In order to own a cab in New York, you need a medallion – a metal shield that is literally attached to the vehicle’s hood. There are a fixed number of these medallions issued by The New York City Taxi and Limousine Commission (TLC).
Owning a Taxi Medallion used to be the dream for taxi drivers. It made you an entrepreneur and it was a solid financial investment.
Until recently, medallions were a great achievement and a good thing to have. In 2013, medallions were going for $1 million.
But owners of these prized medallions are now filing a lawsuit against New York City regulators, claiming that their business has been destroyed by their decision to allow companies such as Uber to compete using “E-hail” services.
The story of Harbir Batth is becoming a common one among taxi drivers. Batth is from India and has been driving a taxi for more than 20 years. He built his life around driving a taxi.
Three years ago, Batth was able to finally purchase a medallion. At the time, he thought it was something that would eventually pay for his retirement. But now, buying that medallion is one of his biggest regrets and his dream of owning a medallion has turned into a nightmare.
That is because historically, only taxis with medallions were permitted to pick up passengers in response to a street hail. But nowadays, companies without medallions, like Uber and Lyft, are able to compete for their business.
Batth says his income has been cut almost in half since the emergence of Uber in the New York City area. He would like to sell his medallion, but now buyers are so scarce, there is a waiting list to sell. This means he will continue to make payments on his medallion, while earning less because of the unfair competition.
According to the lawsuit, the number of Uber rides in the core of Manhattan between April and June 2015 increased by 3.82 million. On the flip side, the number of rides picked up by a medallion cab fell by 3.83 million. This, in turn, has driven down the value of the medallion.
The sudden drop in medallion values has created a financial hardship for taxi drivers. In order to purchase the medallions, people would take out specialized loans. But these loans were only good for a few years and they would need to continue to keep taking out new loans when time expired. This was easy to do when the value of the medallion remained steady or went up.
One of the suit plaintiffs, White & Blue Group, manages fleets of licensed taxicabs by leasing out the medallions. They have seen its monthly leasing income drop by 50% in the past year. Since many of the taxicab drivers have left the industry to drive for Uber instead, this has left a graveyard of empty taxicabs in New York City.
Another plaintiff in the suit is the large number of credit unions that give loans based on medallions. One credit union has 628 medallion loans that totals close to $138 million.
YellowCabNYCTaxi.com Staff Writer