The Plan That Wouldn't die?

Despite unanimous loathing from cab drivers and company managers, Mayor Gavin Newsom's plan to rip-off San Francisco's taxicab industry remained the centerpiece at the Town Hall Meeting on October 9, 2009. Deputy Director of Taxis Chris Hayashi led the discussion with the aim of "adding to or improving" the scheme.

This gave taxi industry insiders a chance to see how dysfunctional the scam (which was adapted from MTA Director Malcolm Henicke's Charter Amendment plan in 2007) really is.

Unable to "get it," at one point I asked Ms. Hayashi to draw a visual representation. Jane Bolig, the manager of Desoto Cab, quipped that it would "look like Berlin after World War II." Medallion holder Mike Spain thought that the plan was drawn up by a grad student. Certainly it appeared to be dreamed up by somebody who knew little about business and less about taxicabs.

The great physicist Richard Feyman once said that the best solution to a problem is usually the simplest. Instead Newsom/Heinicke take a complicated problem and convolute it.

The taxi system as it is now.

There are three different categories of medallions.

1. There are about 300 Pre K individual medallions.
2. There are 96 Pre K corporate medallions.
3. There are 1,100 Post K medallions

The medallions are not for sale.

• They are given out to working drivers on a waiting list on a first come first serve basis.
• The list is currently about 3,000 drivers long.
• Holders of the medallions are required to work a minimum of 800 hours per year.

The major problem with the system is that there is "no exit strategy." Since they cannot sell the medallions and there is no retirement program in the industry, medallions holders tend keep the medallions until they die. This forces many of them to keep driving long after they want to, or should. Others pretend to drive and don't.

The upshot of this is that it takes a long time for drivers to gain a medallion. I've had mine for four years, for example, and it took me a dozen years to get it. While I personally don't think that this was an unreasonable amount of time to wait to own a piece of a business, there were only 1,000 people on The List when I signed up. The List is much longer now.

Heinicke's solution to this problem is to create yet another class of medallions called M medallions. These would consist of:

• All newly issued medallions.
• Pre K medallions that go back to the city as the holders die off.
• Corporate Pre K and Post K medallions that would return (through a convoluted route) to the city after all their holders passed.

Did I say convoluted?

• The corporate Pre K medallions would first be transfered to a living person who was a shareholder of said corporation as of July 1, 2009. Only when he or she died off would the medallion become an M.
• Post K medallions, on the other hand, who continue to be given out to people on The List but The List would be capped at around 3,000.
• Current Post K medallion holders would be allowed to retire and their medallions would become M medallions.
• The 3,000 New Post K medallion holders would not be allowed to retire thus keeping the current system with all its problems alive. As they eventually bit the dust, the New Post K medallions would become M medallions.
• In short, all the medallions would eventually become M medallions but the process would take 40 or 50 years.

The plan is actually more complicated than that but the less you know the better. Trust me on this.

The M medallions would be leased to taxi companies not to drivers. The companies would bid against each other at periodic auctions. Heinicke expects the companies to bid about $3,000 for each medallion. This would set up an interesting scenario. For 40 or 50 years there would be two types of medallions:

• M medallions for which the companies would pay $3,000 per month.
• All other medallions for which companies usually pay about $2,000 per month.

Why would companies that ordinarily pay $2,000 for a medallion suddenly pay $3,000? Good question. I haven't the foggiest.

Numerous taxi company management types were at the Town Hall meeting and they generally agreed on the following:

• Taxi companies could only afford to pay $3,000 if they cut back on services like the radio and only dealt with long term leases.
• The larger companies would probably drive the smaller companies out of business by initially overbidding.
• After they'd wiped out the small fry, they'd bid whatever they liked. Jane Bolig mentioned a dollar as a possible price.
• Another possibility would be that the companies would collude to keep the bidding down. This seemed like a popular option with most managers.

In other words the Newsom/Heinicke plan doesn't even work on its own terms.

If I'm a little more acerbic than usual its because I've wasted six hours of my time taking apart two pieces of paper that should have been shredded a month ago. Everybody in this business has already told the MTA that the Heinicke plan won't work.

This is a not very ingenious ploy to separate us from our money. Under this con all the profits in the business would eventually go to the MTA. The medallion holders would be wiped out, the companies would be reduced to leasing agencies and the drivers would become a permanent underclass with no hope of ever improving their status.

I wonder when or if Newsom will realize that, in putting his trust in Heinicke, he's riding a dead horse.

Last Friday's Town Hall Meeting was attended by people who were experts on all aspects of the taxicab business. They were and are eager and ready to come up with a plan that would benefit the companies, the drivers and the public.

When is Mayor Gavin Newsom going to start listening to them?

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.

Chris Hayashi's New Plan

Deputy Director of Taxis Chris Hayashi had an epiphany the other night which led to a change of emphasis during the October 16th Town Hall meeting. Originally she had intended to discuss two separate plans: one offering medallions holders a chance to buy a retirement and the other offering the chance sell a medallion at a fixed rate.

Ms Hayashi's revelation was that the two ideas could be combined into one. She only saw the broad strokes in her vision so the details have yet to be worked out. However, the outline goes something like this:

• Medallion holders could opt for either retirement or sale.
• The List would be maintained and drivers on it apparently would have a choice between getting the medallion by paying for it or not.
• The City would take fees of at least $10 million for brokering the deal because they are giving us public access to the streets ... or something.
• Some of these fees would go back to the taxi industry in the form of enforcement against illegal taxis and limos as well benefits for the non-medallion drivers.

It's hard to see how some of this would work but the genius is always in the details and we won't begin to see those until Monday.

I think the idea was generally greeted with enthusiasm - especially by those of us who thought that the twain could never meet between the plans; and that the people favoring one side or the other could never reach an agreement.

There was hostility loudly expressed against the high percentage of the fees (ranging from 20% to 50%) that the MTA wants to charge the taxi industry for putting Deputy Director Hayashi's plan (or any other plan) into effect, mostly by medallion holder Jim Templeton and myself. Jim argued that it was absurd for us to be contributing to the salaries of MTA personnel who make more than twice as much money as we do. I concentrated my attack on the fact that we would be hit by much higher taxes than anyone else pays.

I'm afraid that we both of got a little carried away. Jim had the good grace to apologize for his outburst but I did not. I should have. My Irish temper had the best of me. My animosity was (or should have been) directed at the idea not the person. Let me apologize now.

In any case, our complaints had no effect. Ms Hayashi told us that we should talk to an attorney. Her legal opinion is that the MTA has the right impose any fees that they wish.

She saved the best news for last. She told us that the plan that wouldn't die is finally dead.

"I tried to get one of you to say something good about the plan but couldn't," she told us.

She deflected all attempts to get details about this radical change of direction with a series of impish "yes" and "no" answers to all queries on the subject. In the shadowy Byzantine world of the MTA, the force apparently is finally with Deputy Director Hayashi.

The people in the taxi industry are apparently to be given the chance to decide their own destinies.

Let's hope the wind stays at her back.

Open Letter to Tim Redman

Mr. Redman,

It's discouraging to spend 6 months helping to create a Taxicab Reform proposal only to see it totally distorted by the press. It was nice of you to provide a link to the proposal. It would've been even nicer if you'd bothered to read it carefully.

In short, this is as bad a piece of journalism as I've seen. What's wrong with it? Let me count the ways:

1. The proposal does NOT, "in essence" or any other way, allow cab medallions to be sold on an open market.

A. At most 300 of the 1500 medallion will be sold ONLY to working drivers on a seniority list.

B. Only medallions belonging to drivers over 70 will be sold as way for them to get out of business with some equity.

C. The other 1200 medallions will be given out without charge to drivers on a seniority list the same way that they are now.

2. This proposal is NOT the mayor's plan. Newsom's plan was to take all the taxi medallions and sell them at an open auctions as you should be fully aware.

. A. Newsom wanted to extort $600 million from the taxi industry.

B. As a compromise, he's accepting $15 million - which, while still extortion, isn't that bad when you consider the size of the mayor's gun.

3. The entire plan, in fact, is a compromise that was put together mostly by working cab drivers like myself but including of course cab companies and the MTA. We spent over 150 hour discussing ways of reforming (or not changing) this business. We listened to over 20 proposals and discussed them all at length.

A. From what I hear the major doesn't like this plan any better than you do.

B. the mayor wants a lot more money then this plan gives him but he's willing to go along with it to avoid a ton of lawsuits and bad publicity.

4. The fixed price sale will probably be closer to $250,000 than $400,000.

A. The whole idea of the Fixed Price is that it should be affordable for a working driver.

B. medallion holder gets paid leasing fees of $2,000 a month. This price will be fixed so that these leasing fees will cover the price of a loan.

C. Once again. This is NOT Newsom's idea, it's MINE.

D. It's compromise between an open auction and continuing a broken system where drivers have to wait over 20 years to get a medallion.

5. The MTA is NOT hoarding medallions. 30 medallions, in fact, have been given out since the MTA took over on March 1, 2009.

A. It would've been nice If you'd bothered to talk about this subject with Deputy Director of Taxis Chris Hayashi instead of listening to unsubstantiated rumors.

6. Not mentioned by you is the fact that this Consensus Plan also includes:

A. A Driver's Fund to give the average driver benefits - something they haven't had for 32 years.

B. Setting up an industry council made up of drivers and the public to monitor and make changes in the plan if necessary.

1. The council will also study ways of improving cab service to the public.

7. The situation that you describe at the end of your piece - with drivers waiting for people to die in order to get a permit - is the situation that exits now.

A. This plan should speed up the process, not continue screw the drivers like they're being screwed now.

Once again, I have to say that it's very discouraging and frustrating to read such a distorted view of a proposal that so many of us working drivers gave up so much time and effort to create.

It makes you wonder? If the press can't even cover taxicabs accurately, what do they get right?

If you really want to know what goes on in this business (humility aside) I suggest you read a little more of my blog.

Ed Healy,

Cab #572

P.S. You comment page on your blog didn't accept this piece because it wouldn't pass your SPAM filter. Is the filter set up to reject negative criticism?

What is the SFMTA Board Going to do With the List?

A few Board meetings ago Vice Chairman Cheyrl Brinkman (photo) gave a short speech saying that she really cared about doing right by cab drivers. If true, this is an indication that she and other members of the Board didn't fully understand the consequences of the vote they took on Tuesday August 21st to allow Pre-k's to sell (er, surrender) their medallions.

This became evident when the subject of continuing the List came up - after the vote.

Chairman Tom Nolan said that the Board should decide what to do with the Waiting List soon. Director of Transportation Ed Reiskin wanted to clarify the situation so that drivers should know whether or not they should wait to earn a medallion. Director Malcolm Heinicke was quoted in a paper as saying that the List was "the elephant in the room."

If so, Heinicke's been trying to shoot it down for five years. With Tuesday's vote, he succeeded. The pachyderm is laying on it's side gasping for breath. The MTA Board has already decided that few drivers will get their "earned" medallions.

Why? To understand let's look at Director of Taxi Services Chris Hayashi's proposal of May 2012.

Hayashi's Plan ....

called for the 350 Pre-K medallions to go to the Waiting List after the holders either returned them or passed on. It was based on her three year study of the cab industry and several assumptions that came from the knowledge she thereby gained:

1. Few cabs would go to the List once medallions started to be sold. Revocations would be about the only source ... 
2. ... except new issues. Hayashi proposed that 50% of them should go to the List. But, she's also a realist  and knew ...
3. ... that Heinicke wanted to Bogart the medallions.
4. Thus, the 350 Pre-K's would be the only major supplier to the List.

Another set of calculations and assumptions also came into play.

1. At a certain point it would be just as advantageous to buy a medallion as it would to wait.
2. Exactly when - would depend upon the age of the drivers and the length of time that they had been on the List.
3. For instance, I put myself on the list at 48 and got my medallion at 62.
1. If I had bought a medallion at 48, I figure that I would have been just as well off as I was from "earning" it 14 years later.
1. This is calculated for $250,000 and buying the medallion.
2. Paying for a "transfer" at $300,000 might be a whole different kettle of fish. I'd need some legal guarantees that I wouldn't be shafted before I'd sign up for this.
4. There are huge advantages to holding a medallion.
1. It's worth $10,000 to $20,000 a year in better shifts which helps balance out the loan payments.
2. You have job security.
1. Before I had my medallion John Lazar fired me for saying something he didn't like.
2. After I earned my medallion I said something that Lazar didn't like then fired him.
3. You can actually afford medical insurance.

Drivers in their 50's, 60's and 70's would be severally penalized if forced to purchase the medallions - especially after already waiting for 15 or 20 years. In most cases it would make no sense at all.

This would leave these people would have no "exit strategy" and cause them to keep driving until they dropped. Few would have been able to save any money on a $25,000 a year job. Many would die (No exaggeration or rhetorical flourish intended - just a fact.) in poverty.

Hayashi counted the number of such people at somewhere between 300 and 500 Drivers.

The Pre-K's, on the other hand, have already made around a million off of each medallion and don't have a driving requirement. Each medallion gives them from $3,000 to $4,000 per month for the rest of their lives to retire on.

Therefore, it seemed humane, rational and just to give the Pre-K medallions to the List.

But, it wasn't only a question of humanity that motivated Hayashi's plan. She has an understanding of people that seems to be totally lacking in the rest of the SFMTA. Her ultimate principle has been to serve the cab riding public.

"Happy cab drivers make happy customers," she once told me. "Bitter drivers sends Germans back to Munich telling their friends not to visit."

The only way to get more medallions to the Waiting List would be to convince the SFMTA Board that Hayashi is right.

San Francisco has the best and most knowledgeable cab drivers in the country. People from all over the world know this. It's only the locals who don't. People from all over the world tell me what a pleasure it is to take a cab in San Francisco. The reason that we are so good is that so many of us stuck around to earn the medallions. The drivers on the List helped make this city a prime tourist destination. They deserve to have the promises that were made to them kept.

Of course, the Waiting List is finished one way or other. If the SFMTA wants to attract quality drivers in the future, they will need to end the List with a legacy of justice and fair play.