NYC TLC Extends Plate Cap As Senator Schumer Wants More For The Medallion Industry

"TLC Plate Cap", including wheelchair accessible vehicle (WAV) exemption, will continue given current supply and demand dynamics. Medallion prices will be influenced by biannual determination

Sep 16, 2021

AutoMarketplace.com NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace.com on YouTube ▶️

“The existing FHV fleet of 96,000 vehicles exceeds current passenger demand…New vehicle licenses would only serve to jeopardize the progress the Industry is beginning to make after nearly two devastating years as a result of the global health pandemic.” - NYC TLC

The New York City Taxi & Limousine Commission (TLC) announced last Friday that the FHV License Pause, commonly referred to as the ‘TLC Plate Cap’ will continue until at least the next biannual review in February. As a reminder, the TLC assessment on whether to allow the addition of FHV Licenses to the TLC fleet factors in the following.

Traffic Congestion
Vehicle Supply
Passenger Demand
Driver Earnings
Attrition Rates (i.e., turnover rates)
Outer-Borough Service
Electrification of the TLC Fleet (new)

The one page TLC press release below quickly summarizes how the NYC for-hire transport regulator made the decision. One stat that particular stood out to me was that 30,000 existing TLC-plated cars didn’t provide any passenger service in July!

“Over 30,000 existing For-Hire Vehicles did not provide passenger service in July 2021, even though they are licensed to do so, representing a large pool of vehicles that could return to the road and provide service” - NYC TLC

One Driver, One Plate

With the recent decision to remove the electric vehicle (EV) exemption to the ‘TLC Plate Cap’, the only way a NYC TLC driver, who doesn’t currently control their FHV license, can add a TLC-plated vehicle is via a wheelchair accessible car (WAV). As I’ve written previously, this has caused concern among some TLC drivers and driver advocacy groups, such as the Independent Drivers Guild (IDG). In fact, the IDG has an active campaign and petition related to the issue (‘Drivers Deserve the Right to Own Their Own Vehicles’).

The IDG believes that the ‘TLC Plate Cap’ has left thousands of drivers at the mercy of exploitative fleet companies, some that control thousands of for-hire vehicle licenses. I believe the IDG has some valid points (i.e., I previously argued that lease caps should considered). The IDG does though fundamentally mischaracterize a few dynamics and it may impact their ability to effectively argue their case.

The Cost of a TLC Rental: “$20,000 per year” includes the cost of the car, insurance, maintenance, etc., not just the car). While it can be cheaper (i.e., better rates for lower risk drivers), I would say it’s far from predatory given insurance costs and risks. I do agree though the rates need to be tracked.
Number of TLC Drivers Who Rent: Through an analysis of NYC Open Data, we estimated over 70% of current drivers own and operate their own vehicle. 30% of ~100,000 vehicles is still a big number, but not as dominant as implied.

All that being said the IDG is, at a high level, making a good point. A few fleet companies own thousands of licenses/cars and therefore over time could accrue a Medallion-like power on drivers (i.e., exploitative leasing rates). In addition, I believe there should be a pathway for full-time TLC drivers, who’ve clearly shown a commitment to the industry, to control their own FHV license in some way. That being said, the IDG does miss out on one very fundamental dynamic that makes ‘One Driver, One Plate’ tricky - the current state of the Yellow Cab Medallion market.

“…there should be a pathway for full-time TLC drivers, who’ve clearly shown a commitment to the industry, to control their own FHV license. That being said, the IDG does miss out on one very fundamental dynamic that makes ‘One Driver, One Plate’ tricky - the current state of the Yellow Cab Medallion market.” - AutoMarketplace

Yellow Cab Medallion Market & Recent Comments by Senator Schumer

In a recent piece, published around the time of the EV exemption being removed, I wrote the following:

“If a ‘One Driver, One Plate’ policy is allowed, Medallion values would collapse below $50,000 in my opinion as their only value at that point would relate to “hand hailing” rights.” - AutoMarketplace

The struggles of the iconic NYC Yellow Cab industry since the launch of Uber and Lyft has been well publicized by not only local media, but national (and global) news outlets. Medallion values have fallen over 80% from once euphoric valuations of over $1 million, a price point which set the stage for the current debt crisis many medallion owners face as they either:

Aggressively debt financed a new medallion purchase
Took “equity” out in a refinancing at higher valuations

In fact, the current distress in the medallion market has peaked the interest of sophisticated value (“distress”) investor, Marblegate, which has taken a huge bet on the industry.

Source: Quora, Wall Street Journal Chart from Nov 2013 article

A recent Crain’s article (behind a pay wall) reports that New York Senator Chuck Schumer (who’s father-in-law was a cab driver for 40 years) has demanded that the City find an alternative to the current $65 million medallion loan-restructuring program. Crain’s reports that Schumer met with taxi drivers on Sunday in Murray Hill and also delivered a “passionate speech” to medallion owners last week during a conference call.

“I worked very hard in Washington, against a lot of opposition, to deliver $6 billion in direct aid to New York City…One of the things I mentioned was I believed this money should go to help the taxi crisis.” - NY Senator Chuck Schumer

According to the article, Schumer is working with the New York Taxi Workers Alliance (NYTWA) to push the City to renegotiate the terms of the debt restructuring. One key ask is that the medallion valuation on which the deal is built upon is pushed higher to $175,000 vs. the current $125,000, in addition to adding a City guarantee. The example Crain’s gives is that if a medallion owner defaults on $200,000 of outstanding debt and the lender resells it for $190,000, the City would be on the hook for the $10,000.

According to the latest TLC data, 133 medallions sold for an average of $117,252 in August with at least 20 sub-$50,000 foreclosure sales.

“It gives the financial security and stability for these [medallion] loans that incentivize the lenders to reduce them…And it takes the risk off the thousands of owner-drivers who face liens on their homes when they default” - Bhairavi Desai, NY Taxi Workers Alliance

Final Thoughts

All things considered, it appears obvious to me that the current medallion crisis will need to be resolved (i.e., measured by medallion valuation, active medallions on road, vehicle supply & trip demand recovering) before any broad action is taken on the ‘TLC Plate Cap’. To allow the addition of more plates at this point in time seems politically impossible and for very valid reasons as outlined above. That being said I do think proponents of “One Driver, One Plate” should be heard and perhaps other protective measures can be taken to ensure NYC for-hire drivers aren’t at the mercy of predatory leasing rates in the future.

What are your thoughts? Is is too late to save the Medallion industry? Should there be a ‘One Driver, One Plate’ policy?