NY Passes Law Allowing New Category of Taxi

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(Photo: Karly Domb Sadof)

(Kathleen Horan, WNYC -- New York) The New York 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.

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 New York City's Taxi and Limousine Commission.

The plan to offer expanded taxi options is a big win for Mayor Michael Bloomberg after six months of hard fought negotiations. The political wrangling over the bill began soon after 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 anyway — 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.