Horse-drawn carriage permits come under scrutiny

Has the city created a black market in horse carriage permits?

As it stands today, the city allows a total of 46 permits to carriage operators which can be renewed annually for $80 per carriage. A man who once sued the city for its role in allowing a carriage permit “monopoly” now owns all but three of the permits, himself.

Sightseeing tours in St. Augustine are a business in high demand by our visitors — a BIG business. Many tourists only stay in the city for a day — some overnight or for a weekend. With a limited amount of time in town, first time visitors are understandably attracted to the various tours available; ranging in cost from about $10-$12 up to $50 or more for charters.

Since motorized tours began in the early 1950’s, the city has regulated the use of the streets and provided the support necessary to maintain a safe and tourist-friendly environment that balanced the needs of the sightseeing businesses with the use of the public right-of-way by our residents. Carriage operators are licensed to use the city streets to conduct guided tours by horse-drawn carriage along a prearranged route.

Over the years, the carriage operators, trailer-trains and trolleys have all grown their businesses using public property.

Attraction operators and sightseeing businesses, mostly started as private companies and now operated by national and international tourism and entertainment mega-corporations, went about quietly operating their businesses and not calling too much attention to the money they were making doing it. Nothing wrong with that until the law of unintended consequences takes a hand.

Unlike private enterprise, the city is not in the business of “making money”. Taxes collected in licensing and permit fees should cover the cost of administering those programs – no more, no less. In the case of horse drawn carriage operators, it is clear that the latter is prevailing and the city has allowed an unfair aftermarket to be created; trading in the “rights” of sightseeing operators as if they were a commodity.

In a recently published statement attributed to McDaniel, he is quoted as saying, “I invested $2 million based on the city’s representation that those licenses were property. The city has participated for 50 years in the buying and selling of them.” If McDaniel is correct, he paid $2 million for right to control licenses for which the previous owner only paid the city $3680 a year.

When did these businesses get the “right” to operate on city owned and maintained streets without reasonable requirements and payment of permit fees commensurate with their use of public resources for private gain?

A lawsuit seeking actual damages of $7.5 million and special, economic and punitive damages, attorney’s fees and lost profit for “discriminatory and monopolistic” practices by the City and another carriage operator, was brought by Avalon Carriage Service Inc. and its owner Robert Murphy McDaniel.

At issue in the 2004 McDaniel litigation was the fair distribution of horse carriage permits, and accusations that the City of St. Augustine was guilty of anti-trust violations, deprivation of civil rights and violations of the Commerce Clause of the U.S. Constitution.

Stuart Gamsey, McDaniel’s competitor, held 42 of the 46 licenses at the time and was only using a few of them — holding the rest, it was alleged, simply to prohibit anyone else from competing with him. In a settlement with Gamsey, McDaniel purchased the competitor’s business and in that way obtained all 46 licenses himself.

The city won the original lawsuit and subsequent appeal when the court said, in essence, that the city can have a monopoly as long as it properly regulates and supervises it. McDaniel lost his claim; however taxpayers paid about $151,732 in defending against the McDaniel litigation which dragged on until March of 2009. Revision of the city’s carriage ordinance was called for at that time by commissioners. City Attorney Ron Brown says city staff has been developing the proposed ordinance to include concerns for the horses’ welfare, traffic and pedestrian safety, and appearance.

St. Augustine Sightseeing Trains and Old Town Trolley Tours offer guided tours on city streets. What you might not know is that they each pay $150,000 a year to the city in permit fees. Horse carriage operators pay $80 a year to the city in permit fees. Do you believe the horse carriages cause that much less impact?

A lot of controversy is being reported in the news and on talk radio, but much of it is theatre — attributable to the potential financial gain or loss to the speaker. Most recently in contention is a staff proposal that horse carriage operators be required to pay $5,000 a year to the city in permit fees. Maybe it should only be $2,000 — but some say only if we go back and assess a recoupmentn fee for all the years the horse carriage operators only paid $80. Brown turned to cities like Charleston to gather information on regulations in other communities; some of which are incorporated into the staff proposal.

A public workshop will be held 3:30 p.m. Monday, May 24th at St. Augustine City Hall in the Alcazar Room located at 75 King Street to discuss the permitting process for horse-drawn carriages within the city. Commissioners can discuss and revise the proposed ordinance in Monday’s workshop, but any formal action would await a future commission meeting.

Photo credits: © 2010 Historic City News photographer Kerry McGuire