The local industry has been reeling for years as venture capital-backed ride services like Uber and Lyft have proliferated and taxi companies’ calls to The City to level the playing field have done little to help.

On Wednesday, cab drivers voted to initiate the San Francisco Taxi Workers Alliance, an affiliate of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) — marking the first time cabdrivers will be unionized in The City in more than four decades.

“If we don’t form a union, we’re toast,” said Beth Powder, 35, a union organizer and driver and dispatcher for DeSoto Cab Co.

Cabdrivers discussed unionizing for a couple of months, but in a “standing-room-only” meeting at the Verdi Club on Wednesday night, they voted unanimously to move forward with making it official, said Barry Korengold, president of the San Francisco Cab Drivers Association.

About 150 taxi drivers signed up for the union and pledged to bring more drivers with them, Powder said.

A number of meetings and conference calls have been held with the AFL-CIO and the National Taxi Workers Alliance, the umbrella affiliate that includes alliances in New York; Philadelphia; Austin, Texas; and Montgomery County, Md.

The San Francisco Taxi Workers Alliance will be the fifth member — and the first independent — contractor union in California. Also coming onboard the national organization are drivers in Chicago, Houston and Prince George’s County, Md.

Among the benefits of being unionized, Powder said, is reversing the public — and, to a degree, real — perception that the taxi industry is disjointed.

“Cabdrivers are very independent people, and that’s one of the beauties of this industry — that you have a diverse group of people who bring all these different elements to the table,” Powder said. “Unfortunately, what it translates to for everybody else is that we can’t get together and find consensus. But we’ve done just that.”

Becoming unionized would also give taxi drivers access to legal resources. Taxi drivers are independent contractors with cab companies, who provide workers’ compensation but not health insurance. Powder said getting health insurance from cab companies is not a priority at the moment considering other battles they face.

“That doesn’t mean that in the future that’s never going to be a conversation,” she said. “But right now, we’re in the same battle together. The cab companies want us to be able to have a place to work and for us to form a union means we can work side by side with the cab companies.”

Some taxi drivers have organized in smaller groups — the San Francisco Cab Drivers Association, the United Taxicab Workers and Association of Burmese Cab Drivers — but they often pushed their own initiatives and weren’t able to garner mass support. And they felt their pleas to City Hall to do something about unregulated app ride services like Uber and Lyft were not heard.

Those enterprises, called transportation network companies by regulator the California Public Utilities Commission, have eaten up a large chunk of the taxi market in just a few years.

“We’re in crisis mode because the legislators and city officials have ignored us,” Powder said in reference to the ride-services issue. “We see in cities across the country, people stepping up and taking action at a municipal level. They’re clamping down on illegal ride services. And the city of San Francisco for some reason can’t get anybody to budge.”

Bhairavi Desai, president of the National Taxi Workers Alliance and executive director of the New York Taxi Workers Alliance, said the San Francisco union will become official once it has 500 paid member drivers.

San Francisco drivers’ vote Wednesday signifies their readiness to defeat attacks on labor, Desai said.

“San Francisco used to have progressive working conditions, in that every driver could earn a medallion and it was a very progressive

model,” Desai said. “But in the last 10 years, San Francisco has been faced with very bitter attacks, with [rideshares] being the latest of the attacks.”

In New York, the largest market for taxis, Uber and Lyft have been limited to black-car operations and cannot operate as transportation network companies as they do in San Francisco, Desai added.

Taxi drivers unionized as early as 1904, evidenced by a “hackman” union that staged a four-month-long strike, according to Charles Rathbone, 65, owner of the website www.taxi-library.org. By 1909, the Chauffeurs’ Union had successfully organized drivers and they earned the highest wages in the country.

“In 1967 a [Chauffeurs’] union official described local taxi contracts as the best in the nation, with drivers earning $13 a day plus tips or 50% of the fares, whichever was greater, plus health care and pension,” Rathbone wrote in the article “Taxis and San Francisco Labor History” on his website.

The taxi industry, through its long history, has proven itself to be very adaptable to change, added Rathbone, who is also assistant manager at Luxor Cab.

“I think the industry is going to continue to be just fine,” he said. “Union or no union, Uber or no Uber.”

San Francisco taxis were unionized dating back to pre-World War II, but they tore away in the late 1970s, according to Mark Gruberg, 72, a taxi driver for 30 years who is currently with Green Cab.

“There’s a new breath of life in unionism,” he said. “And we in San Francisco are going to be part and parcel of that.”

The San Francisco Municipal Transportation Agency indicated it will continue to negotiate and work with the taxi industry regardless of the union move.

“San Francisco taxi drivers will always have a seat at the table with us, whether individually or collectively,” agency spokeswoman Kristen Holland said. “We will listen to their concerns regardless of their affiliation.”

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If Uber, Lyft and others are allowed to expose loopholes in the regulatory process — which boost their bottom lines exponentially — then so too can the traditional taxi industry, he realized.

During public comment at many recent San Francisco Municipal Transportation Agency board of directors meetings, Kim has explained that his 204-vehicle operation is “bleeding money” due to competing ride services subject to a different set of rules enforced by the state, not The City.

If DeSoto were to change the model of its operations, it would cut its highest cost — nearly half a million dollars in monthly payments to taxi medallion holders — but not become another Uber or Lyft (the app-based ride services dubbed transportation network companies). Instead, DeSoto — The City’s third-largest cab company — would seek charter-party carrier, or TCP licenses, intended for limousines and Lincoln Town Cars but legally obtained by nonluxury vehicles.

“Uber isn’t putting me out of business,” Kim said, speaking hypothetically. “What Uber is making me do is retool — and given the same rules, I’ll beat them all day long.”

The California Public Utilities Commission’s Transportation License Section states, “The most important operational difference is that TCP transportation must be prearranged” whether by telephone or writing, whereas, “Taxis may provide transportation ‘at the curb.'”

To have a livery plate, a type of TCP permit, a vehicle can be any sedan or SUV that seats 10 or fewer passengers including the driver.

“If a driver has applied for and received a livery plate and then becomes a driver with a TNC, that driver can provide TNC service in that vehicle,” CPUC spokesman Andrew Kotch said.

AN ALTERNATIVE PLAN

Technology-driven companies like Uber have blurred the definition of prearranged transportation and the code has not since been amended, said Barry Korengold, president of the San Francisco Cab Drivers Association. That has allowed TCP-licensed cars to use smartphone apps and act as taxis.

“Somehow, they’ve played with the words so much that ‘on-demand’ is ‘prearranged,'” Korengold said.

Together, Kim said, the TCP and TNC ride services are a “double-whammy” to taxis.

“I hate to say it,” he said, “but all this deregulation is, from a financial standpoint, an opportunity for me.”

The cost factor is also important to DeSoto, as Kim pays $2,200 per month each to his 204 medallion holders for an annual total of nearly $5.4 million. If Kim decided to pull the trigger, it would take him three months to remove the cab meters and infrastructure while keeping his dispatch system, DeSoto name and two-toned blue colors. Each TCP license would be a one-time $1,500 fee plus $100 to renew annually. Kim said he would do just fine because he has built a loyal customer base over the company’s 80-year history and now receives an additional 2,000 hails daily through the hailing app Flywheel, which he hopes would adapt with him.

Since 2010, medallions have been sold to drivers at $250,000 each. Up until a few months ago, Kim was paying medallion holders $2,500 per month, but that dropped to $2,200 with competition from other ride services. The monthly rate could drop to $1,800 by September, Kim said. Yet a medallion does have advantages, like allowing drivers to pick up street hails and airport customers.

“The SFMTA is going to kill their golden goose, which is their medallion sales,” Kim said.

NO CONCERNS FROM CITY

The repeated warning from DeSoto Cab Co. about retooling was not a major concern for the San Francisco Municipal Transportation Agency Taxis and Accessible Services’ interim director, Kate Toran. DeSoto’s medallions are a small fraction of the roughly 2,000 citywide, she said, and the medallion holders could do business with other taxi companies.

“That could be a business decision that they undertake and really that’s [Kim’s] choice,” Toran said. “There would be no loss for the SFMTA taxi fleet.”

There continues to be a “strong demand” for medallions, she said, with about 1,000 people ready to buy them.

“If the industry continues the positive work of adapting to the new challenges, we believe that the value of the medallions will remain strong,” Toran added.

Ed Healy, 69, a taxi driver for more than 25 years, said he sold his medallion a year ago because it appeared to him The City was not going to regulate the app-based ride services. He now drives for DeSoto two or three days a week.

“The state is allowing these people to put in all the vehicles they want, whether they are needed or not,” Healy said of the app-based ride services.

WILD, WILD WEST

Korengold said his main issue is that The City still cannot crack down on the state-regulated ride services. A state audit last month found that CPUC failed to enforce safety laws around limousine and bus companies and lacks properly trained investigators.

Luxor Cab, the second-largest taxi company in The City, is not considering converting its entire 220-vehicle fleet to a sedan service, Assistant Manager Charles Rathbone said. But it is keeping an open mind about getting TCP licenses for vehicles to operate them commercially or getting TNC licenses.

“We’re not about to abandon the medallion system that has worked so well in San Francisco for generations,” Rathbone said.

While there are cabs that aren’t leaving company lots, a number of drivers are returning to the cab industry, noted Steve Humphreys, CEO of the app Flywheel that is working with every taxi company in The City.

Kim’s own reservations around the sedan service route are based on his belief that vehicles transporting people should be subject to regulation.

“Of course I want to be a business that is not losing money, but I don’t want to see the industry become deregulated, because it’s not in our public interest,” Kim said.

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The tall, hard-to-miss, curly-haired blonde took over as deputy director of the San Francisco Municipal Transportation Agency’s Taxis and Accessible Services Division in December 2008, a time when the industry was in dire need of reform.

A lawyer by trade, Hayashi, 51, maneuvered the transition from the now-defunct Taxicab Commission to the cab industry’s regulation under the SFMTA, and she took the lead in implementing a transferable medallion system that taxi drivers desired. She informed colleagues of her imminent retirement for the better part of a year and leaves as The City’s taxis are in a tight race for riders with Uber, Lyft, Sidecar and similar mobile-app-based services.

“I’m ready to hand off this continuing process to somebody else — in a responsible way that’s not going to diminish what I’ve done or slow down the progress,” Hayashi said. “I’m just ready. Really, a large part of the decision is about timing with my years of service to The City and my age.”

“It’s not,” she added, “because Travis has kicked my ass.”

That’s Travis Kalanick, founder and CEO of competitor Uber.

Hayashi said she is “extremely proud” of the changes she fronted, which include a taxi enforcement team after the Police Department backed away from the role, and that it seems the industry in the past five years has moved “100 light-years forward.” Then, enter Uber, Lyft, Sidecar and others formally known as transportation network companies.

“Here I am, trying to steer the Titanic and someone hits me over the head with a baseball bat, is pretty much what the TNC issue is like,” Hayashi said. “We were about to clear, and all of a sudden here comes billions of dollars of venture capital for people who are willing to break every law in the book.”

At that stage, she said, she didn’t have the backing of government officials and it was a state agency, the California Public Utilities Commission, that got regulatory oversight of the TNCs.

Hayashi managed a very difficult job well, one that often had dozens of angry cabdrivers screaming at SFMTA meetings, Transportation Director Ed Reiskin said.

“The one thing I would hear from people from all parts of the spectrum of the taxi industry,” he said, “is, ‘I don’t agree with what she did, but she was fair and listened to us and I respect her for that.'”

SFMTA board member Malcolm Heinicke said, “She gave it her best as a public servant and she deserves a lot of credit for that.”

But DeSoto Cab Co. president Hansu Kim, who agreed that Hayashi shepherded the industry through some of its most trying times, said that with Uber, Lyft and the like, he would be surprised if the cab industry survives another 18 months in The City.

“The bottom line is, the taxi industry is in big trouble and it’s not her fault,” he said. “But she’s leaving at a time when it’s critical to have strong leadership.”

Before becoming the head of taxis, Hayashi spent 18 years as a deputy city attorney with the city attorney, and was a leader in the rewriting of The City’s procurement laws. She reached her current position in part through experience on the city attorney’s transportation team.

“She was gifted at listening to all the stakeholders and finding a compromise,” said Deputy City Attorney Mariam Morley, her former colleague.

The SFMTA is continuing with a recruitment process that started six months ago and had hoped for more transition time for Hayashi’s successor, Reiskin said.

“She’ll leave some very big shoes to fill,” he said.

After she leaves the taxi world, Hayashi, who has long loved Afro-Cuban art and music, will tour the East Coast for books she has translated on the culture.

Her retirement party July 7 will double as a cabdriver appreciation celebration, an annual event that ceased to exist along with the Taxicab Commission. She has booked a Brazilian band with a member who drives for DeSoto Cab Co. and a piano player who drives for Royal Taxi.

“I’ve had a line item all these years to do a taxi driver appreciation party but it was either something we haven’t been able to focus staff time on, or considered a waste of time,” Hayashi said, choking back tears. “But before I go, I’m determined to make sure we have the party they deserve.”

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