April 16 2014 09:54 AM

Mayor Faulconer considers new rules for the industry

Cab driver Osman Ibrahim Osman, in the middle of a shift of more than 12 hours
Photo by Joshua Emerson Smith

Last Friday afternoon, taxi driver Osman Ibrahim Osman had picked up only two customers. He started at 7 a.m. and anticipated being on the road until 2 the next morning. If lucky, after gas and a permit fee, he might make about $75.

"I never tried to work taxi, but the situation put me to work taxis," he said. "There's nothing. There's no manufacturing. There's not another job to work at, only this taxi."

Granted asylum from Sudan, his home country, Osman moved to the United States more than a decade ago. After being laid off during the recession from two successive security-guard positions, a friend got him a job driving a cab. For the last three years, he said, he's brought home about $11,000 a year, working 14-hour shifts.

"Working taxi, you're disconnected with your social [life], with your people, with your family," said the 41-year-old refugee, who lives in City Heights with his wife. "I don't like it, but I don't have choice."

Osman is subject to a system that critics say enriches taxicab owners by exploiting the city's roughly 1,850 drivers—about 90 percent of whom are Middle Eastern or African immigrants and lease their vehicles.

"It's hundreds of refugees that are being affected," said Sarah Saez, program director with the United Taxi Workers of San Diego, a member organization formed in 2010. "It's an area-specific, cultural-specific issue that they're just not dealing with."

Under mounting pressure to reform the system, Mayor Kevin Faulconer is expected to soon issue new rules regulating the industry. However, it's unclear if his changes will address cab-driver wages.

Faulconer declined to comment for this story. But a spokesperson said the mayor supports regulations that would take older vehicles off the road, as well as require owners to issue and maintain records for lease payments. Such policies are commonplace in large cities around the state and country. Also on the table is the creation of a city-run forum to settle wage disputes between taxicab owners and lease drivers, the details of which are murky at best.

However, the Mayor's office wouldn't say if Faulconer supports the taxicab drivers' primary demand: setting a cap on how much money cab owners can charge drivers to lease a vehicle.

"This is a common-sense solution for reducing the dangerously long hours they're required to drive to barely make a living," Saez said.

Backing the United Taxi Workers of San Diego are more than a dozen groups and officials, including the ACLU of San Diego and Imperial Counties, the National Association for the Advancement of Colored People, state Assemblymember Lorena Gonzalez and the Employee Rights Center.

However, the San Diego Transportation Association, a coalition of taxi-permit holders and cab-company owners formed last year, has vehemently opposed a lease cap. It would be unfair to fix lease prices across the board because overhead costs, such as car insurance and maintenance, can significantly fluctuate between permit holders, said Michel Anderson, a spokesperson and lobbyist for the association.

"All of these variable costs that go into the vehicle cannot be standardized to the extent that a cap lease would be acceptable to the owners," Anderson said.

At the same time, taxicab owners lobbying to maintain the status quo donated generously to Faulconer's mayoral campaign.

For example, George Abraham, owner of Eritrean Cab, donated $500 to the mayor in the primary and then the maximum $1,000 in the general election. Yellow Cab marketing director Anthony Palmeri injected $1,000 into Faulconer's primary campaign and $500 into his general. Tony and Alfredo Hueso of USA Cab each gave $500.

Right now, the city contracts with the Metropolitan Transit System to oversee its more than 900 permitted taxicabs. In recent years, taxi drivers and advocates have pleaded with MTS officials to reform industry regulations. Now some elected officials are increasingly criticizing the agency for not taking action.

"MTS has always taken the irresponsible posture that they don't have any role in oversight of the taxi situation," said San Diego City Councilmember David Alvarez, a member of the transportation agency's 15- person board. "That's been the sentiment from them for a long time."

Under the current system, permit holders often lease a vehicle in 12-hour shifts to two drivers a day, pulling in an average of $800 a week per permit, according to a 2013 study from the Center on Policy Initiatives and San Diego State UniversityThe industry has yet to disclose its average overhead costs, but with permit holders often owning dozens of permits, revenue can be in the hundreds of thousands of dollars per year. USA Cab alone, for instance, held 42 permits as of 2012, according to the most recent MTS records available. Eritrean Cab had 35 permits, Unique Cab had 27 and San Diego Cab had 25.

Meanwhile, drivers earn an average of $4.45 an hour, working more than 70 hours a week, according to the report, for which more than 300 taxi drivers were interviewed. A major reason why earnings are so low is that about 40 percent of gross income goes to pay for the cab lease.

This apparently lucrative setup for permit holders has created an unregulated market in which permits are bought and sold for tens of thousands of dollars, according to the industry's own figures.

"[T]he market value of each taxi permit has many folded [sic] and reached at [sic] record price of $150,000," reads an internal memo from the San Diego Transportation Association obtained by CityBeat. "Many people have sold their whole lifetime assets to own one Taxi medallion for operating their own business and make the living of their families."

While Anderson, speaking for the association, said he couldn't speculate on permit-holder profits, he denied that drivers were suffering, blasting the CPI report as inaccurate.

"I don't believe that they interviewed 300 taxicab drivers," he said. "I dispute that.

"Why would anybody want to be a lease driver if they're making less than minimum wage when you could go to In-N-Out Burger or anywhere else and get a minimum-wage job?" he added. "They do it because there's money in it."

Last June, former Mayor Bob Filner declined to renew the city's five-year MTS contract overseeing the taxicab industry. Rather, Filner issued a one-year extension and set aside $100,000 to study whether the city should take over regulating the permitting system.

That concerned permit holders. According to the association's internal memo, its top two goals are to "stand firm" against transferring industry regulation away from MTS and causing the "dissolution" of the United Taxi Workers of San Diego.

In the run-up to the association's formation, Orange Cab owner Amir Aghassi also released a letter, urging prospective members to charge cabdrivers a $10 a month fee in an effort to raise money for a lobbyist. Anderson got the job. The lawyer and owner of Michel Anderson Associates also donated to Faulconer's campaign, giving the maximum $1,000 in the general election.

However, taxicab owners may not have needed so much firepower. After Filner resigned in disgrace last year, City Council President Todd Gloria became interim mayor and put the study on ice, telling MTS the city would renew its long-term contract.

"I understand that some drivers agree to leases that are beyond what may be reasonable, and that vehicle and driver safety is a concern," Gloria said in an email to CityBeat. "Unfortunately, the study that was suggested by my predecessor wouldn't have addressed those items. Developing regulations to actually improve the industry instead of fighting over who will oversee those regulations that haven't been written would be more productive."

Echoing the mayor's comments, Gloria, an MTS board member and former chair of the MTS Taxicab Committee, said he supports reforms that would keep older taxicabs off the road and require records of receipts for lease payments.

The most vocal advocate for drivers has been City Councilmember Marti Emerald, who also sits on the MTS board and whose District 9 has the majority of the city's immigrant cabdrivers. In December, she successfully put Gloria's plan to extend the MTS contract on hold, pushing for more substantial reforms.

"As a member of the San Diego City Council, it is important we create a solution that is in the best interest of the city, the safety of the public, and all of those involved in the taxi industry," she said in an email to CityBeat. "The core issue: current working conditions for taxicab drivers."

In March, the MTS board of directors voted to move forward with a new agreement, recommending a contract of up to five years and the city-run forum to settle wage disputes.

The substance of the contract now falls to the Mayor's office. The MTS board will consider final approval this summer. The current contract expires on June 30.

Write to joshuas@sdcitybeat.com or follow him on twitter at @jemersmith.


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