Thursday, March 4, 2010

Letter to Skyler Swezy of the Bay Guardian - Taxi Turbulence

March 3, 2010

Hi Mr. Swezy,

I'm the 3rd guy who was standing near Bill Mownsey and David Barlow outside the hearing room - the one you weren't interested in talking to.

It appears that the cab business is simply too complex for the layman - at least the journalistic layman - to fully grasp. But, you've done better than most.

I suppose we are doomed to having Gruberg giving the main quotes in all the media's articles. He always speaks in the cliques that everyone is familiar with: greedy owners, windfall profits, medallion holders who get their medallions for "free." He's entitled to his opinion and I guess you're entitled to think he speaks for "the cab driver" and thus pass on a message that no one who is actually in the cab business pays any attention to.

However, there are a factual errors that should be corrected.

1. The pilot program was not the brain child Christine Hayashi with a the help of a few drivers. It is a plan that was hashed out over 175 hours by cab drivers, company representatives and others including Gruberg (who spoke for about 3 hours all by himself), Rua Graffis and Bill Mownsey. It was a compromise that was worked out by the various sides from over 20 plans that were submitted over the course of the 175 hours.

2. The fixed price sale was one of those compromises. An open auction was predicted to bring in prices as high as $500,000 for each medallion. We chose not to do this because we thought that drivers on the waiting list would not be able to afford them.

2A. The fixed price is to be set at price where a driver can afford to cover the loan payments with the monthly payments that he or she will get for leasing out the taxis when he or she isn't driving it. That is to say - the whole point of the fixed price is that it should affordable for the drivers.

3. The plan calls for the list to stay intact at least until all 3,200 names have been gone through. At that point, it will become a seniority list. There is nothing in this plan about ending the list. In fact, this plan kept the list alive despite the fact that Mayor Newom and others wanted to kill it by holding open auctions that would have brought in much more money to the city and the greedy medallion holders.

4. This plan also has a Driver's Fund, meaning that for the first time in 32 years the average driver will be given benefits.

5. At $200,000, 20% would go to the city and the driver's fund = $40,000. 200,000 - 40,000 = $160,000. There will also be a 15% federal tax = $30,000. $160,000 - $30,000 = $130,000. And there is a state sales tax of 9.5% = $19,000. $130,000 - $19,000 = $111,000.

6. Is this really your idea of a lot of money that someone would get for "free" after working in a job with substandard wages and conditions for 15 or 20 years?

7. In my opinion, the only one who gets windfall profits from this is the city - but that's my opinion.

For opinions on the same subject see http://

Ed Healy

Cab 572

I see that number 6 is clumsy and confusing. It should read, "Is this really your idea of a 'lot of money for a person to get ('for free') after working ... for 15 or 20 years?"

I also see that I downplayed the role of Madame Hayash in my letter. Of course she was the mediator, driving force and ultimate arbitrator of the final form of the plan but almost everything in it came from one of us - that is to say, a working driver.

March 4, 2010

Hi Mr Swezy,

I did miss one thing in your article that's of importance and I also underrated the role of Chris Hayashi.

First, you mentioned that the cabs would be sold on an "open" market. This is totally incorrect. An open market would be an auction and these medallions will not be auctioned off. They will sold only to working cab drivers on that list. It is thus a closed market.

Second, once again this is not Chris Hayahi's plan but it would not exist without her. She was the driving force behind making those Town Hall Meetings an actual study and mediation of the possibilities for reforming the cab business instead of the dog and pony show that the Mayor had intended them to be. The fact that an actual reform plan was created by Hayashi and the drivers, rather than rubber stamping the Mayor's rhetoric, is the real story of this event - one that every journalist missed.

Chris Hayashi mediated and was the ultimate arbitrator of the final form of the plan but everything in that plan comes from a working cab driver. The fixed price idea comes from me. The driver's fund comes from Rua Graffis and Mark Gruberg. Maintaining the list comes everybody except the MHA, the cab companies and the mayor.

I've tried to tell every one of you guys what actually went on to create this plan and it's gone in one ear and out the other. Why? Is the idea too unusual? Are you only trained to listen to cliques? If this subject is too complicated for you, what are you qualified to report on?

On the other hand, I liked your title. I think summed up the situation rather well. Of all the articles I've read on San Francisco cabs, this is the least worst.


Ed Healy
Cab 572


  1. Hi Ed,

    I'm against this proposed plan for the some of the same reasons you appear to be supporting it. This plan as I understand it is so full of holes that if it was a damn the water would level out on either side.

    If a medallion sells to the new owner for $200k and the old medallion holder walks off with $110k then what is accomplished? This medallion is hardly worth selling for just $110k. $110k is not enough money to sustain yourself for more than a couple of years. It's certainly not enough to retire on. If an aged driver keeps his/her medallion and drives just 500 hrs. (the reduced driving requirement) per year they'll clear at the least $31k annually.

    On the purchasing side the medallion price is hardly worth the price of $200k. The interest rate will be high (as I understand there are no established/credible institutions interested)because the lenders will be taking a tremendous risk. The lender cannot repossess or resell the medallion if the buyer defaults. Therefore the lender would potentially take a huge hit. There's also the very real risk that the medallion structure could change or the pilot program could cease. Then what would the lender be stuck with?

    As for the purchasing driver I wonder why anyone would pay $200k for a business that requires them to work at least 800hrs. per year and doesn't allow them to expand or grow in any way? For the same price a driver could buy a coin op laundry or a bar or any number of other businesses which could potentially provide a much greater return or opportunity. Finally for the purchasing driver, they would only be able to sell at the set price, which if it was the $200k, they would only keep $110k of... So after working and sustaining the business, which the driver purchased for $200k + interest, they would take over $100k loss when they sell.

    This structure is fundamentally unsound. It is creating more instability in the industry. It is sucking more money out of the industry and rewards no one in the industry.

    My proposal to auction off leases of medallions from the SFMTA to the drivers makes financial sense. The driver leases the medallion from SFMTA in 4 year blocks at market rates. No outside lenders are necessary because there is no down payment or financing. If the driver wants out they could leave at the end of the lease. With designated "fleet medallion" companies could bid to lease blocks of five medallions for 4 year terms. Again at market values, no outside funding is necessary and these would add stability to color schemes.

    This structure allows the SFMTA a shot at earning revenue and cab companies to have a greater stake while allowing drivers to have their own medallions. It also gives SFMTA a direct long term stake in the taxi industry. The better cab business is the more valuable the medallion leases become, the more revenue generated for SFMTA.

    What's on the table at SFMTA now is just a pile of junk.

    Athan Rebelos
    SF Taxi Driver since 1995
    On the medallion list since 1996
    Green Cab GM since Nov. 2008

  2. Hi,

    Thanks for your comment.

    Your plan appears to be designed to make the companies and the city money. I don't see what it does for the drivers.

    If the drivers are leasing at market rates - how could they possibly not need outside financing?

    Your plan is a wet dream.

    Ed Healy

  3. Ed,

    By creating two classes of medallions, the standard "individual", which exists already and then adding 100 new "fleet" medallions, that's how. Individual medallions can only be leased to working drivers. Since only working drivers could bid for them the market value would be different than for fleet medallions, which could only be leased in blocks of five and only by qualified color schemes.

    The medallion holding driver would make money just the same as they do now or if they had "bought" a medallion. Under the current proposal "buying" a medallion really just amounts to a lease if you think about it. The driver has to fulfill a driving requirement, pay 20% to SFMTA, and a pre-determined "price" to the previous medallion holder. When the driver wants to move on in life they "sell" the medallion at a pre-determined price, of which they only get 80% of BEFORE TAXES... There's no profit in this "sale". The driver actually suffers a loss, after working for however many years. It makes no sense.

    Outside financing isn't necessary for my lease scheme because it's simply a monthly payment, much like the present long term lease fees. Instead of leasing the medallion from an owner or color scheme though, the driver would lease it from the SFMTA, then place it with a color scheme, just as they do now.

    It creates an ongoing revenue generator for SFMTA, opportunities for drivers to control their own medallions and for color schemes to be more stable. It's a win for all parties.