Friday, October 15, 2010

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.


  1. The scheduling problem is true. But it is not a silly little problem like it is being referred to here. The companies know this situation very well as any one who owns or works in a managerial position in these companies have been in this industry for a long time. This problem is kept in place very deliberately to earn extra money by the managers.

    A dispatcher who dispatches 200 drivers makes about a thousand dollars a shift.

    Where does this money go? Check the managers' pockets is the hint.

  2. David Khan is a Gate and Gas Driver. Not a Lease driver.

  3. Hi,

    Once again I've been besieged and inundated by anonymous comments, including the two above, that I think all come from the same person.

    And, once again, if somebody doesn't want to use a name, I feel no great urge to offer them a platform - especially if they are ranting. However, I am publishing the two above comments because they have something intelligent to say.

    1. I don't think the scheduling is a silly little problem. Although anonymous goes way off track on the amounts and who gets the money, he or she is quite correct that the policy is a deliberate method to earn extra money for the companies.

    I treated the subject as I did to satirize Chris Sweis and TAC for choosing to avoid a discussion of an unethical practice by deliberately mislabeling John Han's complaint.

    2. Actually David Kahn is a gate and gas lease driver as is John Han but the point is well taken.