SF Credit Union Continues to Make Taxi Medallion Loans

I've personally never met a group of people more prone to gossip than cab drivers. Furthermore, few of their rumors turn out to be true. So, when some taxi drivers at the California Public Utilities Commission (CPUC) hearing yesterday claimed that the San Francisco Federal Credit Union (SFFCU) was no longer loaning money to drivers to purchase medallions, I was doubtful.

Carl McMacmurdo, the President of the Medallion Holders Association, who was also at the CPUC meeting, shared my skepticism. We decided to walk a couple of blocks over to the credit union and talk about the subject to Senior Vice President & Chief Lending Officer Rebecca Lytle.

Miss Lytle was on vacation but her Executive Assistant of Lending, Hanh K Ha was gracious enough to speak with us.

She wishes to issue this statement.

“San Francisco Federal Credit Union is making taxi medallion loans. Since the program started 5 years ago, we have never stopped taking applications or making loans to drivers who want to purchase a taxi medallion. “

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, "It's True If I Say It's True."

There were 170 hours of Town Hall Meetings leading up to the creation of the Pilot Plan in April 2009.


Tariq Mehmood showed up at around the 160th hour, after the plan was more or less in place. Claiming that 90% of the drivers were behind him, Mehmood declared that the taxis should all be sold at auctions. 


This was similar to they way he behaved at the airport meetings in December 2010 where the record shows that he said,


"Each driver of the taxis industry knows me personally... 6,000 drivers are known to me but they cut me out.  I had to push myself into it.  As regard to the people, the 6,000 drivers, 18,000 family members has come to you to beg you."  

Tariq rarely mentions the merits of an idea. In fact, he appears to be incapable of arguing rationally. Instead, he takes a position then claims that he has 90% of the drivers or 6,000 or 18,000 people behind him. He once told me that my thoughts didn't matter because I only spoke for myself.

Mostly what he did in 2010 at SFO and at the 2009 Town Hall meetings was try to take over and gum up the works.

Selling medallions at auctions was a position that had already been discussed and dismissed before Tariq showed up at the Town Hall meetings because it would penalize both drivers on the waiting list and those with A-card seniority. 

He gave two memorable speeches at the Town Halls.

In the first, he said that he was fighting, not for himself, but for other drivers. He, Tariq Mehmood, didn't even want to be a medallion owner and had never put his name on the list.

In the second, he took credit for the medallion sales pilot program and praised Deputy Director Christiane Hayashi for her role in helping negotiating it.

At the last Town Hall meeting, Hayashi informed us that she had closed the Waiting List in order to preserve A-Card seniority for the purpose of future medallion distribution, which is a key element of the Pilot Program.

Mahmood started screaming at her that she shouldn't have closed the list without warning him. He hasn't stopped shouting at her since.

He was not arguing that she shouldn't have closed the list at all, mind you, only that she shouldn't have closed it before Tariq Mehmood - the man who'd claimed a week ealier that he didn't want to own a medallion - had had a chance to put his own name on that list so he could buy a medallion.

Flexible Reality.

The "truth" for Mehmood appears to be whatever he says it is at any particular moment. 


This truth was borne home to me at the August 8, 2011 TAC meeting that resulted in recommendations to curb illegal brokering that were passed by the Council by a vote of 14 to 1.  


Contrary to everyone else who spoke at the meeting, Tariq declared that brokering was a minor problem and shouldn't even be discussed.


My inside sources tell me that the practice includes from 200 to 500 cabs and involves millions of dollars a year.


Why would Tariq Mehmood, who lives in the milieu where the brokering takes place, deny that it exists?


A Man Who Lives to Hate.

"Tariq reminds me of the character in (James) Joyce who lives just to hate," a driver who'd known Mehmood for years told me.


The quote seems apt.


Hayashi isn't the first person that Tariq has trashed. Instead of arguing a position, he makes personal attacks on anybody who disagrees with him. At various times, this has included Mark Gruberg, Brad Newsham, Christopher Fulkerson, members of the Airport Commission, Sonali Bose and Tone Lee.


Mehmood and his disciples have sent dozens of attack e-mails my way. The one below is my favorite. It was supposed to have been sent by one of his goons but he can't hide his unique style from me.


"Bullshit and lies. That's what you are doing. Are you defending your girlfriend. Wait till she get fired. The die is casted. Murai did not defend her. I found Tariq the most powerful and great leader this industry has ever seen."


Mehmood, of course, has made a special project out of hating Deputy Director Hayashi and has spent over a year and a half going around trying to get her fired. At this point he probably can't even stop. He's boasted so often that he'd be able to get rid of her that he'd lose face with his followers if he failed to do so.


The 2011 Town Hall Meetings.


His animosity reached its height during the these meetings when he showed up at every one of the three two-a-day sessions to harass and verbally attack Deputy Director Hayashi for long periods of time.


The Town Hall meetings are intended to be democratic with people being able to speak without time limits as long as they are reasonable and stay on the subject.


Tariq Mehmood, who has accused other people of being communists, actually borrowed an old trick that communists used to take over unions in the 1930's. He undermined the democratic process by bringing an entourage of 6 to 12 people with him for every meeting. Thus, he had a built in majority for almost every vote and, even when he didn't, he claimed he did. In one case, he went out into the atrium next door with 9 of his disciples and returned to claim that all 7,000 drivers were behind him. 

Mehmood rarely stayed on point, constantly interrupted other drivers, monopolized the floor, repeated himself ad nauseam, and, incredibly, complained that he was not being given a fair chance to speak. His preposterous behavior would have been entertaining if he wasn't so vicious.


When he sat down, one of his disciples would usually take over to either express the same viewpoints or harass the Deputy Director. His acolytes repeatedly told Hayashi that if she did what Tariq wanted they would make her popular and successful among all the people of San Francisco, but, if she went against the great Mehmood's wishes, she would suffer the consequences of his wrath. 


Hayashi responded saying, "it's not my job to be popular."


In the end, the only thing that drivers not in Tariq's entourage agreed with Mehmood on was that they didn't like back-seat terminals. His insistence that the meter should be increased 40% was thought ridiculous and most drivers liked Hayashi's compromise plan on electronic waybills that would allow the MTA to gather statistical information without taking individual driver information.


Medallion Financial Of New York

Mehmood has repeatedly attacked Hayashi for conspiring with Hansu Kim of Desoto cab and Rebecca Lytle of the San Francisco Federal Credit Union (SFFCU), to cheat San Francisco cab drivers by keeping a loan company "so big it's on the Stock Market" out of The City. These  verbal assaults included a 40 minute diatribe carefully transcribed by Julie Rosenberg (photo) of the MTA during the Town Hall meetings.


Talk about Doublethink! 


Setting up driver loans though SFFCU is actually one of Hayashi's finer accomplishments and the terms the drivers are getting are far better than many people expected when the Pilot Plan was drawn up. 


Tariq's "Evidence" for a Conspiracy.


Hansu Kim introduced Christiane Hayashi to Rebecca Lytle.


That's it, folks! That's the alleged evidence. That's all there is. Nada mas.


In short, Mehmood's accusations are pure slander.


Some Facts.


A taxi cab medallion hadn't been sold in San Francisco for over 30 years when the Pilot Plan was put together and many people, including Mark Gruberg of the UTW, thought that nobody would loan money to a cab driver.


Deputy Director Hayashi had trouble finding anyone willing to risk money on such a loan. At one point, she invited more than 35 banks and credit unions to a meeting to discuss medallion loans and only four loan officers showed up. Three of them left before Hayashi's presentation was over and the other guy never came back. 


Even the San Francisco Federal Credit Union originally declined to participate because this was an untested loan program.


San Francisco Federal and Montauk Credit Unions.


Some time after the above meeting, Hayashi was contacted by the Montauk Credit Union of New York (which has a lot of experience making loans to cab drivers) to get the ball rolling. Then,  Rebecca Lytle became Vice President of Lending at the SF Federal Credit union and became interested in the Pilot Program. Lytle worked with the Montauk Credit Union and convinced her superiors at her  uredit union to rethink their opposition to medallion loans.


The result is the Pilot Plan Sales Program that is tailored to San Francisco's unique situation.


Two things that both Hayashi and the drivers who helped draft the Pilot Plan insisted on were: (1) there be no prepayment or other hidden fees and (2) that the loan payments be no larger than the monthly amount that a taxi company pays a "gates & gas" medallion holder. 


Both of these conditions have been met by Montauk and SFFCU. The program has been going on for a little over a year and about 150 cab drivers have received loans. So far, no cab driver has been turned down for a loan nor has anyone defaulted on a loan. In fact, no driver has even missed a payment.


Ms. Lytle says, 


"We’ve moved our rates down twice now because of movement downward in the interest rate markets and because we’ve gained a little more knowledge about the borrowers ..." 


For a look at the San Francisco Federal Credit Union's current rates click here.


So, are San Francisco's taxi drivers being cheated by Christiane, Rebecca and Hansu?


What Rates?

A good way to answer that question might be to compare SFFCU's rates with the rates of Tariq Mehmood's favorite loan company.


The problem is that - unlike SFFCU or Bank of America or Chase or Wells Fargo or any other bank or credit union that I checked -  Medallion Financial does not publish its loan rates.


Why? It's one those questions that would seem to answer itself. If their rates were lower than the competition they'd certainly want you to know about it, wouldn't they?


And, they also hit their taxi customers with prepayment penalties. This means that, if drivers tries to pay off their loans early, Medallion Financial charges them penalties equaling three months of payments for every prepayment. Grotesque but apparently true. There are stories of cab drivers who've paid on their loans for years only to discover that they owed Medallion Financial more money than they had borrowed in the first place.


And, Tariq Mehmood has accused Deputy Director Christiane Hayashi of not letting this company do business in San Francisco. Can you imagine that?


But, like so much that Mehmood says, it's simply not true. 


The Deputy Director will allow any loan company that meets her criteria to do business here. Medallion Financial did inquire about making taxi medallion loans locally and Hayashi sent them her guidelines (i.e. No prepayment penalties or other hidden fees, payments be no larger than the monthly amount that a taxi company pays a "gates & gas" medallion holder.) 


Medallion Financial never got back to her.


So Why Does Tariq Mehmood Keep Trying to Bring Medallion Financial into San Francisco?


Is that another question that answers itself?


A driver who had aligned herself with Mehmood during the first few summer protests changed her mind after watching Tariq spend 3 or 4 hours a night at the airport trying to sell drivers on Medallion Financial. 

"He'd tell them not to worry about the prepayment penalties because nobody paid off their loans early," she said. 

Tariq Mehmood, the self-proclaimed "powerful and great leader of the taxicab drivers," has repeatedly declared that he has no connection with Medallion Financial of New York.

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

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.

It's $250,00 - Of Course.

$250,000 was chosen as the Fixed Price Sale amount at a Town Hall Meeting yesterday. The figure was a forgone conclusion. Of much more interest (if you'll excuse the pun) were the details of the financing that will become available to the buyers.

Attending the meeting were Louis Jimenez (photo) and Michael Turano of the Montauk Credit Union from New York City; and Rebecca Reynolds Lytle and Stephan B. Ho of the San Francisco Federal Credit Union. These two institutions have joined with the San Francisco Police Credit Union and the San Francisco Fire Credit Union to provide loans to drivers.

The team, of course, was put together by negotiator extraordinaire, Director Christiane Hayashi, who gave the presentation.

The loans will:

• have an interest rate of around 7%.
• require a downpayment of 5% to 20%.
• be amortized over a period of either 15 or 25 years.
• have a three year balloon payment that will be refinanced at the end of the three year period.
• There will be no prepayment penalties and no fees up front.

Credit unions are required by federal law to get a 20% downpayment on a loan. One unique feature of these loans is that the seller might have to guarantee the downpayment if the buyer is unable to come up with the full 20% or $50,000.

• If the buyer can only do 5% down, the seller would have to guarantee the other 15% or $37,500.
• At 10% down, the seller would have to front $25,000.
• At 15%, the amount would be $12,500.
• The money would be held in an interest bearing CD and paid to the seller when the equity in the loan reaches the $12,500 to $37,500 figure.

Payments on the loans will be about:

• $1,800 a month at 20% down on a 15 year loan.
• $2,100 a month at 5% down.
• from $1,400 to $1,700 per month on a 25 year loan.

The creative and unique way of guaranteeing the downpayment is the brain-child of Mike Turano of Montauk. It's a response to our unique situation where the rules of the game are changing too rapidly for drivers to have planned for them in advance. It shows the willingness of Taxi Services and the credit unions to qualify as many drivers as possible.

As it is, this might turn out to be minor feature of the Pilot Plan anyway. According to Chris Hayashi, most of the drivers who have sent in their Buyer's Participation forms say that they do have the 20% downpayment.

That the loans are possible at all is due to Hayashi's bringing Montauk Credit Union into the mix. They have expertise in loaning money to medallion holders in New York, Chicago and Philadelphia.

Louis Jimenez, CEO of Montauk, said that he was attracted to the San Francisco market because he's found that individual medallion holders are very good risks. He said that he hadn't foreclosed on this type of loan in the last 15 years. He thinks that the only way he can lose money is if San Francisco does not continue to sell taxi medallions after the Pilot Plan is over.

Buyers will not be required to use only these finance companies for their loans. If they can get better terms from other qualified lenders, they are free to do so.

Tomorrow: What sellers and buyers should be doing.