TAC Votes to End the Driving Requirement for "Key" Cab Company Personnel on the Waiting List ... Or the End of Daly/Ma?

At the 10/25/10 meeting, the Taxi Advisory Council voted 12-3 to recommend ending the driving requirement for key cab personnel on the Waiting List. From the discussion leading up to the vote, "key" here means, not only managers, but mechanics and dispatchers as well. Only driver representatives John Han, David Kahn and Bill Mounsey voted against the motion.

There is a lot to be said about this motion but first I think you need to see the agenda item under which it was voted upon.

"Medallion Sales Pilot Pilot Program: Review buyer/applicant qualification procedures for the Medallion Application Process (Discussion and Possible Action.)

A careful reading of the above naturally leads to a few questions.

1. What does giving cab company personnel medallions without their having to drive cabs have to do with Pilot Program?
2. What does it have to do with the agenda item?
3. What happened to public comment?

Barry Taranto, a sometimes driver and a member of the public, started to object about the lack of connection between the motion and the agenda item only to be silenced by Yellow Cab's Jim Gillespie who said, "Barry - we don't think we need your comments."

Nor did they think they needed comments from the rest of the public. The specific subject of the motion wasn't brought up until AFTER public comment on the theoretical agenda item. So, as a member of that public, I have no choice but to make my comments now.

Arguing in favor of zapping the driving requirement for taxi company personnel were Anthon Rebelos, Jane Bolig and John Lazar. Lazar said that mechanics and dispatchers were so important to running the companies that they shouldn't be burdened with having to drive taxis. Rebelos said that managing a cab company was a very demanding job and he had trouble finding time to meet the driving requirement. Medallion holder Jane Bolig, (a little off topic but perhaps looking forward to a future motion) seconded this idea saying that she was not even paid for being the president of Desoto Cab.

I'd like to look at these "key" personnel groups one by one.

Mechanics?

As David Kahn and Bill Mounsey pointed out, being a mechanic is its own trade and it can be a good one. If they belong to a union, mechanics have it made - retirement and all the other stuff that cab drivers, including medallion holders, don't have.

Unionized or not, why should mechanics be entitled to a medallion simply because they work for a taxi company instead of a bus company or a garage?

Dispatchers???

This is may favorite.

These are the guys who used to give me cars without brakes if I didn't tip them enough. But we all know about the corrupt practices that are "key" to their income flow so I won't go into the subject here.

Let me just say that, almost without exception, dispatchers are ex-drivers who quit driving cabs for one or all of three reasons:

1. Dispatching is easier.
2. It's safer.
3. It pays a lot more money.

John Han mentioned the five or ten dollars that drivers have to tip in order to "get out" but he didn't total it up. I've heard numbers as high as $400 or $500 a shift but I suppose that's rare. Nonetheless, it's well known that dispatchers make two or three times more money than cab drivers do.

It must be a good deal. Once they start being fed those five dollar bills through the window, dispatchers almost never go back to driving taxis.

I think being dispatcher is a perfectly legitimate life choice - unless he or she wants a medallion. In which case, they can put in the time just like the rest of us.

Management Problems

I can certainly identify with the demands that meeting the driving requirement puts on people like Chris Sweis and Athan Rebelos. We all know what it's like.

Take me for instance. During the nine years leading up to the day I received my medallion, I worked two different jobs - teaching driving in addition to driving the cab - six or seven days a week. I did this because these are both low paying jobs and I needed money to take care of my loved ones.

I suppose I could have simply driven a cab six days a week like Francoise Spiegelman but, for the ten years prior to taking up teaching, I had been driving a cab over 2,000 hours per year and I began getting all sorts of repetitive stress injuries. I took up teaching because it's much less physically demanding. Of course you have to concentrate all the time when you teach or the kids might suddenly go on the freeway the wrong way or try to whip a left in front of a charging semi; so, it's not exactly relaxing.

In short, I know how tiring putting in the hours for the driving requirement can be. But managers, like other "key" personnel and unlike regular drivers, can pick and chose the shifts they want to work. They can schedule their time any way they want. And, remember, they only have to work 156 four hour shifts or 624 hours a year. That's a lot less than the time that Francoise, I and hundreds of other medallion holders put in to earn our medallions.

In addition, like all other medallion applicants, "key" personnel only have to drive four out of the five years prior to applying. They can take a year off and kick back whenever they get close.

If, as "key personnel" they can't find the time to drive, being a manager is still a very good job. Managers certainly make considerably more money than I do.  In fact, a few of them could be considered wealthy.

Unlike regular taxi drivers, they shouldn't need a medallion to help them retire.

Conflict of Interest?

Since this clearly is a foreign concept to the Taxi Advisory Council, a definition is in order. From Wikipedia:

"A conflict of interest (COI) occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other."

"More generally, conflicts of interest can be defined as any situation in which an individual or corporation (either private or governmental) is in a position to exploit a professional or official capacity in some way for their personal or corporate benefit."

Chris Sweis, Athan Rebelos, John Lazar, and any other members of TAC who are the list, have engaged in a conflict of interest by using their positions on the council to vote to give themselves medallions worth a minimum of $250,000, or $25,000 for life, without meeting the requirements demanded of everyone else.

The ideal of K

I voted in favor of Proposition K long before I ever drove a cab myself because it promised to reward taxi drivers for working. When I started driving myself, and realized that unions were a thing of the past, I began to understand that a medallion was the only reward that a working taxi driver would ever get from this city. As I got close to getting my medallion, I began to see how much this system contributed to public service by keeping the best and most experienced cab drivers in the business.

Of course it was never perfect. In the old days, anybody could put his or her name on the waiting list. It was common for mechanics, dispatchers, lawyers and cops to put their names on the list and then claim that they intended to drive when their numbers came up. As Hansu Kim has pointed out, this resulted in all sorts of people (including a few millionaires) getting medallions who wouldn't dirty their hands by driving a cab.

With the advent of Daly/Ma back in 2001, a concrete set up of rules was adopted to insure that medallions would only go to working taxi drivers. Once again, of course, the system wasn't perfect. People could still fake waybills - although it was much more difficult to cheat than it had been earlier. 

Now, with electronic waybills on the horizon, the ideal of "K" can finally be realized.

And, at this precise moment, TAC is trying to change the rules so that non-cab drivers can once again own medallions.

This is no small thing. It's a radical change in principle.

One no longer has to drive a taxi to get a medallion, it's enough to work for a cab company. The medallion is now to be rewarded to people the companies "like" instead of working taxi drivers. The specter of medallion holders who have never driven a cab and never will, once again becomes a possibility.

The 3,000 or so drivers who have already qualified under Daly/Ma will just have to take a step back in line to move room for taxi company personnel.

A Conversation with Rebecca Lytle

I spoke last week with Rebecca Reynolds Lytle, Vice President of Lending at San Francisco Federal Credit Union (SFFCU).

Among other things we discussed the differences between a Gate and Gas and an Owner/Operator arrangement from her standpoint of making a loan to a new buyer. Other subjects came up during the conversation including, of course, her decision to require the full 20% down payment from those who choose the Owner/Operator lease and not accept down payment assistance except on a gate and gas arrangement.


Let Last Be First

It turns out that Ms. Lytle and SFFCU had already decided to require the full down payment from Owner/Operators before TAC voted to do so. The reasons for this were that an Owner/Operator loan:

• Costs more to underwrite and maintain.
• Has little or no way for the credit union to verify that various financial arrangement are, in fact, what the new buyers claim they are.
• Carries a higher risk because of this.

SFFCU wants to reduce their risk by getting the full $50,000 down payment from Owner/Operators.

In order to understand the reasoning behind this, it's necessary to see how these loans are structured.

Gate and Gas Arrangements

Lytle described these are "turnkey" arrangements because the company:

• Buys the car.
• Provides the insurance.
• Does the maintenance on the car.
• Hires the drivers and makes certain that they have good driving records and A-Cards.
• Etc.

The taxi companies are set up to do this and they have a vested interest in making certain that everything is done properly.  Therefore the credit union doesn't have to sweat the details.

Owner/Operators Arrangements

The Owner/Operator has to do all the above himself or herself.

In order to assure the safety of the loan, SFFCU and Ms. Lytle need to make certain that:

• The Owner/Operator owns the car and does have insurance.
• The drivers have A-cards.
• The Owner/Operator is complying with City regulations by not charging more than $104 per shift for a hybrid or $96.50 for a regular vehicle.
• Lytle is also considering getting copies of DMV printouts as supporting documentation that the medallion holder is complying with the Transportation Code.
• Etc.

All this involves considerably more work and thus more cost in terms of labor hours than a GG Loan. And, even after the additional issues, the loan company still has no way to guarantee that the information is accurate or kept up to date - although the credit union does require the Owner/Operator to provide updates on all the above annually, or sooner, if requested.

Because of the uncertainly, Ms. Lytle and SFFCU want to see a greater amount of financial responsibility on the part of an Owner/Operator. Lytle added that it doesn't make any sense to continue allowing  Down Payment Assistance on a loan with this type of lease arrangement when the MTA intends to stop this practice in the next 30 days or so anyway.

Forced into being Owner/Operators?

Prior to 10/14/2010, when SFFCU began requiring the 20% down, Ms. Lytle said that 63% of the loans were to Owner/Operators. She takes issue, however, with people who claim that new buyers have been "forced" by financial necessity into this type of arrangement.

Ms. Lytle pointed out that the $250,000 fixed price was chosen by the MTA requirement that loan payments not exceed the monthly amount that medallion holders are paid by taxi companies. The $250,000 number was arrived at by calculating the size of loan payments and comparing them to Gate and Gas monthly payments. Lytle also indicated that, in order to further validate the worth of the medallion, the MTA's fixed price was compared to medallion markets in Boston, Chicago and Philadelphia - cities similar to San Francisco.

SFFCU so far has made three types of loans;

1. 12 years with a fixed rate for $2,300 a month.
2. 15 years with a 3 year balloon payment for $1,798 a month.
3. 25 years with a 3 year balloon payment for  $1,440 a month.

The monthly payment is slightly higher if the borrower did not have the full 20% down payment and needed the down payment assistance loan. You can view examples of loan payments for all the different types of loans on the credit union’s website at http://www.sanfranciscofcu.com/loans/taximedallion_loan.htm

These numbers are consistent with the amounts that various companies pay their medallion holders.

To the charge that the interest rates will probably rise when the balloon payments become due, it could be said that there will probably be a meter increase before then, meaning that medallion holders will be paid more money.

Satisfaction

Ms. Lytle said that these taxi medallion loans have given her more satisfaction than almost any other loan that she's ever underwritten. They've allowed her to "help these people realize their dreams." The medallion holders or their relatives are "overjoyed" to be able to sell the medallions after thinking that they never would be able to do so. And the new buyers are "so excited" to finally get their medallions.

Ms. Lytle said that she would be more than happy to answer any questions about the loan programs. She can be reached at:

Tel. 415.359.2926   Fax. 415.447.2240
Rebecca_Lytle@SanFranciscoFCU.com

Ordinance Amending the San Francisco Transportaion Code

The ordinance that Director Christiane Hayashi intended to present to the MTA board today (it will be heard on 11/4/2010) does several things:

1. It puts the enforcement of specific laws concerning the taxicab business under the San Francisco Transportation Code.
2. It creates a class of misdemeanors.
3. It clarifies and describes various violations of the law.

For instance, it prohibits "Solicitation and Paid Passenger Referrals" and then spells out in detail exactly what this means.

I intended to do a summary of the ordinance but the Director has already done it far better than a humble cab driver like myself could hope to do, so I'll simply copy her prose for you.

SUMMARY:

 The proposed ordinance would grant express authority to Taxi Services’ field enforcement staff the ability to enforce specified parking regulations. Such authority would also support their ability to tow illegally parked vehicles in violation of those sections in accordance with state laws.

 The proposed ordinance would move several existing misdemeanors from the Police Code to the
Transportation Code: § 7.3.8 (to knowingly make false statement or conceal information in connection
with a motor vehicle for hire permit); § 7.3.9 (to refuse to pay the legal taxi fare), § 7.3.10(a) (for a Driver to overcharge a passenger); § 7.3.5(a) (to drive or operate a taxi on City streets without a permit).

 The proposed ordinance would newly create the following misdemeanors in the Transportation Code:
o § 7.3.5(b): To operate an unpermitted dispatch service or color scheme.
o § 7.3.5(c): To drive a taxi without a permit or to allow a person without a permit to drive a taxi vehicle.
o § 7.3.6(b): For any person, and for any person or business acting in concert with that person, to take
payments for the purpose of referring passengers.
o § 7.3.7: For any permit holder to solicit or accept payments or gifts from drivers in exchange for
dispatch calls, shifts, vehicles or assignments.
o § 7.3.10(b): For any permit holder to charge drivers except such charges to drivers that are authorized
in Division II of the regulations.
o § 7.3.10(a): For a taxi driver to charge more than the legal rate of fare.

The complete text, as well Hayashi's summary of the ordinance, can be found here.

Mas Dinero Por Citations

The ordinance allows police to issue misdemeanor citations to illegal limos and taxis for $2,500 for a a first offense and $5,000 for a second. This is up from the current charge of $165.

 Taxi investigators for the SFMTA already have the ability to issue "administrative" citations to limos and taxis for $5,000.

Administrative Enforcement vs Criminal Enforcement

This is an important distinction because administrative laws allow SFMTA investigators to issue fines without having to go to court. This is similar to the fines that investigators can level against restaurants for sanitary violations or bars for allowing underage drinking.

To tell the truth, I'd never heard of this field of law until I talked with Director Hayashi. Yesterday I tuned on Law and Order as a break from writing and there stood Lt. Anita Van Buren threatening to bust a bunch of militia types for carrying rifles in NYC under "Administrative Code No ...." It seemed effective. They dispersed.

Administrative fines should greatly enhance the ability of the SFMTA to go after and penalize illegal taxis and limos, doormen soliciting tips and the hotels where they work as well as others violators of the misdemeanors listed above.

If this ordinance is okayed by the SFMTA it will go to the Board of Supervisors for final approval.

TAC Votes to Limit Down Payment Assistance

On Tuesday October 12, the Taxi Advisory Council voted unanimously (William Minikel and Dmitry Nazarov were absent) to grant Down Payment Assistance only to buyers who choose to work their taxis as "gate and gas" for at least three years. 

The motion to do so was put forward by National Cab's Dan Hinds (photo, left) in order to limit the number of new buyers who operate their cabs as Owner Operators or Affiliates (i.e. owners who operate their cabs as Long Term Leases).

The vote came after a lengthy discussion of the pros and cons of GG vs LTL and the problems of trying to run a full service cab company.

Declining Profits

Desoto's Jane Bolig said that: problems with the EDD (California's Employment Development Department), the costs of medallion holder bidding wars, and the increased number of cabs going LDL were causing declining profits in companies giving full service.

(Her comments on the EDD referred to suits that the EDD had filed against both Luxor Cab of San Francisco and Yellow Cab of San Jose that charged the taxi companies with millions of dollars in back Unemployment taxes.)

Yellow Cab's Jim Gillespie said that the EDD "only has issues" with GG drivers and leaves LTL alone. However, he added that it was possible to structure GG leases in such a way that "doesn't" turn GG drivers into "employees." He gave the practice of having drivers pay for their shifts in advance as an example.

Jane Bolig said that she thought that giving Fleet Medallions to full service companies would be about the only way for them to survive.

Green Cab's Athan Rebelos (photo, left) said that he agreed with the necessity for fleet medallions and added that he'd been in the taxi business in New York City where they had a combination of Fleet medallions and individual medallion holders and suggested that San Francisco follow a similar policy.

But he also said that declining profits were a "national problem" and that in many cities neither the taxi companies nor the cab drivers were making any money at all.

Scheduling Problems

Lease Driver John Han (photo, right) said that he wanted to be a GG driver and that, if taxi companies would actually honor the "Independent" contracts that their drivers sign, fewer drivers would want to become LTL drivers.

Han gave the example of his own shift which is listed as being from 7:00 am to 5:00 pm according to the lease he signed. He usually can't get started driving, however, until 9:00 or 9:30 am - unless he pays the dispatcher "some huge tip."

Council President Chris Sweis chose to describe this as "a scheduling problem." And, indeed, it no doubt is. The company Han works for is clearly scheduling a "short" that overlaps John's shift. The "short" apparently runs from 3:00 am or 4:00 am to 9:00 am. This allows the company to get an additional three or four hours of profitability (not including tip) from the medallion. The "short" takes up part of Han's shift  because the company would be unable to sell the "short" without including the 7:00 to 9:00 morning rush hour.

But I digress ...

Unintended Consequences

Dan Hind's original motion didn't impose any time limit but Jane Bolig said that having a GG taxi wouldn't do Desoto Cab any good unless they could keep the taxi for three years.

Lease Driver David Kahn (photo, right) then proposed an amendment to the motion calling for a three year time limit.

Athan Rebelos backed the motion saying that the Pilot Plan "had been developed around a gates and gas program" and that no one was prepared to deal with so many Owner/Operated taxis hitting the streets at the same time.

The unanimity of the vote came from the perception that the conversion of GG cabs to Owner/Operated leases has been having a negative effect on almost everyone in the business except the new buyers.

• Companies have been losing revenue from cabs.
• Drivers have been losing shifts.

"Warp Speed Scottie."

The Taxi Advisory Council, as its name suggests, can only advise the MTA on a policy. The MTA has to okay a change and then a new policy does not officially take effect for 30 days.

The San Francisco Federal Credit Union, however, already put the new Down Payment Assistance rules into effect on 10/14/2010. As of that date, "Supplemental funds from the down payment assistance provision in the Pilot Program are not acceptable for financing" Owner/Operator (aka Affiliate) leases.

TAC 10-12: This and That

Most of the TAC meeting was concerned with leasing but a few other subjects came up.

1. Chris Hayashi, wearing her flashiest dress ever, mentioned that she was re-staffing in order to end various backlogs.

She also said that an owner/driver has been putting stickers on cabs calling for an end to Paratransit. The man apparently has a website advocating violence against handicapped people. Chris said that she has started revocation action against the owner and added that any other drivers who knowingly placed anti-Paratransit stickers on their cabs would face disciplinary action.

"This goes way beyond the rights of free speech," she said.

2. Hayashi has revised and re-written Article 7 of Division 1 of the Transportation code to add several new misdemeanors. I intend to write a post on the subject later but the ordinance would:

• Allow MTA investigators to fine illegal limos and taxis $5,000 for violations.
• Make enforced tipping illegal.
• Make it a misdemeanor for a customer to refuse to pay the fare.

The ordinance will go before the MTA Board on Tuesday 10-19-2010. Public comment will be allowed and is usually listened to by the Board.

3. Speaking of public comment, I quietly suggested that TAC's policy of requiring public comment to come before the council discussed a subject instead of after was, "unheard of, ridiculous and outrageous" adding that TAC was the only committee that I knew of that followed such a policy.

Much to my surprise, Council President Chris Sweis discussed the issue with me after the meeting. I told him that the public could make more meaningful contributions if they were allowed to speak after the councilors but before motions and voting. I was backed up in this by Barry Korengold who noted that both the Board of Supervisors and the MTA Board conducted their public meetings in the manner that I was suggesting.

Sweis said that his main concern was that my approach would be less efficient. I told him that I thought that doing it (taxi reform) right was important than doing it quickly.

Swiess said that he'd look further into the matter and presumably make a ruling on it next meeting.

4. Mark Gruberg of the UTW, in one of his stranger (considering that he's supposed to be representing lease drivers) speeches, passionately attacked the provision in the MTA ordinance that would make tipping illegal. He said that it would be unenforceable.

Nonetheless it'll be on the books, Mark, making it more enforceable the than nada we have now.

5. As the meeting was winding down, John lazar, out of the blue, said that the taxi industry was being run by an agency that didn't know anything about taxicabs and was doing nothing. He added that the room was full of people who really knew what they were doing, implying (I think) that the cab business would be better off if it wasn't regulated.

Director Hayashi  responded heatedly to Lazar saying, "I take exception to the idea that we've done nothing here." She went on to praise her staff for their hard work and accomplishments under trying circumstances; and pointed out that, among other things, they'd re-written all the rules and regulations concerning cabs and cab driving in San Francisco.

I would add that, while Lazar and his knowledgeable pals spend over 20 years trying to get the right to transfer medallions, Chris Hayashi is the person who made transferability happen. She also:

• Negotiated the Pilot Plan.
• Set up a realistic method to rid the City of illegal limo and cabs.
• Created the Taxi Advisory Council that has empowered Lazar to influence the way the industry is run.
• Etc. Etc. Etc.

Although I no longer think that Chris Hayashi is perfect, she's close enough for the cab business.

Next: More on Leasing.

TAC 9-27: The Driver's Fund

As of last week, some numbers for the Driver's Fund were:

• 13 = Total Medallions Sold at $250,000 each.
• $162,500  (5% or $12,500 for each salex13) = Total in Driver's Fund.
• $92,026 = Taxi Wrap Fund balance.
• $254,526 = Taxi Wrap and Driver's Funds combined.

                                                The Taxi Wrap Fund

was a holdover from the Taxi Commission and has been administered by Taxi Services since last year. The money coming from the current taxi wraps ($141 to the MTA while $265 goes to the companies) is currently being put into the fund.

The Taxi Advisory Counsel, in an unanimous vote, decided to wrap the Taxi Wrap Fund into the Driver's Fund.

Director Chris Hayashi said that she was working to make sure that future wraps would not cover any windows in the cabs and that taxis would be clearly recognized as such by the public.

The Driver's Fund

There were an abundance of ideas about what to do with money (see top photo.)

Jane Bolig said that what was done with it would depend upon whether it was "a popcorn fund or a plasma tv fund."

Chris Hayashi did some arithmetic showing that the sales of 100 medallions under the Pilot Plan would bring in 1.25 million dollars.  If such sales continue beyond the Pilot Plan (almost a certainty), the fund would definitely grow way beyond the "popcorn" category.

There were several ideas about how to increase the money in the fund:

1. Put the money into an interest bearing account instead of just letting it sit as it does now. Chris Hayshi said that she would look into this.
2. Councilor William Minikel had the intriguing idea of makiing the MTA give part of its advertising revenue to the Driver's Fund since the MTA gets money from us. Quid Pro Quo. Great idea. Good luck with that Bill. 
3. Mininkel also proposed that each driver give one dollar to the fund every shift echoing a plan laid out by Barry Korengold last year. 

Who gets the money?

Barry Korengold (photo, right) wanted a vote to insure that the monies in the fund be used for non-medallion holding drivers - as the people at the Town Hall meetings intended. He said that it shouldn't even be necessary to discuss it.

Director Chris Hayashi, on the other hand, has expressed the idea that the people at the Town Hall meetings had left it up to the Taxi Advisory Council to decide who the money was to be used for - an interesting view to me since the duties of TAC were never discussed at Town Hall meetings.

My impression agreed with Korengold's so I checked my notes and, indeed, that the monies in the Driver's Fund should be used for non-medallion holders, was a basic cornerstone of the Pilot Plan.

Chris Hayashi (photo, left) had said, "Nobody will get everything they want but everyone will get something." Her vision of fairness and justice - in a business with little of either - is what turned so many of us into her groupies.

The Driver's Fund was the "something" that 5,000 or so non-medallion holders were supposed to get. The medallion holders would be given the right to sell their medallions and the non-medallion holders would have the right to benefit from the Driver's Fund. Quid Pro Quo. That was the compromise. That was the consensus. That was the deal.

Nonetheless, Hayashi wrote it up differently than the vast majority of Town Hall participants had purposed and insisted that her Taxi Advisory Council decide for whom the money should be used.

The Vote

Despite the fact that eight of the fifteen members on TAC are taxicab company owners, managers or stockholders, I still thought that Korengold's motion would carry the day. My reasoning was:


3. Those 5,000 non-medallion holders make up about 75% of the drivers in the business. Simple logic would dictate that, if TAC is supposed to be representing the taxi industry, something should be given be given to the majority of its workers.

2. Retired medallion holder Art Lembke has often said that the reason that taxi companies can't give benefits to drivers is that the profit margins are too low. But the Driver's Fund is new money. Allowing regular drivers to keep that money would give medallion holders and company owners the chance to unleash the true generosity of spirit that Lembke claims has been held in check by the harsh realities of the taxi business.

1. Taxicab owners and medallion holders are very sensitive to the public's perception of them as greedy, grasping, self-serving, venal and corrupt sharks. Allowing non-medallion holders to keep the money in the Driver's Fund could help to change this bigoted and unjust stereotype.

After Korengold introduced the idea that the non-medallion holders should keep the fund, the ensuing discussion was initially lame, as if the councilors couldn't think of what to say. Then Luxor Cab President John Lazar (photo, in center), claiming that medallion holders could little more afford to pay for a catastrophic injury than a regular driver could said,

"Its a Driver's Fund ... yea, the medallion holders make a couple a thousand a month more ... but they don't have so much either ... they're all drivers ..."

A slight gasp of relief could be heard from around the room and one councilor after another soon gave a variation of the "we're all drivers" speech. I half expected them to break into a chorus of We Are the World.

Of course, one could have pointed out that:

• Lazar had turned the question on its head and was using semantics and sophistry to spin his argument. 
• Since the fund is about money and not sentimentality, the essential fact IS the $25,000 more a year that the medallion holders make, not the fact that some medallion holders also drive.
•  The "couple of thousand" more that we medallion holders make a month could be used to purchase the accident insurance that non-medallion drivers rarely can afford.

One could have added that:

• Being able to sell the medallion gives the medallion holder an additional $250,000 more than non-medallions drivers.
• Giving medallion holders access to the fund would be double-dipping - in effect giving them a rebate on the 5% that they are charged for transferring their medallions.

One could have concluded that the reason the Driver's Fund was set up in the first place was to give the non-medallion holding drivers, who make half as much money as their medallion holding brothers and sisters and won't be paid $250,000 when they retire, a little pocket change.

But one wasn't allowed to point anything out. TAC president Chris Sweis (photo, left) has decreed that (unlike at SFMTA board meetings or at most public government committee meetings of any kind in San Francisco and California) the public is not allowed to speak after the councilors and before a vote, making TAC's claims to meaningful public participation and true transparency largely bogus.

Thus, did semantics and sophistry carry the day. And, thus, the public's unfortunate prejudicial, bigoted and unfair perception of taxicab owners might continue.

Only Korengold,  John Han and David Khan voted in favor of reserving the fund for non-medallion holding drivers.

In sum: A victory for TAC over the Pilot Plan. A defeat for Chris Hayashi's vision. And, a defeat for those 5,000 non-medallions holding workers who are "all drivers" too.

TAC 9-27: Gate and Gas vs Long Term Lease

The main topics of the latest TAC were Gate and Gas (GG) vs Long Term Lease (LTL) and the Driver's Fund. Both subjects were discussed at length and in depth so I'll deal with them in separate posts.

First, I want to apologize in advance for any omissions or errors. I recorded the proceedings and slacked on my note keeping. When I listened to the tape, however, the only people I could understand were myself and Carl Macmurdo, who sat next to me. This article, in other words, will be even more a stream of consciousness than usual.

                                   Random Stuff

San Francisco, the third most expensive city in the country, has the 10th highest taxi fares.

Some Pilot Program Stats:

• 18 medallions are being issued to people on the list.
• 1 SFMTA held medallion has been transferred (i.e. sold) to a buyer.
• 19 medallion holder medallions are in the process of being transferred.
• 9 Pre-K medallion holders have died during that last year.
• 3 Pre-K medallions have been sold.

Quote of the week,

"Cab drivers are all schemers and frauds ... and need to be watched." Bill Mounsey  (photo, above) on the drivers ahead of him on the Waiting List.

Leasing vs Leasing 

The above title is my way of noting that no other system  (like a split of the meter) is in play. 90% of the county may work on some form of employer-employee relationship but we in the cab business prefer to stay in the same league as strippers, office temps and call girls.

The Name Game.

The initial discussion centered around tying to decide what to call the new owners who chose to work their cabs as an LTL. Some people wanted to call the relationship an "affiliate" because the new owners would usually be affiliated with a color scheme but I think Rebecca Lytle of the San Francisco Federal Credit Union carried the day by calling them "Owner Operated" leases (OOLs.)

The Owner Operated Lease.

It's basically the same as an LTL, except the owners don't lease it from a company. They buy their own cars and chose their own drivers. If they associate with a company, they pay for the radio and the color scheme.

There are significant differences in the way the contracts are written because the credit unions demand certain information from the owners (I'll cover this later in an interview with Rebecca Lytle) but the taxis themselves are worked much like an LTL.

The Leasing Debate.

There are strong feelings on both sides of the GG vs LTL issue.

Cons
Green Cab manager and councilor Anthan Rebelos said that he had "about five pages" of things he didn't like about the LTL. Councilor and driver John Han, Mark Gruberg of the UTW and myself also spoke strongly against the practice. Putting our ideas together, you could come up with the following partial list:

• Hundreds of experienced drivers have lost their shifts or their jobs.
• They've been replaced by drivers with less knowledge
• LTL drivers are less likely to take radio calls.
• LTL taxis hurt service in the neighborhoods.
• LTL cabs are frequently subleased to brokers.
• These brokers are charging desperate people illegal amounts of money to drive shifts.
• This brings a criminal element into the industry and, as such, creates situations of potential violence.
• This is almost impossible for the MTA to police.
• The companies themselves often don't know who's driving their cabs.
• This increases the potential for catastrophic insurance losses; and 
• Endangers the public.

Pros

• Jim Gillespie of Yellow Cab says that LTL drivers are as likely to take radio calls as anyone else.
• In the past, he's also claimed that LTL drivers get into fewer accidents.
• A man whose name I didn't get (photo, right) said that he'd been driving for 34 years and had been given junk taxis under the GG system.  He now works under an LTL  and loves it because he's got a brand new cab and makes a lot more money.
• Driver Ton Lee, who represents Asian drivers at the airport, said that LTL drivers work hard just like everybody else and deserve consideration.

The Devil Made Him Do It.

John Lazar of Luxor Cab said that he resisted LTLs until 2004 when he "lost 24 GG medallions."

This echoed Jane Bolig of Desoto Cab who said, "medallion holders are diving the system" by setting up bidding wars between companies (Hmm - guilty). She also said that "insane" liability insurance rates were forcing companies to change the way they do business.

"Force" is a big word with Lazar who claimed that new buyers were "forced" to go OOL because of the high cost of their loans. At an earlier meeting, he had said that a buyer making $2,300 a month couldn't cover $2,700 a month loan. This time he asked Rebecca Lytle to confirm his theory.

Ms Lytle, however, did nothing of the kind, saying that their cheapest monthly rate was $1,446 per month for a 25 year balloon loan. She later told me that the rates for the other loans that she had underwritten were:

• $1,798 for 15 year balloon loan.
• $2,304 for a 12 year fixed rate loan.

Not Forced - Wanted.

Nonetheless, all but a few of the new buyers have chosen to become Owner Operators. This is something that few people at the Town Hall meetings anticipated and it changes the dynamic of the sales. All the calculations that were done to come up with the $250,000 fixed rate were based on a GG system.

Once upon a time, Director Chris Hayashi told me that she wanted to end LTLs. Even if she still wanted to do this, it would take three years to phase them out because of the money the drivers have spent on cars. And, what about the new OOLS?

There could be a lot more said about this subject ... and there will be.