New taxicab leasing rule could hinder service

Driving a cab, and possibly hailing one, is about to get a little more challenging in The City.

The City’s two largest taxi companies, Yellow Cab and Luxor, are undergoing an operational change that will significantly increase the price of leasing a cab for employment, which could make it financially impossible for some drivers to keep their jobs and may add to an ongoing shortage of cabs.

Most taxi drivers in The City lease cabs on a daily basis for $91.50, a price called the gate fee that is regulated by city ordinance. Citing “severe financial constraints,” however, the two companies are phasing out daily leases in favor of monthly leases that can cost up to $6,000.

Taxi officials and drivers have said the change is a result of a proposed health care plan for The City’s6,000 taxi drivers, which could cost cab companies about $4 million a year if approved. The City does not regulate the cost of monthly cab leases, but does regulate daily fees.

“The companies are trying to eke out more money from the drivers,” said Heidi Machen, executive director of the San Francisco Taxicab Commission. The monthly or long-term lease is a way of “circumventing” the regulated gate fee, she added.

Health care for taxi drivers in San Francisco is a decade-old issue. In 1997, drivers had access to a Kaiser Permanente plan geared toward small businesses and independent contractors, but it went defunct in 2002. Since then, city officials have been grappling with how to fund a plan for drivers.

A report issued in March by the taxi commission recommended a program funded by all taxicab stakeholders, including drivers, companies and The City. The proposed plan would need approval from the Board of Supervisors, but a hearing has not been scheduled.

For now, the new lease arrangements are set to kick in July 1. Thomas George-Williams, chairman of United Taxi Workers, said 600 to 800 drivers could lose their jobs. He said many drivers cannot afford to lease a cab for $6,000 a month.

Drivers take home anywhere between $24,000 and $70,000 a year working four to five 10-hour shifts per week, according to the taxi commission report.

The lease changes come at a time when the industry has been heavily criticized for a shortage of cabs and wait periods of up to 15 minutes. A substantial loss of drivers could further deteriorate the service.

A memo posted for drivers at both companies stated that because daily lease rates have not kept up with inflation, “We are being forced to change the way we conduct business or face the real possibility of shutting down operations.”

“We’re being potentially asked to contribute to health care, alternative fuel vehicles— all good things, but they all cost money. We have to look at our business model and see what makes sense for us,” said Jim Gillespie, a senior manager at Yellow Cab.

arocha@examiner.com

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