Passage of Taxi Plan Legalizes Street Hails of Livery Cars

Saturday, June 25, 2011

Taxi, cab, taxi cab (Karly Domb Sadof/WNYC)

The State legislature voted Friday to approve the sale of permits allowing a new class of livery vehicle to enter the street hail businesses, something that up until now has been widely practiced but officially off limits. Up to 30,000 permits will be available. The legislation passed the Senate by a vote of 40-21.

Yellow cabs move more than 600,000 people each day in New York — and 97 percent of all yellow street hail taxi pickups are in Manhattan or at area airports, according to data from the Taxi and Limousine Commission.

The plan to offer expanded taxi options has been one of the legislative focal points of the Bloomberg administration and the passage is a big win after six months of hard fought negotiations.

The political wrangling over the bill began soon after Mayor Michael Bloomberg announced his intention to offer more legal, safe taxi options to the 80 percent of the city’s population who live outside of Manhattan.

He may not have guessed the fight the city would have on its hands -- the plan changed a number of times as the stakeholders in the taxi industry waged a battle for a piece of the very lucrative pie.

Livery bases who relied on pre-arranged calls opposed the plan. But bases and drivers — who had been flouting the law by accepting illegal street hails — mostly supported the idea.

One of the most powerful and vocal opponents were yellow taxi fleet owners who operate garages and rent their medallions to drivers. They feared losing their exclusive right to street hails would devalue their investments.

The medallion system has been in place since 1937. The city passed a law known as the Haas Act at a time when it had an excess number of cabs and sold the licenses for $10. At recent auctions, medallions have fetched between $600,000 and just under a million dollars apiece. 

It's not only the fleets who wanted to keep things the same; the small brokers, banks and other lenders who finance the sale of the pricey medallions do, too.

There are currently about $5 billion in outstanding loans on medallions, according to Richard Kay of the League of Mutual Taxi Owners. LOMTO is a credit union with about $100 million in assets. There are currently only about 3,000 owner-drivers out of more than 49,000 licensed drivers operating yellow medallion taxis.

Kay said lenders may be reluctant to put up money in the next medallion sale because of the new changes.

And he's confounded why the legislation passed because, of the dozen senators he discussed the legislation with, "every one said they don't like the plan but they have to vote for it anyways because someone is twisting their arm."

The Mayor, a major political donor in Albany, has been applying constant political pressure to get the measure passed.

But it's still unclear who will gain the most from new taxi rules.

"This is a battle of interest groups and these are powerful groups that have built up significant interest over decades," said professor Edward Rogoff, an economist who studies the taxi industry.

"In most parts of the outer boroughs, people can already get street hails, albeit illegally," he said. "The city will benefit because it will create more licensing fees and through enforcements."

But Mayor Bloomberg says the passage of the legislation offers "an historic turning point for the riding public and solves a problem that has proven intractable for decades."

The sale of the new livery permits is scheduled to begin early next year. The livery cars will have meters, partitions, credit card readers and be required to collect the 50 cent MTA surcharge that taxis currently do. They'll also have distinctive markings or paint that sets them apart from both yellow cabs and other livery vehicles.

Opponents of the legislation hope that the delayed sale of new permits will give them time to pursuade Governor Andrew Cuomo to veto the bill or, if it is signed, possibly block the plan in court.

In addition, the auction of an additional 1,500 yellow taxi medallions is scheduled for next July. The sale is expected to bring in over a billion dollars in revenue to the city.


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Comments [4]

Ray C Bronx from Bronx

What happens when a Livery Taxi goes a few blocks in the wrong direction with that meter running? It's much harder to maneuver around in the outer boro's than it is in Manhattan which is based on a simple grid that works well with a meter. The negotiated flat fare's that Liveries work on now is better because the fare is agreed upon before the ride starts and many times, paid up front and gives the driver flexibility to get from point A to B that’s the fastest way he or she the driver knows. I think by having a meter in the outer boro's will only lead to many complaints and refusals to pay as passengers will question the route the driver took more so than in midtown Manhattan which is easier to get around. Liveries will have to justify the route as the cheapest and fastest while passengers will be accusing the driver of going the long way to run up the fare on the meter, a problem that doesn’t exist currently. Is the Police Ready in the outer boros to intervene as this, without a doubt, is going to be a big issue? Most likely, Liveries will still pre negotiate flat fares and ignore using the meter to avoid the Taxes and hassles continuing the work illegally proving that this bill doesn't solve the problem as this will now be against the law (flat fares within the outer boro zone will be against the law in cars equipped with a meter for street hails). The fair way to handle this would be to set up a Medallion system in the outer boro's and let the free capitalist market system dictate the value and interest working under these conditions. Auction off 30 Thousand Outer Boro Medallions if this is the number determined and needed. What about the extra class room training it takes to get a Hack License to drive a Yellow Taxi. It’s only fair that all “For Hire Livery drivers” now be force to go through that same process or are we saying, “People who live in the Outer Boro’s get a less trained driver than the people who live in Manhattan served by a Yellow Taxi”? This is not fair.

Jun. 25 2011 02:16 PM

In typical bullying fashion, the Mayor bull-dozed these state senators and assemblymen into voting for a plan that has not been proven necessary or economically viable. A task force or experimental plan should have been done before the bill was proposed, not the other way around. And enforcement is the key issue. Only in the last couple of months has there been any effort at enforcing the law against illegal pickups in Manhattan or the airports. But, now that the bill has passed, enforcement will revert to the non-existent state that was in effect for the last thirty years.

Jun. 25 2011 01:16 PM
potobac from Soho

As someone who drove a cab in the '70s, a problem most people wouldn't think of is that one probably has almost no knowledge of the streets in the outer boroughs. I had the experience of having to ask the passenger how to get to the destination, and then not knowing how to get out of the neighborhood and back to the main streets.

Jun. 25 2011 10:08 AM
abaraham from 5 boros

i drove a yellow in the70s there is no money in the outer boros .car services do better there .car services do very good in manhhatan.before any bills are passed .let the bill passers drive a yellow and a livery in the outer boros for a week .then one week in the city .then see if they can handle it or pay bill from a-z i doudt it

Jun. 25 2011 09:20 AM

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