Wednesday, August 22, 2012

Living the Farce 1

There is good news. The SFMTA Board changed the percentage for a transfer of a medallion (they are no longer to be sold) from 30% to 20% of $300,000 and raised the cut for a "surrender" of a medallion by both Pre-K and Post-K holders to $200,000 instead of $150,000.


video

Director Malcolm Heinicke came up to me before the meeting, told me that he read my blog and said that he had no hard feeling over what I'd written about him. We shook hands like pals in a debating society. He added that he did pay attention to my ideas.

I imagine that this was his way of telling me that my writing had influenced the changes that he'd made in the above figures. Flattering - but I doubt that I really had much to do with it.

I think it was more like the old scare-the-be-Jesus-out-of-them-and-they'll-be-happy-with-what-we-give-them gambit. There are a few reasons for my thoughts:
  1. Contrary to Heinicke, the financiers clearly did not "bless" the 30% loan. Rebecca Lytle of the San Francisco Federal Credit Union, who loves her work and has enthusiastically answered every question I've asked her in the past, politely declined to comment on the 30% figure; and her boss Stephen Ho spoke with relief about the drop to 20%.
  2. Nobody else on the SFMTA Board discussed, debated or questioned the amendments that Heinicke introduced, giving the impression that the subject had been vetted and agreed upon behind closed doors.
  3. Driver Tariq Mehmood claimed during public comment that he knew about the changes the Saturday before the meeting.
  4. If true, this would be a clear violation of the Sunshine Ordinance. But, the existence of a rule has rarely stopped people in power from abusing it.
  5. In any case, it shows that something other than the force of my prose motivated the amendments.
There was another theory going down on "The Street." Depending upon who you talked to, either John Lazar of Luxor and Jim Gillespie of Yellow or Lazar, Gillespie, Chris Sweis of Royal and Dan Hinds of National had either threatened to sue the MTA or had worked out a back door deal with them.

I asked Jim Gillespie about the rumors. He told me that he was "a Christian" and "wouldn't lie" to me. He assured me that no such events had taken place.

Gillespie reminds me of Ronald Reagan. He has the same ability to believe everything he says while he's saying it. I always believe him when I'm listening to him. Later in the meeting, Gillespie told God and the MTA Board that there was no enforced tipping at Yellow Cab. I'll leave it to the drivers at Jim's company to judge the relationship between his religious beliefs and his conception of truth.

But, do the amendments make the Heinicke plan a good deal?

My mother might have said that the changes were better than a poke in the eye with a sharp stick. $50,000 is $50,000 and 10% is 10%.

But, Heinicke is once again being misleading when he says that his amendments are "in line" with the Pilot Plan:
  1. In the Pilot Plan - there were no separate categories of medallions. Whether Pre-K, Post-K or re-sold, they all gave the same 15% to the MTA and 5% to the Drivers Fund.
  2. Under the Pilot Plan - any increase would apply to all medallions being sold. Therefore, capping the profit at $200,000 for a "surrender" has nothing to do with the plan that was worked out with the consensus of most people in the industry in 2010. If the price went up to $300,000 under the Pilot Plan, the medallion holder would get $240,000; at $400,00 the holder would get $320,000.
  3. This makes the cut to the MTA either 33% or 50% for a transfer. The national average is 5%.
  4. Under the Pilot Plan - an increase in sale price was to be based the Consumer Price Index (CPI), not Director Heinicke's thoughts.
  5. The CPI that I just ran calculates that $250,000 in 2010 is worth $262,666.47 today.
  6. As driver Tariq Mehmood and others pointed out at the board meeting, the combination of a slack tourist season and run-a-muck competition from illegal taxis and limos has greatly reduced the money coming into the taxi industry. 
  7. This challenges the very idea of raising the price of the medallions.
In addition, "surrendering" the medallions instead of selling them would also apparently take the 5% away from the Driver's Fund.

There is neither a policy reason for the increase in the sale price nor for the creation of "surrendered" medallions except to give the SFMTA more money from the labor of the drivers who have worked to earn it. The MTA would gain $18 million over time from the Driver's Fund and $72 million from $300,000 sales.

Is it worthwhile to get a medallion "transferred" to you for $300,000 with 20% to the MTA?

Depends.

The $250,000 figure was chosen because it was doable without too much pressure on the new medallion holder. The down payment on $300,000 would be $10,000 more or $60,000 and payments would increase about $400 per month. Balance that against making an additional $40,000.

More important might be the difference between a "sale" and a "transfer." The 300 or so drivers who bought medallions under the Pilot Plan actually own or owned them. In a transfer, the city owns the medallions as an "asset." And, as we've repeatedly been told, the city can do anything it wants with one of its assets ... for the public good as is, of course, understood.

Another way to put the question might be to ask, "Would you buy a used car from Director Heinicke?"

More tomorrow.

4 comments:

  1. some random hunches I haven't studied this as much as you but let me give my limited gist..

    I heard it takes 15 years to pay of a medallion.
    So basically you are paying the same as gas and gates for something that you will own for a little while and could potentially sell if everything goes to plan 15-20 years out. You will also probably get better shifts and be treated slightly better as an add on.

    So if you buy medallion when 50 you will finally own it fully when 65 years old and maybe be able to sell it for the equity you put in it. lots of risk with rules changing all the time but ok.

    I think smart people have thought this medallion thing out and it is sort of like killing rent control, in the end as the little drivers sell all the medallions will be held by 4 big companies and then in the end the final battle will be between the SFMTA and those 4 companies as the SFMTA tries and take over the whole cab industry ,,thats my crazy hypothesis.

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  2. Gillespie might be a Christian and not lie to you Ed but he and Lazar lied right to the Boards face on tipping issue. Anybody that has ever driven at either place would burst out laughing.
    BTW, ask Gillespie if he is a convicted Felon some time.

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  3. "Would you buy a used car from Director Heinicke?"

    Ha Ha! LOL!

    Clever... very good Ed.

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  4. I must be missing something. Why would Yellow or any company care what the selling price is aside from the fact that all the managers are medallion holders. They sure as hell had nothing to say about the guys on the list getting screwed (except Sweis).
    I can hardly guess how the pre-k's got back into the sellers column. Hayashi told the Board that if they prevented them from selling they would collect $37 million by the time they all died. So why did MTA change their minds?
    Because the owners and managers of yellow and Luxor are pre-K of course.

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