🚖 DO TO TAXIS: DROP DEAD
David Do's TLC has essentially crashed taxi medallion prices overnight by reinstituting the EV exemption to FHV License Pause (a/k/a TLC Plate Cap). Yellow cab industry faces existential crisis
Before we begin, as we stated in our last article, we do not have a mandate to make and effectuate policy. We can analyze and critique policymakers though. That’s what our audience demands of us and that’s why they subscribe. We also have a genuine passion for it.
All that being said, our content will also reflect policy reality, whatever it may be, and our team, in conjunction with our commercial partners, is busy working on A LOT of content filled with practical guidance - from helping drivers & fleets purchase electric vehicles (EVs) to understanding comprehensive & collision coverage insurance options for TLC-plated Teslas to clarifying which EVs qualify for UberBlack to explaining how to purchase a TLC-plated vehicle in an LLC, etc. We have a lot of content coming up!
To be frank, a huge business opportunity has opened up for us on multiple levels that we will embrace.
However, something is not sitting right with us. The iconic NYC TAXI is a critical part of this City’s identity. More than a century old, over double the age of the TLC itself! We will not remain silent while this industry is crushed via misinformed policy.
The below, if it’s not clear, is an opinion piece.
As our readers know, we’ve been closely following and tracking developments in the NYC taxi medallion market. A market that was finally showing some signs of recovery after years in distress, before, during and after the pandemic. We don’t have to retell our audience the entire story, as many know it, we reported on it and most importantly, so many of our readers lived it.
Notably, current TLC Chair David Do was not even a resident of this City until 2022 and therefore we fear he does not actually appreciate what exactly went down, what happened. The suicides, the broken families, the stress, the lost money, the hunger strike, the near impossible debt restructuring, the fight to the very end to keep the iconic NYC yellow taxi alive.
We frame it like this to show a bit of sympathy for Do, who was not living in New York at the time, as this is the ONLY excuse Do and his Commission have to explain away their catastrophic, not to mention surprise, decision to reinstitute the EV exemption to the FHV License Pause (a/k/a TLC Plate Cap) last week.
In fact, according to a recent profile (“All Hail David Do” 👀) published in his alma mater’s newspaper, we find out more about Do’s qualifications before being selected to lead the most prestigious for-hire transportation regulator in the world.
“While he was a graduate student, Do ran for D.C.’s Board of Education. He knocked on doors and campaigned at community events, repeatedly bumping into then-Councilwoman Muriel Bowser, who became mayor in 2015. He lost his race, but she tapped him to lead the Office of Asian and Pacific Islander Affairs during his last semester, and three years later, to oversee the Department of For-Hire Vehicles (DFHV), his first foray into the world of transportation regulation.”
- University of Maryland, Terp Magazine
Why is this person leading New York City’s Taxi & Limousine Commission? Someone who just started regulating for-hire vehicles, in Washington D.C., in 2018! Someone who “NEVER KNEW I would have to pee so much when I drive”. Do likes publicity and the spotlight, this has become obvious to us. He does 10 to 20 for-hire trips, including some with his favorite company Revel, and thinks he is a real NYC TLC driver, a real street toughened New Yorker. He wants to make sure the world knows about it. 🐎💩.
Enough is enough. This isn’t how New York works, or at least should work.
We do not have time for NYC TLC industry tourists that require on the job training. Mayor Adams, Deputy Mayor of Operations Joshi, a former TLC Chair herself, and the City Council must be held accountable for this choice (i.e., they can still take action by asking for Do’s resignation). Things have gotten very, very serious now. The taxi medallion industry is on the verge of collapsing again.
Medallion Prices Have Quietly Crashed
Getting to the numbers, in our view, the NYC taxi medallion, a famously illiquid market, is likely now worth 40% to 50% of what is was only a few weeks ago, based on our analysis and very recent discussions with several taxi medallion brokers and owners.
We believe, if current policy is held (i.e., EV exemption to TLC Plate Cap) for more than a few months, taxi medallions will be worth between $70,000 to $90,000 and will have a downward valuation trend. Valuation levels last seen during the depths of the pandemic. Many medallion loans, including MRP restructured loans, are now underwater.
Here’s the simple financial logic.
TLC-licensed drivers have three general options (right now) to claim their own for-hire vehicle license:
Buy a taxi medallion for $130,000 cash or $175,000 financed, then purchase a ~$40,000 to ~$70,000 vehicle to attach to medallion = ~$170,000 to $250,000 investment.
Buy a ~$60,000 to $70,000+ wheelchair accessible vehicle (WAV) and attach a TLC Plate to it = ~$60,000 to $70,000 investment BUT requires one to do accessibility work in often rough riding vans that drivers don’t prefer. This is why this option being available doesn’t impact taxi medallion valuations as much as an EV exemption. This is also why drivers would rather lease a TLC-plated vehicle or yellow cab than get their own TLC Plate via purchasing a WAV (i.e., this exemption has ALWAYS existed). There was always a way for drivers to escape “predatory” leasing companies (more on that in another article).
Buy a ~$40,000 to $60,000 EV and attach a TLC Plate to it = ~$40,000 to $60,000 investment. This option offers access to the same earnings potential as a yellow cab, so why would a driver (or anyone) buy a medallion, right now?
Given these choices, it’s obvious almost every driver will choose (3). In addition, opening option (3) up to corporations like Revel and Hertz, who can add thousands of vehicles in short order, is also another dynamic to consider. Accessibility advocates are justifiably angry, more drivers and fleets will choose an EV over WAV, like-for-like.
Do’s Commission has likely cost the taxi medallion industry, drivers, fleets, investors and others, hundreds of millions of dollars overnight and also spooked investors away by demonstrating how uncertain and unpredictable the Taxi & Limousine Commission he leads is. Marblegate’s stock market listing, we believe, is at serious risk of failing now. People in the taxi medallion industry are furious.
Chair Do is not qualified to lead the NYC Taxi & Limousine Commission. When policy this disastrous is made, a cold, blunt New York truth must be spoken. If he’s offended by the criticism, too bad, the medicine is going to be very strong now, it needs to be. His Commission is costing a lot of people, a lot of money. His policy continues to hamper the yellow cab industry’s ability to recover.
We believe you’ll see taxi medallion driver advocacy groups, notably the powerful and influential New York Taxi Workers Alliance (NYTWA), make major noise. This is existential now for the yellow cab industry. We believe to make sure no TLC Chair or Commission acts this erratically and irrationally again, yellow cab advocates must demand not only the EV exemption to the TLC Plate Cap be removed, but for TLC Chair Do’s resignation, nothing less.
We have a genuine fear that suicide stories of taxi medallion drivers might return, this is a very serious matter. Again, Chair Do was not even resident in this City or really in the transportation industry, when all of this happened. We don’t think he gets it and no one has the time to teach him about it right now.
As we, with our friends Abe and Carolyn at NYC Taxi News, asked him directly and as we’ve stated so many times, there are over 4,500 taxi medallions in storage!!! Why are we issuing more TLC Plates?!! Electrify those 4,500 taxi medallions. His answers continue to make no sense.
Do’s own team, Ryan Wanttaja, First Deputy Commissioner, and Edward Wilton, CFO/Deputy Commissioner of Finance for the TLC Finance Division, literally shared details, in front of City Council a few weeks ago, about the continued struggle of the taxi medallion industry and yellow cab drivers. No mention of the EV exemption returning 🤔.
Here are the technical details from the TLC itself:
$455 million of debt relief has been granted to smaller taxi medallion owners
$58 million from MRP, $387 million from MRP+
1,879 owners, representing 2,258 medallions have participated in MRP programs (i.e., medallion owners with 6 medallions or less were allowed to participate)
2,001 medallions owners have applied and MRP+ process currently takes about 12 weeks to complete from start to finish
16% of taxi medallion loans are more than 90 days overdue
21% are generally delinquent (loan > 30 days past due), which represents ~400 medallions (i.e., implies 2,000 active medallion-related loan benchmark?)
~800 taxi medallion loans still need to be restructured according to NYTWA, but their lenders have not signed up
With these facts, the TLC thinks it’s a good idea to release more TLC Plates? The madness has to end, before it’s too late.
DO MUST GO.
We also wanted to mention a few other things.
Office of Financial Stability
In 2020, NYC Council approved (Vote of 49-0) the creation of the TLC Office of Financial Stability. The Office, which became active in November 2020, was to oversee the financial stability of medallions.
Each year, starting in November 2021, the new TLC Office is required to issue a report including details about its activities, an assessment of the financial stability of the NYC taxi medallion industry, and any recommendations regarding the financial stability of the NYC taxicab industry.
We (1) do not see any published reports by this Office on TLC’s site (please correct us if we’re wrong) and (2) we also ran across a job listing on LinkedIn looking for a Program Coordinator for this Office (i.e., Office not appropriately staffed).
City Loan Guarantee On Medallion Debt
As part of the Medallion Relief Program (MRP+), the City agreed to grant a City Loan Guarantee on probably somewhere between $300 million to $500 million of restructured medallion debt. If this Commission blew up Marblegate’s ability to list its portfolio, you might hear something about this and it may cost the City some serious money.
As always, let us know your thoughts in the comments section below or by emailing us at firstname.lastname@example.org.
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