Capitol Connection – How to Start a Livery Vehicle Service

October 16, 2013

Last month, a Connecticut businessman sued the state for refusing to let him start his own taxi cab company. The state said he failed to prove that the community needed his services, and therefore denied his application for certification. The businessman said that was not fair, and he wanted a chance to find out for himself whether there was enough of a community need to make his business successful.

When you first hear his story, you may be a little confused. Why would the state prevent the individual from launching his own small business? Should it not be up to the business owner to determine if the market needs his services?

In this case, the reason behind the restriction is the regulated taxicab and livery vehicle registration process we have in Connecticut. Taxicabs provide a convenient and often necessary service for people across the state. Since the services provide a public good, the state regulates some aspects of the industry to ensure that services operate safely and effectively.

If you want to launch your own taxicab or livery vehicle service in Connecticut, there are a few key things you need to know about the registration process.

The Connecticut Department of Transportation is the registration gatekeeper. The first step is to apply to the Department of Transportation to obtain a certificate of public convenience and necessity (C.G.A. 13b-97(a)). This certificate indicates how many taxicabs you can have (must be a minimum of three taxis for new applicants) and where you can operate. The certificate also verifies that the community has a need for your services.

In order to attain a certificate, the burden is on you, the applicant, to prove that your target area needs your proposed business. The definition of “need” is not outlined in detail, so the way to prove there is need varies. You must also provide proof of financial stability to operate the business and suitability to own and drive a taxicab.

Once your application is in, along with a $2,000 application fee, the review process begins. After the Department of Transportation reviews your financial and criminal background, a formal administrative hearing is scheduled and publicized.

Your hearing officer has 90 days after your hearing to make a final decision. If your certificate is approved, congratulations! You may now begin registering vehicles at the Department of Motor Vehicles with your certificate number. If your certificate is denied, you may petition for reconsideration or appeal to a superior court.

So, now that you know the process, you may still be wondering: why so much regulation?

In Connecticut, regulation is in place to prevent destructive competition, poor service and unsafe vehicles. According to a 2008 report from the Legislative Program Review and Investigations Committee, every year approximately 70,000 travelers at Bradley International Airport rely on taxis and over 182,000 taxi departures come from Stamford Train Station alone. Also reported in the study, over 500,000 nonemergency medical transportation trips were made in FY2008 by livery vehicles to help Medicaid recipients visit doctors and medical facilities. That is a huge amount of people moving all over the state, and some level of regulation is necessary.

The case of the Connecticut businessman suing the state is a story still unfolding. One thing is certain, taxicabs and livery vehicle services are different than other new businesses. It is not as simple to start your own taxi company because of the nature of the service and the crucial need to keep vehicles and passengers safe. And one other thing, they don’t come in standard yellow (YET!).