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Charter Reform Working Group


August 19, 2008 at 10:30 a.m.

City Hall,1 Dr. Carlton B. Goodlett Place

Room 305


Present:  Director Thigpen, Laurie Graham, Rich Hybels, Rich Schlackman, Charles Rathbone, Malcolm Heinicke, John Lazar, Tone Lee, Autumn O’Keefe, Paul Gillespie, Rick Wilson, Tom Owen

Absent:    Adam Millard-Ball, Bruce Oka, Hansu Kim, Thomas George Williams

1.      Call to Order/Roll Call

2.      Adoption of Minutes from the July 15, 2008 Meeting: Adopted without objection.

3.      Potential Reforms to Current Process for Issuance of Medallion Permits [DISCUSSION AND POSSIBLE ACTION ITEM]

  • Heinicke: We are working our way into two models in way of reform, leasing or phased approach going to permit holders or abrupt sale. I have an idea of some proposals going forward.  I want to get someone technical input as well as from the public.  Final Issue, current drivers and their driving ability.  I wanted to raise the question about whether the medallions should be leased or own.  Leasing makes for more gradual process of owning and a more steady revenue stream.  Leased for 5-8 year terms or until sold. What do people think of that dichotomy?

Committee Discussion:

  • Laurie Graham: I’m worried about the fact that all these plans don’t really address customer service and the public.  It’s very important to make sure that people are picked up and all the neighborhoods are serviced.
  • Heinicke: We have several policy issues here.  The permitting process is one that may not solve the service issues.  The final proposal will address this in some fashion.  This is a more limited topic.
  • Laurie Graham: I oppose leasing because the turnover rate will cause less affiliation to the industry.  I’m worried that this will not promote self satisfaction and ownership.
  • Rich Schlackman: How about lease to buy? If you want you can then use that as part of the buy system.  It allows someone to buy it that can’t afford it.  
  • Paul Gillespie: I don’t see the evidence that other cities who own there cabs take better care of there cabs.  I think that SF cabs are taken care of as well although they are publicly owned.
  • Tom Owen: It’s the intangible right to engage in the business.
  • Heinicke: If you don’t take care of the right to drive the value does not deteriorate because you can get someone else to drive.
  • Tom Owen: Limited life of the vehicle is going to turnover.
  • Rich Schlackman: I think it’s more about the resale.
  • Tom Owen: The license doesn’t become more valuable. 
  • John Lazar: There is a rental fee to be paid to the Medallion Holder.  Financing is going to be difficult for people off the current medallion waiting list.  Some of the rental fee should be paid to the city so the infrastructure can have money.  You have to make it easy for the people on the list.  As far as customer service goes it doesn’t have anything to do with the medallion.
  • Heinicke: The concern that I have is that if we are going to maintain some allegiance to Prop K, how are people going to do it?
  • Rich Hybels: Where is it written that the city has to get money out of this?
  • Heinicke: This is just view.  This is a publicly regulated permit.  It’s an appropriate place for the city to raise revenue for the city’s transportation system.  The idea here is rather than just setting fees like many regulatory bodies do, is to have some sort of market sensitive process so the fee is the amount where it allows the Medallion Holder to make profit.
  • Rich Hybels: I think that the industry is self sufficient, we don’t need the city.
  • Rich Schlackman: You use the roads, the police.
  • Tom Owen: We limit the number of medallions to keep value.
  • Tone Lee: Prop K is blocking the city’s growing economy.
  • Heinicke: As a driver, would you favor leasing of the medallion?
  • Tone Lee: Yes, leasing is good.
  • Charles Rathbone: The real question is, is the interest of the people in the City and County of San Francisco? It’s a tremendously valued public owned asset.  We need to exercise the judiciary responsibility.  Preserving the value of that asset, to do that is to put it in the hands of a private company to sell it.  Whether that asset is better managed in an open market through buy and sells or in a novel system that has never been tried before. I think it would seriously compromise the value of that asset. 
  • Heinicke: I will take the criticism that this is novel and untested.  I think even if they are leased the market still determines lease prices. 
  • Charles Rathbone: The lease and sale proposal both do that same thing.  Does that take place out in a free market or at the MTA? I could imagine something that is run by MTA would be open to different competing interest. The bottom line is that this asset has a tremendous value and we should not try new schemes.
  • Rich Schlackman: The private market will be under the same pressure by MTA.  The issue between lease and ownership.  Ownership boxes a lot of people out.  But ownership will make for a well taken care of industry.   How do we make a system where people can have some sort of ownership?  What do we do with people who already have it?
  • Heinicke: I don’t think there is a clear answer there. My inclination is to proceed on two tracks and have the committee make a decision.  Next time with the proposals, we can take a vote on it. Allegiance to Prop K has two elements.  How many Pre-K medallions are there right now?
  • Dir Thigpen: Approximately 96 corporate medallions and 310 Pre-K.
  • Henicke: How many Pre-K’s are actually driving?
  • Gillespie: 5% only driving.
  • Heinicke: We have two classes of medallions, Post-K and Pre-K. What portion of pre-k are actual working drivers.
  • Dir Thigpen: It’s pretty low. If 10% or more change hands it automatically reverts to the city. Everyone that has died has not been a driver.
  • Laurie Graham: I would say that there are a lot of pre-k drivers at Yellow.  At least 50 medallions.
  • John Lazar: A lot of these pre-k people drive for over 40 years, you have to give them credit.
  • Heinicke: Should in a system going forward, should the rights of post-k medallion holders be treated different than pre-k holders?
  • Laurie Graham: Prop K grandfathered in all the pre-k medallions.
  • John Lazar: The Pre-k people brought there medallion.
  • Laurie Graham: Post K medallion have paid lots of money for gates and with that money we could have bought medallions.
  • Heinicke: We can legally take the medallions back but that’s not fair. 
  • Laurie Graham: I think that they should be treated the same.
  • Rich Schlackman: The pre-k who drove are the same, I don’t look at them any differently.
  • Dir Thigpen: We get a lot of complaints about drivers who shouldn’t be out on the road. 
  • John Lazar: At Luxor we have 2 pre-k medallion holders who are still driving.
  • Rich Hybels: My idea all my pre-k are 75-80 years old.  Give them the option to sell it.
  • Tone Lee: The pre and post K is the same.  They both have the same functions. Pre-K not driving is better for driving opportunities.
  • Heinicke: Would you want the same exit strategies for both pre and post k?
  • Tone Lee: Yes.
  • Charles Rathbone: We have an obligation to preserve the value of this publicly owned asset.  I hope we never do anything as you suggested Mr. Heinicke.  One of the things that make medallion transfer so solid.
  • Heinicke: If you had 2 classes of medallions, would one have a lower cost to fleet to operate. If we were to change the gate cap, the medallion would be worth less?
  • John Lazar: The drivers would still have shifts, but the money would go to the regulator to fund the industry.
  • Paul Gillespie: Section 1A of prop k (reads). What I'm hearing is an abolishment of section 1A.  We need to have a third alternative which is public ownership.
  • John Lazar: Like a point structure?
  • Paul Gillespie: Yes, from start date of driving and medallion issuance date it would be vested.
  • Heinicke: You’re right to remind us about public ownership. 
  • Paul Gillespie: I just want to make sure that public ownership is still on the table.
  • Heinicke: If you want to include your proposal please do that now.
  • Rich Schlackman: If we go back to corporate, we will be defeated over and over again.
  • Heinicke: The pre-k medallions became variable color scheme owner.  Post K stayed driver owned.
  • Rich Schlackman: You’re ending what some people consider a “sweet heart deal” which is pre-k.
  • Laurie Graham: Any type of corporate medallion would give a company a technological advantage.
  • John Lazar: Prop K was written with good intentions, but time has changed and we have to change accordingly. Corporate permits enhanced companies.
  • Heinicke: To promote competition there would be a limit on how many a company can own.
  • Laurie Graham: If you have a corporate medallion and the company see s that the business is going down they don’t have to put the car on the street.
  • Dir Thigpen: All the 3000 series, we can put them out. 
  • Heinicke: Lease to own, allegiance to prop k
  • Tone Lee: Too many people are on the list to get medallions.  This is the only way people can get it. 
  • Tom Owen: You can consider some form of public financing.  The city would contract out with a private company to do financing.
  • Heinicke: we covered three turning points.  Paul also raised the issue of continued public ownership. Leasing vs. Owning.  Preference on post and pre-k rewarding system.  Non driver controlled medallions and then filtering how do we take care of the current drivers and non-medallion holding drivers.

Public Comment

·         Michael Spain: I just want to explain how corporate medallions are corporate.   There was no rush in 1978 to put medallions into corporations.  Among the individually held medallions they were allowed to bring a couple people into tenants in common. 

·         Dir Thigpen: That is totally contradicted to the documents I have in the office.

·         Carl Macmurdo: The city property definition in prop k in context means people cannot inherit the medallion.  We need to change the police code to confiscate the medallions with good cause. All medallion holders should be treated alike.  As far as medallions not being affordable.  The problem is the down payments.  The difference in leasing is your giving the money to MTA. You limit the bidding pool to actual drivers. Customer Service issue is separate.  We have a critical need for an exit strategy.

·         Tariq Mehmoud: You are not a taxi commissioner anymore you should not precede anymore.  You cannot change this industry like that.  Let’s go the way the system exists today.  Exit strategy is leave everything this the way it is except allowing them to sublease it on a long term basis.   I made a proposal, you can look at it.

·         Peter Witt: I had a chance to look at the proposals.  I’m not sure what this group is for.  Exit strategy for drivers is just leaving the business.  A holder and not an owner is what we are.  Drivers have hardships and they have to cover those, this is not giving a leg up to drivers.  I also believe that the city would be acting as a 3rd broker.  The chief of polices wife should not have a medallion.  Post k should not be treated the same and non driving medallion holders.   MTA is the direct conflict with the taxi industry. Cabs are not the major source of transportation in San Francisco. 

·         Mark Gruberg: I want to start where Paul Gillespie left off, he talked about public ownership and along with that goes non-transferability.  The service is going to be the same, what’s the point of changing the landscape and you end up with the same service.  In prop k you put your name on the list you figure you will get a medallion.  This other system will lock people out permanently and forever.  It seems that everything has been boiled down to Heinicke’s proposal.  Is everything off the table except for those ideas?

·         Heinicke: I don’t want to be naive and not move forward.

·         Mark Gruberg: if our ideas are pushed aside, I will come down very strongly on keeping prop k.   The whole thing that has happened is the risk is shifted downward onto the driver.

·         Mary Mcguire: To stay with the tried and truth process.  Paul and I went to the conferences and this city is not that bad.  Post and pre-k should be treated the same.  We are a self sustaining industry.  You know that your proposal upsets me.  I just turn 60 years old, I worry about my future.  Are you saying that now I have to go bid and buy.  What’s in store for me?  I’m not going to let go of that medallion.

·         Heinicke: there is some work that post k holders put into this industry and I did not include that in my proposal.  As I hope this debate showed today, I want to work into this system what post k medallion holders have done. 

·         Mary McGuire: We all have to give our medallions back to the city.  I’ve been driving a cab 30 years and we can compete with these people.  Give us a break.  What is your interest in this?

·         Heinicke: This is apart of the city’s transportation network.  That’s my interest.  This is a volunteer hobby job and I love this city and I want to make a reform.

·         Dan Hinds: I think we have to keep in mind what’s wrong with the system today.  This policy is going to be very difficult to enforce. We need to change that fundamental flaw in this system.  We need to create an entry and exit strategy.  Now lets speak about the market, this market would be one of the most carefully controlled markets.  Your going to be limiting the units can be purchased.  Most people like the public auction because it’s open and straight forward.  The way the city is set up you control the revenues. 

·         Jim Gillespie: The name of this group is charter reform, it’s for possible changes.  We should get rid of everything is prop k.  I know my father purchased his for $25,000 in the 60’s.  I think this will help service.  Service has suffered in the last 30 years because of proposition k. We should maintain the driving requirement. It should only go to working drivers. I think the exit strategy is important and it should be for pre or post k.  I support if someone elects to hold a medallion, they would have to have an A-Card for 20 years and at least 65 years old.

·         Gene: I been driving for 10 year but I see there is some unfair things going on.  If there are some leases, I think that would be fair and it would be good for the city. 

Public Comment:

  • Michael Spain: We should be going to the NY model
  • Tariq Mehmoud: While we are talking on different issue, you have whispering going on with city attorney; he should stay away from you.  It’s a public violation.
  • Peter Witt: What’s broken about prop k? I’m questioning whether it is or isn’t working.   Prop K is working on all cylinders.


  1. Adjournment, 12:33pm.



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