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U.C. Study Recommends Permit Transferability

Report Cites Permit Profits As ‘Core Inequity’ in System

An academic study of the taxi industry recommends making taxi permits transferable — but admits that it would be hard to convince voters to pass such a measure. The study was performed by graduate students at the Goldman School of Public Policy at the University of California at Berkeley, at the request of Mayor Gavin Newsom and Supervisor Sean Elsbernd.
The students’ report, entitled “The San Francisco Taxicab Industry: An Equity Analysis,” cited “windfall profits” permit holders receive from cab companies for leasing their medallions as a “core inequity” that “results in a wide disparity in the quality of life of medallion holders versus non-medallion holders.”
Under Proposition K of 1978, permits may not be transferred. But permit holders can get $1,800-2,000 or more a month by leasing their medallions to cab companies. “In essence, the city is giving each medallion holder a subsidy of more than $20,000 per year,” according to the report. It recommends that a portion of the proceeds of permit sales go to pay for driver benefits.
The study contemplates abolishing the waiting list of permit applicants. Instead, permits would be sold at auction at auction to taxi drivers who have driven a cab for two of the past three years.
The report estimates the market value of a medallion at $180,000 to $250,000. In New York City medallions have recently been selling for over $400,000.
The system would apply only to newly issued or reissued medallions. Current permit holders, most of whom received their medallions for the price of an application fee, would not be able to transfer them.
The report warned that there were formidable political obstacles to transferability, which would require a ballot measure to overturn Proposition K. Eight different ballot attacks on Prop K have failed, most by wide margins.
“As moving to transferability provides no direct benefit for customer service, San Franciscans have no self-interested reasons to support such a reform,” the report concludes.
The report also recommends a “second-best option” of charging permit holders a fee for the use of their medallions. The study recommends a minimum fee of $2,100, or about ten percent of lease revenues, to help fund health insurance for cab drivers.
United Taxicab Workers opposes the idea of transferable permits because we believe drivers should be able to gain a stake in the industry without a huge investment many would not be able to afford even if substantial financing were available. Rather than alleviating economic inequities, we believe transferability would make them much worse.
Discarding the waiting list would also be highly unfair to applicants who have waited many years in expectation of receiving a permit. And we are most concerned that importing a huge burden of debt into the industry in the form of loans to permit holders will put enormous pressure on gates and meter rates.
UTW supports the concept of a rental fee on city-owned taxi permits. We believe the fee should be set at a level sufficient to make a significant contribution to health care and other driver benefits and protections.
On July 17, a committee of the Board of Supervisors held a hearing on the study. At the hearing, Supervisor Elsbernd showed interest in the report, but indicated that no taxi measure would be on November’s ballot.
click here to read the full Goldman report