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.

LIMITED DRIVING REQUIREMENT - A Proposal by the SFCDA

The Taxi Advisory Council is still collecting data and reviewing some effects of the Pilot Program so far.   Because of delays in the implementation of the program and the many issues presented to the council, we have not yet discussed long term medallion reform.  I feel much further thought and discussion is necessary before making a final recommendation to the SFMTA  Board.

There are many who would like to see all medallions eventually transferable.  I would like to point out that if all medallions become transferable, there will no longer be the advantage of jumping the line by purchasing.  Everyone will have to wait again, only now when their name comes up, they'll have to split their medallion income with the bank.  This will exclude many older veteran drivers from owning a medallion.  We therefore feel a significant cap on the number of transferable medallions is essential.

Barry Korengold
President, SFCDA
Vice Chair, Taxi Advisory Council

Medallion Reform Proposal by the San Francisco Cab Drivers Association

We believe that as in most occupations, career cab drivers deserve a dignified end to their career. This plan will benefit a broad spectrum of interests. It will benefit the city by putting money into the SFMTA, it will benefit all cab drivers by contributing money to the driver's fund, maintaining gas and gate shifts, as well as continuing San Francisco’s long honored system of earning a medallion through time spent on the road, rather than by having to go hundreds of thousands of dollars into debt. This plan will keep medallions going to veteran drivers at the top of the list and allows for elder and disabled medallion holders to reduce or eliminate their driving requirement or to sell their medallion. It benefits the public by maintaining quality, career cabdrivers in the industry.

We feel that although purchasing a medallion might be a good choice for some younger drivers early in their careers, many other drivers have already invested 20 years or more of their lives servicing the public for low pay, long hours, with no benefits, doing one of the most dangerous jobs in the country. Therefore, there needs to be a way for drivers who have made a career of driving a cab to be able to obtain a medallion.

In order for medallions to continue going to veteran drivers, as has been the respected practice in San Francisco for the last 32 years, there needs to be a cap on the number of transferable medallions. We suggest a third. Because of the slow movement of the list, we feel two thirds of the medallions should continue to go to the top of the list without purchase. When new medallions are issued, one third of that number would become transferable. In other words, if 30 medallions are issued, 10 more medallions could become transferable.

The City should sell no more medallions outright, as each one deprives a career working cab driver from obtaining their medallion, which can be compared in other industries with tenure or a management position after usually at least 20 years on the road.

We propose that when a medallion holder reaches the age of 55, the driving requirement could be voluntarily reduced to 600 hours and the holder would contribute $100 a month or $1,200 a year to be split between the SFMTA and the Drivers Fund.

When a medallion holder reaches the age of 60, the driving requirement could voluntarily be reduced to 400 hours and a contribution of $200 a month ($2,400 a year) would be split between the SFMTA and the Drivers Fund.

When a medallion holder reaches 65 or becomes disabled, the driving requirement could voluntarily be eliminated with a $400 monthly contribution ($4,800 a year) to the SFMTA and the Drivers Fund. The medallion holder would still retain the medallion and still be able to drive.

To allow for inflation and market changes, these payments could also be set at a comparable percentage to medallion income instead of a dollar figure.

All reduced or eliminated driving requirement medallions would be run as a gate and gas cabs. This would create stability for companies as well as maintain available shifts for drivers.

A medallion holder would have the option to sell when they reach 65. If they chose to hold on to their medallion with a reduced or eliminated driving requirement, they would retain their medallion the rest of their lives, but would no longer have the option to sell. When these medallion holders die, their medallions would go back to the list. A medallion holder over 65 who continues driving, could make their decision at the time they wish to stop driving.

Since there would be a cap on transferable medallions, eventually there could be a waiting list to sell. A qualified medallion holder waiting to sell would not have to pay to eliminate their driving requirement until able to so, at which time they would make their decision.

We’d like to make this comparison of revenue from the current transfer fee of $50,000 per medallion to the revenue from this Limited Driving Requirement plan. With the amount of debt undertaken when buying a medallion, the purchaser will likely hold onto their new medallion for more than 10 years, probably closer to 20 or 30 years. After 10 years of participation in our recommended program, a 75 year old driver will have contributed $48,000 to the SFMTA and the Drivers Fund. If the same driver took advantage of the plan starting at the age of 55 he will have paid in $66,000, and still be contributing to the fund and the SFMTA.

We feel this plan is healthier for the industry overall. It will allow senior and disabled medallion holders to stop driving and allows older career drivers to still obtain a medallion. This will also help color schemes maintain gas and gate medallions, and provide more available shifts for non-medallion holding drivers.