Ken Garen, CPA, Co-Founder and President, UBCC

September 26, 2017

After London Bans Uber, New York Weighs Limits to Help Cabbies

Council may study ride-sharing impact on taxi medallion values

Cab owners say they’re in dire straits and need city’s rescue

By Henry Goldman September 25, 2017, 1:02 PM PDT

A week after London moved to revoke Uber Technologies Inc.’s operating license, the company and its electronic ride-hailing competitors are feeling the heat in New York as city officials consider moves to regulate and control the industry.

The City Council on Monday was considering a six-month study of Uber’s impact on the traditional yellow cab business, where the value of medallions -- licenses to operate taxis -- has dropped by 90 percent in the past four years. Medallion owners and some council members say the city shouldn’t have allowed companies like Uber and Lyft to operate in New York without applying the same fees and regulations.

The taxi owners are pushing for officials to rescue their industry. They are emboldened by London’s move to ban Uber’s 40,000 drivers amid company failures to do adequate driver background checks.

“If the competition continues to insist on playing by a different set of rules, then New York should simply follow London and tell Uber to hit the road,” said Richard Lipsky, a spokesman for the Taxi Medallion Owners and Drivers Association, an organization that he says includes more than 6,000 immigrants.

Uber Campaign

The last attempt at regulating the mobile ride-hailing companies ended badly for Mayor Bill de Blasio, who failed to limit the vehicles’ increasing presence on Manhattan’s clogged streets. The mayor backed down after Uber ran a multi-million-dollar television and social-media ad campaign that accused him of taking jobs from cab-driving immigrants, whom the mayor has considered part of his political base.

Taxi license owners also count themselves as losers and victims of Uber’s rise. Medallion Financial Corp., a public company specializing in taxi-medallion financing, has seen its stock drop to $2.13 Monday from a high of $17.74 in November 2013. Last month, MGPE Inc., a hedge fund, bought 46 medallions out of foreclosure for about $200,000 each including fees, according to Medallion Financial President Andrew Murstein. That’s down from an all-time high of about $1.3 million four years ago, Murstein said.

Yellow cab operators are subject to the city’s Taxi and Limousine Commission regulations governing driver qualifications and cab operations. That includes prohibitions on phone use, which don’t apply to electronic-hail drivers. While yellow cabs are restricted to about 13,600 in New York City, there’s no limit on how many Uber and Lyft cars may cruise city streets.

Crowded Streets

Before the advent of the app-based ride-sharing industry, there were about 38,000 vehicles for hire on the streets. Now there are about 110,000 cars competing for riders, and city officials say they expect 35,000 more within a year.

“There are simply more vehicles out there chasing the same number of passengers, lowering the income for black, yellow, green and livery drivers,” said Carolyn Protz, whose family has owned a medallion for more than 50 years. “As a result, individual medallion owners and their families, which amount to 30,000 people, have been plucked out of the middle class and plunked down into the depths of poverty.”

Another problem for the city, she said, was a 65 percent increase in accidents since July 2014 involving vehicles-for-hire, particularly among liveries other than yellow cabs.

“How can we account for these increases? Many new, less experienced drivers using multiple phones and GPS resulting in distracted driving,” she told council members during a hearing Monday. “Yellow cab drivers, in contrast, are not even allowed to have a phone conversation using an earpiece.”

Lucius Riccio, an urban affairs faculty member at Columbia University and city transportation commissioner for former Mayor David Dinkins, told the council committee that the sinking market in taxi operating medallions is symptomatic of “several significant policy mistakes” stemming from the failure to regulate electronic-ride hailing companies.

The advent of medallions 80 years ago created order on what had been a “Wild West of vehicles and drivers,” Riccio said. The failure to restrict the growth of black-car limousines and electronic-hail cars has reverted to “the out-of-control situation we now face.”

https://www.bloomberg.com/news/articles/2017-09-25/after-london-bans-uber-new-york-weighs-limits-to-help-cabbies