Unregulated surge of ‘ridesharing’ wreaking havoc on NYC medallion values
by Mike Beggs
Uber, Lyft, and the like have clearly taken a huge bite out of the Big Apple’s famed taxi fleet.
A report from January of this year estimated that Uber and Lyft now outnumber New York’s Yellow cabs by four to one. And a July 15 article in the Associated Press reports that these ridesharing companies have been so disruptive to New York that they have caused many taxi operators and now money lenders -- to go under.
AP reported that three New York credit unions, specializing in lending money against the value of the taxi medallion, have recently been placed into conservatorship, due to the nose-diving value of NYC medallions.
Credit union analyst Keith Leggett likened it to the “subprime loan crisis”, with some borrowers now, “under water”.
While three years back medallions were selling for around $1.3 million, now they are reported to be worth less than half of that, with some medallions owners owing more on their loans than the medallion’s market value (after using their medallion to finance home purchases, their children’s education, trips, etc.).
Making matters even worse, critics told AP that the authorities are now “playing hardball” with struggling medallion owners, demanding that they pay off the balance of their loans, or face foreclosure.
While operators across the GTA have taken a heavy hit at the hands of ridesharing regulations, Mississauga plate owner Peter Pellier suggests no taxi industry has suffered as much economic loss as that in New York City (the largest taxi industry in the U.S. with 13,000 medallions).
“For those who paid well over $1 million for the privilege of owning a medallion, their loss is staggering,” he wrote in a recent dispatch. “As for the market recovering any time soon, or for that matter at all, the probability is low, indeed.”
And he argues that if any city has a fundamental responsibility to protect the financial interests of the cab industry, it’s New York.
“After all, the auctioning of medallions has enriched the city’s coffers handsomely over the years,” he adds. “(But) from all accounts, Uber has been allowed to operate at will in the continent’s biggest taxi market.”
“Yet another example of gross negligence on the part of governments.”
All this suffering recently inspired Councillor Ydanis Rodriguez to call for the City to “level the playing field”. He said he will introduce a bill to require half of Uber and other black cars to be wheelchair accessible, just like Yellow cabs.
The City Council Transportation Chair, Rodriguez also planned to set up a “blue ribbon mission” to investigate the crashing value of medallions, and what stands in the way of a recovery.
Medallion owners and the disabled community say the City has failed to act to defend the traditional taxi industry.
They also want Uber and the other ridesharing companies to conduct environmental impact studies when they put large numbers of new vehicles on the road Ð something NYC has always been required to do before selling new medallions.
“When tens of thousands of new for-hire vehicles hit the streets causing traffic in Midtown Manhattan, we see no measure of their impact on our environment,” Rodriguez told Crain’s New York Business.
And, while Uber has launched a new program to fund wheelchair accessible cars, it currently has only about 200 on the street -- and advocates say that is not nearly enough.
In the ongoing war against ridesharing, the New York taxi industry previously filed an unsuccessful legal action against the City and its Taxi and Limousine Commission in November of 2015, claiming that companies like Uber and Lyft were destroying their businesses and livelihoods.
The suit, filed in Manhattan federal court, accused the defendants of violating Yellow taxi drivers’ exclusive right to pick up passengers on the street, by allowing Uber drives to operate in the same area.
“With companies like Uber operating in the marketplace free of regulatory burdens, licensed taxi drivers have left the taxi industry in droves, choosing instead to drive for Uber,” the complaint stated.
It also alleged that the City of New York misled those in the taxi industry about the value of their medallions, that there is no reason to regulate medallion values, and that doing so violates the Equal Protection clause of the Fourteenth Amendment.
Fastforward to June 29, 2017, when ridesharing became legal statewide under the new New York State Budget, the legislation driven by Governor Andrew Cuomo. This news elicited a mix of excitement, and fear in upstate New York cities like Rochester, Albany, Buffalo, and Syracuse.
Supporters claimed ridesharing is a way of cutting down on the number of drunk driving accidents and fatalities. And some Buffalo residents expressed relief, after ranking as the largest U.S. city without Uber.
Ridesharing drivers must now carry $1.25 million in liability insurance on their cars, and will be subjected to a rigorous screening process (that includes criminal background checks, but stops short of the fingerprinting required of cab drivers); and display the ridesharing company logo on the passenger side of the front window.
Ridesharing companies must submit an application to the Department of Motor Vehicles with a $100,000 application fee; pay an annual renewal fee of $60,000; provide workers’ compensation for drivers, and put ant-discrimination policies in place.
This development came after two years of heavy lobbying by Uber, Lyft and Via.
“Extending ridesharing across New York is a matter of fairness that brings new transportation options and Ð with it Ð new economic opportunity, and innovation,” Cuomo said in a June 6 statement.
And while consumers have heralded the affordability and convenience of the Uber app, critics point to its devastating effects on taxi driver revenues and plate values, and to Uber’s history of flouting municipal regulations, and racking up fines and criminal charges in the 450-plus cities it operates in.
“I think Andrew Cuomo and the Mayor of Buffalo (Byron Brown), what they’re doing isn’t right,” Queen City Taxi owner Alfonso Falsione told The Buffalo News. “A lot of people are going to lose their jobs. It’s good for the consumer, but our drivers are screwed.”
Uber spokesperson Alex Anfang told The News, “We are focused on the future. We’ve had some missteps.”
She stressed that the new ridesharing laws hold Uber to tougher standards.