companies.

Kargbo, who, along with Texas Taxi chairman Steve Harter and some other donors, owns a stake in the parent company, said Yellow Cab executives gave money to "council members we have found to be open to sitting down and hearing both sides, hearing what the history of the industry is."

Kargbo, asked if his company was against the city issuing permits directly to cabbies, said he would need to know the details of any proposal.

"It’s just an idea that has been bandied about," he said.

Shade said the donations have nothing to do with any specific policy questions.

"I think what they want to have is council members who understand their business and understand how the taxicab business works in the larger context of transportation," she said.

Another $2,950 was bundled and given to Morrison’s campaign by Lone Star Cab owner Solomon Kassa . The dozen or so people in Kassa’s bundle of donors included at least seven cabbies, some of them identified as Lone Star drivers in Morrison’s May 6 campaign finance report.

Fourteen taxi drivers, including some of the same individuals in Morrison’s bundle, gave donations to Tovo before and after the general election.

Tovo and the other candidates were asked at an Austin Interfaith forum in April whether they supported legacy permits. Tovo and Morrison said yes, while Shade and Riley said no.

"That was an important thing because the cost the drivers pay to the companies make it hard for them to earn a living wage," Tovo said. "And Randi Shade did not make that commitment."

Kassa said he did not ask drivers to contribute money and was not aware that he was listed as a campaign bundler by Morrison.

"It has nothing to do with Lone Star," said Kassa, whose company, with about 50 taxi permits, is dwarfed by the more than 450 held by Yellow Cab and Austin Cab’s 160 or so. Asked about the rash of contributions, Kassa called it a coincidence.

Austin Cab, the third franchise company in Austin, was not an active player in the election. Reports show that owner Bertha Means gave $100 to Morrison in late March and Shade in mid-April, then another $100 to Shade for the runoff. It was unclear if other Austin Cab officials or drivers made contributions to council candidates this spring.

Ethics complaint

The giving by Yellow Cab this year, along with company donations to Mayor Lee Leffingwell and other council members in past council campaigns, sparked an ethics complaint on March 7 from Darbonne, a Lone Star cabbie.

In her complaint, Darbonne cited a provision of the Austin City Charter, in effect the city’s constitution, that says in part that the mayor and council members shall not "receive directly or indirectly any wage, commission, fee, gift, favor or payment" from a franchise holder.

Running afoul of this ban, the charter goes on to say, "shall ipso facto render vacant the office held by the person so violating it."

City auditor Kenneth Mory , whose Integrity Unit received the complaint, ran it by the Austin city attorney’s office. On March 10 , three days after receiving the complaint, Mory wrote Darbonne, concluding that "the contributions in question do not violate this section of the Charter."

The city charter, he wrote, prohibits a "franchise holder" from donating to a candidate.

"However, it does not prevent an individual who owns or is employed by a taxi franchise from contributing in their personal capacity," Mory said. The association has not pursued its case through the court system.

Buck Wood , formerly the Texas director of elections and an election law expert, noted that the charter provision says that a candidate may not receive the money "indirectly" from a franchise holder.

"It sounds like it was organized (by Yellow Cab), and I think you get over that first hump of whether the franchisee is actually causing the donation to occur," Wood said. He said the more interesting and perhaps unsettled legal question, in this case, is whether a campaign donation meets the definition of a gift or payment.

"That question has probably not been answered" by a court, Wood said. "I would be very jumpy about it if I were a candidate, knowing about that section."

Ongoing considerations

Yellow Cab and Austin Cab were granted five-year franchises in May 2010 by the council. Both votes were unanimous, although Morrison and Riley were not present when the Austin Cab vote occurred. The taxi drivers association at the time argued that given its concerns over the taxi fees and other issues, the term of the franchises should have been much shorter than five years.

The council’s response to the drivers’ concerns was to pass a resolution ordering the city’s staff to develop recommendations on a variety of issues involving taxis. In September, city staffers gave the council a briefing that included some immediate recommendations and items for further study.

Those recommendations included putting into the city code regulations for "low-speed electric vehicles," a suggestion that has complicated the taxi dynamic this election season.

That proposed ordinance, which was to come before the council on April 21 , would allow the sole Austin company running those golf cart-like vehicles to potentially compete directly with taxis for short trips downtown. The company, Electric Cab of Austin, currently operates only as a shuttle contractor for hotels, rather than as a taxi service.

Two days before it was to come up, however, Shade raised concerns at a council work session about authorizing a new business while study of the overall taxi industry was ongoing. The council decided to table that matter for three to six months.

Electric Cab owner Chris Nielsen , who had flirted earlier in the year with running against Shade, claimed that she and other council members were influenced by the donations they had received from the cab executives. No, Shade said.

"It’s not the city’s job to create a special niche for one guy’s business," she said.

Nielsen, still angry about the delay, said last week that on the May 14 election day he talked to Yellow Cab employees passing out Shade campaign fliers near the O. Henry Middle School polling place.

He said they told him they were from Houston and were paid by their company to travel to Austin and do the electioneering.

Not so, Shade said, after checking with Kargbo with Yellow Cab. Kargbo said that the Yellow Cab contingent did include employees from Houston, none of them drivers, and some nonemployees.

They were campaigning exclusively for Shade, he said.

Regarding Nielsen’s claim about the workers being on the Yellow Cab payroll during their Austin stay, Kargbo said: "That is 100 percent inaccurate. No one was paid to come up and do anything for Shade."

bwear@statesman.com; 445-3698

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