Politically Connected Power of Auto Towing & Storage Business
June 26, 2001
An article in the June 24, 2001, Oakland Tribune provides some insight into the political and police connections that helped Billy Taylor build a fortune from exclusive towing and storage contracts in Oakland. There are some lessons here for Richmond, which has similarly manipulated tow and storage contracts over the years. The article can also be found at the Tribune web site http://www.oaklandtribune-ang.com/.
BLACKHAWK MAN HAS BUILT FORTUNE OFF OAKLAND CONTRACT
Bill Taylor cornered market through deft moves
June 24, 2001
By Robert Gammon
OAKLAND—THE HIDDEN fortress blends in with the hardscrabble backdrop. Guarded by a 12-foot-high fence topped with barbed wire, most of the 30 acres are visible only from the air or the nearby elevated BART tracks.
About 30,000 cars, vans and pickup trucks pass through the padlocked gates of this sprawling industrial site in East Oakland each year. Six blocks long and five blocks wide, it’s home to all vehicles towed at the city’s request.
Assessed at $9 million, but likely worth twice that amount in today’s real estate market, this spread of land belongs to Bill Taylor, a politically connected multimillionaire who was born in Oakland and now lives in the gated community of Blackhawk.
For three decades, Taylor has quietly assembled a monopoly empire in Oakland by holding title to a lucrative city contract—towing and storing cars. Over the last 20 years, that contract has been worth an estimated $50 million to $100 million to Taylor, possibly more.
In an industry known for its hard-nosed op-erators, many of whom carry concealed handguns, some local people in the tow business say that while they’re envious of the deal Taylor cut with Oakland, he can also be a ruthless intimidator, who has squeezed out his competitors or gobbled them up.
His colleagues and partners scoff at such characterizations, preferring to describe Taylor as a shrewd wheeler-dealer who consistently has outfoxed the competition.
But whether friend or foe, there’s little dispute that Taylor has cornered the Oakland towing market through a series of deft moves, from molding key alliances with political and law enforcement leaders to greasing the gears of city government, and all the while, managing to avoid the glare of public scrutiny.
Taylor’s monopoly has been fueled with the help of the Oakland City Council. Since 1981, the council has repeatedly extended Taylor’s contract without putting it out to bid, insulating him from competition and leaving Oakland with a smaller share of towing revenue than other large cities.
And there’s no indication the council has any intention of ending the city’s long, close relationship with Taylor, even at a time when other communities are reevaluating, and often splitting up, the old-boys network of towing monopolies and no-bid contracts.
City Council members defend the numerous contract extensions they’ve given Taylor, saying he has provided Oakland with quality service and noting there have been few complaints. They also argue that no other local towing company has the capacity and the financial wherewithal to assume control of the city’s extensive towing business.
According to the Oakland Police Department, the city last year ordered 27,746 vehicles towed to Taylor’s lot, which runs along San Leandro Street between 86th and 92nd avenues and is home to his businesses, A&B Auto and A&B Vehicle Processing.
“The guy’s doing a good job, that’s the thing,” said Dick Spees (Montclair-Laurel), the council’s elder statesman who was elected in 1978 and has never opposed the 11 amendments to Taylor’s towing contract approved by the council in the past 20 years. “If it’s not broken, why fix it?”
Taylor, meanwhile, says he’s worked hard for what he has, has never done anything wrong and deserves his success.
“I consider myself to be a good businessman,” said the steely blue-eyed, 70-year-old, who comes across as a low-key, matter-of-fact salesman with an abiding affection for automobiles. “And my feeling is we do a really good job for the city.”Hauling cashThe exact amount of money Taylor makes from the city contract remains something of a mystery to city officials, partly because Taylor refuses to discuss it and partly because the city has never analyzed his books.
But according to figures obtained by The Oakland Tribune during a three-month investigation that included more than 75 interviews and a review of more than 3,000 pages of documents, the city contract was worth at least $6.5 million in gross revenues last year alone for Taylor’s towing and storage businesses.
Taylor makes money several ways.
Whether cars were parked in a red zone or confiscated for any number of reasons by the Oakland Police Department, the owners of every car ordered towed by the city must come to Taylor’s lot and pay his clerks, who work behind bullet-proof glass as a precaution against angry visitors.
To get their vehicles back, owners must fork over hundreds of dollars—sometimes more than $1,000 -- in fees. If they can’t afford to, or decide their car isn’t worth it, the vehicles are auctioned off at lien sales or torn apart and sold piece by piece, often a more valuable process than selling the car whole. What’s left Taylor sells for scrap.
A Tribune comparison also found that while Taylor hauled in profits, the city of Oakland took in far less from its towing contract than other large cities, such as San Jose and San Francisco.
San Francisco, which has the only other monopoly towing contract among big cities in Northern California, last year pulled in more than $4.5 million.
That was nearly 50 percent more per vehicle towed than Oakland, which collected about $1.07 million on about one-third as many cars. And San Francisco, unlike Oakland, routinely revises its contract to maximize revenues and puts the contract out for competitive bidding.
By contrast, each time A&B’s deal has come within a few years of expiring, City Council members have voted to extend the contract another three to five years, often granting Taylor’s request to increase towing and storage fees. The latest extension came in 1999 and lengthened Taylor’s contract with the city until October 2005.
Although all former and current elected councilmembers have accepted campaign contributions from Taylor, his companies, his employees or his family during the last 10 years, they dismiss any connection between the donations and their votes.
Spees said there was never any political pressure applied or any overt or implied quid pro quo of donations in exchange for contract extensions.
And Taylor shrugs off the campaign donations as “just part of doing business in this world.... Money makes the world go round for these people,” he added with a smile.
Taylor also said it’s not fair to compare towing in Oakland to San Francisco, because there are far more “higher quality” cars towed from San Francisco city streets than “the junk” that passes through his huge lot at 8717 G St.
“I feel more and more like we’re in the waste management business than anything else,” he complained repeatedly during a recent tour of A&B’s property, which is sprinkled with rambling warehouses that look like large metal islands jutting out in a vast sea of cars—many of which were headed for the dismantler and then the scrap heap.Avoids scrutinyTaylor has operated in relative obscurity over the years, despite his high-profile political connections—he considers state Sen. Don Perata, D-Oakland, a friend and has attended Perata’s Bullpen sessions, get-togethers reserved for the East Bay business elite.
Not only has the city of Oakland never analyzed A&B’s financial records, but it also has yet to complete what’s known as a “performance” audit on whether A&B has met the specifications laid out in the 20-year-old contract and its amendments.
Two audits were started, the first in 1999. But both were halted abruptly before they could be published. One auditor transferred out of the City Auditor’s Office, the other told The Tribune she was fired. City Auditor Roland Smith would not discuss the previous audits, but said a third is now underway.
Like the first two, the new one is planned to be a performance audit, not an examination of Taylor’s books, which means the exact value of the city contract likely will remain known only to Taylor and his brother-in-law, Bob Connor, general manager of A&B.
Oakland political leaders, meanwhile, acknowledge that the numerous contract extensions and rate increases have helped Taylor build his Oakland towing monopoly and made it virtually impossible for any other towing company to compete effectively.
In addition to controlling all aspects of towing, storage and lien sales for the city of Oakland, Taylor owns one-third interest in both the business and property of the only car dismantler in the city—Pick-n-Pull. Pick-n-Pull buys unwanted towed cars stored by A&B and then sells off the parts.
Also, according to Securities and Exchange filings, Pick-n-Pull has an exclusive joint venture with the nation’s largest scrap metal processor, Schnitzer Steel, which has a giant metal shredder in Oakland down the street from Pick-n-Pull and A&B, and is run by Taylor’s longtime friend, Gary Schnitzer.
Other tow operators joke that Taylor owns Oakland’s cars from “street to grave.” Some also resent having to battle each other for what they call the “small potatoes”—the $30 to $50 fees Taylor pays per car towed to his dozen or so subcontractors, who do the lion’s share of towing under the Oakland city contract.
A&B, meanwhile, pulls in the real moneymaking revenues—from storage fees, lien sales and dismantling—while handling a relatively small share of the towing. A&B only has three tow trucks and tows just 10 to 15 percent of all the vehicles requested by the city each year.
“Bill is like a tobacco landowner—he’s got sharecroppers and the sharecroppers do all the work and he keeps the profits,” said Robin “Bob” Berry of Berry Bros. Towing, a longtime North Oakland business, and up until earlier this year a subcontractor for A&B. Berry said he was fired by Taylor; Taylor maintains Berry quit.
“As far as I know, there’s nobody in the Bay Area—maybe the whole state—who has as much personal wealth as Bill Taylor in the towing business, and he’s not really even a tower,” Berry added.Not registeredTechnically, the city of Oakland’s towing contract is with a loosely knit consortium known as the Oakland Tow Car Association, formed by Taylor in June 1970 and originally made up of five local towing companies.
But in practice, the consortium exists in name only. Unlike A&B and the other individual contractors involved, the association itself is not a legal entity—it’s not registered with the city, the county or the state.
Taylor, who says many of his business transactions are “handshake deals,” has long been recognized as the head of the consortium, and A&B has long been regarded as the city’s towing contractor.
City Attorney John Russo said having the city involved in a long-term major contract with an entity not legally registered anywhere does not violate any law he is aware of. But, he added “that it’s something we should look into.”
City Auditor Smith was more blunt, saying “the city ought not be in a contract with an entity with no business license.”
Over the years, all the other towing companies in the consortium, except one, folded or were bought out by Taylor. Left standing, besides A&B, is Jenkins Bros. Towing, which has been little more than a glorified subcontractor throughout most of the life of the contract. Jenkins Bros. collects the city’s standard tow fee of $79.70 per vehicle, and like the subcontractors, does not share in any of A&B’s other proceeds.Campaign war chestsAccording to a review of campaign finance statements over the last decade, Taylor and his businesses have shared a bit of his riches with the war chests of Oakland politicians.
From May 1991 to May 2001, Taylor ranked among the top donors in Oakland, giving money to every elected City Council member, as well as former Mayor Elihu Harris and current Mayor Jerry Brown. Taylor, his family members, his employees and his companies—including Pick-n-Pull—donated at least $37,791.
Although not a lofty sum, it was comparatively significant considering Oakland’s campaign contribution limit of $500 per candidate per year. Taylor often donated the maximum. He also contributed at least$17,075 to Perata in the past five years, including $4,000 to the Three Rs—Perata’s and Brown’s controversial soft-money political action committee not bound by the $500 limit.
The biggest recipient of Taylor’s campaign largess among council members was Nate Miley, now a member of the Alameda County Board of Supervisors. Throughout the 1990s, Miley represented the Eastmont-Seminary district of East Oakland.
“He’s a solid person ... he runs a good operation and clearly he was a supporter of mine as a council member,” Miley said of Taylor. “He’s a real savvy businessperson and he has built up a good relationship with people in the city.”
Miley said it was never his intention to support Taylor’s monopoly, but he added that it was also never his intention “to discontinue a contract with a business that was doing a very good job.”’Free-for-all’Up until a year and a half ago, however, the city barely kept an eye on Taylor’s business practices. From 1981 to 1999, the city’s Purchasing Department was in charge of administering the contract. But Purchasing Director Jimmie Jackson said his department never inspected A&B and primarily was a storehouse for information. Jackson said before 1981, “it was a free-for-all” as to what department kept tabs on towing in Oakland.
During the last three to four decades, Taylor has forged a good relationship with the Oakland Police Department, which makes nearly all of the towing requests and orders for the city each year.
In an interview, George Hart, who was Oakland’s police chief from 1973 to 1993, spoke highly of Taylor, saying he has known him at least since the 1960s. He called Taylor a great guy who has benefited the city and brought order to the once chaotic towing industry in Oakland.
Taylor also has benefited the Police Department. From July 1990 to March 2000, Taylor provided—at no cost -- 12,000 square feet of office space for the department’s Beat Health Unit at the Pick-n-Pull site at San Leandro and 85th Avenue.
“The city needed it, they asked me for some room and I gave it to them for free,” Taylor said of the arrangement, adding there was never any deal or favorable treatment he expected from the department in exchange for the space.
Along with helping to fight drug dealing and working to shut down crack houses, the Beat Health Unit assists in the enforcement of the city’s anti-blight ordinances, which includes towing abandoned cars to A&B.
Beat Health commander Sgt. Bob Crawford said he “always had concerns” about the appearance of conflict of interest between Beat Health and the Police Department and Taylor.
Last year, new Police Chief Richard Word moved Beat Health to the main police administration building in downtown after the department’s vice squad relocated. Word said that while the primary reason for moving Beat Health was for police efficiency, he “was concerned about the perception of impropriety about being in that building.”
Since Word took over the department, the police traffic division also has stepped up oversight of the towing contract. The department now conducts more frequent inspections of A&B’s tow yard, oversees customer complaints and makes sure all of Taylor’s subcontractors are fully licensed and have had criminal background checks.
The department also plans to keep better track of when towing outfits show up late, because it costs the city in lost time when police officers have to wait around for tow trucks to arrive.
Taylor, meanwhile, said he plans to keep his hands in the local towing business, and continue to show up to his tow yard six days a week.
When asked to respond to those who say he has a good deal going in Oakland, he said with a grin, “Yep, I’ve got a very good set-up—I’ve also worked really hard.”