Wednesday, June 17, 2009

Players & Plans: Luxor

While we're waiting to find out when (or if) the Town Hall Meetings will resume, I thought that it'd a good time to glance at the players and their plans.

Reading through them, I've come to realize that I've arrived late at a party that's been going on for years. Many of the proposals are far too detailed to have been worked up in response to Newsom's bomb. While I was whiling away my summers riding camels on the Silk Road or trading vodka shots in Mongolia, cab drivers were feverishly mapping out strategies and engaging in back-door negotiations - all with the dream of being ready for the death of K.

In short, the allegations that I am "uninformed" are true. However, I'm less "uninformed" than any official journalist is likely to be. Reviewing these plans will hopefully lead toward enlightenment. I only have space to look at a few main points. For a full summary check with .

Let's start with Luxor because it has a plan that is both unique and, up to this point, has had the most effect. Drawn up by President and General Manager John Lazar together with Charles Rathbone, the proposal features:
  • A $50,000 up front fee to be paid by a K medallion holder for the right to transfer the permit via an auction. It's a striking idea that the MTA liked so much that thy stole it.
  • A two tiered system that would consist of two classes of medallions and medallion holders.
  1. Transferred medallions, called "M", could in turn be auctioned off like medallions elsewhere. The transfer fee for these would be 5% - 20%. And, once an M always an M.
  2. K medallions would also be maintained as would the List. K cabs would be given out as they are now. Where would they come from? From drivers who died or retired without transferring their medallions and from the City which would issue 10 to 20 new cab permits each year. K drivers from the list would always have the option converting to an M.
  • Drivers high up on the list would be able sell or auction off their positions to drivers lower on the list.
  • The City would give a few corporate medallions every year to dispatch companies like Luxor as a reward for top performance.
While it's authors see lots of winners (money for the City, protection for both medallion holders and drivers on the List as well an exit strategy), the proposal also has difficulties.
  • $50,000 is a chunk of money. It = two and a half years of my life. And up front?
  • The figure is so high that it doubtless has already destroyed any chance of negotiating a reasonable compromise with the City. Then again, at this point that might not be possible anyway. Threatening to steal all the medallions probably was Newsom's idea of negotiating.
  • The amount may be so high that only desperate drivers would pay it. Once the old and infirm had cashed out, the medallions would probably move very slowly. Many medallion holders wouldn't be able to raise the money or wouldn't have enough left to retire on after they did sell their medallion.
As for Luxor's plan for a dual system ...
  • It appears very complicated and the best ideas are usually simple. On the other hand, San Francisco's taxi industry is very complex. Maybe there are no simple solutions.
  • It also seems to me that the supply of K medallions would dwindle fairly quickly as most holders converted to the M permits. Charles Rathbone thinks that 30% of K drivers would chose not convert but even so the number of K medallions would eventually run low.
  • For me, that is the major flaw of the dual system. It can't be maintained without constantly putting new taxis on the street.
  • And, the cabs would be added solely to make the system work - not because of any real business demand or necessity.
The more I think about this proposal, however, the more I like it. It needs to be tweaked of course but it's bold and creative. It shows a willingness to look at the situation with fresh eyes instead of being mired in the usual us vs them narrative. Now if only Mr. Lazor could put that $50,000 back in his paper bag.


  1. Nice work, Ed.

    The $50,000 figure had two purposes. First was to communicate to listeners that we recognize a lot of value in our permits.

    The second purpose was to get the attention of people in City Hall. Luxor's proposal says "We can help" with some serious money at a time when everybody else is crying for help.


    Of course you are right that 50 grand is a lot of dough. If folks want to bargain down from 50K, believe me, there won't be any argument from me.

    At the same time, 50K is do-able. We won't even need to go to a bank. Cab companies will offer loans to medallion holders at favorable terms in exchange for a promise to keep the medallion at the company for x number of years.


    > For me, that is the major flaw of the dual system.
    > It can't be maintained without constantly putting
    > new taxis on the street.
    > And, the cabs would be added solely to make the
    > system work - not because of any real business
    > demand or necessity.

    That's fair criticism. But I cannot think of any other way to keep faith with people on the waiting list. My concern for them is not just altruism. For any medallion plan to succeed, it has to be fair.
    Charles Rathbone
    San Francisco, California

  2. Charles,

    Do you mean that the driver would not be able auction off the medallion right away if he borrowed he money from Luxor? That she couldn't sell the medallion until x number of years had passed?

    Ed Healy

  3. > Do you meant that drivers couldn't actually auction off
    > the medallions until the x number of years had passed?

    Favorable loan terms would come with strings. If a cab company is making the loan, they would want to tie you into a long-term contract.
    Presumably the MH could pay off the loan in full and get out of the contract, just like a home purchaser can pay off a mortgage early.

    No matter who is lending the money, a MH will want to read the fine print. Caveat emptor.

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