UPDATED with new information about the paid and old-version permit holders): The San Francisco Board of Appeals is pushing back against a move buy the Municipal Transit Agency to block the board from hearing appeals on taxi permit revocations.
It’s an issue that doesn’t much press attention, but for older and disabled people in the beleaguered taxi industry, it’s a huge deal:
After the city allowed Uber and Lyft to decimate the taxi industry, and created a failed market for permits that left many drivers broke and in debt, losing a permit is a devastating financial hit.
It’s also a devastating hit to older drivers who got their permits the old way, by seniority, before the sales began—that’s why the Board of Appeals has overturned a few of those revocations on equity grounds. And instead of changing its policies, the SFMTA is trying to push the appellate board out of the way.
Jeffrey Tumlin, the head of SFMTA, wrote to the Board of Appeals Dec. 5 to unilaterally declare that his agency would no longer allow the independent board to hear cab permit appeals. The board, in a Jan 4 letter, essentially told Tumlin: No.
More than that, the letter suggested that the hearing officers at SFMTA who consider permit appeals are lacking in independence and in some cases have changed their decisions under pressure from management.
The background:
Nobody can operate (and that’s a key word, more on it later) a taxi in San Francisco without a permit, called a medallion. Between 1978 and 2010, the rules were simple: The medallions belonged to the city, and could only be used by active cab drivers. They couldn’t be bought or sold or transferred, and were awarded entirely on seniority: When you started a career as a driver, you put your name on the permit list, and when someone else retired or died, you would move up and eventually, after about 15 years, you would get your own permit.
Now, the permits were good for 24 hours a day, seven days a week, and nobody would drive that much. So for the shifts the permit holder wasn’t working, they could lease the permit to someone else, usually through one of the cab companies.
So the more junior drivers would pay a lease fee to use a permit (and typically to use a car); after covering the so-called “gate fee” and gas, the driver would keep anything left over in fares.
The gates and fares were regulated by the city at a level that allowed the junior drivers to make a decent living. The medallion holders made not only the money they earned from driving but also the lease fees.
The idea: You work for 15 years in the industry, and you get a chance to reap the benefits of a permit. But the rules were clear: You couldn’t just get the permit and sit back and make money; you had to be an active driver to keep it.
Proposition K, the measure that set up the system, was sponsored by then-Sup. Quentin Kopp, who said he wanted to be sure that the public benefit of permit ownership went to the drivers, and that the permits could never be privatized.
In 2010, then-Mayor Gavin Newsom decided that the permits were worth a lot of money, and moved to sell them, essentially at auction. No more waiting in line; anyone with $250,000 could buy a permit, and hold onto it until they sold it, at a market rate, with the city taking a cut. There is no driving requirement for those paid permits. That brought $64 million into the city coffers, but since most drivers had nowhere near that amount of money, they borrowed it, mostly from SF Federal Credit Union.
But just as that move to privatize the permits and put drivers in the hole for big loans happened, Newsom and his successor, Mayor Ed Lee, decided to let Uber and Lyft “disrupt” the industry by operating illegal cabs with no medallions at all.
In a very short period of time, those $250,000 medallions became worthless, the owners in debt, unable to make a living, and unable to sell the asset. Remember: This was not the fault of the drivers who bought medallions, with the understanding that they would be able to pay the debt by driving. The city refused to crack down on the illegal ride-shares, leaving the permit holders with nothing.
So now the cab industry has stabilized a bit, as Uber and Lyft fares have risen and the older companies have adopted the same quality of apps; you can now get a cab from, say, Flywheel, just a fast and at the same or a lower price than Uber. And Flywheel is working on a deal with Uber to share dispatch.
Drivers who can’t pay the mortgage on their permits can lose them, but those permits will just sit in a drawer, since the is no market for them.
Many of the drivers who got their permits by waiting patiently in line are at this point older and some are disabled. The SFMTA has been moving to revoke those permits, because the operators aren’t able to drive anymore.
On Nov. 16, 2022, records show, the board rejected the SFMTA’s decision to revoke the permit of Robert Skrak, who because of multiple disabilities diagnosed in 2012, no longer had a valid California driver’s license and couldn’t drive a cab. His lawyer argued that he could still “operate” a taxi as an owner and manager. More important, Skrak argued, the SFMTA staff repeatedly told him that he could continue to lease his permit until he decided to sell it—which soon became impossible, thanks to the SFMTA’s embrace of ride shares.
But the Board of Appeals took a larger stand:
Allowing him to keep his medallion is necessary to avoid a grave injustice, it would not defeat a strong public policy and would not create any safety issues for the public.
The board voted 5-0 to let Skrak keep his medallion, and his income.
The SFMTA then decided, with the support of City Attorney David Chiu, was to cut the Board of Appeals out of the process.
The board’s director, Julie Rosenberg, with the unanimous support of the members Jan. 4, told Tumlin that the board wanted to continue hearing these types of appeals:
we think it is important for the SFMTA to consider the advantages of the BOA process, which include extensive public input and participation. Having SFMTA taxi matters heard alongside non-SFMTA items on the BOA’s agenda provides a broader audience for such hearings and promotes a higher degree of public exposure to the issues raised in such matters. Similarly, the BOA, as a body existing outside of the SFMTA (the commissioners are appointed by the Mayor and the President of the Board of Supervisors), incorporates diverse viewpoints informed by the commissioners’ collective experience handling and resolving a wide variety of appeals across many San Francisco agencies.
But the letter goes much further, casting doubt on the fairness of the process the SFMTA uses to consider permit appeals:
We also think that the SFMTA should consider recent questions raised about the independence of SFMTA hearing officers. These questions came up in the context of cases where decisions were reconsidered by SFMTA hearing officers after the hearing officers had previously issued decisions that were not favorable to the SFMTA Taxi Division. In each such case, after receiving a decision that overturned the SFMTA Taxi Division’s revocation of a medallion, counsel for the SFMTA reached out directly to the SFMTA hearing officer and requested that he reconsider the decision. The record showed that the hearing officers ultimately changed their decisions after receiving these communications. Given that the communications submitted to the record suggest that several decisions may have been reconsidered by SFMTA hearing officers, a reasonable member of the public might question whether the SFMTA hearing officers are sufficiently independent. Given the composition of the BOA and its existence outside of the SFMTA as noted above, the BOA may have a greater potential of surviving this type of scrutiny by the public. We think you would agree that the appearance of independence and impartiality are important tenets of due process and thus ask that these questions be considered as the SFMTA makes this decision.
That’s a pretty serious problem.
It also puts the city attorney, who was a supporter of Uber and Lyft back in the day, in a bind: He has already sided with the SFMTA, but the Board of Appeals is also his client.
“They should just leave these people alone,” Barry Taranto, a longtime taxi activist, told me. “Don’t revoke anyone’s permits; there’s no market for them anymore anyway.”
An earlier version of this story confused the line between paid and pre-2010 permits. The revocations don’t involve drivers who paid for their permits, only the Prop. K permits issued between 1978 and 2010. We apologize for the confusion.
