Players & Plans: Jane Bolig Comments & Clarifies

Dear Ed,

Thanks for the ink. I happened upon your blog a few days ago and was pleasantly surprised at your kindly appraisal of my proposal.

Unfortunately, I don't think the ESOP (Employee Stock Ownership Plan) proposal has much of a future. It has no powerful champions. It doesn't promise big bucks to bureaucrats or speculators, nor does it wish to seize and redistribute medallion profits. In its undramatic way it tries to imagine a means by which we could give elderly and disabled medallion holders respectable compensation for their medallions and a realistic retirement hope for all drivers through stock ownership. It imagines an industry in which cab companies compete primarily for customers rather than medallion holders, and in which we need fewer and fewer regulations...and regulators.

ESOP, I think, is really pretty simple. Drivers within a company would use their gates to purchase medallions from current medallion holders who wish to retire. "Wouldn't that mean higher gates?" No. Same gates, but instead of your money just going to another person, you--and your fellow drivers in your company—would purchase real ownership in the form of stock. You earn your shares simply by working. The more days and years you work, the greater your shares. When you are ready to retire you cash out your shares.

Imagine that instead of working as a driver for 15-20 years and then getting a medallion--and then worrying about staying healthy enough to keep it--you could work 20 or more years and at the end of that time leave the industry with enough income to live comfortably for the rest of your life. That's the ESOP idea.

ESOP doesn't wipe out the current system. Drivers who have invested a lot of years working and waiting for their medallions would not lose their sweat equity. Newly issued medallions still would go to the top qualified persons on the waiting list. What about reissued medallions? Because current medallion holders could, but would not be forced to, sell their medallions to ESOPs, their medallions, too, after death (or confiscation) would be reissued to those on the waiting list, just as they are now.

Once a medallion was sold to an ESOP, so long as the company it was in remained solvent, it would not move. As time went on, yes, there would be fewer and fewer medallions available to individuals. By then, however, obtaining an individual medallion would become less of a necessity and more of a cherry on top of an already tasty reward for years of service.

ESOP is not an instant fix. (There haven't been any instant fixes in 30 years, nor will there be, no matter what changes may come.) The gradual transformation it offers, however, is our best hope for the healing and revitalization of our afflicted industry.

As I noted earlier, however, there are too many large, contending forces that want it all now, whatever "it" is: Big bucks for MTA vs. big bucks for medallion holders vs. confiscated bucks for city hall commissars. I'm reminded of a book I read as a kid, "Millions of Cats," in which millions of cats fight over which is the prettiest. In the end the only one left is the one that didn't fight.

Perhaps that's ESOP.

Jane

Players & Plans: The UTW & The Asian Law Caucus

Before examining this proposal, I should admit that there are two reasons why I can't pretend to be objective:

1. Money for the plan would come out of my pocket. It would treat other medallion holders and myself as if we owned companies instead of just medallions and tax us as much as $10,000 per year.

2. The UTW went to Supervisor Chris Daly's back door before the people in the taxi industry even got a chance to look for more reasonable and creative solutions to the benefits problem at Town Hall Meetings.

The UTW and the Asian Law Caucus (ALC) mainly want:

1. Health insurance for the drivers.
2. Retirement for the drivers.
3. Enforcement of laws against illegal limousines.

Well and good. I agree. In fact we medallion holders are already paying $1.5 million (or 5% of our incomes) to (among other things) help fight bandit limos - who also steal rides from us.

The ALC does make several statements that I can agree with:

• Non medallion drivers, many of whom are immigrants, are low paid, forced to sign "independent contracts" which deny them the right to unionize and are exploited in numerous ways.
• These exploited drivers must wait for as long as 15 or 20 years in order to own a medallion.
• Once a driver owns a medallion his or her life is changed dramatically by an income that effectively doubles.
• In addition to whatever they make driving their cabs, medallion holders earn around $2,000 per month by leasing their taxis out when they themselves are not working.
• "The dream of holding a medallion inspires many taxi drivers to stay in the industry and maintain good driving records."

Well and good. It's all true. The disagreement starts with the UTW's financing plan. They want to charge medallion holders an additional fee of from 20% (ALC) to 50% (Supervisor Chiu). This is a tax rate many times higher than any company or corporation pays for employee benefits.

The reasoning to justify such outrageous fees - if reasoning is the word - starts with the above mentioned facts and then goes bonkers. George Orwell probably would have called the UTW's arguments double-think - in his kinder moments. Many of their other rationalizations are just plain false.

• The $2,000 that these poor, exploited drivers stayed in the industry for up to 20 years to earn is magically transformed into "unearned income" by the UTW. Apparently all those years of toil and strife should gain drivers nothing but a chance to pay the bills for people who haven't yet paid their dues. It's OK for those abused immigrants to dream but not too much.

The ALC also likes to load it's arguments. The word "immigrant" mysteriously disappears whenever medallion holders or fees are mentioned although a substantial number of the holders who would pay these fees are indeed immigrants.

• The $2,000 is treated as a huge pile of money by the ALC that claims that imposing extortive fees "will encourage medallion holders to actually drive their vehicles ..." This is a variation on a bogus factoid constantly yammered by Rua Graffis of the UTW who once claimed that medallion holders stayed home "eating pizzas" instead of driving.

This is nonsense! Where do these people think we're living - San Francisco Del Mar, Mexico? Studio apartments here rent for $1,500 a month. Even if there wasn't a driving requirment, we'd need to work. But there is a requirement. If medallion holders don't work, they lose their medallions. Personally, I work about 50 weeks a year just to tread water.

• The purest piece of double-think, however, is the idea that the plan will give medallion holders an "incentive to retire." This in turn supposedly would result in an "exit" strategy that is lacking now.

Think and think about this. The medallions holders would pay 20% to 50% of their incomes to finance not only retirement plans but other benefits for thousands of people. Any such plan would pay them back cents on the dollar. Maybe I just have a strange sense of humor but wouldn't we be better off putting that $4,000 to $10,000 into our own plans? As for the "exit strategy" - another joke. Under the UTW's plan, holders would be able to save little if anything and would cling to their jobs even more desperately than they do now.

As a former insurance underwriter, I think the main flaw of this and other proposals like it is that it distributes the cost among too few people. Usually the rate of insurance is spread among tens of thousands or hundreds of thousands of people. This was the case back in the day when the Teamster's union provided benefits for San Francisco's cab drivers.

But, the ALC and the UTW want to stick less than 1,500 people with the bill. This means that San Francisco's medallion holders would be charged a rate five or ten times higher than any other group pays to provide similar benefits. As such, the fees would be punitive and oppressive.

However, one aspect of this proposal is true. It would speed up the waiting list. Few drivers, immigrant or otherwise, would be willing to spend 15 years being abused by the companies only to be exploited in turn by the UTW, the Asian Law Caucus and the City of San Francisco.

New "800 Hours Only" Driving Requirement for Medallion Holders

Medallion holders now only have to work 800 hours. The 156 shifts is a thing of the past. This applies to new medallion holders same as everybody else. I'm passing along this letter third hand to make sure everybody sees it.

From: Christiane.Hayashi@sfmta.com

Subject: RE: verification of driving requirement

Date: June 22, 2009 9:08:03 AM PDT

On Jun 22, 2009, at 9:08 AM, Hayashi, Christiane wrote:

Yes, you are correct. Several people pointed out that the rule about driving 156 shifts in the first full year after you receive your medallion was somewhat nonsensical. So we changed to it to 800 hours, same as any other year. Any partial year, such as the year of receiving the medallion, would be pro-rated. There is still a lingering reference to 156 shifts in the definition of full-time driving in the regulations, but we will get that out in the next amendment.

I hope that helps,

Christiane Hayashi

Director of Taxis and Accessible Services

San Francisco Municipal Transportation Agency

1 South Van Ness, San Francisco, CA 94103

(415) 701-5235

---

Players & Plans: SFCDA

Although they are the new kids on the block, the San Francisco Cab Drivers Association is the only group to consistently protest against the MTA's plans to extort money either by selling cabs or imposing fees on medallion holders. With refreshingly openness, President Barry Korengold consults with the general membership in order to formulate policies or plan actions.

SFCDA's plan calls for:

• The preservation of Proposition K.
• An "exit strategy" that would entail a gradual relaxation of the driving requirement. Korengold suggests that the requirement be reduced by 25% every five years and an additional 25% when a driver reaches 65.
• Changes in the waiting list that include: drivers being automatically placed on the list when receiving an A-Card and the idea that drivers should be able to remain qualified once they meet a basic requirement of driving 9 out 10 continuous years.
• A serious crack down on illegal limos that would create significant revenue for the City and allow for the issuance of "hundreds more permits" for legitimate taxicabs.

The proposal should appeal both to medallions holders who don't want transferability and to people high on The List.

Medallion holders who want to sell and regular drivers who want to buy of course will dislike it.

The plan also doesn't really address the fact that the waiting list moves much too slowly for many people - except once again by putting more taxis on the street.

Players & Plans: Jane Bolig Comments & Clarifies

Another out of the box thinker is Jane Bolig, President of the Board at Desoto Cab. She wants to transfer the medallions but instead of selling them to individuals, she thinks they should be sold to "all the drivers and employees in their companies ..." Bolig says that this could be done through federal programs called Employee Stock Ownership Plans (ESOP) that have worked successfully for almost 50 years and "carry enormous tax advantages."

I'm not clear as to how this would work but, having once helped put together a paper with Jane in the distant past, I'm certain that she can provide a detailed and logical argument. Some features of her proposal are:

• Both individual medallions and the List would continue.
• Companies could continue to contract only with medallion holders but when the owners retired they could sell their companies to an ESOP.
• K medallion holders could continue to work them as usual. When they retired or died the medallion would be given to the next person on the list just as they are now. Or the holder could sell the K medallion to an ESOP.
• New medallions would go to people on the list.
• The City could charge a fee for each medallion sale.

The plan is idealistic and would solve more problems than any other plan out there. Non-medallion holding drivers would benefit far more from this proposal then they would from anything else that has been offered so far. Unlike the UTW or the Asian Law Caucus, Bolig actually addresses the fundamental weakness of the ordinary driver's situation - a lack of power or control.

It's a great proposal and could make medallion holders, ordinary drivers and the City all happy. Now all Jane has to do is convince her fellow owners to go along with her idea.

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.

Chris Hayashi on Illegal Taxi's Etc

I called Director Chris Hayashi of  the MTA'S Taxis and Available Services to find out when her Town Hall Meetings would resume but she couldn't give me an answer. Her office is swamped with numerous problems such as moving personal from the Taxi Commission and re-checking the qualifications of almost every driver who ever had dealings with Officer Makaveckas. It'll be at least a few weeks before she'll be able to plan the meetings.

She did say that soon after June 19th her office will start issuing the thirty or forty medallions that have been backlogged by the Proposition A changeover to the MTA. Most of the medallions come from either the deceased or revocations and will be handed out to drivers on the list ala Proposition K. 

Hayashi's department is also gearing up for a crackdown on illegal limos and taxis. They'll start by going after the cabs which she says are, "on the front burner right now." "The "initial stages" of the operation are already in planning. This entails a a lot of administrative detail. "The best work requires the best preparation ...  the groundwork is being laid so that we know when we do hit the ground that we are effective. I don't want to just chase them (the illegal taxis) around."

These preparations sound incredibly complex and include:

• Putting the Traffic Division under the control of the MTA which "will get more responsiveness from traffic cops on MTA issues and taxis is now one of those issues."
• Coming up an enforcement plan. "The airport has one," Hayashi said, "so we're going to do our own for downtown ... we want that before we turn the police loose because ... we want to make sure that we have what we need for the district attorney to prosecute."
• "We want to talk to the District Attorney's Office first, give them a heads up that these cases are coming , let his office know how important it is to prosecute these and find out what they need in order to make sure they can prosecute effectively."
• And of course they need to identify and find the addresses of the illegal taxis.

Hayashi's team is compiling a list of illegal cab - including four that I gave her. Drivers can help in this effort by sending their photos of taxicabs that they think are illegal to:  sftaxi@sfmta.com or they can call 415.701.4400 for with other information. 

Some things you might look out for are:

• A fleet of taxis with a 333-3363 phone number pretending to be yellow cabs. If would be helpful if the MTA knew exactly how many bogus taxis are in this fleet. So if you see any of these cabs try to photograph them. 
• Any location where you see illegal taxis parked - especially if it looks like a base address.
• Try to get license numbers, vehicle numbers, color schemes, phone numbers and any thing else that might help to identify the fake cabs. It might also be useful to take down the cross streets where and the time when you saw them.
• For now, focus only on the taxis. The limos are a more complicated issue so the MTA is going after them later.

One thing drivers should avoid, however, is any kind confrontation, vigilante action or citizens arrest. I can attest to the wisdom of this.  One limo driver I photographed last year threw a punch at me and another one tried to run me off the road with his limo. While I personally found these events entertaining, I sensed that my customers didn't. As Hayahsi puts it, "avoiding fist-fights is a good thing."

She would also like all drivers to check their brakes before starting a shift. San Francisco's cable car fleet is small.

Hayashi thinks that she can get $5,000 for every illegal cab she catches. She's looking forward to this "because the city needs the money." 

Once director Hayashi has "all my stuff in order ... it'll just be a matter of going out and mopping up the floor. We'll swoop down and pick 'em off one by one."

MHA: A Representative Democracy - Spain answeres ed

In mid-May, MHA President Carl Macmurdo wrote that " a formal proposal for a new taxi law will be forthcoming within a few weeks ... from the meetings held by the Gonazalez-Kim mediation working group. MHA is represented by Mike Spain and myself, plus we anticipate that Robert Cesana (will be) participating ...  I anticipate that the proposal submitted by the mediation group will replace any prior proposals ... submitted independently ... by some of our group members."

This stuck me as putting the cart before the horse. How do you mediate a proposal without knowing what the membership wants? Therefore I asked a series of questions:

Why is your mediating group consisting of these people? Why have you not opened the question of who should belong to the group to the general membership? Why have you not asked the general membership ... whether they want to be members of this mediation group or not? If you are going to "replace prior proposals" ... shouldn't the people who made the proposals be part of the process?

I was basing my questions on my idea of the MHA as an association of equals.

MHA Treasurer Michael Spain quickly schooled me in the error of my thinking. He did this in a series of e-mails directed to other people rather than to me. Most of the creative spelling and grammar is Spain's.

• " ... questions that deal with powers and authority ... can best be answered by reading our bylaws."
• "... a common sense approach is to infer that the person in question (president, board member, etc) is acting within the descretion of those powers and authority."
• "The President is not required to answere any question comming from a member."
• "So if Ed (see photo) has any questions my advice to him is to contact a Board member to relay his concerns to the President."

When criticized by other members for being sarcastic and sounding autocratic, Spain became more ... well, himself.

• "his (ed's) e-mail to Carl was deliberately provocative. it was the kind of "by what right" sort of nonsense that is offensive, disrespectful and of course ill informed ....."
• "when you are dealing with someone so clueless, it is necessary to point them in the right direction so that they can get self educated and stop bothering those who have better things to do then answer their silly questions."
• "if ed has a problem then come out and say it instead of all the questions like. how do you do this? and how do you do that? and should the members do this? blah blah blah...."
• "At our Board meeting Ed also began to ask questions that everyone in the room, except ED, knew the answers to ... I thought it strange that someone, who was attending our meeting for the first time, would simply not listen and try to learn something."

Talk about clueless. I used to think that asking questions was a way to learn something. On the other hand, I think the idea of one cab driver telling another cab driver to be quietly respectful of a self-proclaimed authority is an interesting concept.

 I might actually agree with Spain's last point - if I was joining a fraternity, a debating society or an athletic club. Then, yes, of course a new member should learn the ropes. But, this is an association of medallion holders facing what is probably the biggest financial crisis of their working careers. If the MHA's leadership screws the pooch, it could cost me and every other member a lot of money. Thus - the questions.

And then there is the matter of what I was so clueless about? What did everyone else in the room know that I didn't? Mr. Spain was kind enough to finally clue me - in of course an e-mail sent to someone else.

• "MHA's position on Transferability (the right to sell a taxi medallion) was formulated during the Gonzalez meetings in 2005 by about 10 members who ... spoke in favor of transferability ... when it was just a position paper ..."
• "Now that the Mayor wants something; and Hayashi wants something; and the MTA wants something..... and something is going to happen, the opponents of T (transferability) like Jim, Norma, Barry, Ed, Murai come out of the woodwork. Now they want a forum where they can announce their opposition and complain. Well ... they had their chance and they were for the most part, silent."
• "Now because they want to unravel all that work that been done in the past and is ongoing, because they (have) DOUBTS?, they expect everyone to stop what they are doing and listen to them."

I was especially "silent" because I didn't join the association until one year after their "position paper" was formulated. I think this is also true of Barry, Norma and numerous other members. I also think it's absurd that a position taken four years before a crises took place would be considered the final definitive word on the subject. I mean even the President has to run every four years and the Supreme Court continually reviews old ruling.

And, as far as I know, I'm not trying to unravel anything. I may even be in favor of their position - depending upon what it turns out to be. All I've been asking for is transparency. I want to be part of any process that claims to represent me. I've paid my dues. I have a perfect right to my "why this?" "why that?" questions. 

Of course Spain has a slightly different take on this. When told by a fellow member said that his attacks were creating negativity he responded with:

• "sorry, ani't going to stop ... negativity? i have not heard that word since the late 60's. cancer is negativiety...and if you let it grow, it kills you."

It's unclear whether he's talking about himself or me. In any case, let's hope it's a metaphor.

Anyway - there you have it representative democracy MHA style.

Chris Daly's Charter Amendment

The charter amendment that Supervisor Chris Daly (seen working the press in the photo) is putting on the ballot would reinstate Prop. K with a few changes:

• 1. The full time driving requirement would be 800 hours only. There would be no option of driving 156 shifts.
  
• 2. The amendment, however, would allow for the MTA to "modify the personal driving requirement for a medallion holder with an injury or medical condition that precludes full compliance ..."
• 3. It further states that "the Agency shall make provision for the welfare of medallion holders and all taxi drivers who satisfy the personal driving requirement of 800 hours per year, including health care, retirement and disability."

This measure of course would have several drawbacks.

1. It would end any kind of transferability.
2. Since the MTA has no money, any fees for the above "welfare" would fall on the backs of the medallion holders. Judging by Supervisor Chiu's plan (see Et Tu Chiu ) such fees could run as high as $10,000 a year.
3. The 800 hour requirement for this welfare (which was not in last week's version) appears to be ambiguous. How could a driver retire if he or she needs to work 800 hours to collect the benefits?
4. While the provision for "modifying" the driving requirement for disabled drivers is an improvement over the current situation, it's vague and doesn't appear to deal with people disabled because of age.
5. There is no provision for an exit strategy or mention of a way to "retire with dignity."
6. It also would short circuit the Town Hall Meetings and thus kill any attempts by the various sides of the taxi industry to mediate a rational and thorough reform plan that could appeal to and be backed by most of people in the business.

Supervisor Daly's putting this measure on the ballot appears to confirm rumors that he plans run for mayor. Win or lose, the proposition could help his liberal progressive resume as the candidate who wants to bring "welfare to the workers."

However, I think Supervisor Daly has badly misread the situation if he thinks he's going to have the "cabbies" at his back. Instead he's succeeded in unifying most of them against him.

• All medallion holders favoring transferability will be against Daly's amendment.
• Medallion holders favoring the preservation of K will be against the measure because of the "welfare" fees and the lack of a clear retirement plan or exit strategy. Barry Korengold is advising SFCDA members to work against it for these reasons.
• Many if not most of the people on list - including many drivers that the UTW claims to represent - will also be against it because the measure will devalue the worth of a medallion.
• Ordinary drivers who want to buy a medallion at auctions of course will also be against the measure.

In short, the cab driver vote would probably run 4 to 1 or 5 to 1 against the amendment.

Nobody really knows what effect the opinions of cab drivers have on their customers but, when it comes to the subject of taxicabs, my guess is that it is quite a lot. Companies pay thousands of dollars to advertise on the top of a cab.

I wonder if Supervisor Daly fully understands what the inside of a taxi is worth?