Taxi Myopia Blues

I offer this photo as a balm to those who've taken umbrage at my comparing San Francisco taxicab company owners to dinosaurs. I think this analogy is more accurate. Besides, it also applies to many cab drivers (far too many) as well.

Let start with the owners.

One could write a fat, non-fiction novel on the short-sightedness and petty greed of the people running S.F. cab companies – especially Yellow and Luxor. But for this article, I'll restrict myself to their opposition to an universal app or Open Taxi Access (OTA).

When John Wolpert first introduced Cabulous in 2010, it should have been obvious to anyone with an entact frontal lobe that, if adapted throughout the taxicab fleet, the app had the potential to both drastically improve service to the neighborhoods and create business for the drivers.

Malcolm on Top

Might as well start with Jim Gillespie (photo, below). He walked up to me with a big smile as I headed across the square toward the MTA board meeting last Tuesday.

"Going to write something in your blog?" he asked with a smile.

"I just found out that Heinicke (photo left) appears to be be violating the Sunshine Ordinance. The meetings are a farce," I told Gillespie. "The proposals are decided in advance behind close doors."

"I thought that's the way it worked," Jim said.

If anybody would know about such things it would be Gillespie. He was seen making one of those back door visits with his pal John Lazar and the way he jauntily bounded up the steps to City Hall told me how the vote would go.

MTA Board did indeed choose to lease 150 to 200 medallions or permits to taxi companies. The permits are supposed to go to the best run companies but "word on the street" is that Yellow will get more than its share anyway.

Jim used the incompetence of his company during the meeting as a reason for the City to give him more cabs. He especially mentioned that a high percentage of the people who call Yellow hang up before the dispatcher answers or cancel before Yellow picks them up.              

What he didn't bother to tell the Board was that Yellow often deliberately fails to answer the phone and then holds the orders for 9 to 12 minutes before dispatching them.  That way the company can use their poor service to ask for more taxis. And, the City is going to do it. Another doublethink classic.

The board will lease the taxis to the companies despite the fact that a study being done by Hara and Associates will not be finished until January.

This caused some discussion and the only dissenting vote. Chairman of the Board, Tom Nolan (photo left) thought that they should wait until the study was completed. He also wanted to revisit the decision if Hara came to the conclusion that no cabs were necessary. But, as one driver said, that's like closing the barn door after the horses are out.

There was an extended discussion by the Board members but it was one of those experiences where reality trumps satire.

Not that there is necessarily anything wrong with ignorance. But, it does take humility to learn and the Board has adamantly refused to listen to anybody - the Taxi Advisory Council, the drivers at the Town Hall meetings, the drivers at the MTA Board meetings, Director of Taxi Services Chris Hayashi, Dan Hara - who could teach them what's what.

The tone was actually set a few Board meetings ago when Director Joel Ramos (photo right) fervently thanked Director Malcolm Heinicke for helping them understand the taxi business. I have nothing to add. This is the level at which the Board functions.

Ramos thought the fact that Uber, Sidecar and other illegal Apps started in San Francisco was a priori proof that there must be a shortage of cabs. It couldn't have anything to do with the fact that this city is one of the Tech start up capitals of the world and that the businesses are being set up in such a way that it's almost impossible for them to lose money. Not to mention that these Apps are invading cities like Washington D.C. and Chicago that are flooded with taxis.

"Word on the street" has it that Director of Transportation Ed Reiskin (along with the Mayor's office) is responsible for raising the payout to medallion holders back up to $200 thousand from the $150 thousand that Heinicke wanted them to suck on. Although Reiskin is clearly being pressured from above to "show them the money," he appears to be struggling to do as best he can by the drivers and the cab riding public.

The problem is that he clearly does not understand the most basic things about the cab business. Nor does he know the characters in it.

And, why should he? He has the entire MTA under his purview. How could he know the nuts and bolts of every division? Especially one as complex as taxicabs? That's what the Director of Taxi Services is supposed to be for. But, of course, the Board has her on the top of their list of people not to listen to. (Hmm. I've just ended two perfectly good sentences in a row with prepositions. Take that Sister Pauline!)

Director Reiskin thought it was refreshing to hear from people outside the cab industry during public comment - after the usual collection of professional shills (most of them paid by Luxor or Yellow) came up calling for as many 700 more cabs. My favorites were the hotel rep and the woman from the Chamber of Commerce. They always want more cabs no matter what the situation. They wanted more after 9/11.

The hotel guy said that they couldn't find cabs at the hotels. Of course not. With all the limos lined up to grease the doorman, where would a cab park? The Commerce lady, as always, cited the expanding population of San Francisco as a reason to put out the taxis.

 She's right of course. In 1950, the population of San Francisco was 775,357. By 2010, it was 805,235. At that rate, one additional medallion a year should do the trick.

When another speaker and myself told Reiskin that, even if they started the process tomorrow, the additional cabs still wouldn't be ready for the Blue Angels, he was disconcerted. He thought about it for few moments and decided that "we have to get them out as soon as possible." He seemed to be unaware of the fact that, if the taxis were needed at all, it wouldn't be until May. Yes - there are no tourists between October and the summer.

The ideal time to add taxis would be in April. That way they wouldn't lower the incomes of current drivers and they'd be ready for the boat races next summer. There was no need to rush. Reiskin had plenty of time to read Hara's study and still add cabs if needed. Anyone in the taxi business could have told him so - if he'd been willing to listen.

On the other hand, someone else is clearly pushing Reiskin's buttons. (See the title of this post.) The only real reason to put the permits out fast is to funnel funds into the income streams of a few cab companies and the SFMTA.

One thing the Board members did right ...

was finally come out in favor of an Uber like App for taxicabs. Finally?

I wrote my first post on Cabulous and Open Taxi Access(OTA)  on January 28, 2011. The idea has been presented to the MTA Board on numerous occasions. The Taxi Advisory Council voted in favor of it. Cab drivers almost universally support it. Chairman Tom Nolan even said that the Board should look into the idea.

Cabulous started at approximately the same time as Uber in 2010. If OTA had been supported by the Board when it first came to their attention, everyone might be talking about how Uber is like Cabulous and not the other way around.

About the only people against it were the managers of Yellow and Luxor Cabs.

So what happened?

"Word on the street (dude sees all, hears all, knows all)" is that OTA died when President and General Manager of Luxor cab, John Lazar (photo), told former Executive MTA Director Nat Ford to kill it.

On the other hand, funds have recently been allocated to Taxi Services for electronic dispatch (The new name for OTA). Hopefully the Board will follow through this time.

Why $1,900 a month?

Of course this figure was not vetted (What is these days?) but the going price for medallions leased to taxi companies is currently $2,500. Yet here is the SFMTA selling permits on the cheap. To say the least, this runs contrary to their normal behavior. It also gives credence to the "word on the street" that John Lazar and Jim Gillespie worked out a back door deal after threatening to sue the SFMTA. At $1,900 a month Yellow and Luxor will make out like bandits - which isn't too far from their normal behavior.

Yellow takes in between $8,000 to $12,000 per day by encouraging its drivers to "voluntarily" tip. And, of course, John Lazar was asking for $10 per day plus $2 for the gasman at Luxor when I was there three years ago. At that time, he was also asking his cashiers to "voluntarily" tip him.  This meant that John's cashiers had to make $100 per shift in tips from drivers through Luxor's dispatching window (photo below) before they could make anything for themselves. This gives the word "voluntary" a whole new meaning.

What we have here, then, is the SFMTA getting together with two of the most dubious taxi companies in the business to divvy up money that had been headed to ease the old age of working cab drivers. This would appear to leave Director Malcolm Heinicke with a profound moral quandary:

Should the MTA take 15%, 33% or 50% from the companies' tipping jars? For the public good - as is, of course, understood.

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.

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.

Tariq - Or Actions Speak Louder Than Words.

Note the irony. Tariq Mehmood, who proclaims himself to be the "powerful and great leader of the drivers" siding with Yellow Cab in trying to remove Deputy Director Christiane Hayashi.


Of course Yellow, Luxor, Town and Checker, not the drivers, would be the major winners of a successful Hayashi coupé.


There are several reasons for this.

• These cab companies coerce their drivers to tip and Hayashi has made this practice a $5,000 misdemeanor. She recently started busting limos. Enforced tipping and other illegal company activities are also on her hit list.
• The recent meter increase did not include a gate increase. The companies, especially Luxor, blame Hayashi who drafted the legislation.
• Hayashi helped create and has promoted Open Taxi Access (OTA) which Luxor and Yellow hate.
• Yellow and Luxor want 500 taxis to go to them - now. Hayashi doesn't want to put cabs out without public hearings.
• John Lazar of Luxor wants himself and his two sons to be given medallions without following the rules. Hayashi thinks medallions should only be given to working cab drivers.

I could go on and on but the bottom line is that Yellow and Luxor are used to running the taxicab industry through backdoor politics and Hayashi has created a culture of transparency through her Town Hall Meetings. For the first time, medallion holders and regular taxi drivers (not just the owners) have a say in how their business works.


So, why is Tariq Mehmood, "the driver's advocate," lining himself up with guys like these?

Well, fact is - he's done it before. Awhile back, when Yellow Cab was trying to force their drivers to pay $2,000 or $3,000 in gates a month in advance, Tariq attacked the UTW which was fighting to stop the pre-payments. Mehmood later backed legislation at the Board of Supervisors raising gates and ratifying gate overcharges. This did Yellow a tremendous service.

Why he did this? I can't say.

Yellow Needs More Cabs? For Whom?

There are several questions and interesting aspects about Yellow Cab manager Jim Gillespie's claim to the MTA Board that Yellow needs 139 more taxis in order to service all the radio calls that the company gets.

1. Why 139? Why not 140 or 135? Must be scientific, huh? Let's do the math:

• Gillespie says that Yellow failed to pick up 280,000 or 25% of its radio calls during the last 6 months.
• 280,000 / 139 = 2,014 radio calls that Gillespie expects each new taxi to pick up in 6 months
• 2,014 / 182.5 days = 11 radio calls per cab picked up per day.
• /2 shift a day = 5.5 radio calls per day per driver.

Sounds a bit lame, doesn't it? But, maybe Yellow doesn't expect much from new drivers. Let's look at the veterans for comparison:

• If 280,000 = 25% then 840,000 (280,000*3) calls must have been picked up during the last 6 months by Yellow's 500 cabs.
• 840,000 / 500 = 1,680 radio calls picked up per driver for 6 months.
• 1,680 / 182.5 = 9.2 radio calls taken per cab per day.
• /2 = 4.6 radio calls per driver per day.

Hmmm. Seems like the vets are even lamer. Let's do a little more math. What if each vet picked up 5.5 radio calls per day?

• 5.5*2 = 11*182.5 = 2,007.5 picked up calls per cab for 6 months * 500 = 1,003,770 radio calls picked up.
• If 280,000 = 25% then Yellow handles 1,120,000 (280,000*4) radio calls per 6 months.
• 1,003,770 / 1,120,000 = the percentage of calls that would be picked up by Yellow drivers if the vets were as good as Gillespie expects the rookies to be = 89.6% of the calls picked up.

 What if the vets worked just a little harder and picked up 6 rides per shift per day?

• 6*2 = 12 pickups per cab per day*182.5 days = 2,190 pickups for 6 months*500 taxis = 1,095,000 pickups.
• 1,095,000 / 1,120,000 = 97.8% of the calls picked up.

Well, it looks like we've found a solution to Yellow Cab's problem - train or whip the slackers.

In short, this is the only time that I can recall a company using the incompetence of its personnel as a reason to expand its business.

In short, the only science involved in Gillespie's speech was the science of bs.

2. Yellow Cab will not guarantee that all, or any, of the new drivers will take radio calls.

Perhaps you, gentle and misinformed reader, imagine that Yellow has a dispatching system that will use GPS to automatically assign the closest of those 139 cabs to one of those 280,000 radio calls?

Alas - that's not the case. Yellow's computer will inform their closest empty cab that there is a nearby radio call but whether or not the driver will accept the order is anybody's guess. He or she can take it or leave it. This also assumes that the closest driver actually has his computer on, which is problematical.

What's going on here?

3. Yellow Cab (along with all other San Francisco taxi companies) is in the leasing business, not the taxi business.

• They make their money from leasing taxis to drivers, not from the actual fares.
• The drivers pay the companies first and then make their money from picking people up.
• As long as a cab company can fill it's shifts with lease drivers, it doesn't matter how much actual business the company does.
• Mild recessions (with declining demand for taxis) are usually good for cab companies because desperate, unemployed people will take bad shifts. A little money is better for them than nothing.
• Yellow Cab, for instance, wasn't hiring in 2008 and 2009 because all their shifts were filled. 

4. Yellow Cab (along with all other San Francisco taxi companies) will never tell a driver to take a radio call. Why?

• Cab drivers in San Francisco are Independent Contractors, not employees.
• What these drivers are is independent of are all laws that protect employees.
• Cab companies do not have to pay unemployment taxes, social security taxes or (for Long Term Lease drivers) Worker's Compensation, etc on Independent Contractors.
• Telling a driver to take a radio call would make said driver an employee. 
• Telling a driver to take a radio call would mean that Yellow Cab would have to pay the taxes etc listed above.

5.  Yellow Cab (along with most other San Francisco taxi companies) is more and more operating its medallions under long term lease arrangements.

• The medallions are leased by the month and the taxi companies have no control over who drives the cab.
• Hundreds of experienced drivers have lost their shifts due to this trend.
• They have been replaced by new drivers who aren't trained (for Yellow to train them would make these drivers employees).
• Most of these Long Term Lease drivers hang out at the airport or head downtown.
• These new drivers are much less likely to take radio calls than the people they replace.

And, those are the real reasons why people in the Bayview, the Sunset, the Richmond and Noe Valley, not to mention the attractive blond at Greenwich and Scott, aren't getting taxis as quickly or as often as they should.

As long as the current taxi system remains in effect, 139 more Yellow Cabs will do little or nothing to improve San Francisco's radio business. 

Gillespie was quoted in the Examiner as saying, "If we had more taxis and they were more spread out, people could get their cabs quicker and more people would call ..."

If the cabs were "more spread out" ... but they won't be any more spread out than the current cabs are. Under the current system there is no leadership or direction, there is no one to tell the taxi drivers where to spread. The new taxis, like the currents ones, will gravitate to areas where the service is already good like SFO and Union Square but service to the outlying areas would not be improved one whit.

If Yellow Cab (along with the other companies) ran their businesses in a more rational manner, if the companies were more interested in serving the public than in avoiding various forms of taxation, the taxicabs we already have on the street would more than adequately handle the radio calls.


The only people who would really benefit from those 139 more medallions would be the owners of Yellow Cab along with the new medallion holders.

Taxi Advisory Council - Two

At the Taxi Advisory Council meeting on August 30, 2010 Chris Sweis of Royal Taxi and Big Dog City was elected as the Chair and Barry Korengold of the San Francisco Cab Driver's Association as the Vice Chair.
 
The primary emphasis of the meeting was how to decide what to study as well as how to limit the study so that they could finish a report to the SFMTA by 12-31-2010

Studying the Pilot Plan

John Lazar of Luxor Cab pointed out that the process of selling medallions was already causing problems because the companies were being given no advance warning as to when a new medallion holder might take over a taxicab. He added that many of the buyers were choosing to run their cabs as "long term" leases instead of "gates and gas"  and this was causing regular drivers to lose their shifts.

Another potential problem could be what would happen to someone who had bought a cab under a long term leasing arrangement only to have the medallion sold out from underneath him or her.

It was agreed by the council that they should deal with the above problems in future meetings as well as the more general problems of the "long term" lease vs the "gates and gas" lease.

Athan Rebelos said that they should study what effects the Pilot Plan had on:

1. Buyers
2. Sellers
3. The Riding Public

Dan Hinds thought that they should create "accountability" from future medallion holders by setting high standards for people on the list.

Jane Bolig thought that the the possibility of raising the Fixed Price might have to be explored if potential sellers held on to their medallions because they thought that the price was not high enough.

Director Chris Hayahsi said that the Pilot Plan ends when you "transition through all the buyers and sellers. Watch what happens and make recommendations."

One of Hayashi's famous visual aids (see photo) summarizes some of the things that the council will be studying.

During the public comments Mark Gruberg said that he was worried that the Driver's Fund hadn't been defined. He also said that the was offended by being left off the council. "The UTW is the oldest driver's organization," he said. "The MHA and the SFCDA both have representatives. The UTW should have one too."

MTA Board member Bruce Oka gave a short talk saying, "If the Pilot Plan fails, we're in a lot of trouble. We can't afford for that to happen ... the more input (from the Taxi Advisory Council) the better," he added, "we are listening."

Elections

For me, this was the most interesting aspect of the afternoon. After watching the last meeting, I posited the theory that TAC appeared to be controlled by an "old boys' and girls' network" of owners, stockholders and managers that outnumbered everyone else by an 8 to 7 margin.

This week my idea did not cut the mustard.

The 8 to 7 margin did hold for the election of the Chair but Chris Sweis was elected instead of one of the "old boys" like Jim Gillespie or Dan Hinds.  The real surprise, however, was that Barry Korengold was elected as Vice Chair when Athan Rebelos and Laurie Graham voted for Barry instead of Carl Macmurdo.

These people think for themselves. In fact, during the various ballots, at least five or six council members cast votes contrary to what my theory predicted. Well ... that's what trash cans are for.

Bill Mounsey said that there were a lot of talented, intelligent people on the council with contrary opinions and that, instead of belonging to one group or another, they needed to work together to evaluate the Pilot Plan and improve the industry.

Indeed, Chris Hayashi has put together a dynamic, talented and knowledgeable group of people. If they do end up working to improve the business instead of just serving themselves, no one would be happier than I.

On the Agenda

In his first real test as Chair, Chris Swies showed a little uncertainty as to how to proceed.

Athan Rebelos wanted to add the Driver's Fund to the agenda for the next meeting. Swies clearly did not want to do so. Under the rules that the council had established the week before, the TAC sets the agenda, not the Chair.  I think that Swies should have either asked Rebelos for a motion or opened the subject up for discussion. Instead he said that the Driver's Fund was something to be studied later and acted as if the matter was tabled.

However, Swies did acknowledge Barry Korengold, who also wanted to discuss the Driver's Fund, and said that they needed to determine on whom the monies in the fund were supposed to be spent. Korengold made a motion to add the matter to the agenda, it was seconded by Rebelos and the motion was overwhelming passed by the council.

TAC will also look at the new credit card plan and take on the question of whether or not a 5% charge should be passed on the drivers.