MtA Board Unanimously Backs the Consensus Plan

Late friday afternoon, the MTA Board agreed in principle to back the Consensus plan. As presented by Director of Taxis Chris Hayashi, the plan lacked details both on how an oversight council would be chosen and how much the fixed price sale would be set at - as well as how it would be financed. Director Hayashi promised that the information on both these things would be in place by the time of the final vote on March 30, 2010.

The usual suspects spoke both for and against the plan.

Mark Gruberg and other UTW members used the lack of financial information as the main point of attack. Joe Mirable presented an amazing chart showing the "actual" monthly payments for a loan running to over $4,000. Bud Hazelkorn said that the solution to a retirement plan for all drivers was to "tax the rich" - meaning medallion holders who earn about $25,000 a year.

Curiously lacking as a speaker was Rua Graffis, who attended, but didn't speak for the first time in the 25 years that I've know her.

Speaking in favor of the measure was medallion holder Peter Fox, Jane Bolig of the San Francisco Taxicab Coalition, Rober Cesana of the Medallion Holders Association, myself and others.

Barry Korengold of the San Francisco Cab Drivers Association "reluctantly" went along with the plan in a "spirit of compromise" in order to back the efforts of Chris Hayashi.

The most effective and affecting speaker, however, was 74 years old medallion holder, Paul Harting, who told the Board that he was already over 70 when he got his medallion, hadn't had time to save much money and that the consensus plan would give him a chance to "retire with dignity."

Two drivers who had attended most of the Town Hall meetings and, previously had been more of less neutral, spoke against the plan.

Driver John Hahn said that he was coming out against the plan because to the lack of information about the fixed price sale and he was also concerned that the plan contained no reform for the drivers who won't end up holding medallions. Driver Bill Mownsey, who is number 200 on the List, thought that selling medallions would ruin his chances of getting a medallion without charge after waiting for 13 years.

Before the meeting, Director Hayashi told me that she intended to put out over 100 medallion during the next year which, she assured me, would be an all time record. (These would not be new issues but, if I understand it correctly, medallions mostly taken from people holding them illegally.) If so, Mr. Mownsey should get his medallion and much of the criticism directed at the plan should disappear.

One sour note (and may I say an increasingly sour note) was a talk given by Director Malcom Heinicke who once again stated that plan wasn't giving the city enough money. He didn't like the idea of medallion holders keeping 80% of the proceeds of a sale and also approached the idea of auctioning off the cabs.

His speech went far toward endangering the fragile coalition that provides the consensus for the plan. Barry Korengold and the SFCDA would never back an auction and most drivers have trouble understanding what right the MTA has to $15 million in the first place.

For me, it's simply been the price one has to pay to get rid of an extortionist. But, if the dude wants too much more money, I'm going to have to reload my weapons.

Or, as Jane Bolig put it in her much more civilized manner, "We note that the mayor is again threatening to inject himself into this process. To the extend that he works within the consensus, we welcome his input. To the extent that he is in conflict with it, we will oppose."

Open Letter to Tim Redman

Mr. Redman,

It's discouraging to spend 6 months helping to create a Taxicab Reform proposal only to see it totally distorted by the press. It was nice of you to provide a link to the proposal. It would've been even nicer if you'd bothered to read it carefully.

In short, this is as bad a piece of journalism as I've seen. What's wrong with it? Let me count the ways:

1. The proposal does NOT, "in essence" or any other way, allow cab medallions to be sold on an open market.

A. At most 300 of the 1500 medallion will be sold ONLY to working drivers on a seniority list.

B. Only medallions belonging to drivers over 70 will be sold as way for them to get out of business with some equity.

C. The other 1200 medallions will be given out without charge to drivers on a seniority list the same way that they are now.

2. This proposal is NOT the mayor's plan. Newsom's plan was to take all the taxi medallions and sell them at an open auctions as you should be fully aware.

. A. Newsom wanted to extort $600 million from the taxi industry.

B. As a compromise, he's accepting $15 million - which, while still extortion, isn't that bad when you consider the size of the mayor's gun.

3. The entire plan, in fact, is a compromise that was put together mostly by working cab drivers like myself but including of course cab companies and the MTA. We spent over 150 hour discussing ways of reforming (or not changing) this business. We listened to over 20 proposals and discussed them all at length.

A. From what I hear the major doesn't like this plan any better than you do.

B. the mayor wants a lot more money then this plan gives him but he's willing to go along with it to avoid a ton of lawsuits and bad publicity.

4. The fixed price sale will probably be closer to $250,000 than $400,000.

A. The whole idea of the Fixed Price is that it should be affordable for a working driver.

B. medallion holder gets paid leasing fees of $2,000 a month. This price will be fixed so that these leasing fees will cover the price of a loan.

C. Once again. This is NOT Newsom's idea, it's MINE.

D. It's compromise between an open auction and continuing a broken system where drivers have to wait over 20 years to get a medallion.

5. The MTA is NOT hoarding medallions. 30 medallions, in fact, have been given out since the MTA took over on March 1, 2009.

A. It would've been nice If you'd bothered to talk about this subject with Deputy Director of Taxis Chris Hayashi instead of listening to unsubstantiated rumors.

6. Not mentioned by you is the fact that this Consensus Plan also includes:

A. A Driver's Fund to give the average driver benefits - something they haven't had for 32 years.

B. Setting up an industry council made up of drivers and the public to monitor and make changes in the plan if necessary.

1. The council will also study ways of improving cab service to the public.

7. The situation that you describe at the end of your piece - with drivers waiting for people to die in order to get a permit - is the situation that exits now.

A. This plan should speed up the process, not continue screw the drivers like they're being screwed now.

Once again, I have to say that it's very discouraging and frustrating to read such a distorted view of a proposal that so many of us working drivers gave up so much time and effort to create.

It makes you wonder? If the press can't even cover taxicabs accurately, what do they get right?

If you really want to know what goes on in this business (humility aside) I suggest you read a little more of my blog.

Ed Healy,

Cab #572

P.S. You comment page on your blog didn't accept this piece because it wouldn't pass your SPAM filter. Is the filter set up to reject negative criticism?

Yes, We Do Give Out Medallions: Hayashi Explains

Hi Ed:

You asked about the process for re-issuing medallions to the waiting list and the fact that we haven’t sent very many offer letters since the transition to SFMTA.

There were some issues in the early part of the transition that involved creating new procedures and regulations, which slowed us down at first. However, that part is past us now, and the hearing officer is getting a better feel for these cases.

The one bottleneck that remains is the fact that we only have one investigator to prepare for those medallion re-issuance hearings. He has to review 4 or 5 years of waybills for each case, and if anything funny shows up, he has to do additional research to try to figure out if there is any fraud involved. Then he has to prepare his declaration for the hearing and attend the hearing to testify.

This person’s duties also include disciplinary matters, such as the annual Prop K audit of medallion holders. He is currently working hard on identifying the medallions that we will be revoking and preparing the evidence and declarations for each case. He is seriously over-tasked at the moment.

The good news is that we will be interviewing to hire more investigators, who I hope to have on board by March 22. That’s optimistic, but I can hope. When I have those people we will be launching a very intensive hearing schedule in order to implement the pilot program.

The legislation that will be voted on the Board of Directors on Friday February 26 includes a provision that would allow us to credit medallions offered to the waiting list after February 26 toward the 60 that we would be committed to issuing to the list to match the 60 that would be sold. I added that to the legislation to avoid creating any SFMTA incentive to keep waiting list people waiting until the pilot program is officially underway in May.

Beginning in March we will be issuing medallions as fast as we possibly can. Since we can’t sell any until the legislation takes effect in May, the first recipients will all be on the waiting list.

I hope that answers your question. I can’t wait to get those offer letters out. I know that this is a sore point right now and I would like to be able to demonstrate our intentions with actions, not words. It won’t be long now. You can share this letter if it is helpful.

Best,

Christiane Hayashi

Deputy Director of Taxis

San Francisco Municipal Transportation Agency

1 South Van Ness, San Francisco, CA 94103

(415) 701-5235

Note - Since the SFMTA took over on March 1, 2009, they have issued 30 new medallion permits: 18 for Regular/Alternative fuel taxis and 12 for Ramp taxis.

Why the UTW Plan (or lack thereof) Doesn't Work

Over the course of the Town Hall Meetings, almost every group or person involved compromised on their original ideas of how the reform the taxi business. We were all in search of a consensus we could support.

Hansu Kim and the MHA wanted open auctions but they accepted a fixed price sale. Barry Korengold and the SFCDA want a retirement option for medallion holders but, for the time being, accepted the fixed price sale. Mayor Newsom and his man, Malcom Heinicke, wanted 600 million dollars but were willing to settle for less. And, they didn't want a Driver's fund but there is one in the Consensus Plan. Newsom, Heinicke, Kim and the MHA didn't want keep The Medallion Waiting List but they all agreed to do so.

The only group not to compromise, not to accept any new ideas, not for a moment to reconsider their own plan was the UTW.(The only exception was Rua Graffis [photo] who offered a plan to based on the London taxi system.) Every third or fourth meeting, Mark Gruberg would respond to someone else's reform proposal by rhetorically asking,

• "I don't see why we can't just keep Prop-K and have the medallion holders pay for everybody's retirement."

The problem. Mark, is that neither of your ideas work.

Prop-K is fatally flawed:

• K offers no exit.
• 600 of the 1,500 medallions are thus held by people over 60 years of age.
• If all these taxi drivers magically disappeared, the same situation would soon reappear.
• It's human nature. Once somebody has something - especially if they've waited 15 0r 20 years to get it - they don't want to give it up.
• And most medallion holders wouldn't be able to retire even if they'd wanted to. Drivers getting a medallion at 60 probably wouldn't have enough time to save enough money to retire.

The idea that medallion holders should pay for everyone else's retirement is unworkable:

• Medallion holders make from $20,000 to $30,000 a year off of their medallions.
• In San Francisco, this is barely enough money to save up for one's own retirement.
• A small, fixed group of people would be paying for an ever expanding group of retired people.
• In few years, the medallion holders would be overwhelmed by the costs.
• Gruberg claimed that it would only cost $300 per month but San Francisco's controller estimated that a package that included medical benefits would cost from between $18 million and $67million a year.
• The total yearly gross from all the medallions in San Francisco is between $30 million and $40 million a year.

So, that's why we can't keep Prop-K.

Open letter to Mark Gruberg

Hi Mark,

Let me start out by saying that I've been admiring your disinformation campaign in the local press. You've certainly got those bozos nailed. Opinions instead of facts, soundbites instead of truth, right? I've got to hand it to you. Carl Rove's got nothin' on ya.

Out of all the red herrings, distortions and flat out lies that you've been feeding these boobies, it's hard for me to say which one I like the best.

• Maybe it's your telling the press that medallion holders make $70,000 a year when you pay your own medallion holders $2,200 a month. (2,2oo x 12 = $26,400, Mark.)
• Or maybe it wss telling the press that the plan was a cab company plan - after you sat though about 120 hours of meetings and watched the Consensus Plan being put together mostly by working drivers like yourself ... but, well ... you're a cab company owner yourself, aren't you?
• Or maybe it was having your man, Bud, get up at the MTA board meeting and claim that taxi companies would buy up all the medallions when you know full well that our Consensus Plan forbids the sale of a medallion to anybody but a working driver who doesn't already own a medallion.
• Or maybe it was your labeling of the Town Hall Meeting as "unfair" when the only thing unfair about them was the fact that we were forced to listen to you say the same things ("I don't see why we can't just keep Prop. K and have the medallion holders pay for everyone's benefits") in same tone of voice ("I've been cheated, been mistreated, when will I be loved") over and over again for 6 months.

But it was the subtler touches that took my breathe away. Like having your disciples warn the MTA and the press that "meter rates" would go up if the consensus plan was adopted. As if they wouldn't go up otherwise. As you know full well:

• The meter hasn't gone up since 2003.
• During that time the purchasing power of the dollar has declined 19%.
• Thus the profit margins of some taxi companies is running as low as 3%.
• Thus cab drivers are making 19% less in actual spending power than they were making in 2003 - and that doesn't include the 25% or so that business is off due to the recession.
• Thus the meter will be going up regardless of what else happens.
• Brilliant, Mark, brilliant. A red herring for all time.

And claiming that the Consensus Plan "wouldn't do anything to improve service" wasn't bad either.

• As if helping aging and handicapped drivers get out from behind the wheel wouldn't improve service all by itself.
• Not to mention improve the life expectancy of both the drivers and the public.
• And of course your statement ignored all the various ideas that Chris Hayahi tossed out during the Town Hall Meeting like: pesero cabs on Geary, using extra spares during rush hour, rewarding drivers for taking radio calls or using high-tec strategies for improving the radio.
• But, of course, those technically aren't in the plan are they?
• Subtle, Mark, subtle.

I can't help but admire the depths that you've explored to keep yourself from facing the fact that you're playing a losing hand. Congratulations.

Yours Truly,

Ed Healy

Financing the Fixed Price Sale

Director of Taxis Chris Hayashi held a Town Hall Meeting on financing Friday before a group that included two bankers, an economist, Cindy Ward of Desoto Cab, Nate Dwiri of Yellow and maybe a dozen drivers.

The purpose of the meeting was to find out what kind of financing was available and under what conditions. Beyond that, it was hoped that the information could be used to determine what the fixed price should actually be. One of the conditions of the Consensus Plan is that the drivers who buy the right to hold the medallions should be able to afford the payments.

The meeting turned out to be more preliminary than had been hoped. Neither of the bankers were up to speed on the taxi business and only the banker from Bank of the West seemed really interested in pursuing the matter.

This gave Joe Mirabile and Mark Gruberg of the UTW the chance to make their usual contributions to the process.

• Mirabile loudly demanded that Director Hayashi tell him in exact detail what would happen if a driver defaulted on a loan.
• She replied that that was what she was holding the meeting to discover.
• Mirabile then loudly demanded that Director Hayashi tell him in exact detail what would happen if a driver defaulted on a loan.
• A bit later, Gruberg broke into his usual "I've been cheated, been mistreated" speech, accusing Hayashi of having promised to have financial details available by now.
• As usual, this was a gross distortion of the truth but, having gotten his sound bite for the next MTA board meeting, Mark left - before the financial details were actually discussed.

In order to decide whether or not to offer a loan and at what interest rate, the banker said that he needed to know:

• The cash flow of the business.
• How stable the business was.
• What kind of collateral was available to back up the loan.
• The debt to earning ratio.

I offered the opinion that financing a medallion offered less risk than financing, say, a car or a home.

• If a driver defaulted, the bank wouldn't have to worry about spending money to recover damaged property like they often do with cars.
• With the gate system, the value of a medallion is pretty much recession proof.
• The only thing that could really drive down the value would be deregulation - and I thought this was highly unlikely.

The banker, however, was not comfortable with my arguments and remained worried about deregulation and the stability of the business.

Cindy Ward gave an example of the worst case scenario: After 9/11, she said that the combination of the recession and the addition of 300 new cabs to the fleet almost bankrupted Desoto. They couldn't fill their shifts and they couldn't afford to buy cars.

Chris Hayashi said that she was setting procedures in place to insure that that wouldn't happen again. In the future a "rational process" would be used to decide whether or not to put cabs on the street; and any taxis that might be added would be added gradually so that they could be comfortably absorbed by the business.

The banker said that the loan would have to be guaranteed by either the city or a company. Otherwise, the individual drivers would be judged by the usual credit ratings.

Hayashi said that, if a driver defaulted, the companies could continue to work the medallion until the medallion was sold and use the driver's medallion payment to cover the loan.

Joe Mirabile said that if the companies guaranteed the loans and worked the cabs after a default that this, in effect, would create corporate medallions.

Chris Hayashi said that this would not be the case because the companies would only operate the medallion transitionally until it was re-sold.

Another concern was that cab companies or loan sharks would control the medallions with back door deals.

Hayashi said this wouldn't happen under her watch.

In end, the meeting provided a good introduction to Taxicab Financing 101.

Chris says that she has five other finance companies and banks interested. We'll be getting a lot more information on the subject in the near future.

The Consensus Pilot Plan

Taxi Director Chris Hayashi is beginning to work the Pilot Plan into it's final form. The part below will be presented to the MTA Board on Tuesday, February 16 at 11 am.

The Pilot Program consists of the following major points:

1. Authorized Sellers: Any Medallion held by a natural person who: (1) has attained or will attain the age of 70 years old or older as of December 31, 2010; or (2) suffers from a permanent disability that prevents him or her from fulfilling the Full-Time Driving requirement and has notified the SFMTA of that disability on or before December 31, 2010, would be eligible to sell his or her Medallion. If any qualifying Ramp Taxi Medallion Holder desires to sell a Medallion, the SFMTA would exchange the Ramp Taxi Medallion for a regular Medallion to be sold by the Medallion Holder. No Ramp Taxi Medallion would be sold pursuant to the Pilot Program.

This limited Medallion sales authorization would represent a benefit to public safety, as it would remove the incentive for elderly taxi drivers to continue driving at the risk of losing Medallion income.

2. Qualified Buyers: Medallions could only be purchased by individual Driver Permit Holders who meet all existing eligibility requirements for Medallion ownership, including Full-Time Driving. The SFMTA would offer available Medallions to each qualified Driver Permit Holder in the order of the Driver’s seniority on the Waiting List, and then in the order of A-Card Seniority. The proposed amendments clarify that person would not be eligible to receive a Medallion if he or she already holds a Medallion as an individual or if he or she is a shareholder in a corporation that holds one or more Medallions.

3. Fixed Medallion Sale Price: Any Medallion sold pursuant to these proposed regulations would be sold at a price established by the SFMTA, not to exceed $400,000. In setting the initial Medallion Sale Price, SFMTA staff would be required to consider commercial loan terms available to Medallion applicants, and the affordability of the monthly payments under such loans, and the anticipated business revenue to be generated from a Medallion. The Medallion Sale Price would be adjusted annually in accordance with the percentage increase in the Consumer Price Index for Urban Wage Earners for the San Francisco Bay Area over the preceding year. The SFMTA would be able to increase or decrease the Medallion Sale Price at any time in accordance with the procedure for setting the initial Medallion Sale Price. No Medallion could be sold until the SFMTA establishes a Medallion Sales Price in accordance with the regulations and notifies the public of that price.

4. Transfer Fees: The seller of a Medallion would be responsible for paying to the SFMTA the Medallion Sale Transfer Fee (15 percent of the Medallion Sale Price) and the Driver Fund Transfer Fee (5 percent of the Medallion Sale Price). The SFMTA would deposit the Driver Fund Transfer Fee into the Driver Fund.

5. Direct Medallion Sales by SFMTA: The SFMTA would be authorized to sell up to 60 Medallions that have been returned to the SFMTA directly to qualified Driver Permit Holders for the Medallion Sale Price as part of the Taxi Medallion Sales Pilot Program. The SFMTA would be responsible for payment of the Driver Fund Transfer Fee for each such Medallion sold.

6. Continued Medallion Re-Issuance to Waiting List: The SFMTA would be required to continue to issue Medallions to applicants on the Waiting List during the Pilot Program, with the goal of offering at least as many Medallions to the Waiting List during the Pilot Program as are sold directly by the SFMTA. This commitment, in addition to the Board’s prior direction to staff to aggressively clean up the Waiting List, means that Waiting List applicants would not be negatively affected by the sale of Medallions. Staff expects the Waiting List to move much more quickly for applicants going forward than it has for many years.

The attached resolution provides that any offers of Medallions made to Waiting List Medallion applicants after the Board’s adoption of the Pilot Program on February 16, 2010 would be counted toward the number of Medallions offered to Waiting List applicants pursuant to the Taxi Medallion Sales Pilot Program. Otherwise SFMTA staff might hold back offering Medallions to the Waiting List until the first Medallion sales in order to be able to meet the demanding targets for Medallion offers that are part of the Pilot Program. There is no reason to make Waiting List applicants wait any longer than they already have for the implementation of this reform program.

7. Establishment of Driver Fund: The SFMTA would be required to establish a Driver Fund. Driver Fund Transfer Fees would be deposited into that Fund, along with any other funds that the SFMTA, in its sole and absolute discretion, elects to deposit into the Fund. The proposed regulation generally provides that the Driver Fund is to be expended by the SFMTA for the sole purpose of improving the quality of life of the Driver Permit Holders, particularly those Driver Permit Holders who are not Medallion Holders. However, specific expenditures that would be authorized form the Driver Fund would be the subject of continued consultation with the taxi industry during 2010.

8. Taxi Medallion Sales Pilot Program Advisory Council: An industry group would be appointed to monitor the Pilot Program, with a report and recommendations for a long-term Medallion reform solution due to the SFMTA Board of Directors no later than December 31, 2010.

9. End of the Proposition K Waiting List: After the Waiting List is exhausted, Driver seniority for the purpose of Medallion issuance would be determined by the date from which a person became a Driver and continuously maintained his or her Driver Permit with a lapse of no more than two years. During the Pilot Program, the SFMTA would work to reduce the accumulated Waiting List to see to what extent it can be cleaned of unqualified, deceased or disinterested applicants to reduce the waiting time for a Medallion through the seniority system. In anticipation of this pilot program the Proposition K Waiting List was closed by SFMTA staff effective December 16, 2009.

The proposed amendments are a result of extensive discussions with the taxi industry over the past 12 months. Outreach has included extensive Town Hall Meetings at 1 South Van Ness and staff visits to taxi company facilities during Driver shift changes, and to the San Francisco International Airport taxi holding lot. There is not universal consensus on the staff recommendation, but the SFMTA staff proposal does represent a compromise position between many diverse interests and enjoys the support of a broad segment of the San Francisco taxi industry.

The Pilot Program is designed to be 1) temporary and 2) transitional.

The Program is “temporary” in that it is not intended to extend beyond the offer to not more than about 300 Taxi Medallions Holders the option to sell their Medallion during a limited window of time.^[1] Even if qualified to sell under the Pilot Program criteria, those Medallion Holders who do not exercise the option to sell their Medallion during the Pilot Program period would not continue to be eligible to sell their Medallion in the future. However, purchased Medallions purchased through the Pilot Program could be re-sold to other qualified buyers over time. The SFMTA Board would be free to limit Medallion transferability to those purchased Medallions going forward. The SFMTA could also elect to purchase the Medallions from their owners and re-distribute them to Drivers by some other mechanism if it wished end the experiment of transferable Taxi Medallions.

The Program is “transitional” in that it is intended to transition certain populations out of the San Francisco taxi industry that had become locked in by virtue of historical events such as the adoption of Proposition K in 1978, the subsequent administrative neglect of the Waiting List and the inconsistency in the definition and enforcement of the Full-Time Driving requirement over time.

During the Pilot Program period, the SFMTA would collect information about the Program, Medallion sales, the Waiting List and other data and performance measures in order to inform the SFMTA Board’s policy decision about long-term Taxi Medallion reform.

The proposed resolution also ratifies SFMTA staff actions since March 1, 2009 in implementing the SFMTA Board’s Motor Vehicle for Hire regulations. The transition of functions between the former Taxi Commission and the SFMTA and the serial process of adopting comprehensive and updated Motor Vehicle for Hire regulations has resulted in a shifting regulatory framework within which staff has sometimes had to operate in accordance with its best judgment. The Board is requested to ratify those staff actions which include but are not limited to permit issuance, denials, revocations, and other decisions made under previous versions of the Transportation and Municipal Police Code, in the event that they are challenged due to any gaps in regulatory authority during the transition period.

The City Attorney has reviewed this report.

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[1] Staff estimates that there are 246 Medallion Holders who would qualify on the basis of age. The number of sellers who might qualify to participate on the basis of disability are as yet unknown. With the 60 Medallions to be sold by the SFMTA, the total number of transferable Medallions would be approximately 350 out of 1400 total San Francisco Taxi Medallions. There are an additional 100 Ramp Taxi Medallions that would not be subject to purchase and sale.