Taxi drivers who spent a quarter of a million dollars to get permission to operate in San Francisco will have nearly exclusive access to trips from San Francisco International Airport starting Dec. 1, a rule change that was upheld as legal by a federal appeals court Monday.
A panel of three judges on the Ninth U.S. Circuit Court of Appeals in San Francisco ruled that guidelines restricting SFO pick-ups only to taxi drivers who purchased medallions for $250,000 any time after 2010 can’t be considered discrimination or a violation of any group’s right to equal protection of the law.
Purchased Medallions were sold by the San Francisco Municipal Transportation Agency for $250,000 a piece starting in 2010. Valid for a lifetime, hundreds of drivers eager to make a down payment on their own driving business took out a loan from the San Francisco Federal Credit Union to foot the steep cost.
The sale of these medallions netted an estimated $64 million that helped The City survive a recession, but the value of these metal plates that function as an operating license has dwindled with the emergence of ridehail apps such as Uber and Lyft at roughly the same time, turning multi-thousand-dollar months into hundreds-of-dollar-months for many drivers.
In 2019, 170 medallions were foreclosed on because the owners couldn’t make their payments.
Marcelo Fonseca, a 60-year-old taxi driver who has driven full-time in The City for 32 years, says he used to average about 40 trips within city limits on a Saturday night, pre-ridehail apps. These days, even before the pandemic, drivers like him were lucky to get 15 rides.
Trips to and from SFO are a cash cow for beleaguered drivers, but the SFMTA regulates which cabs have access to the airport.
The rule change, announced in an email to the taxi industry on Oct. 27, is part of a string of attempts to rectify the fact that The City sold hundreds of now greatly devalued medallions to drivers.
All taxis with accessibility ramps will continue to get access to SFO as well.
As of Oct. 20, there were 1,214 taxi medallions issued citywide, according to an SFMTA count. Of those, 478 were Purchased Medallions.
But many taxi drivers, namely those who have been driving in San Francisco for decades, went a different route to get their permits.
Fonseca, as well as many others, acquired his medallion free-of-charge before SFMTA started selling the pricey permits in 2010. Many sat on a waitlist for years, if not upwards of a decade, before securing permission to start operating their taxi in San Francisco.
Those drivers will no longer be able to pick passengers up from SFO, a move Fonseca says will further victimize certain medallion holders and not adequately address the plight of those who purchased their permits for hundreds of thousands of dollars.
“Helping one group of medallion holders with airport privilege will not pay off those loans, nor will it save the day for the taxi industry as a whole,” he said. “It’s like putting a Band-Aid on a gushing wound.”
Limiting access to SFO isn’t a new concept. SFMTA gave Purchased Medallion holders expedited access to the airport in February 2019 as part of a broader plan to rectify the permits’ devaluation.
SFMTA says regulating who can operate at SFO eases congestion and allows drivers who spent $250,000 on their license a better chance of paying off their debt.
In fact, it did achieve those goals.
Data shows the average wait time for taxis dropped by 17 percent, the number of trips originating at SFO for Purchased Medallions rose by 54 percent and those drivers saw a 33 percent increase in average monthly fare revenue from November 2019 to January 2020, pre-pandemic.
But the San Francisco Taxi Coalition, made up predominantly of drivers who endured the pre-2010 waitlist process, say its members are suffering, too, and challenged the SFMTA in a lawsuit by asserting the distinction amounted to discrimination.
A federal judge dismissed the suit last year, and the ruling was upheld Monday by the appeals court, determining the “purchased medallion holders faced severe financial hardship because of high debt loads joined with fare loss to ridesharing services.”
As for the lawsuit’s claims of violation of equal protection under the law, the appeals court sided with the lower court’s view that SFMTA’s distinction only affected economic interests, and, therefore, was only subject to questions about whether it advanced legitimate government interests.
“The rules are rationally related to the legitimate government interests of aiding beleaguered taxi drivers and easing taxi congestion at the airport,” Judge Kenneth Lee wrote in the ruling. “That The City would try to mitigate the fallout for those most affected by a shift in the market is a permissible state purpose, even if some may question its policy wisdom.”
The City Attorney’s office was “pleased” with the unanimous ruling upholding the ruling.
“The SFMTA’s regulations comply with the law,” spokesperson John Cote said.
To this, Fonseca, who isn’t a member of the Taxi Coalition because of time constraints, says that while he concedes Purchased Medallion drivers certainly do have more invested in the industry financially, people like him have poured two, three or four decades into it.
“The ruling is clearly a win for the SFMTA, not for the taxi industry,” he said, clarifying that his fight is not with other medallion holders who he believes should receive debt forgiveness and support, but rather with The City’s transit agency that’s “failed” to regulate the industry helpfully.
SFMTA reminded drivers in the letter announcing the changes to SFO of the steps they’ve taken to help all medallion holders, regardless of classification. Efforts include waiving taxi-related fees for two years, generating the Essential Trip Card program and the Essential Worker Ride-Home program, providing protective equipment, include taxis in most transit-only lanes and vast educational outreach about the availability of local cabs.
COVID-19 has upended the already struggling market for San Francisco’s taxis, perhaps most obviously for those still are burdened by monthly loan payments. Trips by cab have dropped by roughly 80 percent during COVID, according to SFMTA, with trips from SFO declining by 95 percent.
Between July and October, there were at least 49 medallion foreclosures, and the San Francisco Credit Union, which issued the loans, has refused to extend a two-month forbearance program despite a resolution from the Board of Supervisors in June urging it to do so.
As of June, there were 433 Purchased Medallion holders with outstanding loans to the credit union.
“SFMTA is deeply concerned and disappointed that the credit nion has refused to continue its loan forbearance program to mitigate the drastic impact of the COVID-19 pandemic on taxi drivers’ income,” SFMTA wrote in an email to the taxi industry last month.
The way Fonseca sees it, though, these airport changes won’t make meaningful inroads on helping drivers pay off their loans, as air travel has continued to stay at record lows.
All business is within the city limit instead he says, where all taxi drivers regardless of their medallion type continue to struggle to make a living wage.
“We are driving to our graves,” Fonseca said.