Adugna Denbel came to America “expecting a better opportunity.”
After fleeing his native Ethiopia for Kenya to escape ethnic tensions that made him feel like “a second citizen,” Denbel decided to move to Nashville in 2004 to reunite with his stepdaughter. He quickly found a place in an industry he knew well from Africa: driving people around.
“Wherever I go, I am always hunting for my own business,” Denbel said while waiting in his taxi to pick up a fare outside the Renaissance Nashville Hotel on Wednesday.
Seven years after arriving here, Denbel, 61, is still seeking a better opportunity — and a better business model. He’s leading a group of 61 cab drivers from Ethiopia — each of them a U.S. citizen or in the process of becoming one — who have applied to Metro government for the chance to form Volunteer Taxi, which would be Nashville’s first driver-owned cab company.
The drivers, who own their cabs and pay to fuel, maintain and insure them, say they know the city and what customers want. They argue that they can create a better economic arrangement for themselves through a cooperative, not-for-profit company that would keep their costs down.
Like generations of immigrants before them, the drivers see America as a land of tremendous possibilities. But what they’ve encountered in their efforts to gain a foothold in Nashville leaves them wondering whether newcomers in pursuit of more comfortable lives for themselves and their families are given the encouragement — and, more important, access to markets — they need to make a go of it.
The Ethiopian drivers ran into resistance this month from owners and drivers with the city’s five existing taxi companies and from the understaffed Metro Transportation Licensing Commission, the industry’s regulatory agency, which deferred a vote until Dec. 20.
Robbie Mann, who works for United Cab, which his father owns, said the Volunteer Taxi group hasn’t been able to justify entering the market with 81 new taxi permits. He said the demand for that much business simply isn’t there yet.
“Why flood a market that’s already not sustaining what’s there?” Mann said in an interview, echoing what a number of other industry players said at the licensing commission’s public hearing on Nov. 15.
Not so fast, said Chris Wage, director of operations for Centresource, a Web design and development company. Wage said it’s often difficult to get a cab, even in Germantown, his neighborhood just north of downtown.
“If you live in an area that’s not regularly patrolled by cabs, it’s easily 30 minutes — if they show up at all,” he said.
Other people in the industry don’t necessarily agree that the market is saturated, either. But they say Volunteer Taxi and the other groups trying to break in — Green Cab and Green Light — aren’t the best solutions.
“We agree that there ought to be more cabs available to the public, and we’re in the best position to provide them,” said Gif Thornton, a lawyer representing Taxi USA of Tennessee, which owns Nashville Cab, Allied Cab and 1-800Taxicab and is seeking 40 new taxi permits. “We’ve demonstrated the ability to meet the need.”
Expenses are high
Taxi drivers not only own, refuel, maintain and insure their vehicles — which tend to be vans rather than sedans these days — but also pay a weekly “lick” to their companies, no matter how much money they’re making from fares.
Denbel said the lick at Music City Cab, for which he drives the No. 72 cab, is $150 a week. Mann said the payment is the same at United Cab. Taxi USA’s lick is $205 per week, executive Jim Church said.
Drivers say all those costs make it difficult to do much more than pay the bills. Del Ambaw, another Volunteer Taxi organizer, said he made $600 in a good week and $200 to $300 in a bad one before he was dismissed by his company, which had discovered his involvement in the new organization.
Denbel, who said he spends $30 to $40 a day on gas and often works from 4:30 a.m. until 10 p.m. or later while shuttling between hotels, the airport and other spots, said it’s impossible to put any money toward savings or retirement. He and his wife, who works for The Picnic Cafe, live in South Nashville.
“There is no savings,” he said. “Just existence.”
With no profit motive, Volunteer Taxi would be able to keep the weekly payment relatively low and reduce it whenever possible, Denbel said. The driver-owned company, whose 61 founding members have pulled together $542,000 of their own money, also would try to find an affordable group health insurance policy and start a garage for repairs and a wrecker service.
But existing taxi company owners say the lick doesn’t just go in their pockets. Michael Solomon, another executive with Taxi USA of Tennessee, said the company puts much of it toward marketing, which generates business for the drivers. Mann said United Cab uses some of the money to pay taxes.
“Everything they pay us isn’t a profit,” he said.
Market isn’t free
At the public hearing, Metro Councilwoman Karen Johnson said Volunteer Taxi should be allowed into the taxi industry because free enterprise is the American way.
“The more, the better,” she said.
But Nashville’s industry isn’t really set up as a true free market, said Thornton, the Taxi USA attorney. The Transportation Licensing Commission decides who can start a new company and how many cab permits each company gets.
“Anybody who wants to enter has to go through the regulator,” Thornton said.
Volunteer Taxi’s attorney, Paul Soper, said Metro’s system is antiquated, putting Nashville behind other big cities. The licensing commission should issue permits to the drivers themselves rather than to the companies, he said.
Brian McQuistion, the licensing commission’s executive director, disagreed. He said bigger cities have more employees, who can keep up with all the cabs and drivers. And cities with “medallion” systems, in which the purchase of an aluminum plate gives the buyer the right to operate a cab, have their own drawbacks, he said.
“The people who get those medallions are lawyers in tall buildings, bankers, other businesspeople who buy up bunches of them as an investment, and then they lease those medallions to people who pay a huge amount more than the lick, I can guarantee you,” he said. “And they’re just leasing the medallion. They still have to find and pay some company to do dispatching for them, and do marketing for them, and all the other things that, here, that one company does.
“I think there’s just misinformation or lack of understanding on their part as to what is really involved in the medallion system.”
Two New York taximedallions were sold for$1 million each last month, The New York Times reported, noting that the value of an average medallion has increased 1,900 percent in the past 30 years.
Nashville’s system isn’t perfect, but it’s not uncommon for cities of its size, McQuistion said.
“It’ll probably be here forever, because the medallion system, unless taxpayers want to pay for a lot of staff here, is probably unacceptable.”
McQuistion said his staff is already too busy to keep up with any more taxi permits. He said he’ll probably ask for more positions in his budget request for the next fiscal year, though other demands on the city’s tight resources could limit his chances. But Soper said demand, not staffing levels, should drive the licensing commission’s decisions about applications.
The commission hasn’t accepted any applications to start new companies in McQuistion’s eight years as executive director, though some existing companies have received additional permits, he said. Daniel Horwitz, a law student at Vanderbilt University who has been working with Volunteer Taxi for about a year, said he believes McQuistion is “a good, capable man who really does want to do what’s best.”
But the system is flawed because it’s essentially closed, Horwitz wrote in an email.
“It’s finally become obvious to everyone that drivers are being robbed blind by a licensing system that has granted a few players a virtual monopoly over Nashville’s taxi industry,” he wrote. “The patent unfairness of the current system, along with the public’s legitimate concern that the Commission is protecting the vested interests of multimillionaire owners at the expense of drivers, will ultimately prove to be too much for the Commission to ignore.”
Demand will rise
There are 585 taxi permits in Nashville now, up from 419 when McQuistion arrived in 2003. Volunteer Taxi says in its application that there should be one cab per 1,000 people in the city. The 2010 U.S. Census put Nashville’s population at 626,861, which would correspond to a need for at least 41 more cabs.
Soper said the 1-to-1,000 ratio “keeps coming up” in the licensing commission’s meeting minutes. But McQuistion said the ratio is “an urban legend.”
Terry Clements, a representative of the Nashville Convention & Visitors Bureau, agreed at the commission’s public hearing that the opening of the Music City Center in 2013 would be a good reason to increase Nashville’s taxi inventory. The convention center will have more than three times as much exhibit space as the city’s existing facility, allowing for bigger events with larger crowds.
The commission will meet again in about three weeks to decide if Volunteer Taxi gets to join the companies its founding members now drive for. While representatives of those companies say running a taxi business isn’t easy, Denbel said he and the other drivers know what it takes to be successful.
“We are owners,” he said. “We are drivers. We know the tastes of our customers. We know what satisfies them. We will be the right people to give the right service.”
Contact Michael Cass at 615-259-8838 or [email protected]