Taxi turbulence

SF's cab industry is about to change dramatically — but no one knows how an experiment in selling permits will actually turn out

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Dorian Lavender hopes to buy a taxi medallion some day.
Photo by Skyler Swezy

By Skyler Swezy

news@sfbg.com

It's 10:20 p.m. on a recent Saturday night. Cab driver Dorian Lavender picks up a middle-aged couple outside the Gold Club, a strip joint in SoMa.

The couple is sharply dressed for a night out. After requesting the Mitchell Brothers' O'Farrell Theatre as their destination, the man brags to Lavender about having had sex with a stripper in one of the club's private rooms. His female companion smiles and says nothing.

"This is before I met her," the man explains. "We're swingers."

Minutes later, beneath the theater's flashing marquee, the man hands the driver a $20 bill for the $10 fare. "Keep the change," he says.

A few blocks away, a young couple flags the cab from the corner of Bush and Polk streets. They are talkative and entertained as Lavender tells them about the swingers. Ten minutes later, the meter reads $9.86. Apologizing, the young man hands him $11.

Lavender folds the bills into the cash-wad kept in his pocket.

"That's how it goes with cab driving," he says. "The nice couple tips 10 percent, the weird swingers tip 100 percent — and they were more interesting to talk to."

At 25, Lavender considers cab driving a great gig and survives working only three shifts a week. He enjoys the cash, freedom, and unpredictable encounters. He's even landed a few dates. A lot of career cabbies start driving for the same reasons. But after the excitement wears off, it turns out to be a tough job.

A typical cab driver in San Francisco makes less than $30,000 a year. Before drivers even start a shift, gate fees (covering the rental on the cab and the use of its permit, known here as a medallion), gas, and graft have already set them back close to $100. Bribes are commonplace in the industry, used to ensure weekend shifts, airport fares, and newer cars.

The industry offers no retirement plan or health coverage. In fact, the primary reason some people stay behind the wheel long after the thrill is gone is the promise that at some point, after maybe 15 years, an active driver becomes eligible for his or her own medallion. It costs almost nothing, and offers a tremendous benefit: drivers with medallions no longer pay high gate fees, get better shifts — and can lease out the permit when they're not working. The lease revenue alone can nearly double a driver's income.

Since 1978, medallions have been issued only to working drivers, and entirely on the basis of a waiting list that now numbers 3,200 names. New medallions become available when permit-holders retire, die, or are forced by disability to stop driving.

That system — and the entire cab industry — is about to change, profoundly. On Feb. 26, the San Francisco Municipal Transportation Agency agreed to allow some permits to be sold on the open market to help close its huge budget deficit. When the dust settles and the implications of that decision become clear, life for cab drivers and passengers will be very different.

Some say the industry will be better; some say it will be much worse — but the truth is, nobody really knows.

 

PRIVATIZING PERMITS

Mayor Gavin Newsom's adminstration has talked about allowing the sale of permits for several years, but only in the past few months has Christine Hayashi, SFMTA's deputy director of taxi services, come up with a detailed plan.

It's aimed at addressing what some drivers call an unfair and flawed system. Permit-holders by law must drive a minimum number of shifts, and it they get hurt or just get too old to drive, they have to surrender their medallions, leaving them with no source of income.

It will also help SFMTA's budget — the city could sell unclaimed permits for big money and would get a cut of every other sale.

Comments

Once the "private investors" get into the Taxi Business they expect a certain return on their "investment"

In order to achieve that return they will, as they have in every other location, squeeze the drivers.

Have a look at other cities that have gone down this road, have a look at the drivers benefits and pay.

Posted by Guest on Mar. 02, 2010 @ 9:42 pm

The tin Medallions that the City wants to sell are a disaster for all but the Medallion Finance Bank.

The buyer of the "tin" will be lucky to meet the monthly interest payment from what he lease the "tin" to the taxi company. So, his only profit is speculation that the sale value will increase, which it won't, unless there is some net lease income. That is not always the case, and it is more likely that the "Tin Man" will default, and lose his deposit....but what is likely: taxi rates will rise a lot faster than they have been, due to pressure from the impoverished "tin buyers"

The City says it is doing this to make money. Only in the first year will that happen, when the City sells what all the drivers on the Wait List had expected would be theirs some day..

If the City kept the Medallions, and charged a 10% Lease Income tax, they would make $3,600,000 per year, forever, and the drivers, in return for paying the tax they do not now pay...should be release from their DR (Driving Requirement), after 25 years, so that they can have the $24,000 lease income as a retirement fund. This modification to the former Prop K would attract top quality drivers, as the problem ones would be winnowed out.

We don't respect our city's taxi drivers, as many are "people of color" and immigrants, so they are seen as "easy pckins"...

I served on the Taxi Commission for 2 years, and follow it daily, and this deal
should not go down.

Posted by jack barry on Mar. 05, 2010 @ 7:23 am

Tim's half baked opinion posted on a blog is no substitute for an in depth analysis of Sit/Lie. I hope that the SFBG puts real pressure on this issue and does something substantial to counter the coordinated effort that the chronicle/chamber/team newsom are unleashing to sell this load of crap. It was disappointing to see nothing in here this week.

Posted by Nate Miller on Mar. 03, 2010 @ 10:07 am

San Francisco Bay Guardian
look up haroldmiller4mayor.org to see his plan for the city of San Francisco

Posted by HAROLD MILLER 4 SAN FRANCISCO MAYOR 2011 on Mar. 03, 2010 @ 12:19 pm
Posted by GuestME on Jul. 02, 2010 @ 1:35 am

Big Dog CityTaxi cab driver Harold Miller will be running for Mayor of San Francisco just to change the medallion rules and Heres future Mayor Miller plateform , first I want every cab driver to have a medallion in 2 years of driving a cab in San Francisco and the way of doing this is enforcing very STRICK rules like having a clean cab, no accidents, and paper worked filled out,and driver and cab smelling nice , no complaints from passengers and after 5 valulations the medallion goes to the next driver on the list and if he can't hold onto it back to the list again , so with this system everyone gets a turn in about 2 years, with a small $600.00 app fee per turn over, and the money goes into the city bugets...

Posted by HAROLD MILLER 4 SAN FRANCISCO MAYOR 2011 on Mar. 03, 2010 @ 12:15 pm

There have been a lot of stupid statements made during the debate on this issue, but Hayashi's comment that "Good service depends on happy drivers. Our goal is to restore professional pride for the drivers, allow them to feel that taxi driving is a career and a respected profession." is one of the more stupid ones. If owning a medallion gives you pride in your profession, there will be the same number of owners after the city starts charging them an arm. Unless, of course, City Hall issues a lot of unneeded medallions just so they can raise more money, which wd be something they wd have a hard

Posted by Guest on Mar. 04, 2010 @ 9:33 pm

There have been a lot of stupid statements made during the debate on this issue, but Hayashi's comment that "Good service depends on happy drivers. Our goal is to restore professional pride for the drivers, allow them to feel that taxi driving is a career and a respected profession." is one of the more stupid ones. If owning a medallion gives you pride in your profession, there will be the same number of owners after the city starts charging them an arm. Unless, of course, City Hall issues a lot of unneeded medallions just so they can raise more money, which wd be something they wd have a hard time resisting, of course. That, naturally wd reduce driver income, and the value of the medallions, and wd lead to higher fares and worse service for the cab riders.
If her idea is, tho, that it's the forking out of a ton of money for a medallion that what makes a driver proud, why not charge twice as much and make them twice as proud?
What actually causes drivers pride in their job comes from within -- knowing that you're a skilled cab driver. And having the respect of the other good drivers and the passengers who ride with you is something you earn. not something you get by telling them how much they soaked you for when you bought that medallion.
Maybe if Hayashi gets her cab license, she might learn that someday.

Posted by Guest on Mar. 04, 2010 @ 9:49 pm

As a former Taxi Commissioner for two years, with no business involvement in the industry, I am sure this selling of Medallions is wrongheaded.

The City needs money. Agreed. A better way, than selling assets, is to impose a 10% Lease tax. That would generate $3,600,000 per year, forever.

The Medallion sale will impoverish the drivers who will be in debt forever, and risk losing their down payment,.

The fares will rise faster, due to increased pressure from theise drivers. Less people will take cabs, as a result, and the city will be more clogged with cars.

Tax the Medallion Lease income, and in return, eliminate the Driving Requirement after 25 or 30 years, so the driver will have a retirement check, and not have to drive in their old age.

Posted by jack barry on Mar. 05, 2010 @ 7:36 am

One of the bad choices the MTA appears ready to approve is the sale of taxicab medallions. This basically amounts to a "taxi tax" that the citizens of San Francisco will pay in perpetuity. As the medallions are sold and resold over time the only one who will profit from these sales will be the banks that provide the loans. A portion of every fare will be required to pay the interest on the note that the driver pays for the medallion but the city will receive its share only once. So the taxi riders of San Francisco will continue to pay the costs of the medallion well after the city has spent what little money the medallion sale generated. The entire proposition is lose, lose, lose. The driver loses two ways, they have to pay more and the increased cost decreases business. The rider loses because they have to pay more and the city loses because they only get the money once. For the driver the medallion fee is simply an employment tax that no other trade is required to pay. dmc

Posted by Don McCurdy on Mar. 05, 2010 @ 9:16 pm

George Burns was to have said, "Too bad those who know how to run the country is cutting hair or driving a cab". If the MTA would listen to those lives they are destroying, just maybe the city and the citizens might see an improved taxi industry and provide drivers a modicum of a decent living wage.
Two myths about medallionis are mentioned in the Guardian's Taxi Turbulence article; one is "medallions cost almost nothing" and the medallion sellers will get a windfall, because "they paid almost nothing for the medallions".
Each cab has a number and each number represents a medallion, so medallions cost to owning one involves car payments, insurance, maintenance, etc. Each driver pays about $100 daily to lease the medallion. After 15 years, the cost to the driver is about $200,000. His equity to one medallion is the years he has drivern plus all the money poured out over 15 years into leasing the medallion.
Yet, neither MTA nor the Mayor (nor the Guardian) gives any notice nor credit to the issue of medallion equity.
MTA recommends selling a medallion they claim might fetch $200, 000 or about the price of equity of a driver who has driven 15 years.
If the MTA nor the City will give equity credit to these drivers and think they can sell the medallions, just watch the class action suits begin flowing in like early morning fog.

Posted by Guest on Mar. 07, 2010 @ 4:00 pm

If anyone wants to provide their input, the blog above (and below) has been set up to consolidate them.

http://sfmedallions.blogspot.com

Posted by Charles on Mar. 10, 2010 @ 6:20 am

The Taxi Mess created by Proposition K -- a Pre K member speaks out.

It was towards the end of the year 1975 that the city of San Francisco lost its Taxicab business. The Yellow Cab Company that existed in many communities in the United
States because of crooked management and greedy practices declared bankruptcy
Yellow Cab owned 850 permits to operate taxis in San Francisco and overnight the
gate was locked at 8th and Townsend and the last yellow cab was silenced.

Yellow Cab also was a monopoly. This company was the only company that was allowed to pick up passengers at San Francisco Airport. This was the only company
that was allowed at the big hotels. The papers were shocked and so were the people.
this is a true story of what happened from then to now.

Contrary to the newspapers sympathy for the drivers who would be losing their jobs
at Christmas time, the few cabs remaining on the streets were busy taking people to
the airport, back and forth – a bonanza for the drivers.

I was one of the citizens of San Francisco that realized that the real problem was the
needy that relied on a cab to get to the doctor, to get home from the store or a visitor
that just wanted to take a taxi – there were none available.

After long thought and concern for these people, my friend and I decided to do something
about it. First of all about three weeks of panic fell on the city. We called the offices
At Yellow Cab and ask what they wanted for the company. Mr. O’Connor, the local President of the defunct company said they wanted 4 million dollars for the company.
We knew our mathematics. We thought that if we could get 250 people together to put
Up $5000 and sign a note for $15,000, we could realistically offer Mr. O’Connor, the
Purchase price of $5,000,000. So we told Mr. O’Connor that we represented 250 drivers, mechanics, and interested parties to come to our attorney’s office and sign an agreement.

To our surprise, Mr. O’Connor and his authorized representatives accepted our offer to meet at Dennis Natali’s (our Attorney) office in the old Jack Tar hotel at Geary and Van Ness.and date. They showed up , and as I remember that date so clearly, so did Channel 2, 4, 5, 7 and 9. They were eager to get this news to the people of San Francisco who were frantically wondering what would happen. We told the TV people and the newspapers where we would be organizing our group. It was at a big office on Van Ness where an automobile company had vacated and we would be open at 0900 the next day to welcome all who wanted to get the problem solved.

Over 500 people showed up and we were so excited to see our plan taking shape. Amongst the applicants was Mr. James E. Steele who was the then manager of DeSoto Cab. My friend, Patrick Shannon and I decided that Mr. Steele could lead us to the prize – the rewarding of the Yellow Cab Company of San Francisco to us from the bankruptcy court.

Our simple yet effective plan was to have those interested in investing and participating in the new company to be called The New Yellow Cab Cooperative initiate a $5000 deposit in our bank in their name. We would allow only one to a member. This met with the favor of over 200 local people who saw the opportunity to invest in a business and think about their family and to inherit the business down thru the years. The bank that we chose was the Redwood Bank and it was on Montgomery and Pacific, catty corner from the Playboy club.

Our job for the next 3 years was to keep our group together and we held monthly meetings in the Jack Tar hotel to keep them informed. There was a great winning spirit amongst the members. We wanted to stick to our plan of one license to each member.
but there were several, not many, who got 2 licenses and one man who wanted 10 licenses, and one lady who had just settled a divorce suit who had $40,000 and she got 8 of them. The reason we allowed more than one was because we had a hard time trying
to get any members. Most of the members were struggling to maintain their savings.

It is necessary to talk about the competition. There were two other groups that also wanted the company. The one prominent group was headed by Harold Dobbs, a former mayoral candidate who wanted to influence the bankruptcy court judge in Los Angeles
By putting up $500,000.00 to act as security and financial strength. The other group of interested parties were those who had no money and thought that a Kelso Plan could work and they had the backing of Quentin Kopp. The three of us met at all of the necessary hearings. (City Police Commission, Board of Supervisors, State of California
Franchise Tax Board )

Finally in May of 1998 the bankruptcy judge awarded the company to us. There was jubilation, but it was premature because 10 days later the court rescinded the order and took It away from us. The Bankruptcy Court wanted the company to go to an entity that would NEVER have to go through bankruptcy again. Our group of 250 investors, headed by Patrick Shannon, went on to convince the Judge that we would never go bankrupt because we were 250 individuals and to go bankrupt each of us would have to go bankrupt, and were finally rewarded the company.

City hall was very concerned about the new cab company. We had the backing of George Moscone and Terry Francois and Diane Feinstein. Several approvals had to be met before any cab hit the street. The Board of Supervisors, The Police Commission, the State of California Franchise Tax Board, and immediate Insurance coverage had to be secured. The city had to transfer the individual licenses held by the old Yellow Cab Company to our 250 members, one by one. We paid $1,000. transfer fee to the city a total of $250,000. Each member had a license (medallion). The medallion was a little tin license plate with the number of the cab pressed in it and each cab had to have one of these in it to be legal. Each member signed a note for $15,000 and after all was in we
paid $5,000,000.00 for the company as we agreed to back at Dennis Natalies’ office.

Our dreams were about to begin. We had many things that worked out in our favor. The former chief mechanic of the old company had personal knowledge of all of the cars. When we opened the lot and washed off the three years of dirt it was stunning to find that many of the cars started right up. We got out 15 cars the first night and I was one of them driving. An amazing thing that I will never get over was that the telephones never stopped ringing with people needing service.

We had challenges because we would be taking in money but we would be having lots of bills and expenses with the start up. With Jim Steele as our leader we had few worries. Our plan was to access each member $300 per month for the first three months. So we had to work our new cabs and guarantee our new company so it would be successful. We worked on the gate system whereas each cab had to pay so much for each shift. To our amazement, the company started off in a positive direction and has never changed.

Politics however interfered with our dream. Because of the fear of corruption and profit making, a proposition called Proposition K written by Quentin Kopp changed the cab business over night. The Prop K simply made the license non transferable.

Our dreams were shot and our disgruntled feelings about the harness thrown on us still hang on us to this date. Those that became members of our cooperative that passed away were left with nothing for their wife or family. The new law protected us by the grand-father clause.which meant that we didn’t have to observe the laws of the new license holders who were given the license by having their name on a list and when they became ill or disabled had them taken away. The drivers who owned the new licenses had to drive 800 hours a year and comply with a tight watch on their waybills, causing lots of anger. The new medallion holders were given a gift that they turned into immediate cash by leasing their medallion. The new license holder regardless of age had to keep driving, some of them up in their 70’s and a few in their 80’s who had to drive to keep their license. The coveted prize given to them by Proposition K was full of dangerous holes. Owners who became disabled had their medallions taken away. It was a nightmare and certainly did not provide the city what it had hoped to cure.

So now MTA (Metropolitan Transportation Agency) is in control of the taxi industry. The agency is in need of money. They have submitted a plan that will introduce $11.2 million in their coffers. The plan is to auction 60 of the licenses from medallion holders (either Pre K or Post K) who are over 70 years old. This auction would favor both Prop K owners and a particular bonanza for Post K owners, who paid little.) They plan an auction that would pay $250,000 to the selected members who would be allowed to transfer their license. The gold rush will be started after the first transfer takes place.

However, the need for money has no conscience. They will argue that those original guys who took a chance and invested their time and money do not deserve the sum of $250,000 The counter argument is that those that got their medallion thru Prop K requirements would get $250,000 too. Draw your own conclusions.

Lets look forward. The city made a law that was wrong. The city has an obligation to correct it regardless of where you might be in the spectrum Once the cabs are made transferable the people of the city and visitors to the city will be served better. The guy who owns his own business will work hard to make it work and pay off for him and his family- this was denied those original investors who stepped in and offered the same thing 31 years ago to save the city. That very fact is why the value of the license should be returned to the pioneers of the cab industry in San Francisco who saved the industry from ever going bankrupt in 1978.

Donald L. Fassett
Age 79
April 8, 2010

Posted by Guest Donald L. Fassett on Apr. 08, 2010 @ 8:29 am