MTA to Crack Down on Unlicensed Taxis

Customers climb into a licensed Luxor cab on Mission Street.

Just past midnight on a Saturday, two women in heels and cocktail dresses hopped out of a cab. The taxi drove another 100 feet, stopped and picked up a couple men waiting for a ride out of the Mission. In seconds, the cab was off with the meter running.

A normal occurrence, except the lack of markings on this taxi indicated it is not licensed to operate in San Francisco. It’s unknown how many illegal cabs operate in the city, with estimates ranging from 100 to 1,500, but the short answer is: plenty. Licensed cab companies and city officials say the proliferation of gypsy or pirate cabs dilutes earnings for legitimate cab companies, reduces tax revenue for the city, and puts riders at risk.

And, with unlicensed limos adding to the fare competition, the number of unregulated rides is growing.

“Have you been out on a Saturday night?” said Christine Hayashi, director of the Division of Taxis and Accessible Services for the Metropolitan Transit Authority (MTA), referring to the problem of illegal taxis and limos in the city.

“It’s insane. They’re everywhere.”

Legal San Francisco taxis can be identified by the police transponder contained in the orange box “about the size of a box of cigarettes” that sits on the taxi’s roof, said Richard Hybels, owner of Metro Cab.

Legal cabs also have a circular decal on the frame between the back door and windshield, as well as other decals reading “San Francisco Taxicab” on the side and rear of the vehicle.

The cab on that Saturday night had none of these markings, and belonged to Air Express, which is not listed on the city’s list of authorized medallion holders.

“It’s hard to go anywhere without seeing one,” said Hybels. “Mission Street in particular is a popular spot for them.”

Operating unlicensed, or “gypsy,” taxis is a very lucrative operation, according to Hal Mellegard, general manager of Yellow Cab. As San Francisco’s largest taxi company, with 1,200 drivers operating 500 cabs, Yellow Cab is also the prime disguise for gypsy cabs.

With one coat of yellow paint, a car can look to most riders like part of the Yellow Cab fleet.

Mellegard said he regularly hears incident complaints about unauthorized cabs from both drivers and customers. Unlicensed cab companies can even have their own listings in the telephone directory, with one “Yellow Cab Co” number being listed as (415) 333-3363, compared to Yellow Cab’s (415) 333-3333. They can also skip the overhead expenses of fingerprinting, background checks and training for drivers, as well as vehicle inspections and insurance.

Hayashi estimated that the phone book lists about 30 illegal cab companies and pointed out that there are actually 18 companies under the name “Yellow Cab” alone.

The Metropolitan Transit Authority, which gained administrative and regulatory oversight over the city’s taxis from the Taxi Commission in March, plans to crack down on these taxis by adopting Senate Bill 1519, a California law adopted unanimously by the MTA board on April 21.

The statute will allow the MTA to file complaints against illegal cab companies, impose a fine of up to $5,000, and get an order from the Superior Court to disconnect telephone service for any unlicensed operator. Previously, the Taxi Commission had no authority over unlicensed cabs, and enforcement was limited to traffic stops by the San Francisco Police Department.

Based on the amount of illegal cab companies in the phone book, Hayashi estimated the fines will contribute “about $150,000” to the MTA’s budget—assuming they all can be collected.

According to taxi companies, gypsy cabs are more than a nuisance, they’re a threat to public safety. Hybels referred to one cab in particular labeled Metro 105. Customers have complained of sexual comments made by the driver, and running people off the road. There is no Metro 105 in the legitimate Metro Cab’s fleet, Hybels said.

The safety problem goes even further, according to Charles Rathbone, assistant operations manager of Luxor Cab. Rathbone said illegal cabs have been implicated in assaults and rapes. The police department’s taxi division could not be reached to independently confirm this fact.

“We’re gonna end up sooner or later with some very ugly situations,” Rathbone said.

The pirate cab drivers disagreed.

“This is something for me to live on until I find another shift,” said Zack, a former cab driver who declined to give his last name. He lost his job after the woman who owned the medallion leased to his company died and the medallion reverted to the city.

To operate legally, drivers and companies must have access to one of the city’s 1,500 medallions, and may spend more than a decade to obtain one from the city’s waitlist. Most drivers working for companies with medallions go through a hiring process that includes training and background checks.

An ex-cab driver of five years, Zack said he can’t find any shifts with other cab companies, but the demand for drivers is still there.

“There’s a lot of people that can’t get a cab,” and waits can extend to 30 minutes or more—a fact anyone out late at night in San Francisco knows well. Zack said the current system of medallions is “fair, but there’s not enough.”

Rathbone agreed that, “When you see large numbers of illegal operators, it’s usually a sign that the supply and demand has gotten out of whack.”

However, he spent 13 years on a waiting list for his medallion and wants to see that protected. “The most valuable asset in my possession is the medallion,” said Rathbone. “In many ways, it’s a safer bet than real estate.”

While the city is planning a trial auction system of 100 of the 1,500 medallions in hopes of raising money for the MTA, Hayashi said there are currently no plans to increase the total number of medallions.

In New York, which uses the auction system, the base rate for a medallion is $500,000, compared to $250,000 for a medallion in San Francisco.

While unlicensed cabs operating in San Francisco are a nuisance for companies, some see the real problems coming from other vehicles.

“It’s the limos … I don’t see too many of the illegal cabs,” said cab driver Shane Kaykendall.

Sal Del Real, an San Francisco taxi driver for 15 years, agreed as he pointed out a white Lincoln Town Car cruising down Mission Street after last call on a Saturday night.

“There’s one right here,” he said.

Riders can easily spot a pirate limo because limousines are only supposed to operate by scheduled appointments and are prohibited from picking up riders off the street. Nonetheless, said Kaykendall, he often sees them cruising down Mission Street or Market Street.

Del Real said the other problem is “out-of-town cabs—they’re all over the place.” While cabs from other areas may drop clients off, they cannot legally pick up fares in San Francisco.

While one cab driver declined to pick up a reporter on the grounds that he was from South San Francisco and couldn’t operate within city limits, other cabs from the East Bay, including an old beat up Corolla labeled Yellow Star, picked up customers on Mission Street on a recent Saturday night.

While SB 1519 restricts unlicensed cab drivers, it does not apply to unlicensed limousines, which the MTA is currently attempting to develop separate guidelines for. Regardless of the new regulations, Rathbone is certain of one thing regarding pirate cabs.

“It’s probably going to become much bigger.”

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  1. Unconvinced

    Why do you interview primarily 1) the lady who collects the license fees and 2) managers of companies whose business is to rent out these licenses (medallions)? “A very lucrative operation” claims the guy whose bona-fide lucrative operation is charging rent to people just for the right try to make a living. It’s not lucrative, it is a bunch of guys from Antioch who are struggling and are giving people something they need at a good price. It would be one thing if these outsiders were mucking up some well-run city operation, but our taxi system is a joke. I never have any confidence when I call an SF cab early to go to the airport that they will even bother to show, they have absolutely no notion of customers or service. And why should they? They have banned the competition. If they spent half as much time improving their quality as the do bleating about these ludicrous medallions they would have something other than fear and $5000 fines (charged to poor people) to offer as a solution.

    This is bad journalism. You get some whiff of an issue and then talk to a politically connected industry interest group and the “regulators” that they work hand-in-hand with, and you just type their quotes like a faithful stenographer.

  2. Athan

    The issue of illegal, especially bandit cabs or Town cars is much more complicated than a supply and demand formula. Bandit cabs & Town Cars do not have the overhead that medallioned cabs have. There are vehicle age and mileage standards, liability policies and workers comp policies that all create quite a financial load for any legitamate cab company in San Francisco. Regulations require SF cab companies to maintain a place of business with off street parking inside SF City Limits. There is staffing regulations and maintenance costs. A bandit cab driver can buy a 10 year old Crown Vic (medallion cabs must become either hybrid or alt fuel vehicles, vehicles must have less than 60k when placed into service and can only operate for 3 yrs or 300,000 mi, whichever comes first)for $1,000, paint it Yellow for $200 and be in business. They then charge the same fare or more than a medallioned cab.

    Even if more medallioned cabs were allocated they could not compete with a driver who has almost $0 overhead. The result will be medallioned cabs just making expenses (as they do now on some shifts) while the bandit takes all the profit.

  3. I’m neither an unlicensed cab driver nor a free market zealot, but I do think the situation in SF is out of hand. Unconvinced is right on, as is Mr. Rathbone when he says, “supply and demand has gotten out of whack.” I just tonight had the experience of waiting outside a popular bar in the Lower Haight for a cab, only to decide to walk down to Market for a better chance. The fact is, the limited supply of taxi medallions is only hurting potential customers, while an increase in the supply would not hurt drivers. Rather than cracking down on unlicensed taxis, why not consider why there’s a market for them in the first place?

  4. To respond to Athan, I think that most cab riders are not looking for the cheapest ride. In general, I think people think of unlicensed cabs as very sketchy, and only take them when they’re the only option available. If there were enough legitimate cabs, I doubt that the “bandits” would get much business.

  5. Unconvinced

    According to the Association of San Francisco Parking Lot Landlords, taxi parking lots in Daly City are a ticking time bomb. “You never know where those parking lots have been,” said Mr. Smith. “We have to have aromatherapy candles in the bathroom by City law, but the ones in Daly City, they’re just a bunch of asphalt.”

    Does anybody else think it’s crazy that you need a medallion worth more than four years tuition at medical school to drive around a bunch of drunk tourists? It is insane on its face, there is nothing else to discuss. I’m all for hybrids and vehicle maintenance — for all I care, they can ban SUV’s from here to Nevada. But the solution to that is to get the current “bandits” into the system — give them medallions and make them follow the rules. And by the way, if there is any bandit who can get 300,000 miles out of a Crown Vic, he deserves his ill gotten gains.

  6. Unconvinced

    BTW, are you the same San Francisco Athan whose linkedin page says he’s “been a shareholder in a New York medallion brokerage and have driven taxis in Los Angeles, Oakland and San Francisco?” Medallion brokerage, seriously? Here I am talking about cutting out the corrupt middlemen and who shows up but a medallion broker!

  7. Athan

    It’s very easy to critique from the peanut gallery. I urge anyone who is truly interested in resolving any taxi isues in San Francisco, and any other city for that matter, to read the applicable local, state and federal rules and regulations for their jurisdiction. Follow that by researching the market demographics and industry financials (many of which are public record). Then and only then will I consider your opinion to be an informed one. Otherwise I feel like you’re probably just spreading misinformation and anectdotal evidence which supports your personl interests.

  8. What do you expect ! The drivers of legit cabs in S.F. get lousy hours , are treated like 2nd rate crap , got to pay out bribes to dispatchers , door men and more . Rates on cab leasing known as a “gate” are high . I say Horaay for illegal cabs in S.F. No wonder why legit cab drivers go illegitimate . I paid American Taxi a $ 1,000 deposit for my right to drive there & after i quit because i was often given no days to work when i tried getting back my deposit they said i needed to drive 90 more days after i give them my notice to quit but the problem was…..i wasn’t hardly ever driving . I never got my deposit back even after i sued them .

  9. Roy Shryock

    Most “legal” San Francisco cabs are driven by “illegal” or undocumented workers, from the middle east, etc. Their have been many complaints about their attitudes,(most basically hate American’s), rudeness, trickery, etc. Out of town cabs are constantly approached by people who dont know the rules, or dont know the difference between city cabs and other cabs; tourists etc. The city should give tourists, and potential cab rider’s all booklets when they arrive warning them about taxi rules and regulations, but do they? Of course not! A guy with a cab or limo trying to make a buck is a system of free enterprise…principles which our country was founded on. The city of San Francisco Taxi Commission regulates this for one reason…the money, they get it from both ends, medallions, taxes, business licenses, and permits, and fining these, “independent” and out of town taxi’s and limo’s for trying to get tourists, and cold, drunk people to their destinations safely without getting picked up by the police for DUI’s, or getting lost in bad neighborhoods, and possibly being mugged. The city of S.F.and the police should be happy these out of town limo’s and taxi’s are getting these people off the streets. Just look at all the Massage parlors in the city, that operate under the guise of “ethical” business’s, using undocumented sex workers from Asia to administer massage…It’s plain and simple, It’s all about the money, as long as the city gets their money under the guise of legal or “ethical” practices, anything go’s! Corruption is rampant in the “city by the bay”…if we want legal, legitimate business practices, we must start the “house cleaning” from the top, with all the corrupt politicians, Mayor Newsom on down, and figure out this mess the city is in!!

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