The 22-Fillmore bus on Church and 16th Street. Photo by Abraham Rodriguez.

Muni’s appointed board yesterday voted to approve a 12 percent fare hike. And, this morning, Supervisor Dean Preston queried the City Attorney’s office if the city’s transit agency was in violation of state laws forbidding price-gouging during times of strife. 

California Penal Code Section 396 states that, following a declaration of emergency, it is unlawful for “a person, contractor, business, or other entity” to charge “more than 10 percent greater than the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency.

Preston notes that there does not appear to be any carve-out for public agencies such as Muni — and that “transportation” is listed as one of the services protected from gouging. 

“If someone running a private bus shuttle did what Muni is proposing, it’d violate the penal code and they could go to jail,” Preston said. “But Muni authorizes it? This does not make sense.” 

Preston noted that, “most public agencies get this. The Public Utilities Commission and others are not charging fees and late fees and penalties right now.” 

Calls and messages to Muni have not yet been returned. City Attorney spokesman John Coté replied that, any request for legal guidance from our office would be protected by the attorney-client privilege, and we would not be at liberty to disclose that.” 

Muni spokeswoman Erica Kato previously described the forthcoming fare hikes as a necessity for an agency that has seen its revenue and ridership crater during the ongoing pandemic. 

“If there was another option not to raise fares, we would absolutely use it,” she said. “But at this time of economic uncertainty, no other option exists to maintain the service that we have and to expand upon the programs that we are offering … to support the people that need our assistance the most.”

While the anti-gouging law is most commonly associated with situations such as the $6 tube of hand-sanitizer at the corner store, Preston, a tenants’ rights attorney, notes he worked with the state Attorney General to stave off rent hikes following the Santa Rosa fires. “The statute prevents rent hikes of more than 10 percent,” he notes, “even in cities with no rent control.” 

That would apply to public housing, too, he says. And, he believes, public transit. 

If the City Attorney disagrees with Preston’s interpretation of the law, he said he’ll consider writing legislation forbidding San Francisco public agencies from engaging in what he considers price-gouging. 

Preston also admits that price hikes of less than 10 percent would not fall under the state statute. Muni’s forthcoming fare hike, set to take effect in November, would raise a one-way Clipper Card fare 30 cents, from $2.50 to $2.80. That’s 12 percent.

But a 24-cent fare hike, to $2.74, would fall just under 10 percent. 

“That would be a cynical, but possible, approach,” Preston admitted. 

Update, April 23, 11 a.m.: Muni spokeswoman Erica Kato sent the following rejoinder after learning of Preston’s contentions:

The fare increase approved by the MTA Board on Tuesday is not an “excessive or unjustified increase” designed to take advantage of the emergency. Rather, the SFMTA considered the proposed increase before the pandemic hit as part of a policy to increase fares based on an established indexing policy adopted years ago.

It’s important to us to pay our hard-working operators a living wage. As the cost of living increases in the Bay Area, so must our operator wages. If we can’t raise fares at the same rate as our labor costs, our only alternatives are to cut service or find new sources of ongoing revenue.

The approved budget includes an expansion of our low- or no-fare programs, allowing us to support the people that need our assistance the most.

The earliest these fare changes would go into effect is November 2020.

Joe Eskenazi

Joe was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. “Your humble narrator” was a writer and columnist for SF Weekly from 2007 to 2015, and a senior...

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21 Comments

  1. You have to wonder if Dean Preston has ever had to balance a budget before ever in his life. If he is really that concerned, he should open up the city wallet and give MTA more money so that they don’t need to hike fares.

    1. Reminds me of a SF school board member, when informed that the vendor they were about to threaten to cancel a contract with was the only one willing to bid on the project, who boldly claimed, “I don’t believe in scarcity mindset.”

      The contract was not cancelled.

  2. “If the City Attorney disagrees with Preston’s interpretation of the law, he said he’ll consider writing legislation forbidding San Francisco public agencies from engaging in what he considers price-gouging. ”

    I assume this legislation will come with a new funding stream for Muni out of the general fund so that the agency can maintain service without raising fares? Right? Maybe he’s brokered some kind of incredible deal to get the unions to take pay cuts? Shaken loose a huge pile of money from the state or feds? Gotten voters to approve a new tax?

    No? He’s just hoping this works like money trees in Animal Crossing? I hate this as much as anyone, but I’ve yet to see Preston offer anything resembling a solution.

    1. I’m also curious if Supervisor Preston read the next sentence of PC 396: “However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, during the state of emergency or local emergency, and the price is no more than 10 percent greater than the total of the cost to the seller plus the markup customarily applied by the seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.”

      I’m also not even sure if the law’s definition of “transportation” includes a municipal bus service, since it seems to be concerned with the transportation of property and freight.

      I’ll leave the statutory interpretation to the City Attorney, but it seems strange to me that “price-gouging” is a label that can be applied to a taxpayer-funded service which continues to be provided well below cost. The markup on Muni services is a negative number, and SFMTA already had a budget deficit to contend with before the virus hit. Which is to say, this continues to be an exercise in pointless grandstanding rather than an actual effort to address the agency’s budget challenges.

      1. The law section carves two exceptions for rising costs, but Muni isn’t claiming rising cost, but that its revenue has declined. So No, that doesn’t fit.

        You’re false claim that the bus service is provided below cost to us doesn’t answer either. If the 14 bus is already going between 24th Street and 6th Street, it doesn’t cost Muni three dollars for us to ride. If the bus is already going there, it doesn’t cost even one extra dollar if a seat is empty or filled. Paying three dollars for the trip is more than it cost Muni to not have an empty seat.

  3. Turnlin set the narrative of false dichotomy between cutting service for the most needy or raising fares, but the third choice is to stop doing stupid expensive counter-productive projects like red carpetting Mission Street.

    1. Having busses sit in traffic is both expensive and a service cut. Truly the worst of every world.

      1. If you’re in a hurry to get down Mission Street, there is always BART which is always much faster.

  4. Fares are already too expensive. Make Uber and Lyft pay for some of the damages they are causing transportation instead of shaft us. Again.

    Oh, sorry, no can do, Mayor I endorse Mike, is for big companies and Billionaires.

      1. Cars already pay for most of the money to run Muni. Uber and Lyft don’t pay their fair share, neither the downtown corporations. Just a week ago, the Muni bus said that at Manny’s
        source: https://sf.streetsblog.org/2020/04/16/tumlin-talks-muni-post-covid/

        “We’re going to lose about $200 million this quarter. And our biggest source of revenue is parking fees and fines, which have dropped by over 95 percent.”

        But the way you defend Uber stinks, Ask the downtown corporation who benefit from the subsudy from private car, and riders paying above to the to ride to in the voice of Muni “Pay their fair/fare share”

        1. Cars pay for most of the money to run Muni because the cost of maintaining roads and dedicating most of our public lands to roadways is extremely high. In fact, it’s more expensive than what we charge drivers.

          Similarly, downtown corporations pay lots of above market rate fees and taxes. Unlike long time property owners.

  5. SF Supervisors complaining about Muni while offering no structural reforms to make operations more efficient or funding more generous is an evergreen story and probably part of why the agency has not met voter requested service guarantees in 20 years. Was just a couple years ago that Peskin successfully took possible Muni funding and had it wired to a bunch of businesses in North Beach. Sure wish we had a few extra trains today instead of slightly richer former businesses, huh?

  6. https://youtu.be/l0zaebtU-CA

    Raising MUNI fares, just another form of taxation, placed against those least able to afford it. Passengers benefit getting a ride to work, school or just getting around, however, it never performs as promised or scheduled. Businesses benefit, it gets their workers to the jobs, especially the basic staff, secretaries, custodial (day & night) etc, without sharing in its basic cost to their employees.. Coronavirus has shown that essential workers count on Mass transportation. At hospitals, high paid professionals can afford cars & parking fees, many offer free parking to staff, but the essential worker who clean, make beds, wash linen, cook & distribute food etc.. they more than likely rely on MUNI.

    Tax all property & business owners, allow partial & proportional transfer of the tax to renters, business or private. Pay for MUNI service outright, allow anyone who wants to ride it, ride it without paying a fare. Everyone in San Francisco enjoys the benefits of MUNI, San Francisco could not function without it. Hence everyone should help pay for it, not just those who cannot afford another option.

  7. How can a price increase based on a formula that’s been used for years suddenly be price gouging?

  8. It is now cheaper to drive my 55-year-old Dodge Dart than ride public transit. Unlike Muni, I can go to the grocery store or my doctors instead of going all the way downtown to see if there is a bus to connect to get to where I need to go to.

    1. Good thing the cost of operating your Dodge Dart doesn’t include the price of 40 years of military operations in the Middle East or a carbon tax on the source of 40% of the state’s GHG emissions. Maybe now with $0 oil it’ll finally be cost competitive without subsidy.

  9. It seems hardly anyone pays for Muni these days, at least in the Mission on the 14 and 49. You never see people pay.

  10. I think it would be fairly easy for a journalist to dig through all of the insurance claims and legal settlements against MUNI in the last 5-10 years to show that their increase in spending is due to driver and management negligence. MUNI has to be one of the most sued public agencies in the Bay Area, which ends up settling and paying off victims of it’s malfeasance. I have personally witnessed a driver hitting a wheelchair-bound man in a crosswalk when he had the right-of-way, and the MUNI driver simply wanted to make a quick turn. The man survived, but when the MUNI driver got off the bus to see what happened, the driver acted like the man was to blame. I know of other senior and disabled people, who were not jaywalking and had the right-of-way to cross the street, who have also been injured by bus drivers.

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