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.

MTA Board Unanimously Passes Pilot Plan

With a vote of 7-0, the MTA Board made history by unanimously okaying Prop-K reform and passing the Pilot Plan.

The meeting, which didn't start until almost 5 PM, had the air of a foregone conclusion about it. The room was half full and only three people spoke against the plan. The usual people, with the addition of Murai, spoke in favor of it.

The people who are financing the loans (called "my suits" by Chris Hayashi) confirmed that they were willing to grant loans on the basis of a Fixed Rate of $250,000.

Director Heinicke asked them if they would be willing to grant loans for a higher amount of money and their spokesman said that $250,000 was all that they would be willing to loan at this time.

That's it folks. It's a done deal. Now we'll see how it works out.

The Phantom Answers Anyonymous

Lately I've been besieged with comments from a character hiding behind a cloak of anonymity. Sometimes he gives a name like "Dave" or "Anonymous #1" but more often he refuses to give a name claiming that he's afraid of retaliation from the companies or the Taxi Division.

As an ex-non-medallion holder who openly tried to form a driver's union and openly criticized policies of the companies I worked for, I can't say that I admire his courage. However, I believe that the main reason he is being anonymous is that he's one person pretending to be several and thus bogusly claiming to represent "how members of the Taxi community really feel."

He's hostile to the Pilot Plan and keeps looking for weak points to attack. If you respond to one of his jabs, he comes back and attacks from a different angle. Some of his rhetorical assaults are beyond ridiculous. For instance, he claims that if people who buy medallions are forced to follow a driving requirement, they would lose their medallion if they had to go away for five years to take care of a sick relative.

What can I say? ... Anybody who left any business for five years would probably lose it. At least a medallion owner would be able to sell the medallion and would be a lot better off than a driver who would lose his or her place on the waiting list.

Having answered that pseudo-question, I'm sure I'll have to field another equally ridiculous one in response. It's like dealing with an eight-year old who knows he's smarter than you are. However, I do think that he has some legit questions or concerns that I'll try to address:

• Buyers of medallions will be able sell them right away: They will not have to wait until they are 70.
• Director Chris Hayashi is not sitting on medallions. Since she's taken over she's put them out at a rate consistent with the years in the past as you can see from this chart.

YEAR # of Medallions Awarded

2000 85

2001 83

2002 26

2003 53

2004 28

2005 18
2006 52
2007 56
2008 106
2009 55
2010 9

• In the year since the SFMTA took over, the Taxi Division has put out 37 medallions. They will be putting out 5 more on April 20th.
• 2000, 2001 and 2008 were all years where new taxi medallions were issued. If you remove these from the equation, the average number of medallions issued per year is 41.

It is true that the Taxi division has a backlog of about 25 medallions but Hayashi says that this is only because she has been unable to hire enough staff to investigate and issue the medallions to new owners.

Anonymous is certain that the real, the true reason is that the SFMTA wants to hold onto the medallions until the Pilot Program is over, when the nefarious Hayashi intends to sell the medallions instead of giving them out to drivers on the list.

There are a few things to say about this:

• On April 16, 2010, SFMTA will be interviewing people for the investigator positions that Director Hayahsi needs.
• The medallions being held now are being given out on a basis of one medallion to drivers on the list for every medallion sold by the MTA. That is to say that she can't sell the medallions if she doesn't also give them out.
• Therefore it doesn't make any sense for her to hoard them.
  

Anonymous has also criticized the Fixed Price sales plan as leading to a possible bankruptcy tsunami like what happened when the old Yellow went down the tubes in the mid 70's.

When the final financing plan is my hands (hopefully in the next few days) I'll go into more detail, but the above scenario is very, very unlikely to happen for the following reasons.

• Old Yellow owned most of the medallions in the city. It's hard to see how 300 or so individual medallion holders could conceivably all go bankrupt at the same time.
• The failure rate of loans to cab drivers in New York City is 1/2 of 1% (0.5%) and New York sells their taxis at much higher prices than they will sell for here.
• Although I don't have the final figures, I've been assured that the loan payments the medallion holders will have to make will be about the same as the amount these medallion holders will be paid for leasing out their medallions when they aren't working them.
• Thus the medallions will pay for themselves. If anything, I would expect the failure rate on these loans to be even less that it is in New York.

For now, I guess that is it.

I've enjoyed the comments that I've had on this blog but I really don't want to continue to deal with the silly little games that this character has been playing. I would appreciate it, if in the future, people who want to post here would identify themselves in a consistent manner. Not that you have to use your real name (I'm not using mine on this blog) just that you do use a name and use the same one every time.

Thanks in advance.