SF's cab industry is about to change dramatically — but no one knows how an experiment in selling permits will actually turn out
By Skyler Swezy
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.
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.
But critics, including Judge Quentin Kopp, the former San Francisco supervisor who wrote the 1978 law that created the old system, say the medallion holders just want to cash in on something that has always been city property.
The pilot project approved by the SFMTA board allows the city to sell up to 60 medallions directly to drivers and allow about 300 drivers over the age of 70 to sell their medallions to any qualified driver who can come up with the cash. The program aims to set a fixed selling price, but has yet to do so, instead setting a $400,000 limit. It is estimated that medallions will sell for no less than $200,000.
That, of course, will be a huge windfall to the sellers, who paid nothing for their permits.
The pilot program was essentially a done deal even before the Feb. 26 vote. In an e-mail to the Guardian, agency spokesperson Judson True confirmed that $11 million in taxi revenue had been added into the MTA budget before the vote took place.
Kopp sat behind the desk in his West Portal neighborhood office a week before the MTA vote, bitterly condemning the medallion sales program. "It's based on greed. It's based on City Hall greed," he said. The stentorian 82-year-old occasionally thumped the desk with his fist for emphasis as he launched into the history of Proposition K. Then-Sup. Kopp authored that landmark legislation prohibiting private companies from owning driving permits, instead granting control to drivers.
"This will reverse a system that gave a genuine cab driver the opportunity to obtain a permit and replace it with a system that restores the ability of people with lots of money to buy a permit," he said.
But Kopp's bill had some unforeseen consequences. The list has become so long that medallions are being issued to people in their 60s and 70s — and some of those people are driving passengers around town despite failing reflexes, eyesight, and motor skills.
Carl Macmurdo, president of the Medallion Holders Association (MHA), believes that selling medallions will provide an exit plan for geriatric drivers while giving younger cabbies an entry opportunity. At 59, Macmurdo is still a full-time driver and has been in the industry 27 years.
It makes sense that MHA members are generally in favor of the pilot program — they could potentially make a mountain of money. Although only those over the age of 70 are now eligible to sell them, the age limit could be lowered in the future.
The United Taxi Workers (UTW) headquarters consists of a few cramped offices on the fourth floor of an old office building in the Mission District. All the interior trim is painted taxi-yellow. In late January, UTW spokespersons Mark Gruberg and Rua Graffis sat at a large table, fearing the worst.
They predict the sale of medallions will provide large cab companies with the equivalent of indentured servants. They say drivers will need upwards of a $200,000 loan to purchase a medallion, requiring a hefty downpayment.
Few drivers will be able to pay for a permit with savings, so the system will only work if someone is willing to finance those purchases. And drivers who are recent immigrants or have bad credit may not be able to get traditional loans. So they could wind up borrowing from their employers, the cab companies, UTW activists say — and by owning the debt the companies will essentially own the medallion.
"Supposedly there's going to be a provision that says a cab company can't lend money to a driver toward purchasing a medallion. But it would be so easy to get around that by hooking up with an outside lender," Gruberg said.
Another fear is that the pilot program will favor young drivers and punish veterans. "Suppose a 27 year-old is on the list and I'm 63. Which one of us is the bank more likely to lend money to?" Graffis asked.
Under the pilot program, drivers will have the option to purchase according to seniority on the list. But without a lender, that's little help.
At 1 p.m. the day of the SFMTA vote, Bill Mounsey and David Barlow were sitting on a bench outside the hearing room. Both are members of UTW and planned to speak in protest of the pilot program.
Mounsey is 63. He's been on the list for 13 years and is No. 200. He is part of the group most vulnerable in the medallion reform process — drivers who have already waited more than a decade but still have years to go.
If at any point the board decides to eradicate the list before he receives a medallion, Mounsey's years of waiting will be wasted. "I would never buy one. I'm 63 years-old, no one would ever give me a loan," he said.
For now, the wait list survives. Under the pilot program, one medallion will be given away for every one sold until the list is exhausted. However, with only half as many medallions being given out, Mounsey fears the list will move half as fast.
Around 50 people attended the meeting, a small fraction of the city's cab drivers. At 3:56 p.m. the board passed the pilot program and Prop. K moved a little closer toward death.
Hayashi spent more than 175 hours trying to create a pilot program that provides the city with revenue and benefits the taxi drivers. She has made an effort to engage the taxi community and worked with a group of drivers to draft the proposal. She even plans on getting a taxi license.
After the City Hall meeting, Hayashi explained the challenges facing the pilot program over coffee in a downtown cafe. Before March 30, when the proposal is set for a final SFMTA vote, Hayashi must lock down lenders, create lending programs feasible for drivers, and set a fixed selling price for the medallions.
The blaring problem with the pilot program is a lack of committed lenders ready to finance cab drivers' loans. Bank of the West has expressed interest, as well as two New York credit unions experienced in medallion loans and two San Francisco credit unions.
But how will those loans be structured? Who will qualify? How much of a downpayment will drivers need? And how, in the end, will this change the experience and qualifications of the drivers — and the quality of cab service in the city?
Hayashi sounds confident. "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," she said.
But a lot — a whole lot — can go wrong with this major change in a complex industry that provides essential service to residents and tourists alike. And once the city moves down the path to private medallions, it's going to be hard to go back.