The practice of selling off cabs and permits has created a virtual taxi black market in San Diego.
  • The practice of selling off cabs and permits has created a virtual taxi black market in San Diego.
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On February 22, former San Diego city councilman Ben Hueso, then a member of the California Assembly, introduced a bill to make clear that “the driver of a taxicab is an independent contractor rather than an employee of the taxi company.” If passed, Assembly Bill 1243 could benefit Hueso’s brother Antonio, owner of USA Cab, one of the largest cab companies in town.

The possible conflict of interest grabbed the attention of the Sacramento Bee’s Laurel Rosenhall. In a March 17 article, Rosenhall quoted Hueso saying, “My family went through a very horrific lawsuit that spanned about six years. And they won [in 2009], but it came at a great cost to the company.”

The lawsuit charged that USA Cab treated its drivers as employees while calling them independent contractors, thus avoiding requirements to provide workers compensation insurance, withhold taxes, and pay a minimum wage.

As an assemblyman, current state senator Ben Hueso sponsored legislation some say will directly benefit family members who own a taxi company.

As an assemblyman, current state senator Ben Hueso sponsored legislation some say will directly benefit family members who own a taxi company.

Mikaiil Hussein, director of United Taxi Workers, wants the city to take over management of taxis.

Mikaiil Hussein, director of United Taxi Workers, wants the city to take over management of taxis.

Hueso went on to argue that his legislation is needed to protect taxi companies, though it would not benefit his brother’s company. According to the Bee, “Hueso says his brother’s company won’t be affected because it already is protected by the 2009 ruling.”

That opinion is not shared by Peter Zschiesche, founder and director of the San Diego Employee Rights Center. Because USA Cab prevailed in its defense against the class-action lawsuit, Zschiesche tells me by phone, does not mean personal lawsuits against the company on similar grounds can’t succeed.

The new law proposed by Hueso, who became the District 40 state senator in a special election on March 13, also appears intended to head off unionization of cab drivers anywhere in California. The legislation is opposed by United Taxi Workers of San Diego, which notes on its web page that Hueso was supported by organized labor in his recent election.

Mikaiil Hussein is the director of United Taxi Workers, having founded the organization in 2009 after angering industry leaders. He emigrated from Somalia in 1993 and eventually earned a college degree in computer science. “After I spoke out at a city-council meeting,” he tells me by phone, “I was told to turn in the keys to the cab I was driving. I was then blackballed by the other companies I tried to drive for.”

The cab owner who released Hussein owns 27 cabs, he says. They appear on the streets as belonging to Yellow Cab’s fleet, although they were purchased by their owner from the parent company and labeled by number and new names. About ten years ago, Yellow Cab sold all its cabs to individuals who could afford the rising prices. Permits to operate the cabs accompanied the sales.

The practice of selling off cabs and permits has been adopted by the other large taxi companies in San Diego ­— USA Cab is thought to still own about 40 cabs — and has driven up prices dramatically. A demand for ownership prompts even smaller owners to market their permits in hopes of making huge profits. The Taxicab Administration, a subdivision of the San Diego Metropolitan Transit System, says it does not have jurisdiction to control the sales, which critics argue have created a virtual black market.

Industry rumors suggest that permits to operate taxis at the airport have been sold for as much as $160,000.

Industry rumors suggest that permits to operate taxis at the airport have been sold for as much as $160,000.

The City of San Diego’s Office of the Independent Budget Analyst looked into the matter in February 2012. It noted, on the basis of a consultant’s report, that neither the city nor the transit system earns “direct revenue” from sales of taxicab permits. “Although the City of San Diego owns the permit, and issues a privilege to participate in the San Diego taxicab market, permit holders profit from the transfer of these permits by charging a premium to the recipient of the permit. According to the consultant report, the price paid for permits ranges between $35,000 and $110,000.”

According to scuttlebutt in the industry, those prices have reached as high as $160,000 in some recent cases of permits to operate at Lindbergh Field. As I discovered one Sunday afternoon by walking the lineup of cabs waiting for passengers at the San Diego Zoo, many local taxi drivers would love having permits to operate their own cabs but despair of ever being able to afford them. Occasionally, the Taxicab Administration holds a lottery to allow new qualified owners into the market at the original permit prices of $3000. The price is somewhat higher for permits to operate at the airport.

The drivers also gave me a range of how much they pay cab owners for weekly leases, which the ongoing sales of permits keep driving up. The leases of the Yellow Cab companies, at $840, seem to be the highest, largely because of a computer system Yellow uses for passengers to “hail” cabs. The lowest lease I heard was $455 per week. The drivers, none of whom would state their names, reminded me not to forget what they pay for gas. The consensus was about $210 per week.

The California Assembly bill that Ben Hueso submitted in February to help taxi owners had no provisions to improve the difficult working conditions drivers face. The legislation maintains the status quo of lease drivers remaining unable to become their own permit holders.

But United Taxi Workers, which has paid staff, and a newer organization called Unified Taxi and run exclusively by volunteering drivers, have been lobbying Mayor Filner for big changes. They want the City of San Diego to take over management of the taxi industry from the transit system’s Taxi Administration and open up the market for original permits, ending the explosion of prices that accompanies permit transfers.

The organizations say they have gotten a good response from Filner, who has granted them several informal conferences to discuss the relevant issues. At its February meeting, the transit system’s board of directors acknowledged that the city is likely to directly take over running the taxi business. But board members voted to renew the contract the Taxi Administration has with the city for another year, noting that the city has created no new agency to do the work.

The date of the board’s meeting was February 21. Hueso submitted his Assembly bill the following day. ■

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Comments

boemac May 15, 2013 @ 8:13 a.m.

Ben is a known loser and should be removed from office because he never follow the rules. We have enough clowns in office as it is.

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HonestGovernment May 16, 2013 @ 10:18 a.m.

Jose Antonio (Tony) Hueso is also the Secretary/Treasurer of an L Street Sacramento lobbyist group, the 501(c)6 Taxicab Paratransit Association of California (TPAC-Ca.org; EIN 237410208). Their direct and indirect political purpose is "To influence legislation for the benefit of taxicab and paratransit operator issues."

Ben Hueso has a long history of benefiting his many family members (wife, children, brothers, cousins) and their many businesses, by obtaining public money.

Martin Stolz, a 2005 U-T staff writer, wrote (Oct 29, 2005):

"Hueso became involved with the family's taxi business, USA Cab. Hueso and two brothers founded a related business, California Paratransit Services, which provided transportation for elderly and disabled people through social service contracts. [bold emphasis added] Hueso said he sold his interest in California Paratransit in 2001.

He has founded a series of other companies, including the nonprofit Inner City Business Association, which Hueso said assists small business owners. He also started the Central Commercial District Revitalization Corp., which has received at least $1.6 million in property taxes to clean and beautify streets in and around an area of Logan Heights where Hueso's family and friends, including National City Mayor Nick Inzunza, Ralph's brother, own property.

The City Council this year gave these nonprofits $40,000 in federal Community Development Block Grants. Hueso said he was never paid by either group.

From 2001 through 2004, Hueso worked for the city's Community and Economic Development Department, where he oversaw the maintenance assessment district that collects property taxes earmarked for the Central Commercial District Revitalization Corp."

But Ben Hueso hands are always clean and his intentions are nothing but 100% honorable. Not to worry, no benefit to HIS family...he's just out to help everybody.

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BenSeifu May 17, 2013 @ 9:48 a.m.

Thank you Joe Deegan for highlighting a real problem in public safety in the taxicab industry. Taxi drivers are under extreme hardship and the public need to be outraged as to why their property is being bought and sold in the black market for as high as $160,000 without a single penny being benefited by the public. There is a big public misconception here: Taxicab permits are not private property. They are distributed as a privilege to use for public transportation. Just like any other permits they can be revoked, suspended and terminated. Why is MTS turning a blind eye to this problem? The fault lies with MTS for being irresponsible and corrupt. The public need to ask why the Taxi Administration Manager, John Scott recently "resigned" after over 20 years at the helm. If he resigned, why the need to escort him out of the building by security?

Mayor Filner has decided to finally tackle this problem by terminating MTS's contract and bringing the taxi business back to the City's jurisdiction after 30 years. It was a decision that was applauded by all drivers. However, there are certain City Council members standing in the way due to permit holders influence and lobby. Mayor Filner wants to allocate $100,000 to hire a consultant to assess the industry to determine the best way forward. Taxi drivers want a free market system rather than the current closed permit market that has resulted in the monopolization of the industry and shortage of taxi. Taxi drivers are willing to raise the funds if necessary if the City Council refuses to release the funds because their livelihoods are at stake. But to do so means that taxi drivers will be in an even more duress to take care of their families due to high cost in lease rates and gas prices.

Many people in the public have negative views of taxi drivers, but let me remind you that behind their negative traits stands a permit holder profiting from their hard work like modern day slavery. It's no exaggeration my friends. A perfect example, ask why drivers refuse to accept credit cards as payment? It's simple. The driver has to pay his permit holder up to 10 percent in interest for every transaction when the permit holder himself only pays 2 to 3 percent. Almost all permit holders accept only cash as form of payment for lease. (Why do you think that is?) A driver sometimes has to wait an entire month to cash in on his credit card transaction because that's how the permit holder wants it. Imagine if your boss was withholding a portion of your paycheck until the end of the month. Don't we all have bills? Where is the outrage? Where is justice? Do we not live in the land of the free? Do you think Ben Hueso had that in mind when he introduced this inappropriate and unjust legislation or was he thinking about his families interest? Disgraceful!

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fredlopez May 20, 2013 @ 10:29 a.m.

Good Morning; although changes in the taxicab industry, as in any other industry are needed, due to the different circumstances in recent economic times, it is important to expose the fallacies of unscrupolous and deceitful "taxi advocate leaders" like Mr.Seifu and Mikail Hussein. These individuals often go unchallenged in their biased and unobjective comments, Why?. It would be convenient to know the financial amounts these individuals receive as "pseudo advocates" for being the leaders and founders of their own driver advocacy groups. Shame on these individuals for taking advantage of hard working taxi drivers, most of them recent immigrants who lack the proper knowledge to understand the complex laws and regulations that govern the taxicab industry. Shame on these individuals for willfully misleading and deceitfully promising these hard working drivers that, and of course, after the proper membership fees that go right in Husseins and Seifu's pockets, that drivers will get their own taxi permit, which currently impossible to obtain. Seifu's and Husseins arguments, although partially corect in the sense that there needs to be change in some aspects, are complete biased, false and malicious. For example: Seifu claims that the reasons for this so called "black market" in reference to the issuing of taxi permits is due to MTS being corrupt and irresponsible. When in fact, MTS was recently awarded the "best transportation system in America" and MTS Taxi Administration is recognized internationallly by the IATR (international assosiation of transportation regulators) as one of the best administrative programs in North America. Hard to believe for being "irresponsible and corrupt" Seifu knows, but maliciouslly chooses not to inform that MTS ONLY acts as an administrator to SD City Council policy which is the main and only governing guideline pertaining to the issuing of TAxi permits. Seifu and Hussein claim Taxi drivers receive "poverty wages" due to the lack of trip revenue and high lease prices, but yet lobby and advocate for the additional issuance of Hundreds of new taxi permits, Which in turn would overflow the supply for taxicabs and in turn would make the drivers earn less. Quite interesting to find out that Seifu and Hussein, whithin their respective groups have appointed themselves to "administer" these new permits if there ever issued. Seifu has presented a lucrative "business" radio service program to the city and has collected hundreds of thousands of dollars from drivers to fund his own business plan, arguing that "the city" would obtain revenue by adopting his selfish business idea. Seifu does not inform, either by ignorance or ommission, that State law mandates that these type of transportation oversite regulatory program operate only on a "cost and recovery basis"

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SarahSanDiego May 24, 2013 @ 12:46 p.m.

Mr. Lopez, you are extremely mistaken. United Taxi Workers and Unified Taxi are completely separate groups. UTWSD does not collect thousands of dollars from taxi workers with the promise of permits. UTWSD has monthly membership dues of $10 a month or the option for voluntary FREE membership. The majority of the low wage drivers volunteer and are NOT paid. United Taxi Workers is also not actively lobbying for new permits and Mikaiil has never appointed himself to "administer" them. United Taxi Workers is a 501(c)4 nonprofit organization with many partnerships in the immigrant community. We do not take advantage of drivers and in fact make it our mission to protect them.

You obviously have an agenda and don't want to recognize the fact that the taxi industry is unsafe. Please refer to this independent study by San Diego State University and the Center on Policy Initiatives. http://onlinecpi.org/reports/driven-to-despair/

You can not argue with facts. If you would like any further information about United Taxi Workers of San Diego please refer to our website at www.utwsd.org. Have a great day.

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BenSeifu May 28, 2013 @ 7:34 p.m.

Mr. Lopez! I have never met or heard of you, but it seems as you have plenty to say about me. This is what I call character assassination, but it's typical from a corrupt taxi industry. My comment was based on facts not personal attacks. It's sad how you're trying to confuse the readers when all the readers have to do is speak to taxi drivers. They will tell them the truth. I'm a volunteer advocate who was democratically elected by the members. I don't collect a penny in personal income. In actuality I lose income from my volunteer time. Let's talk about a three million dollar a month industry who's revenue doesn't trickle down to the city of San Diego. Focus on the facts Mr. Lopez instead of character assassination. Don't hide from the truth. Speak to our members and we're as transparent as ever about our finances. Our organization is self-funded by hard-working drivers who have been fighting for change to anyone who would listen. We're protecting consumers interest as well as drivers well-being. An industry that uses high mileage salvage title vehicles for its fleet is not one who serves the public's interest. An industry that forces drivers into public assistance is not an industry who safeguards taxpayers money. Let's focus on the facts Mr. Lopez not character assassination. That's what the writer of this article did.

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ninotrovato June 19, 2013 @ 2:38 a.m.

I am a permit holder of 1 taxicab in San Diego. I purchased it nearly 2 years ago for $130,000 and I bought a nice car and prepared it for the road for approximately $10,000. I had a grand total of $117,000 to my name. This was all the money for my family. I borrowed the rest, $23,000, to complete the purchase and have my car on the road working. My net return is $500 per week. Approximately $25,000 per year. I also manage 10 taxicabs. In all I manage around 40 people because most of these cabs have 3 to 5 drivers. EACH AND EVERYONE OF THEM MAKE MORE THAN $500 PER WEEK ON AVERAGE. I purchase, repair, replace, register, and pay ALL fees for the cars. My brother bought a permit last week. His driver made $450 on Friday night alone. The taxi union should teach its drivers to make more than $4.5o per hour instead of teaching them to stick their hands out for free housing allowance ($1,100 per person), free welfare, and now they want to receive a taxicab permit from the city for $3,000. A study, which cost taxpayers $100,000 just two short years ago, was independent, and it concluded that there were too many taxicabs on the road. Now, two years later, Mr. Filner and the San Diego City Council just approved another $100,000 study for the purpose of releasing more permits. There is less work now than there was two years ago, isn't there? Drivers are "supposedly" making $4.50 per hour, right? What do you think more taxicabs will do to the earnings of cabbies?

STOP LYING AND CHEATING AND LEARN HOW TO MAKE A LIVING. Create repeat customers. Stay off of your phones while driving passengers around! Stop taking tourists the wrong way to their destinations! My drivers tell me every day about customers complaining about these issues.

KPBS, PLEASE DO A STUDY ABOUT WELFARE AND HOUSING ALLOWANCE. COMPARE THOSE WHO ARE CHEATING THE SYSTEM TO THOSE WHO ARE REQUESTING MEDALLIONS FROM THE CITY. BE FAIR

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BenSeifu May 17, 2013 @ 9:50 a.m.

One last thing: The taxicab industry is a 3 million dollar a month industry!!!! Does our City benefit from this??? NOT A SINGLE PENNY!!!

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fredlopez May 20, 2013 @ 10:30 a.m.

Driver working conditions DO need to be improved, change needs to come in some aspects, but with a comprehensive analisys of the industry and not under a hidden political agenda based on votes from a disenfranchised constituency and the delivering of empty promises. what is disgraceful is the malicious manipulation of immigrant drivers who are given empty promises in return for their union dues, donations in other to fund unscrupolous and racketering individuals. The FBI should look closely on the financial records of these groups as we can assure you drivers are being ripped off under the excuse of labor changes.

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SarahSanDiego May 24, 2013 @ 12:51 p.m.

Mr. Lopez, you think working 12-16 hours constitutes good working conditions? Or cars that have well over 200,000 miles on them?

Also you're argument is baseless about racketeering, at least on the part of United Taxi Workers. Please provide more information about what you mean by this?

Additionally, are you a permit holder?

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BenSeifu May 29, 2013 @ 7:30 a.m.

Be careful what you wish for! I highly welcome the authorities to look into our industry. It would finally bring about much needed reform to our industry. For the record, we cannot unionize due to a technicality ruling in court that your friends in the industry made those same very "immigrant drivers" you refer to unknowingly sign a document to claim that "they are not employees and that they are independent contractors." I thought you would know that by now Mr. Lopez. Speak facts and not character assassination. I would tread carefully Mr. Lopez. We know our rights and you're closely overstepping that boundary.

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Visduh May 19, 2013 @ 9:19 a.m.

The first ingredient in making these abuses work is the old "independent contractor shuffle", wherein the employer pretends that his employees operate independently. This goes on all the time, in all nooks and crannies of our economy. It avoids having to pay the match on FICA tax, unemployment tax, and workers compensation. The usual "contractor" ends up living hand-to-mouth, fails to pay his/her taxes, and ends up in hot water with both the IRS and EDD. Part of this pattern also means that the employee doesn't report much or anything as net income, hence pays far too little into the social security system, leaving him/her high and dry at age 66. It's a rotten slimy deal, and while illegal, requires massive enforcement to eliminate. That enforcement has been lax for a long time, which is why this keeps growing. Add in all the other twists and turns of taxi licensing plus the lease of the cab and dispatch, and you have a perfect recipe for something close to involuntary servitude, or as one commenter called it, slavery.

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neperevarivanie May 30, 2013 @ 4:23 p.m.

Read the article several times and still confused what is it about. There are so many issues in it but most of them written without fully understanding the roots of the problem. - I've being in taxicab business for more than 16 years as independent owner-operator and I leased my cabs to the drivers. This is the sad reality: small independent companies can not afford workers comp. insurance! Let me show you why: $3K a year auto insurance, which cover nothing but the customers in the cab; $1K a year collect crooks from MTS to have their jobs and make the life of taxi driver miserable; about $500 other charges licencing, equipment and other stuff; minimum $2000-3000 a year must be spent on maintenance of the cab, and if you are the "lucky" guy who happen to be on Yellow Cab radio service, add another $1000 a month(!) for the radio service. Plus, all these permit holders who was tricked to buy the permit at the price of $150K still need to pay back the money they borrowed for permit belonging to the city and can be revoked at any time if the crooks from MTS will want to! - So, what is left? - Nothing. Now you see why the lease is so high and workers comp. insurance impossible. The only way to get out from this situation in my opinion is get rid of the Taxicab Administration of MTS who serves to itself and to 5-6 people in taxicab business. The public will get much better service without them. And the "safety of the public" with what they cover their parasite existence will not be in jeopardy at all!

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