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SFMTA home > About Us > Meetings > Taxicab Commission > January 29, 2009 Charter Reform Working Group

Medallion Issuance Reform Proposal

Goals:

(1) To realize revenue potential of taxi medallions for the City in order to (a) fund enforcement of driver and consumer protection regulations in the taxi industry; and (b) provide additional funds for overall traffic mitigation and public transportation programs;

(2) To maintain eligibility requirement permitting only drivers who have worked in the industry to obtain medallions;

(3) To create a payment system accessible to those eligible to participate;

(4) To provide some degree of benefit or “exit strategy” to medallion holders exiting the business both now and in the future; and

(5) To provide flexibility to MTA to address the needs of the industry and public in the future, including the regulation of color schemes and their associated services.

Proposal

There are currently 1500 medallions issued or in the process of being issued. These medallions are held by individuals but are the property of the City. This proposal would bring these medallions back into the City on a gradual basis so that they could then be auctioned to the highest qualified bidder to be held for a set term. The following walks through the various aspects of the program:

The Re-Issuance of the Current Medallions

The City would call in a small percentage of the current 1500 medallions (perhaps 10% per year) for re-issuance. Because the current medallion holders will receive some portion of the re-issuance proceeds, some current medallion holders may want their medallions called in for auction. Calls for volunteers would be made. If more than the set number volunteered, the set number would be chosen randomly from those who volunteered. If fewer than the set number volunteered, the medallions of corporations and non-active drivers would be called in first, and then the remaining medallions would be re-issued, according to the seniority or some other objective factor of the current holder.

Currently suspended medallions or medallions for which revocation proceedings have been started would not be eligible for re-issuance, absent exception made by the MTA. These medallions would be re-issued before any medallions from involuntary participants, and if the proceedings later vindicated the current medallion holder, he or she would receive the benefit as if he or she volunteered his or her medallion.

The Status of Medallion Holders Whose Medallions are Not Called In

Medallion holders whose Pre-K or Post-K medallions have not been called in would continue to hold their medallions subject to the same restrictions currently in place, including the driving restrictions for Post-K medallions. Any revocation of a medallion for failure to abide by these restrictions would lead to the re-issuance (auctioning) of the medallion in the next round of annual auctions with no benefit to the former holder.

The Term and Details of the New Medallions (“M Medallions”)^{^[1]}

The re-issued medallions would have a set term, subject to payment and proper operation requirements. The M Medallion could be leased as can the current medallions. There would be no requirement that the M Medallion holder continue working as a taxi driver, but the M Medallion holder can do so. The M Medallion would have to be registered with a color scheme as with current medallions, however, the MTA would have the authority to preclude registration with a color scheme deemed in violation of rules and regulations from (a) receiving new M Medallions until the issues raised were addressed; or (b) operating any (new or existing) M Medallions; or (c) operating any medallions. If a color scheme was deemed out of compliance, the M Medallion holder would be allowed to re-register with a new color scheme.

The payments by the holder to the MTA would be made on an annual or twice annual basis. The amount of the payment would, as set forth below, be set by auction, provided the payment amount would adjust every year according to an index, i.e., CPI, provided MTA could suspend the index in case of industry hardship.

Eligible Auction Participants

The auction would be open to Prop A drivers who have met a more limited form of the current Daly-Ma driving requirement.

The Auction of the Medallions

Through the auction process, MTA would solicit bids for an annual payment to be made for the term of the medallion, subject to an indexed (likely CPI) annual increase. In other words, the bid made would be for the first year’s payment subject only to indexing increases after that. The highest of the yearly number of bids (say 100 or 150) would be the conditional winners.

While pre-K and post-K medallions still exist, current medallions holders would be given a chance to match the mean or mode (whichever is higher) of the conditional winning bids to obtain their re-issued medallions. Any remaining medallions would be awarded to the highest original bidders in order of bid amount. The proceeds of the sales would go to MTA for (a) taxi administration, including vehicle and color scheme oversight; (b) parking and traffic enforcement, including illegal limousine enforcement; and (c) other traffic and transit programs as directed by the MTA.

If the pre-K or post-K medallion is currently held by someone who does not meet the driving requirement and thus is ineligible to bid on the M Medallion and exercise the right of first refusal described above, that right shall transfer to the first person on the current taxi medallion waiting list. No more applications to this list will be accepted.

The Subsequent Re-Auctioning of the Medallions

In the first round, i.e., the conversion of Pre-K and Post-K medallions to M Medallions, the current medallion holders would receive a minority percentage of the annual payment for the medallion for a set number of initial years of the auction term, not to exceed a set number of years and subject to an overall cap.

Similarly, in future years when the M Medallions are-issued after the expiration of the original term, the M Medallion holders would receive a set percentage of the annual payment for the re-auctioned medallion for a set number of initial years of the new term, again subject to a total cap. Also, those Medallion holders who have not completed their terms could return their medallions for re-issuance (and auctioning) and receive a guaranteed portion of the benefit for those who complete their terms, depending on the amount of the term completed. The MTA could also yearly state more advantageous terms on which a current M Medallion holder could return his medallion for re-auctioning. These benefits would be different from those for a completed term.

Failure to make the annual payment for the M Medallion would result in the revocation of the medallion and the re-issuance with no benefit to the former holder. Revocation for other reasons would have the same effect.

Issuance of Other Medallions

All 1500 current medallions would eventually become M Medallions. The MTA would have the authority to issue new medallions of a different nature beyond the M Medallions.

[1] This is just a working name. M comes after K, and “L Medallions” is very hard to say.

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