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.

Meter Increase??? Gate Increase??? No-Go Fee. Technology Fee. ETA.

All the above and more were discussed at a recent Town Hall meeting.

On May 31, 2013 Dan Hara will be handing in his final recommendations, which will include whether or not there should be gate and/or meter increases. There will be Town Hall meetings to discuss the issues on June 11th and the MTA Board will look at and possibly vote on the proposals on June 18, 2013.

Not to editorialize but:

 1. No businesspeople in their right minds would raise their rates when they are being successfully underpriced by their competition.

2. It's time to get rid of gate fees and replace them with a split of the meter. I've been saying this ever since I was first hired by Yellow Cab and saw the corruption and incompetence that the gates & gas system caused. And I repeated my ideas to the MTA the moment they took over. The bottom line is that a gate system makes leasing to drivers the business of cab companies - not picking up customers.

There are companies like Desoto, Luxor and Green who consciously try to give good service but they are in the minority. I won't rant about the details. I've already done this enough. The primary problem is simply that the profits and losses of the companies are not directly linked to the amount of business that they do. If the meter were split, the MTA wouldn't have to conduct arcane studies to find out which companies were good and which were bad. All that would take care of itself - and service to the public would drastically improve.

I've said this so often that I sound like a crank but the future lies with me. (See Uber. It might also be a good idea to take a Business 101 course along with a double dose of common sense.)

Electronic Taxi Access (ETA) et al.

I didn’t catch the entire meeting and Director Chris Hayashi (photo, hand) was still presenting the proposals when I left so I can’t give definitive summary. The final plan won’t be presented until May 31^st but the following covers what little I do understand of the system.

1. All available taxis will appear on the map of a customer’s smartphone.
2. The MTA itself will create no app but rather will co-ordinate hails from Flywheel, Uber's taxi app and other legal apps.

3. All the information from the individual apps will be routed through a central system in order to appear on the smartphone.

3. The exception will be calls to dispatch services and e-hails from single company apps like Luxor or Desoto’s.

     A. However, these calls and e-hails will be integrated with the ETA system so that only one cab will be sent to each order.

In other words, this will be the centralized dispatch system that drivers have spent thirty years lobbying for.

In addition:

1. The App Fees will be paid by the customer.

2. There will be a Technology Fee to be paid by the customer instead of credit card processing fees paid by the drivers.

3. A $10 No Go fee also will be automatically deducted from customers’ credit card if they aren’t there.

4. The “Response Time Fee” listed on the white board above is being renamed a “Premier Service Fee.” It will be paid to a driver if his or her taxi gets to a customer within a promised time like under ten or fifteen minutes. Yes this does mean that a driver will get a bonus picking up a ride in time.

Needless to say there are criticisms:

1. ETA won’t improve service because taxi drivers will take a flag before they will take a dispatched call. As the saying goes, a bird in the hand is worth two in the bush.

Well, that depends upon the birds in question doesn't it? Seriously, if you think about it, you are often closer to dispatched calls - unless you spend all your time in Union Square.

Take my situation for instance. I start driving from the inner Bayview at 4 pm. It takes me five minutes to get to the area around Zynga and Adobe where I can pick up flags, and another three to five minutes to get to either Market Street or the cabstand at Cal Trans. All that time I'm within five minute or less of dozens of businesses where people might want taxis.

The unwritten rule is that a driver shouldn't take dispatched calls during rush hour because most of them will be No Go's. The reasons for this are that you don't how old the orders are and the people have probably called three or four companies.

With ETA both these problems disappear. Your cab will be the only one sent to the order and you'll get the No Go fee if the party isn't there. In addition, with all hails going through one dispatch system, you'll have at a minimum of three times more orders to choose from.

2. This will discriminate against people without smart phones or with Paratransit cards.

The orders will be dispatched in such a way that a driver can’t tell what type of order it is.

3. If so, drivers won't take the hails because they might not get a No Go fee.

This comes from the meeting. Cab drivers, man. So many of us look only at the empty side of the hourglass. Eighty per cent of the people in S.F. have smart phones and people who don't have them don't take as many taxis as people who do. Furthermore, No Go's on Paratransit rides are rare. 

The percentage of No Go's will be extremely rare on with ETA and the odds of getting the fee if the customer isn't there are better than 90%.

The Age of the Dinosaurs...

... reputedly passed over 65 million years ago but a few survivors are hanging on in the taxicab business in the personas of John Lazar and the management of Yellow Cab.

Mr. Lazar reputedly killed Open Taxi Access a few years back and is out to waste ETA as well. The problem for him is that it's not as easy to buy politicians as it was back in the day. With Lyft and Uber on the scene the price of corruption has sky rocketed.

On the other hand, maybe Lazar is getting a kickback from Uber and Lyft. The balkanization of the dispatching services in this town is what opened the floodgates for the illegal apps in the first place. The adoption of an ETA system would be the best weapon we could possibly use against them.

But the President and General Manager of Luxor Cab is still living back in the Jurassic Age when the companies with the most medallions necessarily made the biggest profit. If he succeeds, all he's likely to win today is a large cut of a dying industry.

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.

TAC Interm Medallion Sales Pilot Program Report

This report was put together by Taxi Advisory Council Chair Chris Sweis (Photo between councilors Richard Hybels and John Han). It summarizes and points out problems arising from the Medallion Sales Pilot Program as well as listing TAC's recommendations to the SFMTA Board.

The report focuses on the effects that Pilot Program has had on various groups in the Taxi industry. I'd like to highlight  (with of course my own views) a few things.

The Effect on Cab Companies.

• A movement away from Gate and Gas to Affiliate operations.
• A concern because Affiliates are less profitable for the cab companies.
• A tendency of Affiliates to hire new and inexperienced drivers.
• A concern about inexperienced drivers "negatively impacting" service - i.e. drivers deadheading downtown and to the airport instead of taking dispatched calls.

The Effect on Drivers.

• A loss of shifts for Gate and Gas drivers.
• Slower movement of the Medallion Waiting List.

The main, negative effect of the list slowing down has been felt on drivers closer to the top of the List. This is because medallions formerly became available to the List as older medallion holders died off. As many of the older medallion holders sell their medallions, the pool of medallions going to the list naturally becomes smaller.

The main, positive effect is that drivers on the list can now buy a medallion at a controlled price that allows the medallion to pay for itself.

The Effect on Medallion Holders.

Aging medallion holders are clearly the biggest winners of the Pilot Program. Medallions, that were worth nothing excect in terms of the monthly rental that they brought in, are now worth $250,000.

This has been a special boon to Post-K drivers who are either disabled or over the age of 70. Prior to the program, they either had to work 800 hours per year or face losing their medallions. Instead, these drivers now have a chance, as the phrase goes, "to retire with dignity."

The program has also reduced the stress level for younger Post-K drivers like myself (a kid of 66) because we now know that we won't be forced to drive (or pretend to drive) for the rest of our lives.

Perhaps the biggest winners, though are the Pre-K medallion holders. Having already made from between $800,000 to $1,000,000 from leasing their cabs over the last 33 years, they can now collect an additional $250,000 for exiting the taxi business.

The Driver's Fund.

The drivers fund was originally intended for non-medallion holders. It was to be a Quid Pro Quo (i.e. something that is given or taken in return for something else.)

The medallion holders were to get $250,000 and the non-medallion holders would get the Driver's Fund - now totaling over $1,000,000 with great potential depending upon how it may be fed in the future.

This intent, however, was wiped out by one of the first TAC votes.

Barry Korengold had called for a motion that would insure that the fund's money would go to non-medallion holders.

President and General Manager of Luxor Cab John Lazar, on the other hand, argued that "medallion holders are drivers too" and that the fund should therefore go to all drivers. This carried the day by an 11 to 4 margin despite the fact that some medallion holders are actually not drivers and a few, like John Lazar, have never driven a cab for a living.

What's going to happen to the Driver's Fund, as well as who will benefit from it, will be decided at future TAC meetings.

One possible use of the Driver's Fund that has been discussed would be using the money as an investment fund for drivers.

Recommendations.

The TAC has made several recommendations that it will urge the SFMTA Board to adopt. 

1. To merge the taxi wrap fund and any new income into the Driver's Fund.
2. To move the Driver's Fund into a managed account that allows the money to grow.
3. To have the Key Personnel Exemption apply to people on the Waiting List. (See Below.)
4. To have the down payment assistance program be made available only to buyers who operate their permits as Gates and Gas cabs.
5. To monitor Affiliate run medallions more closely and to have all medallions issued to the Waiting List be run as Gates and Gas taxis for the first 3 years.
6. Preliminary recommendation that the sales program continue after the Medallion Sales Program is complete. (See below.)

Not Recommended.

There were also several motions that the TAC either failed to pass or refused to even discuss in addition to the vote not to give the Driver's Fund to non-medallion holding drivers.

1. Failed to pass a motion by Councilor Barry Korengold to limit the number of medallions that the MTA could sell outright to the sixty agreed upon in Pilot Plan.
2. Failed to pass a motion by Councilor William Mounsey that would have changed the ratio of medallions sold outright by the MTA to medallion give to the Waiting List from 1:1 to 1:2. In other words, 2 medallions would given to the Waiting List for every medallion sold by the MTA. 
3. Failed to discuss a plan by Councilor Barry Korengold that would preserve the Waiting List by allowing medallion holders to retire and give the medallions back to the City when they died.
4. Refused to even discuss discussing replacing the current leasing system with a split meter (along with employee rights) despite the high probability that such a change would drastically improve service to the neighborhoods.

A closer look at two recommendations.

6. The explanation written in the report says that "many members of the council are pleased with ... Sales Pilot Program and would like to see it continue ... "

Possibly but, if this is true why did it take the better part of three TAC meetings to pass the recommendation? The truth is that Dan Hinds kept on bringing the motion up over and over again until he bludgeoned it though. He basically paralyzed the proceedings by constantly calling for a vote about medallion sales no matter what other subject was being discussed. In effect, Hinds filibustered the TAC making it impossible for the council to do any other business until the voted on his measure.

In my opinion, the vote was taken more to shut Hinds up than for any other reason.

3. I'm amazed that TAC Chair Chris Sweis had the temerity to include extending the Key Personnel Exemption to people on the Waiting List in his report after being told that such a vote was inappropriate and would probably have been illegal if TAC actually had the power to put the recommendation into effect.

To put it simply - Chair Chris Sweis, Councilor Athan Rebelos and Councilor John Lazar are all on the Waiting List and thus voted to make it easier on themselves to get medallions worth $250,000 than it would be for other people on the list. In addition, Councilor John Lazar has two sons working for him who are on the Waiting List and would thus qualify for the Key Personnel Exemption.

Let me expand on this last point. Lazar's sons have never driven a taxicab. Lazar is thus trying to use a public office to try to give his children medallions worth $250,000 without the two of them ever having to drive a cab for a living.

Meter Increase - Yes, Gate Increase - Nyet, Nine, Buyao, No Way Jose

Traditionally cab companies have waited for a few months after a meter increase to implement a gate increase so that their drivers could a make a little extra money but John Lazar, President and General Manager of Luxor cab, isn't one to stand on custom. He's calling for a gate surcharge the instant the meter raise goes into effect.

Lazar and some other company owners argue that they need more money in order to provide services like computerized dispatch. But companies like Luxor have been relieved of millions of dollars worth or credit card charges that are already being passed onto the drivers.

 In addition, taxi companies have also had two gate increases of $5 and $7.50 since the last meter hike.


Hybrid Surcharge


The $7.50 is supposed to help cab companies cover the extra charges of purchasing hybrid cars. However the price of hybrid vehicles declined to the point where the cost was about equal a few years ago. And, although hybrid prices have gone up again, the difference is only $2,000 or $3,000.

Time for a little math:

• $7.50*2 per shift = $15 per day *365 = $5,475 per year.
• This means that this surcharge pays the companies from $15,000 to $18,000 over life of the vehicle.
• If the car is new - subtract the $3,000 extra cost of the hybrid from the surcharge and you can see that companies are making $12,000 to $15,000 per cab off the last $7.50 gate levy.
• Owners like Lazar, who buy their cars used, are basically paying for the entire cost of the cabs simply from this hybrid jack up. 

Unconscionable 

This is a big word. My dictionary defines it as "not right or reasonable, excessive, wrong, unethical, unfair."

All of which accurately describes taking a much needed wage raise away from drivers - in terms of both a gate increase and credit card charges - and giving it to taxi companies who've already taken more than enough relief.

Thoughts on the Meter Increase

The SFMTA Board okayed a meter increase of ten cents for every 1/5th of a mile and 1 minute of waiting time. They will take up the question of an increase in the drop from $3.10 to $3.50 at the next meeting. For more complete coverage see John Han's blog.

Here I'm simply going to expand on the short talk I gave to the SFMTA Board.

The Need for the Meter Increase.

• Many people have pointed out that the cost of living has gone up 19% since the last meter increase.
• The increase the Board passed (including the additional 40 cents on the drop) would equal 22%.
• Therefore - it's simply a matter of catching up.  

After the meeting, I went to work and discussed the increase with my customers. Of course nobody likes the idea of paying more for anything but the people I talked with accepted the raise without much complaint - making me think that the amount we settled on was just about right.

Nix on a Gate Increase.

The vote hadn't even been taken before John Lazar, President and General Manager of Luxor Cab, stood up and pushed for a gate increase of just 75 cents a hour so that Luxor could keep on giving it's full service including computerized dispatch.

What a salesman? 75 cents an hour doesn't sound like much does it? Let's take a closer look. That means:

• $7.50 a shift or  $15.00 per day = $5,475 per year per driver profit for Luxor.
• $7.50 a shift paid by drivers * 5 shifts per week = $37.50 *52 weeks = $1,950 per year out of the drivers profits - off the top.
• If non-medallion drivers average $25,000 per year, a 20% meter increase = $5,000.
• Meaning that almost 40% of the income boost would be eaten up by the gate increase.
• Meaning that they've already more than lost their cost of living increase.

More later.

TAC 3-14-2011 Part 2

The rough draft of the TAC report on the Pilot Program was put together by Council Chair Chris Sweis (photo) after going through more than 12 hours of tapes. For this he deserves an award.

However, as councilor Carl Macmurdo and others pointed out, Sweis forgot to include Medallion Holders as one the four primary participants in the S.F. taxi industry. (A Freudian slip? Sweis wouldn't be the first owner of a taxicab company to wish that medallion holders would disappear. ) The Chair admitted that it was an oversight and promised to include a section on medallion holders in an amended draft at the next session.

As for the rest, I simply want to deal with a few points of the draft. You can read the full text in TaxiTownSf.

The discussions at TAC were mostly about the effects on Taxi Companies and Drivers on the waiting list.

1.The major effect on companies was the change from Gates and Gas to Affiliate Leases.

• In 2003 there were few cabs operated on as Affiliates.
• By 2010 more than half the taxis were affiliates.
• 56% of the medallions purchased during the pilot program have chosen to become affiliates.

Sweis and others see this as a negative.

• G and G operations, according to Sweis, "provide greater control over vehicles and drivers."
• Loss of G and G medallions "will reduce company revenues and quality control."
• Companies are losing taxis to Affiliates.
• Experienced drivers are losing good shifts when Affiliates replace them with less experienced drivers.
• Which "would lead to a decline of taxi service to the public."

Driver Tone Lee (photo) disputed this claiming that Affiliates and LTLs did a better job because the drivers worked harder and took better care of the cars that they, themselves, purchased.

Gratchia Markanian, the head of Checker Cab, made similar points and predicted that all taxis would someday be Affiliates.

Hansu Kim (photo), on the other hand, who has been strongly in favor of Affiliates, reversed his position and said that taxi companies needed gate and gas arrangement to be profitable. Coincidentally, Kim recently purchased Desoto Cab.

Councilor John Lazar of Luxor Cab said that the frozen gate rates had "killed gates and gas" arrangement. He also said, as he's said before, that new buyers couldn't afford to work under gate and gas because their loan payments were too high.

I have a few problems with these arguments - namely that neither one of them appears to be true.

• The payments on a 15 years loan are $1,798 per month. The lowest amount that a GG medallion holder is paid is $1,800 per month and the highest is $2,400 per month. In addition a medallion is worth $5,000 to $10,000 per year in better shifts etc. What can't they afford?
• If the cab companies are so strapped for cash, how come they are engaging in medallion bidding wars?

Companies are currently offering bonuses as high as $5,000 and medallion payments as high as $2,400 a month to wrest medallion away from each other. If they're so broke, where are they getting the money for their campaigns?

In the end, they passed a motion by 10 to 4 to have all cabs that are awarded to drivers on the list to be worked as Gates and Gas for the first three years.

Next: The effect on Drivers.

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.

  

Players & Plans: Luxor

While we're waiting to find out when (or if) the Town Hall Meetings will resume, I thought that it'd a good time to glance at the players and their plans.

Reading through them, I've come to realize that I've arrived late at a party that's been going on for years. Many of the proposals are far too detailed to have been worked up in response to Newsom's bomb. While I was whiling away my summers riding camels on the Silk Road or trading vodka shots in Mongolia, cab drivers were feverishly mapping out strategies and engaging in back-door negotiations - all with the dream of being ready for the death of K.

In short, the allegations that I am "uninformed" are true. However, I'm less "uninformed" than any official journalist is likely to be. Reviewing these plans will hopefully lead toward enlightenment. I only have space to look at a few main points. For a full summary check with sftaxi@sfmta.com .

Let's start with Luxor because it has a plan that is both unique and, up to this point, has had the most effect. Drawn up by President and General Manager John Lazar together with Charles Rathbone, the proposal features:

• A $50,000 up front fee to be paid by a K medallion holder for the right to transfer the permit via an auction. It's a striking idea that the MTA liked so much that thy stole it.
  
• A two tiered system that would consist of two classes of medallions and medallion holders.
  

1. Transferred medallions, called "M", could in turn be auctioned off like medallions elsewhere. The transfer fee for these would be 5% - 20%. And, once an M always an M.
2. K medallions would also be maintained as would the List. K cabs would be given out as they are now. Where would they come from? From drivers who died or retired without transferring their medallions and from the City which would issue 10 to 20 new cab permits each year. K drivers from the list would always have the option converting to an M.

• Drivers high up on the list would be able sell or auction off their positions to drivers lower on the list.
• The City would give a few corporate medallions every year to dispatch companies like Luxor as a reward for top performance.

While it's authors see lots of winners (money for the City, protection for both medallion holders and drivers on the List as well an exit strategy), the proposal also has difficulties.

• $50,000 is a chunk of money. It = two and a half years of my life. And up front?
  
• The figure is so high that it doubtless has already destroyed any chance of negotiating a reasonable compromise with the City. Then again, at this point that might not be possible anyway. Threatening to steal all the medallions probably was Newsom's idea of negotiating.
  
• The amount may be so high that only desperate drivers would pay it. Once the old and infirm had cashed out, the medallions would probably move very slowly. Many medallion holders wouldn't be able to raise the money or wouldn't have enough left to retire on after they did sell their medallion.

As for Luxor's plan for a dual system ...

• It appears very complicated and the best ideas are usually simple. On the other hand, San Francisco's taxi industry is very complex. Maybe there are no simple solutions.
• It also seems to me that the supply of K medallions would dwindle fairly quickly as most holders converted to the M permits. Charles Rathbone thinks that 30% of K drivers would chose not convert but even so the number of K medallions would eventually run low.
• For me, that is the major flaw of the dual system. It can't be maintained without constantly putting new taxis on the street.
• And, the cabs would be added solely to make the system work - not because of any real business demand or necessity.

The more I think about this proposal, however, the more I like it. It needs to be tweaked of course but it's bold and creative. It shows a willingness to look at the situation with fresh eyes instead of being mired in the usual us vs them narrative. Now if only Mr. Lazor could put that $50,000 back in his paper bag.