NYC Council Medallion Task Force Releases Report!
Matthew Daus was quoted in an article published on Friday by the AP News, entitled "Task force says ‘mission-driven’ investors must help cabbies.” Matt said the crisis of sinking medallion values is “primarily the result of Uber’s exponential growth after its 2012 market entry,” and added that the priority for any bailout should be “owner-drivers who bought medallions at the three auctions held in 2013 and 2014. The City benefited from those auction sales by more than $409 million, and should return or find the money somehow.”
On Friday, January 31, 2020, the New York City Council’s Medallion Task Force released its Report to address 2 central questions concerning the NYC taxi medallion market:
(1) how the current financial crisis among over-indebted medallion owners could be addressed, and
(2) how the medallion industry could remain viable in a changing market place.
The Task Force was created pursuant to Local Law 212 of 2018 to study and issue its Report. The Task Force is made up of 19 members, including Council Members Ydanis Rodriguez and Stephen Levin (who serve as the Co-Chairs), government officials, fleet owners, driver advocates, academics, and representatives from financial institutions.
The report is now publicly available (click here), and includes a history of the rise and fall of the medallion values due to disruption from app-based services, regulatory steps (or lack thereof) taken by the City and TLC in response to the crisis, followed by several recommendations to reform the industry as a whole. The 77-page report rightly devotes over half of its content to exploring solutions to reform medallion lending practices, to address the debt crisis, to expand/strengthen TLC enforcement, and to modernize taxi services.
The following are some highlights from the recommendations section:
- On medallion lending practice reform, the Task Force recommends verification of borrower’s ability to pay, banning confessions of judgment, prevention of risky debt structures, and stricter regulations on taxi brokers.
- Of special interest to many is the section on addressing the debt crisis. Specifically, the Report recommends the City to bring "mission-driven" investors together to purchase distressed medallion loans through a special-purpose fund with guarantees or insurance policy.
- The Task Force made it clear that taxpayers should not bear the burden of bailing out medallion owners.
- With regard to innovation, the Task Force suggests making taxis more competitive with app-based services by having a universal taxi app similar to Uber or Lyft.
- The Task Force also recommends the potential use of a dynamic pricing model in taxis.
As next steps, the Task Force recommends that the TLC continue to meet regularly with industry stakeholders and experts in the field to continue the discussion. This will be needed given that some of these recommendations will also require federal or state action. Our firm will continue to monitor and report any developments.
Please contact Matthew Daus at mdaus@windelsmarx.com with any questions or for more information.