Taxicab Firm Goes to Battle for Franchise : Transportation: The debate over whether to add a second Valley operation heats up as a final City Council vote on the question draws near.

As a recent meeting of the Los Angeles Transportation Committee was about to begin, City Councilman Hal Bernson peered over the top of his glasses at a dozen senior citizens who had filled the small meeting chamber.

They were preparing to urge the committee to add a second taxi operation in the San Fernando Valley, which has been served exclusively by one company for eight years.

“They are here to speak on the taxi franchise matter,” said Gilbert M. Archuletta, an attorney hired by Babaeian Transportation Co., a Burbank-based firm that is seeking a franchise to operate in the Valley.

“You probably brought them all here,” Bernson said gruffly.

“Not me,” replied Archuletta, raising his hands innocently.

But, in fact, Babaeian Transportation later admitted that it had bused the senior citizens in from a North Hollywood nutritional center--just as it had bused nearly 60 senior citizens to a June City Council meeting to discuss the same subject.

The incident illustrates Babaeian’s aggressive campaign to win a Valley franchise. The company has already spent more than $100,000 on lobbying activities, consultant fees and campaign contributions to key city officials.

To spearhead the campaign, Babaeian has hired Archuletta, a partner in the influential law firm headed by former City Councilman Art Snyder, as a lobbyist.

Valley Cab Co., the taxi firm that has had an exclusive license to serve the Valley since 1984, isn’t taking Babaeian’s efforts lying down.

It has tried to squash Babaeian’s hopes of winning the franchise by raising questions about the company’s financial strength and accusing it of stealing fares.

The battle over whether to add a second taxi operation in the Valley has intensified as the Feb. 18 final City Council vote on the question draws near.

For the two combatants, a lot is riding on the council’s vote.

If Babaeian wins the franchise, Valley Cab will face stiff competition in an area that generated $4.5 million in gross revenues last year, according to city transportation records.

And Babaeian, which operates about 100 cabs in Burbank, Glendale and Pasadena, would extend its empire from as far east as Arcadia to as far west as Woodland Hills.

So far, Babaeian’s lobbying campaign seems to be working.

Last year, the City Council voted to add a second Valley taxi operation, even though the city’s transportation staff and an appointed citizens panel concluded that there is not enough business to support a second firm. Council members defended the vote, saying competition would improve cab service in the Valley.

The Transportation Committee last month recommended giving the second franchise to Babaeian, despite questions raised by the same citizens panel about whether the company has the money to provide services to the Valley. The citizens panel, the city’s Transportation Commission, meets Thursday to decide whether to recommend Babaeian over three other taxi companies bidding for the franchise.

Both sides have gone to great lengths to discredit each other, both in public meetings and behind closed doors in City Hall.

Lloyd Conway, president of Valley Cab, has accused Babaeian representatives of lying, and using slick lobbying tactics and campaign contributions to get the franchise. He has also said that Babaeian fails to provide adequate insurance for all its cabs and has illegally sent taxis into the Valley to steal business from him.

“We are doing everything we are supposed to and we are getting killed,” Conway said.

For its part, Babaeian representatives say that Conway’s eight-year monopoly has made him complaisant and that he has failed to adequately serve Valley customers. They also note that Valley Cab was reprimanded recently by the city for advertising in telephone books under fictitious names.

If they win the franchise, Babaeian executives said they will bring “state-of-the-art” cab service to the Valley, including a computerized dispatch system, telephone-keyboard service for the deaf and bilingual operators for Spanish-speaking customers.

“I think it’s going to be a win-win situation because Conway is going to be forced to be more competitive,” Babaeian General Manager Scott Schaffer said.

City officials say the hardball tactics from both taxicab operators are not uncommon when it comes to competing for a city franchise. Valley Cab has one of only eight city franchise licenses.

“This type of thing is going on all the time,” said Kenneth Cude, head of the taxi unit for the city’s Department of Transportation.

Babaeian Transportation is headed by Masood Babaeian, an Iranian-American who started out as a cab driver 11 years ago and built the company with the help of his younger brother, Mahmood (Bobby) Babaeian, who later formed his own taxi company, Century Transit Systems.

The brothers separately operate the only taxicabs in Burbank, Glendale and Pasadena. Masood Babaeian’s cabs operate under the names Checker Cab and Burbank & Pasadena Taxi. He also has licenses to do business in Arcadia, Alhambra, Santa Clarita, Rosemead, Monterey Park, El Monte, West Covina, Palmdale and Lancaster.

Century Transit Systems operates under the names Yellow Cab, Red Top and Celebrity cabs.

Babaeian family members have given generously to the campaign coffers of various city officials.

Masood and his brothers Mahmood, Saeid and Vahid and their father, Mohammed, have given a total of $12,500 in campaign contributions to Councilman Nate Holden, who is chairman of the Transportation Committee, according to campaign records for the period between 1988 and 1990. Masood Babaeian has also contributed $1,000 to Councilman John Ferraro and $500 to Councilman Richard Alatorre, the records show.

Schaffer, a former Valley Cab driver and dispatcher, donated $1,500 to Holden and $500 each to Alatorre and Ferraro during the same period, according to the records.

A Holden spokeswoman has said the councilman’s vote on the franchise decision is not influenced by the contributions.

Holden has himself vehemently denied allegations that the city has given Babaeian preferential treatment because of Snyder’s law firm’s lobbying efforts.

“Art Snyder doesn’t run Nate Holden,” he said. “It has nothing to do with Art Snyder.”

Archuletta said there was nothing unethical about the campaign contributions given by Babaeian family members and executives. “I don’t believe it has played any role in this,” Archuletta said.

Conway said he has only contributed $500 to Bernson, who sits with Holden on the Transportation Committee.

But Conway concedes that he may lose his battle against Babaeian because he does not have strong political connections. “It’s a political thing,” he said. “This is not our thing; we don’t get into all of that.”

Valley Cab has a license to operate 96 cabs in the Valley. But Conway said he operates an average of only 50 cabs daily because the demand for taxis is low. At night, he operates an average of 35, he said.

Valley Cab provides an average of about 38,000 taxi trips a month, according to city records.

But Conway said the Valley cannot accommodate two cab companies. “Ultimately, you will lose both companies,” he said.

But the City Council has agreed that competition will improve service in the Valley. Some members have even said they would not be too concerned if the competition forces one of the two firms out of business.

“If only one survives, it’ll be the best one,” Councilman Joel Wachs said in a previous meeting on the subject.

But city officials say there is a potential for increased business beginning this summer when a citywide program begins to distribute discount taxi coupons to senior citizens and the physically disabled.

The program would generate about $1 million in revenue and about 215,000 taxi trips a year--enough to support only about 20 additional cabs, according to a Department of Transportation report.

Questions about Valley Cab’s customer service record and its compliance with various city regulations have surfaced periodically since Babaeian began to lobby City Hall for the second franchise, city officials said.

For example, Archuletta raised questions a year ago about Valley Cab’s self-insurance coverage. As a result, the Transportation Commission ultimately required Valley Cab to use a California bank to keep its account for paying insurance claims. Valley Cab had kept the account in a Nevada-based bank.

But Conway is also raising questions about his rival.

At a recent Transportation Commission meeting, Conway suggested that Babaeian didn’t have the financial strength to add services in the Valley because, he said, the company faced about 600 lawsuits filed over the past year in Los Angeles Superior Court. He later recanted, saying there were only 100 suits.

Schaffer said the company faces only 52 lawsuits, which he described as routine, “fender-bender-type” lawsuits. City transportation officials said they are investigating Conway’s charges about the lawsuits.

But one of those lawsuits, filed in May, 1991, by five former Babaeian drivers, charges that the company did not provide insurance for their taxicabs as promised. The lawsuit alleges that Babaeian misled the drivers as part of a scheme to keep the company’s insurance premiums low.

Archuletta denied the lawsuits’ allegations, saying the company has “consistently paid off its claims.”

“Like any other business, we’ve had lawsuits,” he said.

Conway has also charged that Babaeian’s cab drivers have been guilty of picking up customers in the Valley, a misdemeanor offense described by cabbies as “guzzling.”

Department of Transportation officials said they do not keep track of the number of times a company’s drivers are arrested on such an offense. But Schaffer has said Babaeian has fired four drivers in the past year for picking up customers in Valley Cab’s jurisdiction.

Conway and some city officials have criticized Babaeian for twice busing senior citizens to City Hall to lobby for the company.

Schaffer said he sees nothing wrong with offering to drive the senior citizens. “We helped them down there, sure,” he said. “Frankly, they had no way to get down there.”

Whether the senior citizens who attended the council meetings represented the prevailing point of view has been called into question.

David Dreyfus, president of the Valley Federation of Senior Citizens, a group that represents 68 senior citizen clubs, said he doesn’t support adding a second franchise.

“There is enough business for one company. Why would they want to put a second company?” he asked. “That means that a lot of drivers will be out of work.”

Transportation Commissioner Nathan Chroman said he has not heard an outcry from senior citizens about taxicab service in the Valley. “If all of those senior citizens that they bused in had complaints, why didn’t they call us before?” he asked.

The Transportation Commission voted unanimously last year against adding a second franchise after a test showed that Valley Cab’s performance was acceptable.

The Department of Transportation regulations require cab firms to pick up a customer within 15 minutes of being called no less than 76% of the time. After failing an initial test that city officials later said was incomplete, Valley Cab passed a second test that showed that the firm was meeting the 15-minute test 93% of the time.

“I don’t think we need the competition,” Chroman said. “The Department of Transportation concluded that we didn’t need it but the council said we do. Now we have to find another operator. I’m not convinced in my own mind that this is going to work.”