Taxi merger

Pub date November 19, 2008


A plan to merge the Taxi Commission with the Municipal Transportation Agency will be heard by the Board of Supervisors on Nov. 25. Most city officials and taxi industry bigwigs support the change, but some drivers fear it could signal the end of the semi-autonomous medallion system that has been in place for 30 years.

The merger legislation by Sup. Aaron Peskin is brief, simply transferring duties from the Taxi Commission to the MTA beginning March 1, 2009. But Peskin also helped write another key piece of legislation — last year’s sweeping MTA reform measure Proposition A — that contains a provision allowing the MTA to wipe out all prior taxi regulations.

Skeptics fear that the real target of the merger is Prop. K, the 1978 law that created the current driver permitting system, which requires taxi medallions that are owned by the city to be in every car. With the MTA in control, the door could be open to privatizing taxi medallions. These permits are currently leased by the city for a fee — $658 a year for most cabs — to longtime drivers, but a scheme to sell or transfer them could mean huge profits for the select group of drivers who now hold medallions, with a potentially high transfer fee kicked back to the city.

Reguutf8g San Francisco’s taxi industry involves ensuring cabs are being properly operated, with medallions held by legitimate drivers, and investigating various complaints. But the Taxi Commission barely has enough money to meet its mandate. Proponents of the merger say the MTA can bring more resources and professional attention to the industry. Mayor Gavin Newsom, who as a supervisor in 1998 pushed for formation of the Taxi Commission, has long supported the merger as a way to have all transportation housed in one agency.

“The benefit of merging is the MTA already regulates all surface transportation,” said Jordanna Thigpen, acting director of the Taxi Commission, who was appointed by Newsom after the Taxi Commission ousted Heidi Machen in 2006. “Most cities in the country do incorporate taxis into the common transportation agency.”

Currently, cab companies, medallion holders, and rank and file drivers essentially function as a feudal system, with the serfs driving San Franciscans around in vehicles usually owned by the lording cab companies and permitted by older drivers who hold the coveted medallions. There are only 1,500 of these permits, which are literally tin medallions that correspond to the numbers printed on the sides of cabs. They are owned and regulated by the city, and leased for life to drivers who wait years to move up the list.

Medallion holders make about $20,000 to $50,000 per year leasing their medallions to cab companies, which then charge drivers daily “gate fees” that are set by the city. Drivers pay an average of $96.50 per day to use a cab, but are allowed to pocket all their fares. Drivers usually clear about $150 a day, but that’s before paying gas, tolls, and tickets, and before even sometimes allegedly slipping bribes to dispatchers to get the best assignments. Drivers have no health insurance and are essentially treated as independent contractors.

Drivers have criticized the newly formed Taxi Advisory Group, which has made recommendations to the MTA and is likely to be expanded after the merger into a 15-member council, which would have only three drivers, but seven medallion holders and cab company representatives. Five members of the public would also be seated and their unanimous support would be required for a driver-led initiative or idea to trump the medallion and cab company bloc.

“We want a much greater and fairer representation on this Taxi Advisory Council,” said driver and United Taxicab Workers chair Bud Hazelkorn. “Without that, all the issues that we bring will not be heard.” Those issues include providing health care for drivers and creating a centralized dispatch system so fares are allocated more equitably. He pointed out that drivers are the only people in the system making all their income directly from fares. Everyone else in the industry gets slices from other pies.

And the existing provisions outlined by Prop. K may soon be a thing of the past.

Prop. A included language that allowed for the Taxi Commission merger and stated that once the MTA was in control, “Agency regulations shall thereafter supersede all previously adopted ordinances governing motor vehicles for hire that conflict with or duplicate such regulations.”

During the 2007 election season, this was interpreted by the UTW and Judge Quentin Kopp, a former supervisor who authored Prop. K, as possibly undermining the current medallion system. “The taxicabs CEOs have tried EIGHT times to undo Prop. K, failing each time as voters upheld this good government measure,” Kopp wrote in a paid ballot argument at the time. “Now encouraged by City Hall, Prop. A slips in a deceptive clause undoing 30 years of voter policy.”

Back in 2007, when seeking the Guardian‘s endorsement for Prop. A, Peskin told us, “I have met with the mayor. The mayor has no desire, as do I, to undermine Prop. K, and what we would do if we ever were to transfer the Taxi Commission to MTA, we would transfer upon the condition that they adhere to and embrace by regulation all of the previously voter approved ordinances, such as Prop. K. So I think we have it handled.”

Peskin said he reaffirmed that commitment in a letter, cosigned by Newsom, but neither office could locate a copy of that letter as of Guardian press time.

But at a Nov. 17 Government Audit and Oversight Committee meeting, Peskin asked MTA executive director Nathaniel Ford if it was his understanding that this merger was not to undermine Prop. K. “That is my understanding,” said Ford. “I think it is important to all stakeholders.”

Yet the interpretation is still correct. “The MTA will now have the authority to enact provisions that supersede Prop. K,” City Attorney’s Office spokesperson Matt Dorsey told the Guardian.

This past summer, the Taxi Commission established a Charter Reform Workgroup with a primary goal of reviewing Prop. K. The group is expected to meet for about six months with any recommendations subject to a citywide vote.

Although the workgroup has yet to release any specific statements regarding Prop. K, chairman Malcolm Heinecke believes it’s already making strides simply by opening up public discourse among citizens, companies, medallion holders, and drivers.

“One of the problems with the taxi industry and discussions of reform is that they are very insular,” said Heinecke, who is also an MTA board member. “I believe we have a balanced group of voices [in the group].”

Heinecke said he thinks varied stakeholders are essential because of broad dissatisfaction with Prop. K. “You hear everyone — both inside and outside the industry — bemoaning some aspect of Prop. K. It’s a system we’ve had in place for 30 years; rather than just say it’s bad and not do anything, [the goal of the workgroup] is to look at where we are and revise.”

While it may be true that no one is satisfied, that hardly means members of the factional workgroup agree on how exactly Prop. K should be changed. For some, the problem begins with issues of representation. Not everyone agrees with Heinecke that this is a “balanced group.” Of 12 members, there are just three drivers and three members of the public, with the rest representatives from the upper echelons of the industry.

Driver and UTW member Thomas George Williams pointed out that “companies and medallion holders often have the same interests — most companies are owned by medallion holders.”

Furthermore, Mark Gruberg, a UTW member, told us, “Everyone would say some things can and possibly should be done to improve provisions of Prop. K. But it’s one thing to work around the edges to reform a law and another thing to throw it out the window.”

He pointed out that one proposal before the workgroup would allow medallions to be sold for profit, something he said “would be a complete reversal of Prop. K.” If other cities are an example, medallions could fetch as much as $500,000 apiece, enough for the holder to retire handsomely. “People that have them would clean up at the expense of the next generation of cab drivers,” Gruberg said. “It would be a completely indefensible windfall.”

“This is public property, these medallions,” Hazelkorn said. “They could be misused as a pension, but that’s not a pension that applies to everyone.”

When questioned, Heinecke was vague about concrete changes the workgroup might instigate. “This is a delicate position for me because the whole purpose of the task force is to hear the views of all the stakeholders,” he said.

Taxi drivers, the serfs of the industry, do not have high hopes about the merger. “If the merger happens, the MTA [officials] will be able to do whatever they please,” Williams said. “Everyone knows MTA is always in need of money … they don’t care about drivers or improving industry, only their budget.”

Williams worries that, under the MTA, the commission will lease medallions to companies instead of individual drivers, which would “totally ruin the concept of Prop. K.” Gruberg agreed. He pointed out that some proposals mention levying a tax on the medallion transfers, a potential revenue source the MTA could be eyeing. “It’s a whole new ball game with MTA and if they’re so desperate for cash and they see the taxi industry as a cash cow, they might go for any scheme.”

MTA spokesperson Judson True told us, “We have no intention of looking to taxi revenue to supplement existing Muni operations.”

Judge Kopp said, “By itself that does not disturb Prop. K, but if that’s a fig leaf for some recommendation from this ersatz Charter Reform Workgroup, then it becomes ominous.” He said dressing the changes in a group with a pithy name like Charter Reform “is not reform, it’s subterfuge.”

And, he added, Prop. K doesn’t need reform as much as it needs enforcement. “They’ve been at this for 30 years. Their revisions are always to start to restore the pre-1978 conditions and enable them to treat these permits as personal possessions for sale.”

Peskin, with the approval of other members of the committee, calendared the full board hearing on the merger for a date after the MTA announces the result, expected sometime this week, of its national search for a director of taxi and accessible services. Solid leadership has been elusive: two years ago the Taxi Commission fired executive director Heidi Machen, reportedly for being too tough on cab companies. Machen was replaced by another Newsom appointee, Jordanna Thigpen, who said she has applied to stay on the job but doesn’t know if she’ll be selected.

When asked if the merger would unnecessarily stretch the MTA’s resources, Thigpen said, “On the one hand you could look at it that way. On the other hand, we’re so chronically understaffed. Trying to add staff is so complicated because we’re funded by the taxi industry.”

The taxi industry brings about $1.6 million in revenue to the city, mostly from fees paid by 1,500 medallion holders and about 7,000 drivers. However, “Fees do not currently meet the city’s cost recovery needs,” according to a Taxi Commission merger report. “Both Taxi Commission and Taxi Detail are understaffed and additional enforcement personnel are needed.”

MTA’s True said, “We expect some cost savings or at least increased efficiencies,” when asked how the merger will affect the MTA’s budget. “When it comes to changing Prop. K, raising fees, or adjusting how medallions are allocated,” True said, “I can’t say that it’s not on the table … In the last several months the focus has been on procedural issues. I think that policy questions will largely come post-merger.”