1 BEFORE THE PUBLIC UTILITIES COMMISSION OF OHIO 2 - - - 3 In the Matter of the : Commission's Review of : 4 Ohio Administrative Code : Chapter 4901:2-24, Related: Case No. 17-713-TR-ORD 5 to Rates for Towing, : Storage, and Retrieval of : 6 Motor Vehicles. : 7 - - - 8 PROCEEDINGS 9 before Mr. James Lynn, Attorney Examiner, at the 10 Public Utilities Commission of Ohio, 180 East Broad 11 Street, Room 11-B, Columbus, Ohio, called at 10:00 12 a.m. on Friday, April 21, 2017. 13 - - - 14 WORKSHOP 15 - - - 16 17 18 19 20 21 22 ARMSTRONG & OKEY, INC. 222 East Town Street, Second Floor 23 Columbus, Ohio 43215-5201 (614) 224-9481 - (800) 223-9481 24 - - - 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 2 1 ALSO PRESENT: 2 Mr. Alan Martin, Deputy Director, Transportation, PUCO. 3 Mr. Matthew Henderson, Transportation Staff, PUCO. 4 - - - 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 3 1 Friday Morning Session, 2 April 21, 2017. 3 - - - 4 EXAMINER LYNN: Let's go on the record. 5 Good morning, everyone. I'm Jim Lynn, 6 the Attorney Examiner from the Legal Department of 7 the Commission that's assigned to this case. 8 As you know, the Commission issued an 9 entry scheduling this workshop concerning rates for 10 towing, storage, and retrieval of motor vehicles. 11 When the Commission updates rules or develops new 12 rules, we hold workshops so interested parties can 13 raise issues of concern to them or provide comments 14 or suggestions. 15 And we also have -- in addition to you 16 folks in attendance we have our Transportation staff 17 here, Allen Martin of our Transportation staff, to 18 provide some comments to let you know what we are 19 looking for in the rules. 20 After the workshop and after anyone files 21 comments in response to the workshop, our staff will 22 develop a proposed set of rules, and those rules will 23 be sent out for comment. And if you are not already 24 on the service list for the documents that will be 25 filed in this case, please let me know. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 4 1 UNIDENTIFIED SPEAKER: Are we supposed to 2 be able to hear you? 3 EXAMINER LYNN: Can you hear me now? As 4 you can tell, I am not a technology person. Okay. 5 Thank you. 6 Anyway, what I was saying basically is 7 that the purpose for the workshop is concerning 8 towing, storage, and retrieval of motor vehicles; and 9 we have Alan Martin of our Transportation staff on my 10 left to add some comments to let you know what we are 11 looking for in the rules. And then let me know if 12 any of you are not on our list as far as service of 13 proposed rules because after the workshop, staff will 14 develop some proposed rules that will be mailed out 15 for comments and there will be a time for reply 16 comments as well. 17 Then after the filing of the proposed 18 rules and reply comments, the Commission will issue 19 an order adopting the rules which will be sent to the 20 Joint Committee on Agency Rule Review at the 21 legislature. And eventually the rules will become 22 final and effective but that will be somewhere down 23 the road. 24 Now, I will let Alan Martin make his 25 remarks, and then we will begin our testimony from ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 5 1 all of you out there in the audience. 2 MR. MARTIN: Thank you. Thanks, 3 everybody, for coming. 4921.25 of the Revised Code 4 basically tasks us with setting maximum fees for 5 towing and storage, a process to review the fees 6 every five years, after-hours retrieval fees, and a 7 process for retrieval of personal items. Those are 8 the big high level areas that required us to do some 9 things. 10 We've already tentatively addressed in 11 other rules the after-hours retrieval fees so that's 12 kind of already on the books and something that if 13 you have comments about that, we are happy to hear 14 them and happy to revisit those, if necessary. But 15 there is already a rule that is addressing that area. 16 So primarily in the order that was put 17 out, we put some specific things that we are very 18 interested in hearing about. For instance, should 19 the Commission establish a single maximum fee 20 applicable to the towing of motor vehicles or should 21 multiple maximum fees be established? We're very 22 interested in hearing what the public and industry 23 have to say about fees, how they should be set, when 24 they should be set, are there classes, are there 25 sizes, are there distinguishing factors so that we ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 6 1 have a better idea as staff how to assemble a 2 proposed package of rules for the Commission to 3 consider. 4 So with that if you have questions of me, 5 I'm happy to answer them, but we're very interested 6 in hearing what you all have to say and what your 7 thoughts are on the matter and any suggestions you 8 have. 9 EXAMINER LYNN: We'll go off the record 10 just for a minute. 11 (Discussion off the record.) 12 EXAMINER LYNN: All right. First up 13 we'll have Brian Coulter who represents the 14 Association of Professional Towers in Ohio. 15 Mr. Coulter. 16 MR. COULTER: I would like to have Joe 17 Hollabaugh jump me. 18 EXAMINER LYNN: Okay. We will actually 19 have Joe Hollabaugh, executive director, the 20 Association of Professional Towers. 21 MR. HOLLABAUGH: Thank you all very much 22 for having us. Good morning. My name is Joe 23 Hollabaugh. I am the executive director of APTO, the 24 Association of Professional Towers of Ohio. We 25 appreciate the opportunity to be here today and look ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 7 1 forward to our continued participation in a strong 2 relationship with the PUCO as your role now continues 3 to expand regarding the towing and recovery industry. 4 So we are very happy to be here. Also coming off the 5 successful process from the Senate Bill 274 rule 6 process and appreciate the opportunity to do it 7 again. 8 As you know, APTO is the state trade 9 association for Ohio towing and recovery 10 professionals dedicated to furthering safety and 11 professionalism in the Ohio towing and recovery 12 industry. We were a very strong proponent of the 13 House Bill 341. We appreciate the tasks that you 14 have at hand to establish the private tow-away zone 15 rate, and we are pleased to be able to provide you 16 with industry information and input in this process 17 and particularly will be addressing the specifics 18 that you asked for earlier. I am glad they were 19 included in our proposal, so. 20 The last private property rate was 21 established in statute by the 123rd General Assembly, 22 that's 1999-2000, via House Bill 600 and that rate 23 prevails today. In the 17 years since the 24 establishment of this rate, the Ohio towing and 25 recovery industry has gone through dramatic changes ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 8 1 resulting in factors we trust the PUCO will consider 2 in establishing this rate. 3 Several significant events have occurred 4 that naturally increased the cost of operations and 5 compliance beyond inflationary adjustment that we 6 believe warrant a private tow-away zone fee increase. 7 For example, amended Substitute House Bill 87 in 2003 8 introducing new regulation of towing companies 9 including those performing private tow-away zone 10 towing and operating storage facilities, for hire 11 motor carriers, and subject to regulation by the PUCO 12 and compliance with U.S. Department of Transportation 13 Federal Motor Carrier Standards, so I brought the 14 handy pocket book as well that will not fit in my 15 pocket. 16 But so we are now in compliance. 17 Everyone here is clearly in compliance with all of 18 those, but compliance with these regulations presents 19 substantial new costs at the time of doing business 20 and since then have just simply been incorporated in 21 the towing company's expenses not contemplating -- 22 contemplated when this rate was established in 2000. 23 Substitute Senate Bill 274 and 214 in the 24 year 2014 and a Substitute Bill 341 in 2006 also 25 added extensive new regulations and civil and ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 9 1 criminal liability to private tow-away zone towing 2 and storage facilities also increasing the cost of 3 business operations in compliance. 4 With the House passage of House Bill 341, 5 APTO, our association, convened a private property 6 rate committee made up of towing and recovery 7 companies across the state with substantial 8 experience performing private tow-away zone towing 9 and storage facility operations to study the current 10 state of the industry with respect to private 11 tow-away zones and storage facility operations, make 12 recommendations to the PUCO, and represent the 13 industry through this process. 14 So as a part of this team, APTO 15 represented by Attorney Brian Coulter who is here, he 16 is from Shumaker, Loop & Kendrick, and today he will 17 further detail the factors we believe PUCO should 18 consider when establishing this rate and deliver the 19 APTO recommendations that we brought with us today. 20 Also representing APTO in the committee is Tim Duffey 21 of Shamrock Towing. He is going to present a 22 step-by-step process explanation of performing a 23 private tow-away zone to give the PUCO a solid 24 understanding of the service these companies provide 25 to private property owners in Ohio. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 10 1 In addition, several APTO members are 2 here. We are available for any questions or concerns 3 the industry may be able to address, and we will be 4 available at your request throughout this entire 5 process. 6 Finally, I would like to invite all of 7 the officials that will be involved in writing these 8 rules to a demonstration of private property tow-away 9 zone towing and storage facility operations where we 10 would be able to provide you with actual hands-on 11 experience of the process, the equipment, vehicles, 12 labor, regulations that our members perform and 13 comply with while performing their private tow-away 14 towing and storing vehicles. We're very proud to be 15 here to represent the Ohio towing and recovery 16 industry and look forward to the process ahead. 17 And with that Brian, I think, would be 18 next up and can give you a better. 19 MR. COULTER: As Joe said, my name is 20 Brian Coulter. I am an attorney here on behalf of 21 APTO, and I also submitted written testimony which I 22 hope is before you for reference, so I will keep my 23 statements here brief. 24 There's two main considerations that I 25 see in developing new rates in Ohio for towing and ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 11 1 storage. I'll get to the after-hours retrieval issue 2 later, but the two main considerations I see are, 3 one, just inflation, just accounting for the value of 4 the dollar 17 years after the rate was set in 2000. 5 And so just using the inflation calculator I found on 6 I think it's the Department of Labor's website, just 7 to account for that, the $90 rate for the 10,000 8 threshold would be increased to 127.32. The $12 9 storage rate should be increased to 16.98. And, 10 similarly, the 10,000 plus pound category should be 11 increased to $212.20, and the $20 storage rate would 12 go up to 28.29. So I think those figures are just 13 the floor just to account for the value of the dollar 14 in the past 17 years. 15 As I'll get to in a little bit here, we 16 don't think that two-tiered structure is appropriate. 17 We actually propose a three-tier for light-, medium-, 18 and heavy-duty vehicles. But in addition to just 19 accounting for inflation, as Joe had mentioned, we 20 strongly urge the Commission to consider the 21 substantial increase in compliance and business costs 22 that have amassed since 2000. 23 Like Joe said in 2003, towers were 24 considered for hire motor carriers which brought on a 25 slew of, you know, background checks, drug testing, ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 12 1 labor limits, things of that nature which, again, 2 just were not contemplated in 2000. But, again, you 3 can refer to my written testimony for more detail on 4 that. 5 And so what APTO proposes is a 6 three-tiered structure. For vehicles with a gross 7 vehicle weight of equal to or less than 10,000 8 pounds, we propose a removal fee maximum of $185 and 9 a daily storage fee of $30. We think this, like I 10 said before, takes into account both inflation and 11 increased compliance costs. For medium-duty 12 vehicles, which would be between 10,000 pounds and 13 26,000 pounds, we propose a maximum removal fee of 14 $300, a daily storage fee of $40. And then for 15 heavy-duty vehicles which we call vehicles with a 16 gross vehicle weight exceeding 26,000 pounds, we 17 propose a maximum removal fee of $500 and a daily 18 storage fee of $50. 19 Obviously with the higher weight there 20 becomes CDL requirements, substantial equipment 21 requirements. I'm certainly not the professional on 22 that. You have many professionals in the room here 23 who can describe the differences that those weight 24 limits take and the requirements that should come as 25 a result of them. But we feel this structure is ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 13 1 appropriate and accurately reflects what's required 2 of towers under Ohio law. 3 And these numbers aren't -- weren't just 4 made up by us. There is support from several other 5 jurisdictions for these figures. The first one that 6 comes to mind is Connecticut has a similar rate 7 structure. I think you'll see that a lot of states 8 do an hourly rate, or they will include mileage. We 9 believe a flat rate is just the simplest way to go 10 with respect to compliance and enforcement, and it 11 reduces opportunities for abuse. You know, there is 12 no taking the long way. There's no stalling to get a 13 higher rate. So we're a proponent of just high flat 14 rates to make sure everyone is treated fairly and 15 predictable in any situation. 16 And with that I'll hand it off to Tim 17 Duffey who is one of our members who can walk the 18 Commission through the step-by-step process and get 19 into more of the technical details associated with 20 the towing. Thank you. 21 EXAMINER LYNN: Mr. Duffey, if you can 22 state your name or more specifically spell your last 23 name, please. 24 MR. DUFFEY: My name is Tim Duffey, last 25 name spelled D-U-F-F-E-Y. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 14 1 EXAMINER LYNN: And you are with the 2 association? 3 MR. DUFFEY: I'm with Shamrock Towing and 4 APTO, and Shamrock Towing was established in 1952 so. 5 I appreciate the opportunity here. I want to thank 6 the Commission for taking the time to listen to these 7 private property tow steps. 8 I'm just going to go through the list 9 here real quick. If there is any questions, don't 10 hesitate to stop me and if you have any questions on 11 the procedure or terminology or anything, please 12 don't hesitate. 13 On these private property tow steps, we 14 receive a phone call requesting the removal of an 15 illegally parked vehicle by the property owner or 16 authorized party. We always request the reason for 17 the impound such as flat tire, abandoned, in a 18 reserved space, anything that separates this or 19 creates the fact that it is an illegally parked 20 vehicle. The reason we do that is we want to know if 21 the problem has been rectified when we get there, 22 then we will call the company and then decide -- let 23 them decide at that point whether -- whether they 24 want to proceed. 25 Some people require faxes, you know, so ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 15 1 they have documentation of the phone call and a 2 signature from the property owner. We record our 3 phone conversations, so we know we can go back if we 4 have to go back for further reference. Then we 5 verify that they have a contract in place and they 6 are authorized to call. We use a code number system. 7 They have the code, and we can look that up in our 8 computer. We dispatch a driver with the appropriate 9 size truck to address the class of vehicle to be 10 towed. 11 The driver arrives, and the driver 12 identifies the vehicle to be towed. We check for 13 signs to make sure it's properly signed. We take a 14 series of photographs to document the infraction. We 15 also take photographs to document any existing damage 16 because that comes up quite a bit. A lot of people 17 don't look at the passenger side of their vehicle 18 ever until it's been towed. So we want to make sure 19 that both the property owner and the towing company 20 is protected. 21 Then we check on the tow specs for each 22 individual vehicle through a computer program that we 23 have. And then we proceed with the tow. Once we 24 hook there's three different classifications as noted 25 before. No. 1 class is 10,000 GVW or less. That's ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 16 1 cars, SUVs, and light pickup trucks. We hook the 2 vehicle up and secure it with safety straps, attached 3 two safety chains, put tow lights on it so that 4 vehicle is properly lit, put dollies on the vehicle 5 if we need to. If it's a front wheel drive vehicle 6 and we have to drive it from the rear, we will put 7 dollies underneath it to ensure there is no damage to 8 the vehicle. 9 Sometimes we have to unlock the vehicle 10 to determine the serial number. Most of the time 11 it's on the dashboard, but a lot of times that's 12 covered up. Depending on the vehicle we may have to 13 secure the steering wheel if it doesn't have that in 14 place. 15 On the class 2, that's 10,000 to 26,000, 16 and that's dually pickup trucks and small box trucks, 17 and same thing, dispatch a larger truck. Once we 18 know what we are dealing with, safety chains, straps, 19 put lights on it, anything else we need to do to 20 properly tow the vehicle. If it's loaded, that makes 21 a difference. If it has a trailer, that makes a 22 difference. If the drive train is on the ground, we 23 may have to remove the drive shaft or the axle. So a 24 lot of these things are just standard towing 25 operational procedures, securing the steering wheel, ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 17 1 same thing, serial number, cage brakes if it has an 2 air system on it. 3 Class 3 is 26 to 80 thousand and that's 4 semi trucks, tour buses, large box trucks, dispatch a 5 larger truck, and hook it up the same way as we do 6 the other ones. Because they have air brakes we'll 7 attach airlines to them so the brakes are in 8 operation. If we don't, we will have to cage the 9 brakes. Safety lights, we determine whether the 10 truck is loaded or not, driveline/axles could be 11 removed if we can't put air to it. And same thing, 12 document vehicle's serial number, all that other 13 information that we need when we call it into the 14 city that it has been towed from. 15 And on -- they have a section here on the 16 drop fee. If someone catches us in the act or, you 17 know, comes up to us in the act of towing, the law 18 requires we can collect half the tow amount so they 19 want to show us whether they own the vehicle or not, 20 proof of ownership, company vehicle we can go with 21 that, you know, anything that marks the company on 22 it, collect the payment with either cash or credit 23 card, unhook the vehicle, and then move on. 24 On the vehicles that are towed back to 25 our impound yard, we do that within two hours. We ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 18 1 need to do that within a 25-mile radius proximity of 2 where the tow has been taking place, close to public 3 transportation, and we are required to be open 24 4 hours a day, 7 days a week, and 365, Christmas, 5 Easter, all the time. The city is 50 hours a week; 6 we are 168 hours in a week, big difference. We have 7 to have a well lighted, proper signage on our impound 8 lot. If the driver unhooked a vehicle, we just 9 reverse the steps of what we do when we hook it up, 10 take the tow lights off, safety chains, everything is 11 put away, reinstall the driveshaft, if necessary, 12 uncage the brakes. 13 And then we go to the paperwork part of 14 the tow. The paperwork is brought into the office. 15 That's put in the computer and then we call whatever 16 city or area that we are in to let the local police 17 agency know that we have moved this vehicle so it's 18 not reported stolen. 19 So all that is documented. All 20 photographs are downloaded into Dropbox in case they 21 need to be recalled at any point to show the 22 infraction or existing damage. We call the local 23 police department and give them the serial number, 24 license plate, color, the vehicle type, location, 25 time, and then we get a number from them, a claim ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 19 1 number, so they have documentation of that so as 2 another reference. 3 On the vehicles that go unclaimed, which 4 is becoming a big problem, we go through the same 5 thing. We answer the phone calls. We document with 6 the local police department. We verify owner 7 information through the Bureau of Motor Vehicles. We 8 send out certified letters, provide copies of photos, 9 if requested, and go on. 10 The unclaimed vehicles is what I was 11 talking about before is a different disposal path. 12 There's three different ones. The title process for 13 cars under 300 -- or $3,500 is within three days we 14 send -- we call for a search through the DMV and send 15 a letter out within five days of receiving that 16 information from them. We send a second letter out 17 to find out if there is a lienholder and that is sent 18 30 days after the first one. And then the third 19 letter is sent after the second letter, 15 days after 20 that. 21 We've always sent out two letters at the 22 same time because the information can vary from one 23 search to the next. And a lot of times if you get 24 the information to send out a certified letter, say 25 if it's Bob Smith, Jr., and that's not what is listed ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 20 1 at the DMV, then your search is invalid. So it has 2 to be exactly the way it is registered with them and 3 those can vary from the two different searches. 4 Then you take the affidavit with the 5 three sets of return letters to the DMV for a salvage 6 title, pay the value of the car to the clerk's 7 office. If it's less -- if it's less than the 8 allowed deductions, you pay the difference. On a 9 destruction only title process for cars under $1,500, 10 within three days you send out the letter from the 11 information you receive from the DMV. The same 12 thing, you send a letter out within eight days of 13 receiving the information back, a letter two goes out 14 to the -- one to the owner, one to the lienholder, 15 and then you complete the affidavit and photos are 16 returned to the DMV. And then you can apply for a 17 salvage only title through the court system. 18 Now, if the vehicle is -- has a value of 19 over $3,500, you have to go through the court system 20 to obtain the title for that so. 21 Any questions? 22 MR. MARTIN: I don't want to ask any 23 questions until everyone is done but have all of you 24 finished? Is that everybody? 25 MR. HOLLABAUGH: Yes. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 21 1 MR. MARTIN: That's what I want to make 2 sure of. I'm interested in where the additional 3 costs are coming from that are above and beyond the 4 cost of living. I think the cost of living is pretty 5 self-explanatory as you presented it but do you -- I 6 don't know if in your written testimony you've 7 identified where the other costs are coming from and 8 specifically if it's even possible to quantify. You 9 know, you cited a number of pieces of legislation and 10 additional regulation but, you know, more 11 specifically kind of digging down into the details 12 what those costs might be. Just as a help to 13 understand. 14 MR. KELLEY: I can address that there's 15 so many different factors that have come into play 16 since the year 2000 when the last one. A lot of it 17 has to do with the regulations that we have to abide 18 by. Certified mail, it's gone up 350 percent. Our 19 searches that we do through the DMV has gone up 20 150 percent. These are just small, small things. 21 We're required to have a storage lot that has proper 22 zoning which is not -- you know, you have to be light 23 industrial. Those locations are not easy to find. 24 Like I said, I mentioned before, we are 25 open 24/7/365, so if we have a car in our lot that's ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 22 1 been towed, we have to stay open even if it's one 2 car. And our biggest cost comes once the vehicle -- 3 on the unclaimed motor vehicles when you start 4 processing all those, those deals, attorney fees, for 5 anything that has a value of over $3,500 can be very 6 expensive. And up until we have the opportunity to 7 go with like destruction only, it was not cost 8 effective to even process these vehicles. They set 9 and they set and they set because the regulations 10 were so -- it was a losing proposition. You spend 11 more trying to dispose of the vehicle than you would 12 get out of it. 13 So, I mean, there is a multitude of 14 costs. Costs of trucks have doubled, fuel costs. 15 Insurance costs have doubled. Workers' Comp. costs 16 have doubled. So we have actual figures and stuff 17 like that if you need it but that's just off the top 18 of my head so. There is probably some other stuff 19 that Joe can fill you in on too. 20 MR. HOLLABAUGH: Yeah. We have -- in 21 reading through Brian Coulter's testimony that has 22 been provided, you will be able to see a little bit 23 better breakdown of what the actual compliance costs 24 are. It's very -- it is going to be very difficult 25 to quantify them, but as -- as Tim said, there is ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 23 1 plenty on that list we can, so the requirements of 2 mailings, for example, the cost of certified mail and 3 the difference between that which is now a 4 requirement and was not. The DMV search costs money. 5 That's quantifiable. Cost of photographs, storage, 6 the technology that goes with that certainly can be 7 considered a quantifiable cost. And then proper 8 signage and everything else that's actually in that 9 statute, I think he lays that out as best we can. 10 The big one when you go -- yeah, and Tom 11 can address this as well, is when you are -- how 12 can -- how is it possible to quantify the actual, you 13 know, Federal Motor Carrier Safety Standard because 14 each of the companies have different applications of 15 those as well, but it's just simply a cost they have 16 to incur in order to get it done. And so we can try 17 to be much more specific but that's kind of the 18 starting point for now. 19 And I think, Tom, you had some ideas of 20 specific costs. 21 EXAMINER LYNN: Sir, if you could 22 indicate your full name, please, and spell it out, if 23 necessary. 24 MR. GARY: Hello. My name is Tom Gary, 25 G-A-R-Y. I represent Southwest Towing & Recovery. I ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 24 1 am a member of APTO. I am currently serving on the 2 private property rate committee. I am also a member 3 of the other industry trade association that you will 4 hear probably momentarily. 5 In response to some of your questions, 6 Mr. Duffey of Shamrock did cover some of those costs. 7 Mr. Duffey's operation is a municipal operation here 8 in the city in the Franklin County area. My 9 operation is a rural operation, so I would like to 10 also provide input from a provider that provides 11 service more in a rural area. 12 There are different cost considerations 13 that come into effect between Mr. Duffey's operation 14 or any other operation in a large metropolitan area 15 compared to a service provider that is serving a very 16 rural area for small apartment complexes, strip 17 malls. We face a different set of cost factors that 18 should be considered between city and rural 19 operations. 20 Also, in addition to that, our operations 21 when we are storing these vehicles, whether it's 22 going to be an unclaimed vehicle that we ultimately 23 have to dispose of or if it is a vehicle that we're 24 holding and then at some point the vehicle owner or a 25 lienholder would appear to claim their vehicle, our ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 25 1 facility, our company is incurring additional costs 2 from the insurance that our operation has to maintain 3 current for our storage lot to ensure the operation 4 of the storage facility, upkeep on the storage 5 facility from lot and fence, lighting, maintenance 6 items to ensure that our lot is in compliance. 7 In addition, technology is a big one that 8 was not initially considered when the previous rates 9 were established. For a large operation in a 10 metropolitan area, technology costs can be somewhat 11 different. Larger operations so you are able to 12 diversify that cost over a larger volume of calls. 13 For an operation such as mine where we are serving a 14 rural area and our volume is less, technology 15 considerations are much more of a factor, from the 16 cost of cameras for documentation that are statutory 17 required to have, also to our compliance of being 18 able to maintain those files and ensure their 19 longevity so they can be recalled and provided if 20 requested, so the technology factors for a smaller 21 operation. 22 And the smaller operations we serve our 23 customers, private property owners across the state, 24 and I feel that's important that the Commission also 25 consider how these costs not only affect the large ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 26 1 metropolitan areas but also all the rural areas that 2 towing companies serve that the property owners need 3 our services for. 4 And thereby the rural areas we -- our 5 costs are generally higher because we can't diversify 6 that cost over a larger volume. 7 MR. HOLLABAUGH: Many of the costs they 8 have incurred as well when you are talking about 9 specific compliance with new laws, rule, regulation, 10 and if you would -- if you take a look at the 11 difference between, say, Senate Bill 274 and then 12 House Bill 341, the consequence they are facing for 13 not being in compliance with these new regulations, 14 for example, the mailing notification requirements or 15 some of the ones that go specifically related to them 16 literally could be a loss of their business very 17 quickly. 18 So a major -- a major violation, three in 19 one year, they are -- you will remove their CPCN 20 number. The minor violations in addition to being -- 21 costing money can also accrue to a death penalty, to 22 a death sentence for them. So those costs are real 23 legitimate that they all have to bear right now and 24 make sure they are doing it properly because of the 25 severity of the consequence. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 27 1 EXAMINER LYNN: All right. Thank you for 2 your comments. 3 Is there anyone else from APTO that would 4 like to give any testimony? You are not required to, 5 but you can do so if you wish. 6 MR. COULTER: I actually have a few more 7 things. 8 EXAMINER LYNN: Mr. Coulter. 9 MR. COULTER: Yes. It struck me as I was 10 listening to some of the members speak that there is 11 a few other items that I think are worth addressing. 12 The first is, before we get back to the storage fees, 13 I wanted to talk about item retrieval for a moment. 14 After just talking with our members, it became pretty 15 clear pretty quickly that it makes no difference to a 16 storage company whether a vehicle owner is there to 17 retrieve a vehicle or an item. It requires the same 18 measures with regard to staffing, same measures with 19 regard to setting up the procedure to get in there at 20 3:00 a.m. if necessary. 21 So we propose an item retrieval fee 22 that's exactly the same as the vehicle retrieval fee. 23 Frankly, it makes no difference whether we are 24 letting a car out or an iPhone out. It's exactly the 25 same. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 28 1 And then another consideration I think is 2 important for the Commission is the drop fee. Now, 3 with -- as required by statute, a tower is required 4 to release a vehicle at 50 percent of the rate 5 established by the Commission if a vehicle owner 6 arrives. And I think that should play into the 7 Commission's consideration because a substantial 8 amount of costs have already been incurred by the 9 time a vehicle owner may arrive. And so if we set 10 these rates too -- too low, there's a risk that, you 11 know, a towing company could do this service at a 12 loss, if a person arrives, before the vehicle is 13 removed. So I think that's just something important 14 to keep in mind. 15 And going back to the storage and the 16 removal fees and quantifying the differences between 17 light, medium, and heavy classes, I think you were 18 referring to, I think, some of those, as Joe 19 mentioned, are just compliance related, and they are 20 pretty difficult to quantify. 21 But I do think with respect to storage 22 fees, it's somewhat obvious, or at least -- maybe 23 obvious isn't the right word, but obviously a 24 towing -- or a tour bus takes up more space than a, 25 you know, Honda Civic would. So it makes sense to ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 29 1 charge, you know, two or three times the space for 2 storing that vehicle. 3 And, similarly, towing a semi or tour bus 4 takes more time and typically more people than it 5 would a smaller vehicle. And so while we don't want 6 to -- we don't recommend getting into the area of 7 hourly rates, although several jurisdictions do, we 8 think that setting flat rates at increasing 9 increments just makes sense in terms of the time and 10 manpower it takes to tow larger-sized vehicles so. 11 EXAMINER LYNN: Thank you, Mr. Coulter. 12 MR. MARTIN: What struck me as I am 13 wondering can you guys give us a little dive into 14 what you are currently charging in these three tiers 15 for a consensual tow? What are the costs? Do you 16 charge a consumer for a conceptual tow for these 17 three tiers? 18 EXAMINER LYNN: If either/or both of you 19 would give your names and spell them, please. 20 MS. SAPONARI: Sandy Saponari, 21 S-A-P-O-N-A-R-I, from Rich's Towing, and I belong to 22 both associations. 23 EXAMINER LYNN: APTO. And, ma'am? 24 MS. MERRIMAN: Christine Merriman, 25 M-E-R-R-I-M-A-N. And I'm from City Service Company ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 30 1 in Kent, Ohio, and also a member of APTO. 2 EXAMINER LYNN: Thank you. Whichever of 3 you would like to proceed first, go ahead. 4 MS. SAPONARI: I guess like they are 5 considering the drop fee. I know I would not want to 6 put one of my drivers in harm's way if somebody comes 7 out and they're combative. They're told to leave. 8 So that's a loss to me, to the company. 9 Also we do tow the car and the private 10 property towing we do, we don't -- people don't come 11 back and pick them up. They have abandoned them. 12 They walked away. They don't pick up their letters 13 because obviously they've moved, and the Bureau 14 doesn't have the information that we need for them to 15 receive their letters. So we send out their letters 16 at a cost, and then the scrap value of the car to get 17 rid of the car in this day and age is down to 90, 100 18 dollars depending on the size of -- the weight of the 19 car, so it doesn't even make up the difference for 20 the ones that are not picked up. I guess that. 21 MS. MERRIMAN: And to answer your 22 question a consensual tow is right around $50 plus $4 23 a mile. And then if it's requiring a flatbed or 24 additional equipment, additional equipment would be 25 35 and the flatbed would be an additional 40 and then ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 31 1 that's $5 a mile. 2 And, again, I am in an area, Kent State 3 University, where, you know, we have a lot of local 4 tows, not long distance. 5 MS. SAPONARI: We are actually a tower on 6 the Ohio Turnpike, and our rates are set by the Ohio 7 Turnpike. So, right now, it's $100 and 4 and quarter 8 a mile for a one -- single axle, one car, and then 9 the rates go up from there. 10 EXAMINER LYNN: And, sir, you had an 11 additional comment? 12 MR. GARY: Yes. To respond to the 13 Commission regarding our retail rates for calls, our 14 facility primarily engages in a large volume of 15 light-duty towing in the rural communities. Our 16 retail rates for a standard hookup for a light-duty 17 wheel lift tow is currently set at $125 for hookup, 18 $5 per mile loaded. For a rollback call it is 19 currently set at, depending upon the type of vehicle 20 and other special considerations of why a rollback is 21 being used, variably set either $150 or $170 for the 22 hookup and the same $5 per mile. 23 And also I do want to indicate our costs 24 will tend to vary given the geographic regions across 25 the state in which we serve. Our company serves a ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 32 1 rural area, different population densities, different 2 costs of business so there may be a discrepancy 3 variation in our rates but that's currently our 4 rates. 5 EXAMINER LYNN: Question for you, you 6 mentioned rollback. That was described in earlier 7 testimony. I didn't quite catch what it means. 8 MR. GARY: Currently in the light-duty 9 market, there are two typical trucks that are used, 10 one of which is a light-duty wheel lift. It is 11 made -- generally be referred to in industry terms as 12 a wrecker. It is typically equipment with a wheel 13 lift device that lifts the drive wheels. If it's a 14 front wheel drive vehicle, it lifts the front wheels 15 off the ground. The equipment may be equipped with 16 what is a sling or sling belt generally used to tow 17 an older vehicle. It has frame rails. A vehicle 18 that's not equipped with the unibody construction. 19 Alternatively, we may refer to the 20 alternate vehicle which is typically referred to as a 21 rollback, a flatbed, or a car carrier, synonomous 22 terms for the same vehicle. That's where the vehicle 23 is loaded onto the tow truck where the deck slides 24 back and pivots down to the ground. The vehicle is 25 wrenched up onto the tow truck, the bed then pivoted ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 33 1 down and slid back forward. All the drive wheels are 2 off the vehicle. That vehicle is capable of carrying 3 two vehicles at a time because that truck is 4 generally, I would say probably 95 percent of the 5 time, also equipped with a wheel lift device. 6 Typically, depending upon the area and 7 the trucks that your fleet is equipped with, a 8 rollback is used in accident situations because that 9 way you can tow two vehicles with one truck, whereas, 10 after you've loaded the first vehicle, you can then 11 load the second vehicle on a wheel lift. 12 Now, if that second vehicle is an all 13 wheel drive or has damage sustained where you need 14 all the wheels off the ground, a rollback would also 15 be equipped with tow dollies, whereas, we can lift 16 that extra set of wheels off the ground, and they are 17 carried on the dollies. 18 EXAMINER LYNN: Very good explanation. 19 Thank you. Okay. We have no further questions. If 20 there is anyone else from APTO interested in 21 testifying. 22 Okay. All right. Thank you, everyone. 23 Move on to another gentleman who is here, Jim 24 Shriner. He is with Broad and James Towing. He also 25 represents the Towing and Recovery Association of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 34 1 America. 2 MR. SHRINER: Of Ohio. 3 EXAMINER LYNN: Oh, excuse me, of Ohio. 4 MR. SHRINER: I'm a member of the TRA of 5 Ohio. 6 EXAMINER LYNN: Okay. And he is here 7 with counsel for the organization. And your name 8 again, sir, is? 9 MR. MECHLENBORG: Bob Mechlenborg, 10 counsel, government regulation. 11 EXAMINER LYNN: Can you spell your name? 12 MR. MECHLENBORG: M-E-C-K-L-E-N-B-O-R-G. 13 EXAMINER LYNN: Okay. Thank you. 14 Mr. Shriner, would you like to go ahead. 15 MR. SHRINER: I am going to let Bob speak 16 first, if that's okay. 17 EXAMINER LYNN: Okay. 18 MR. MECHLENBORG: First, I do want to 19 thank you so much for addressing this issue so soon 20 after the bill became effective. That's a real boost 21 for the industry. And I know I speak for all of us 22 wanting to thank you for that. 23 Now, Mr. Shriner is going to start with 24 his explanation. Some of the questions that you 25 asked before will probably be answered in that in how ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 35 1 his particular organization is affected beyond what 2 the Consumer Price Index or inflationary measures 3 might resinate with the last 17 years. And you were 4 good enough to talk to me before this when I was out 5 of town and we just got the notice. So one of the 6 things we would like to do is submit in writing after 7 this hearing the question that was asked what are 8 the -- how do we quantify some of these things beyond 9 the Consumer Price Index because, make no mistake 10 about it, both groups are asking for a good bit 11 beyond what inflationary measures might tend to lend 12 to. 13 EXAMINER LYNN: When you refer to both 14 groups, that's Association of Professional Towers and 15 then also Towing and Recovery Association of America. 16 MR. MECHLENBORG: Yes, that's correct. 17 MR. SHRINER: Of Ohio. 18 EXAMINER LYNN: Of Ohio. I will get it 19 straight before the end of our workshop. 20 MR. MECHLENBORG: All right. Mr. Shriner 21 has got his. 22 MR. SHRINER: All right. First of all, I 23 would like to thank you for hearing us today. This 24 meeting regarding rates is long overdue. As you may 25 or -- as you may or may not realize, in Ohio the rate ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 36 1 for private property tows has not changed in nearly 2 20 years. The last increase was in the year 2000 3 when fuel was a dollar 50 per gallon, and we thought 4 health insurance was expensive. 5 Tow -- the tow truck we purchased in 2000 6 cost a lot less than the pickup truck I purchased 7 personally last month for my personal use, although 8 both came with air conditioning. 9 I don't really believe that anyone in 10 this room does not understand the huge increases in 11 the cost of doing business as a towing company. 12 However, I will list some. Let's start with wages. 13 In the year 2000, our hourly rate for a light-duty 14 wrecker operator was $10 per hour. Today it is $15 15 per hour. If you understand how much training and 16 responsibility goes into becoming a wrecker operator, 17 you would realize the pay is not enough. 18 With the technology of today's vehicles, 19 it is important to completely understand how to 20 properly tow these complicated vehicles. Don't 21 forget when these vehicles are impounded, there is no 22 key for the vehicle and it is normally locked. A 23 large percentage of vehicles are hybrids, electric, 24 and all wheel drive. If you can find a good 25 heavy-duty wrecker operator, he or she is worth their ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 37 1 weight in gold. This person is someone who repairs a 2 leaking brake line, leaking brake air line on the 3 side of the freeway, and he can upright an overturned 4 tractor and trailer loaded with hundreds of thousands 5 of dollars of cargo. This operator must have the 6 mechanical ability to remove a driveshaft and back 7 off brakes. 8 The operator must also be a competent 9 driver. This is someone who will work in the rain, 10 snow, ice, or sun, someone who will work day or night 11 or even day and night when necessary. We all know 12 how much a heavy over-the-road truck driver can earn, 13 and the only time that person needs to get out of the 14 cab of the truck is to do a daily inspection or to 15 refill his cup of coffee or his belly. 16 In addition to wages, employee costs have 17 continued to rise. In the year 2000 our Workers' 18 Compensation premium was less than half of what we 19 pay today. We paid $4,300 per month for health 20 insurance -- yeah, we paid $4,300 per month in health 21 insurance in 2000. Today our health insurance costs 22 over $20,000 per month. And don't forget the -- 23 about the increased price of required high visibility 24 uniforms which were not required 20 years ago. 25 As long as we are on the increased costs ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 38 1 of government regulation, House Bill 341 requires 2 additional lettering on our trucks, additional 3 signing at our shop and storage lot. It requires us 4 to accept credit cards which will add another expense 5 to our tows. 6 With the extra emissions regulations not 7 only does it raise the cost of the trucks, but it 8 raises the cost of repairs on the trucks. In 2000, 9 our repairs on our trucks was about $2,000 per month. 10 In 2016, our repair costs on our trucks averaged over 11 $14,000 per month. The cost of our ability -- the 12 cost of our liability insurance in 2000 was 13 approximately $35,000 for the year. In 2016, our 14 liability insurance costs $78,000. This year it will 15 probably -- it will cost approximately $90,000. 16 That's up a huge bit from 35,000. 17 In addition to the increase in the cost 18 of the obvious items, we now need computers, GPS, 19 smartphones, iPads, computerized tablets, internet, 20 wifi, and video cameras. We did not have any of 21 these expenses in 2000, the last time the private 22 property rate changed. 23 In 2000, we purchased a new truck for 24 $45,000. In 2016, we purchased a new truck for 25 nearly $100,000, again, a huge increase. The last ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 39 1 heavy-duty truck I was quoted was $435,000 for the 2 truck, again, a huge increase from the prices in 3 2000. 4 We are asking for the private property 5 rate to be changed. We would like to see three 6 classes of impound based on the vehicle's GVW, and my 7 weights are a little bit different than the APTO, our 8 weights. We have light duty, 10,000 pounds and less, 9 $185 for the tow with a daily storage rate of $30. 10 Medium duty, which is the different weight, I have is 11 10,001 pounds to 20,000 pounds which we would like to 12 have $250 for the tow with a daily storage rate of 13 $45. And the heavy-duty class we would like to see 14 20,001 pounds and up would be $485 for the tow with a 15 daily storage rate of $75. 16 And the reason -- the difference I see I 17 see box trucks being a different class. You have 18 some box trucks which are rated 25,999 pounds. 19 That's different than being a one ton truck so I 20 think those are a little bit different prices as far 21 as towing those. 22 I would like to thank you for your 23 consideration. And I do have, you know, a couple of 24 things. I don't know if you caught those. You asked 25 about the difference in CPI, our costs for CPI versus ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 40 1 CPI. The insurance has gone up dramatically. 2 Government regulations are increased on us which 3 costs a ton more money to keep in compliance. 4 Technology has, you know, become extremely expensive 5 for us, and the cost of equipment has just gone 6 astronomical, not to mention the wages. 7 And another thing you mentioned, 8 consensual towing, now, I heard their rates. I can 9 tell you at my place to tow a Ford Explorer, it would 10 cost $89 plus $2 per mile, so 10-mile tow you are 11 looking at, I don't know, $109 plus tax and that's if 12 you have the keys and the owner is there with you 13 and, you know, everything works nice when you have 14 the keys for a vehicle. If you don't have the keys 15 or if there is extra labor which, for example, on a 16 lot of these private impounds, you don't have -- 17 there are no wheels on the vehicles, tires are flat, 18 and you really don't know the condition of the 19 vehicle. The wheel could be falling off when you are 20 towing it. You don't know if the lug nuts are loose. 21 There is additional information that you 22 have to have and you have to obtain on yourself so it 23 does cost more for a private property impound than it 24 does for a consensual tow. Vehicles may be wrecked. 25 You know, I have seen them where they are basically ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 41 1 in two pieces almost, and you still have to tow that 2 thing. And to tow it for what we are getting now 3 just isn't -- doesn't even cover -- doesn't cover my 4 conceptual tow rate on what we would charge on that 5 stuff. 6 If you have any questions, I'm more than 7 happy to answer them. 8 EXAMINER LYNN: You have a question from 9 one of our staff. 10 MR. HENDERSON: I am Matthew Henderson 11 with the Transportation staff here at PUCO. I just 12 had a couple of questions as you were going through 13 some of your costs. First question do you have 14 any -- you mentioned liability insurance that was 15 pretty high, about $90,000. Is there any other 16 additional insurance that's also kept as well or is 17 that? 18 MR. SHRINER: Other than it's -- well, 19 it's liability on -- I would say no to that question 20 as far as insurance goes. We have, you know, health 21 insurance on the employees but that's different so 22 just liability insurance. It's liability. It -- 23 also it's comprehensive on our trucks and, you know, 24 mechanics, mechanics insurance, whatever you want to 25 call it, so hook coverage, but it's basically ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 42 1 liability and comprehensive on our vehicles. 2 MR. HENDERSON: Okay. And then as it 3 concerns -- I know you have a number of different 4 trucks that you operate but what would you say just 5 the average life cycle of a truck might be? I know 6 that varies. 7 MR. SHRINER: It does vary quite a bit. 8 I try to get between -- you know, first of all, you 9 are paying on the truck for the first 5 years, so you 10 better get 5 years out of the truck, or you are just 11 throwing your money away but try to get 10 years out 12 of my truck. But basically most people I would say 13 seven years would be a good response, good lifestyle 14 of truck. If you take care of it, seven years would 15 be a good life cycle. 16 MR. HENDERSON: And then as you kind of 17 listed some of those expenses, if you could give a 18 ranking maybe of the top -- top three expenses that 19 we are trying to -- we were -- we were tallying all 20 the expenses and just some of your costs, what would 21 you say probably the top ones are? Probably 22 insurance and truck costs, I would assume. 23 MR. SHRINER: First of all, that would 24 probably be -- I can tell you everything has gone up 25 so much. I would say our top cost is our employees ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 43 1 because, again, not only do you have the wages of the 2 employees, you also have so much more involved in 3 training them. You have so much more involved in 4 their -- in the insurance. Every -- all the expenses 5 on the employees have just gone up. So I would say 6 that would be probably the top one there. 7 Let's see, the second thing insurance, 8 and I -- actually one of our insurance carriers is 9 out here in the thing. And the rates on the 10 insurance -- he is out here in the audience I guess 11 you would call it, but the rates on insurance they 12 have told us is going to go up even higher next year 13 because a lot of the carriers have dropped out of the 14 market, so they keep telling us to expect a huge 15 increase when we know it. If our 90,000 this year, 16 is going to be probably I would -- they won't tell us 17 except a huge increase. 18 But the other thing on the trucks would 19 be the vehicles, the trucks, not only has the 20 equipment gone up but all -- the emissions on those 21 trucks has gone -- and that's probably why the trucks 22 have gone up so much, big part of it anyway, because 23 of the emissions requirements and, again, not only is 24 it required, you know, costs of the trucks, but it 25 also raises the cost of the repairs on the trucks ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 44 1 drastically. I can tell you every time I take a 2 truck in to -- if I have a check engine light come on 3 or starts hesitating, you might as well count on that 4 bill being 2,500 to 4,000 dollars every single time. 5 MR. HENDERSON: Thank you. 6 EXAMINER LYNN: Thank you for your 7 comments. 8 Mr. Mechlenborg, any other remarks? 9 MR. MECHLENBORG: Yes, just a few. If 10 you look at the regulatory history of the towing 11 industry since 2000, a number of bills were cited and 12 what you are seeing there is a push by the 13 legislature to try to get, I guess, the proper word 14 would be more professionalism and these towers have 15 met that challenge but with that comes the added 16 expenses. Some of them seem minor, the extra 17 cameras, the extra certified mail, the -- all of 18 these different things, but they do add up. 19 And that is one of the things that we are 20 really going to work on to try to quantify a bit 21 better for you in our next session. I would also say 22 that, for example, in 341, now, there must be written 23 contracts with the private owner. There is a quote 24 antikickback provision in there and there's a number 25 of things that makes this industry sort of a target ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 45 1 just by the nature of the towing business in and of 2 itself and the number of the things the legislators 3 added on there. Some were alluded to before with the 4 three strikes, et cetera. So this then has, of 5 course, litigation costs involved. A lot of these 6 smaller ones they will exceed the Consumer Price 7 Index. 8 I did have a brief conversation with the 9 insurance agent out there. He is not prepared to 10 testify today, but he is going to assist us with 11 working some numbers as to what the real costs of the 12 different types of insurance have been. 13 Another thing that sort of hasn't really 14 been noticed enough today is the lot storage. It is 15 getting harder and harder to clear these lots which 16 is why I think in Mr. Shriner's presentation there 17 was a slighter increase in the lot storage over the 18 other recommendations. We believe though this is a 19 very real charge. You start sending out these 20 certified mail notices and there is even a provision 21 in 341 when you send it out to the lienholder, it 22 doesn't even become effective until the lienholder 23 receives it. So that thing can get kicked around for 24 weeks and there's less and less incentive for people 25 to come claim their vehicles and these lots you see ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 46 1 the pictures of them. They are just filled. And 2 that, of course, increases insurance costs and the 3 cost of retaining these vehicles. So we have a 4 number of things to get deeper on your question 5 primarily is what differentiates this from the 6 Consumer Price Index. 7 The last one is sort of a delicate 8 subject. I have negotiated a lot of labor contracts 9 in my day. Usually you are working back three years, 10 four years how do you correct, you know, the last few 11 years. We are talking 17 years here. And we've got 12 to get it right this time. I know the 341 requires 13 periodic reviews which is a very, very good thing but 14 these have been long, long overdue and I don't know 15 how you are going to want to consider that but I hope 16 you do a little bit. 17 So look forward to continuing our 18 dialogue here. 19 MR. MARTIN: Thank you. The Attorney 20 Examiner had to step out. So are there other people 21 that wanted to provide testimony? I am going to try 22 to do my best to run this the way the Attorney 23 Examiner runs it, but you need to state your name, 24 who you are with, and please spell your name for the 25 court reporter. ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 47 1 MR. WINDLE: Yeah. My name is Kenny 2 Windle, W-I-N-D-L-E, and I am with Wichert, 3 W-I-C-H-E-R-T, Insurance. And I want to speak on 4 behalf of the insurance industry. I didn't sign up. 5 I didn't really prepare, per se, but and what the 6 towing industry is facing at this point in time one 7 of the larger players in the business has been around 8 forever is Progressive Insurance, and last September 9 they pulled out of the towing and recovery industry 10 all together. And it had somewhat of a ripple effect 11 because they were our go to with our new business 12 situations or with risks that were -- maybe had more 13 claims than a typical carrier may -- or a typical 14 towing business may have. 15 And so with that and any time you limit 16 the competition, if you will, it's spread out over 17 fewer players, and we have seen the rates increase. 18 Another carrier, I won't mention their name 19 necessarily, but they had three separate claim 20 situations where the $1 million of liability that's 21 required by the PUCO had already been used, and they 22 had gone into the umbrella, the $1 million of 23 liability over and above. And that in itself over 24 probably an 18-month period, the result was that 25 carrier said no longer are we writing towing and ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 48 1 recovery business, another large player in the 2 industry. 3 We had a company jump in about six years 4 ago, and we see this occasionally where they see 5 there's a lot of money, if you will, in the towing 6 per truck, and they jumped in and cut the going rates 7 by 10, 15, 20 percent. I guess in one way 8 fortunately we represented that company. But they 9 found out relatively soon, within about three years, 10 that the claims well exceeding what the premiums they 11 were bringing in per unit were. And so they -- they 12 pulled back the reigns dramatically, limited the 13 number of trucks they would take to five, actually 14 will limit the number of miles that can be on the 15 trucks you operate. They don't want any older 16 trucks. 17 We see the age limit for drivers 18 continually -- continually increase. It used to be a 19 father-son operation you could be 16 and jump in the 20 truck, Junior, let's go. Then that -- that kind of 21 went to 18 and now 21. Even a family member within, 22 which is a very common thing, better have a very 23 clean record and have worked in the industry for some 24 time before they actually get behind the wheel. 25 So there's no question with the limited ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 49 1 players, the fact that the -- and unfortunately in 2 towing accidents you have the large truck and you 3 have the smaller vehicle and the damage is done, both 4 bodily injury and property damage, to the small 5 vehicle. 6 So we're -- I wouldn't want to put us in 7 the health range of where you have so few players 8 that they just call the shots. We still do have I 9 would go with a half a dozen, again, depending on the 10 risk that we will submit our applicants to. 11 You had asked what other costs, if you 12 will, besides insurance. Within just the insurance 13 you obviously have the liability for the bodily 14 injury, property damage. You have the general 15 liability for folks that are coming onto your 16 premises or things that you may do non-auto related 17 while you are in the act of business out in the 18 field. 19 Employment practices liability is a very 20 big factor right now in that you have wrongful 21 termination situations. You have failure to hire. 22 Someone may come in, let's just say they are in their 23 mid 50s, and you hire the 35 year old because he has 24 got more experience, better driving record, whatever 25 it may be. There's an attorney waiting in the wings ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 50 1 that will allege age discrimination. And these are 2 things our owners face here and there. 3 Stopgap employer's liability is a 4 fallback for Workers' Comp. when someone is injured 5 on the job that steps in over and above the Workers' 6 Comp. If you are sued alleging that let's just say, 7 you know, your husband was put in a situation of 8 danger which, of course, as we know, every time that 9 one of our towers is out on the roadside, they are in 10 a situation of danger, but stopgap is another 11 expense. 12 Of course, the property, most of these 13 folks have the building they operate out of. Several 14 do service and repair also and if not just for their 15 own trucks. That can -- that can add up. Garage 16 keeper's legal is for the actual storage of the 17 customers' vehicles and something that everyone must 18 carry. Garage liability itself, if one of our guys 19 even replaces a tire out on the roadside and for 20 whatever reason, maybe error, maybe negligent, maybe 21 at that time the hub was ready to fall off anyway but 22 that car goes down the road and there is an accident, 23 they are brought into a suit for that, so they have 24 to have that garage liability. 25 So there are several insurance coverages ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 51 1 within, you know, the towing itself. But there's no 2 question it's volatile, if you will. We are right 3 now seeing 5 to 8 percent increases on a clean 4 account, no -- in other words, no claims. We've had 5 somebody that's gone for three years with no claims. 6 If you've had one of a 10,000 or up nature, you can 7 count on a minimum of 10 percent if that's all you 8 had, and then honestly it goes up from there. 9 Anything over 25 percent you frankly -- 10 well, there's a limit. 25 percent is about the 11 limit, and we don't necessarily see that very often 12 but what these -- what these companies will do that 13 are afraid of the industry now, they will give that 14 full increase in hopes frankly that that person will 15 move to another company, that someone will outbid 16 that and move to the other company. 17 So insurance costs ranks right up there 18 with employee costs, no question about it, as one of 19 their major expenses. Be welcome to any questions. 20 MR. MARTIN: Thank you. I am trying to 21 think how to phrase this. From the perspective of 22 claims, what goes into the claims that you see when 23 they are coming in and it's a person who's coming in 24 and asking a claim. What is generally -- what are 25 they -- what's going into that you're seeing? I am ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 52 1 trying to get an idea what's in the cost. 2 MR. WINDLE: Okay. So, in other words, 3 an underwriter we're presenting a risk to wants to 4 know -- I am going to give you a really good example 5 I had with one of my personal clients. We had a twin 6 axle 30-ton wrecker that was cresting a hill in a 7 light rain. When he came over the hill, traffic was 8 stopped above from a previous accident. 9 Of course, secondary accidents are a 10 major concern these days. He was able to brake. He 11 did everything he could to avoid a little Prius that 12 had two passengers in it. And he did actually steer 13 the wrecker over to the side. He hit a flatbed semi, 14 tractor-trailer, with a -- with a mold, an automotive 15 mold, on it. Our driver who was belted actually was 16 thrown from the vehicle in spite. The mold slipped 17 off the side of the vehicle. Our driver went over -- 18 rolled over the flatbed onto the ground. And State 19 Highway Patrol was sure they were going to be coming 20 upon someone with serious injuries, if not fatal. 21 And our driver never lost consciousness, 22 so he survived that with no problem. The two ladies 23 in the Prius were injured. The truck driver was 24 injured. The fifth wheel on the semi tractor was 25 destroyed. The flatbed was destroyed. Thankfully ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 53 1 the automotive mold survived. Those things can cost 2 half a million dollars in themselves. 3 So what we try to do is give our 4 companies details. In this situation our -- our 5 client had not had previous claims to speak of. We 6 call this one of the catastrophic nature as opposed 7 to a frequency nature. It was a severe one. And 8 we -- we try to give them the details so they take 9 that and they take the amount of that claim which in 10 that case was $360,000 total combined and they take 11 that against the premiums that are brought in and 12 they come up with a loss ratio. 13 Ideally you keep something in the 20, 25 14 percent loss ratio range. When they go up and above 15 that, that's when then these towing and recovery 16 operations are looking at, if you will, a severe 17 increase in premiums. So they absolutely do dissect, 18 if you will, judge, you know, depending on the 19 circumstances and, again, the likelihood of something 20 like that happening again. 21 They -- actually the frequency issue is 22 more concern when you see a lot of little 3, 5, 6, 8, 23 10 thousand dollar claims. They are like, okay, 24 something's not quite being taken care of here. And 25 so that's judged sometimes actually with more ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 54 1 scrutiny than a severe claim that is an aberration. 2 I hope that answers that. 3 MR. MARTIN: Yeah. Just getting an idea 4 of how you come up with -- I guess I was angling more 5 towards people that might be asking to be reimbursed 6 for nonconsensual tows that might be covered under 7 their policy. 8 MR. WINDLE: And, you know, there is no, 9 if you will, per se, coverage for something like 10 that. When it comes to exchange of funds between our 11 towing and recovery owners and their clients, 12 there -- frankly there is no coverage in that sense 13 so that does not -- does not come into play. Okay? 14 MR. MARTIN: Yep. Yeah. 15 MS. SAPONARI: I just wanted to say in 16 his insurance -- sorry. 17 MR. MARTIN: That's okay. 18 MS. SAPONARI: Our deductible is really 19 high. On a small claim we usually pay them 20 out-of-pocket, so we don't have to deal with that. 21 So we have a $10,000 deductible so anything that 22 happens under that deductible, we will pay it 23 out-of-pocket instead of letting it go against our 24 insurance. 25 MR. GARY: Piggybacking regarding the ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 55 1 insurance in these situations, we're contracted with 2 the property owners who are ultimately our customers 3 that we are providing the service to of enforcement 4 of their property rights. The parking violator in 5 which we towed, they are upset that their vehicle was 6 towed. They are upset that they have come out; it is 7 an inconvenience that their vehicle is now gone which 8 hampers the rest of whatever their daily scheduled 9 plans are. 10 So understandably they are upset. 11 Sometimes and potentially frequently they are looking 12 for an outlet because they are now incurring the cost 13 of the towing and storage of that vehicle. So they 14 are looking for an outlet. Sometimes illegitimately, 15 they've paid us as the cost for the towing and 16 storage, and then they turn around and file what they 17 may be believing that we caused damage to their 18 vehicle. And as Sandy has indicated, generally in 19 those occurrences we don't want our insurance to go 20 up of incurring a claim on the vehicle, so we will 21 generally have to pay those out-of-pocket to ensure 22 that it doesn't incur a hit to our insurance. 23 And in those situations especially, I am 24 sure this may affect Mr. Duffey's operation 25 especially in the city with the volume of calls, but ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 56 1 we pay those out-of-pocket. That's an additional 2 expense we need to incur, you know. We provided the 3 service for the property owner. We billed the 4 customer -- correction, the parking violator for the 5 infraction, for the towing. And then on the back end 6 of that we get hit with essentially a damage 7 liability claim that generally is fraudulent like 8 Mr. Duffey explained. 9 That's another assurance when we are 10 taking photography, the photographs showing the 11 parking violation, we are also trying to document the 12 condition of the vehicle even with the presentation 13 of those photos to a customer to validate that, you 14 know, we didn't cause that damage to the preexisting. 15 If they continue to push that issue, it 16 may be in our best interest to go ahead and settle 17 and pay them something to avoid it going to the 18 insurance which would escalate our insurance claims 19 costs over the year. So I hope that can provide you 20 with some feedback that is a very real and legitimate 21 concern that as owners we face when we decide to 22 enter into this market, and especially for my 23 operation being a rural provider, if I'm not there, 24 it is very -- a very select few and handful of 25 companies that are willing to undertake the liability ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 57 1 exposures that we incur as the business so that we 2 can enforce the property owner's rights. Simply put 3 if we don't do it, who will and that's where we need 4 to weigh that balance out. 5 MS. MERRIMAN: And to add to what he is 6 saying and in the increase of security, my office 7 window has been broken out on our building 10 times 8 in the last 20 years by the college student that got 9 his car towed and knew better. And then that goes to 10 the insurance and then the insurance comes back and 11 says, oh, well, this has happened time and time 12 again, so it gets raised another 10 percent. So if 13 we can't keep the costs going up with all of our 14 costs going up, then we can't continue to have the 15 security and the safety of our employees let alone 16 our customers because we too have the repair garage 17 there too. Thank you. 18 MR. MARTIN: Thank you. One more kind of 19 general question just for everyone out there, I've 20 heard some discussion of urban versus rural, and I 21 know that both organizations that have come up and 22 testified so far kind of said flat rates based on the 23 size of the vehicle. Can you talk a little about why 24 flat fee basically that doesn't distinguish between 25 rural and urban and what your thinking is around that ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 58 1 concept, whether that's worth exploring or not worth 2 exploring, or what your thought process went into the 3 fact that you chose a flat fee by tier and not based 4 on urban versus rural since we've heard there are 5 differences obviously between the urban versus the 6 rural? 7 MR. MECHLENBORG: I want to take a shot 8 at it. 9 MR. MARTIN: That's fine. Make sure you 10 tell the -- 11 MR. MECHLENBORG: Sure. Bob Mechlenborg 12 from TRAO. I think that discussion of urban versus 13 rural was more designed to show that each group might 14 have a different set of challenges and issues like 15 something might be more important over here than over 16 there. But the reality is from our perspective it 17 really doesn't affect the central costs of the wages, 18 of the equipment, of the insurance. And because of 19 this, because quite frankly I think you run into if I 20 tried to make grades between urban and rural, then 21 are you going to do a suburban rate? Are you going 22 to do a really rural rate? You can go on and on with 23 it. 24 So because of that the numbers as 25 presented by both organizations generally reflect ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 59 1 what would work best for both the urban and rural and 2 that's why it was presented in that fashion. 3 MR. SHRINER: I can just tell you it's 4 too complicated. 5 MR. MARTIN: And can you just let us know 6 who you are. 7 MR. SHRINER: I'm Jim Shriner with TRAO. 8 Yeah, it's just too complicated like he -- it's just 9 too complicated. Well, they are parked in a shopping 10 center with population of 10,000 versus they're 11 parked in a shopping center which has a population of 12 100,000. How can -- it's too complicated to do that. 13 MR. COULTER: It is Brian Coulter with 14 APTO. I think the only think I would add is we had 15 some discussions in our rate committee about this 16 issue. And the conclusion we came to was that it all 17 essentially comes out in the wash. With rural 18 communities, yeah, tower might be spending more on 19 mileage and more deterioration to their vehicles 20 because they are driving longer distances but that at 21 this time a towing company or storage lot is paying 22 more for property tax, things of that nature, and so 23 while they are going shorter distances, I think the 24 simplest way I can put it at the end of the day I 25 think taking into consideration just simplicity of ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 60 1 flat rate and the fact a lot of these costs even out 2 with the flat rate structure, so. 3 EXAMINER LYNN: Does anyone else have any 4 comments at all for the day? 5 Okay. Well, hearing none, thank you all 6 for your appearances here, I know some of you had to 7 travel quite a distance, and for your testimony and 8 verbal as well as written. And we will take these 9 comments into account when we begin to work on some 10 proposed rules. 11 Thank you. Have a good day and good trip 12 home. 13 (Thereupon, at 11:20 a.m., the workshop 14 was concluded.) 15 - - - 16 17 18 19 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481 61 1 CERTIFICATE 2 I do hereby certify that the foregoing is 3 a true and correct transcript of the proceedings 4 taken by me in this matter on Friday, April 21, 2017, 5 and carefully compared with my original stenographic 6 notes. 7 8 _______________________________ 9 Karen Sue Gibson, Registered Merit Reporter. 10 11 (KSG-6350) 12 - - - 13 14 15 16 17 18 19 20 21 22 23 24 25 ARMSTRONG & OKEY, INC., Columbus, Ohio (614) 224-9481