🚕🌆 That's Good, Right? NYC FHV & Taxi Congestion Toll Outlook

MTA's Traffic Mobility Review Board (TMRB) looks to increase passenger congestion surcharge vs. making driver responsible for new congestion tolls. Yellow cab industry wanted complete exemption

• Under latest proposals, NYC for-hire vehicles (FHVs) and yellow cabs will NOT be exempt from congestion tolling, but effectively have the current PASSENGER PAID congestion surcharge increased

  • 4 new scenarios range from peak tolls of $1 to $2 per trip, with potential non-peak hour discounts

  • With pre-existing congestion surcharges of $2.50 and $2.75, passengers will often be paying more than $4 per trip in congestion fees 👀!

• If Uber, Lyft, base or taxi garage does not remit *new* congestion surcharge, then driver technically still has to remit payment in a similar manner to other E-ZPass tolls

  • Administrative, but not financial, burden might still fall on TLC-licensed driver and/or vehicle owner

• Base congestion toll could be ~$15, according to MTA leader Janno Lieber

  • Another way to view new MTA proposals is 3 to 5 for-hire trips would raise the equivalent of one private vehicle congestion toll

  • App-based FHVs and yellow cabs average between 6 to 12 daily trips involving Manhattan’s congestion zone, according to NYC DOT

• Government entities might be collecting more money than Uber & Lyft on many NYC trips, under new proposals

• Congestion tolling could be in place by April 2024

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The six-member Traffic Mobility Review Board (TMRB) held a public hearing yesterday and presented four new pricing proposals related to how final NYC congestion tolling might look. The new pricing proposals indicated that FHVs and yellow cabs would not be exempt, but rather a congestion surcharge, IN ADDITION to the one that currently exists, would be paid for by the passenger.

Below, is a screenshot of the proposals (“scenarios"“) from yesterday’s over one hour public meeting.

Source: MTA Hearing

NYC Taxi & FHV Specific (Congestion Tolling Proposals)

(Note: Scenarios below EXCLUDE existing congestion surcharge of $2.50 and $2.75 for NYC taxis and app-based FHVs, respectively)

Emoji Key

🚕 = NYC Taxi, Green Cab, traditional black car & livery sector

⚫🟣 = NYC Uber & Lyft (high-volume “app-based FHVs”)

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Scenario #1

• 🚕: $1.50

• 🚕: $0.75 (9pm to 6am)

• ⚫🟣: $2.00

• ⚫🟣: $1.00 (9pm to 6am)

Scenario #2

• 🚕: $1.00

• 🚕: $0.75 (8pm to 10pm, 5am to 6am)

• 🚕: $0.50 (10pm to 5am)

• ⚫🟣: $1.50

• ⚫🟣: $1.13 (8pm to 10pm, 5am to 6am)

• ⚫🟣: $0.75 (10pm to 5am)

Scenario #3

• 🚕: $1.00

• 🚕: $0.25 (10pm to 5am)

• ⚫🟣: $2.00

• ⚫🟣: $2.75 (trip within CBD)

• ⚫🟣: $0.50 (10pm to 5am)

• ⚫🟣: $0.69 (10pm to 5am, trip is within CBD)

Scenario #4

• 🚕: $1.50

• 🚕: $1.13 (8pm to 10pm, 5am to 6am)

• 🚕: $0.75 (10pm to 5am)

• ⚫🟣: $2.00

• ⚫🟣: $1.50 (8pm to 10pm, 5am to 6am)

• ⚫🟣: $1.00(10pm to 5am)

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As a quick reminder, since the Federal Highway Administration (FHWA) has now approved NYC’s congestion tolling, the TMRB is tasked with developing recommendations for toll rates, as well as any credits, discounts, or exemptions and then present the recommendations to the MTA Board for consideration before the program is implemented.

Therefore, the two key decision making bodies for NYC congestion pricing are:

• The 23 member MTA Board

• The 6 member Traffic Mobility Review Board (TMRB), which includes current and former MTA Board members

“The TMRB will take into consideration traffic patterns, traffic mitigation measures, operating costs, vehicle types, public impact, public safety, peak and off-peak rates and environmental impacts. Accompanying their recommendations, the TMRB will provide a report…Ultimately, the MTA Board will determine the final toll structure after the TMRB’s recommendations. The recommendations must ensure collection of annual net revenues and fees necessary to fund at least $15 billion for the MTA’s 2020 to 2024 capital program”

- MTA  

Hearing Highlights

To make it easier for our readers, we’ve condensed the over one hour meeting (click here to view the full hearing) into a 10 minute highlight reel just related to NYC for-hire vehicles and taxis. In our view, it’s important to hear the discussion directly without our commentary, so you may also judge it for yourself.

“[NYC yellow cabs] typically are making, on average, 12 trips a day that in some way touch the the CBD, while for FHVs…it’s about half that amount”

- Will Carry, Assistant Commissioner for Policy, NYC Department of Transportation

Based on the above quote, if a yellow cab 🚕 made 12 trips during congestion hours, the collective congestion surcharges, if Scenario #1 was implemented, could illustratively look like this:

• (Status Quo) $2.50 * 12 trips = $30 per day of congestion fees collected from passengers

• (Status Quo + New Congestion Tolling) ($2.50 * 12 trips) + ($1.50 * 12 trips) = $48 per day of congestion fees collected from passengers

Finally, we conclude the article with some brief thoughts.

Government “Take Rate”

Midjourney based on AutoMarketplace prompt

In the investment world, a “take rate” is a common financial metric used to measure the network effect and pricing power of a marketplace business. For example, Airbnb takes X% of a booking, or Amazon takes Y% of a third party sale completed on its website. The more powerful and valuable a service, the higher take rate a marketplace, or market maker, can demand.

Uber’s 20%+ take rate is often criticized, rightly so in some cases, by drivers and policymakers. However, with this new congestion pricing proposal, the government, at this point, might be making more money (as a % of the total passenger fare) than Uber & Lyft does from trips the companies originate!!! 🤔

This isn’t hyperbole, take a look a NYC yellow cab or Uber receipt, and then add the newly proposed, additional congestion tolling.

To be frank, and now is the time for absolute frankness, we have a class of policymakers and politicians who are not in the habit of balancing budgets, this dynamic cannot last forever and it should be a nonpartisan issue.

In fact, the MTA is an embarrassing City, state and national poster child of budget mismanagement, so of course it’s only appropriate that it’s this very organization that…needs more money 🤑. Having a best in class mass transit system and balancing the budget without raising taxes or surcharges, are not mutually exclusive goals. The MTA has a long, documented history of being financially irresponsible, so before they are granted more money, we perhaps should all pause and reflect.

It’s quite ironic that so many of our elected officials, their staffers, their lobbyists and their appointees criticize Uber and Lyft’s historically unsustainable cash burn, while they are doing the same thing with taxpayer money! This is simply, to us at least, an unacceptable political and budget dynamic that must change.

The formula looks something like this - need more money? Raise taxes, raise surcharges, demonize the business people who help build this City and attract talent to it and then look at cost cutting later. Our domestic state and city rivals continue to gain ground on New York. For example, Florida’s workforce ended the year larger than New York's for the first time ever! Many of our business & financial elite, plus consequential taxpayers, have departed to South Florida or Texas. The writing is clearly on the wall 🧱.

To say the driver does not pay for these congestion tolls while technically correct, is ignorant to the obvious fact that if trips are more expensive, perhaps less people will take taxis/FHVs…but perhaps that’s MTA’s goal in a way. MTA capital spending plans from a pre-pandemic era where work from home (WFH) was non-existent, must also obviously be revised downwards.

Furthermore, the City’s / TLC’s inability to help the taxi medallion industry recover quicker is concerning, especially given the City loan guarantee on restructured medallion debt (fyi, 4,000 medallions * $170,000 = $680 million). Once upon a time, the City had this amazing tool (taxi medallion auctions) that helped it raise billions for the budget.

Does the City have no interest in reclaiming this mechanism? In seeing the turnaround through? In ensuring that the City does not default on its obligation related to the City loan guarantee on restructured medallion debt?

Source: X

As over 4,500 taxi medallions sit in storage and the TLC considers initiatives to (re)issue *new* FHV Licenses (TLC Plates), we are entering peak City politics. In one breath we are arguing the City has too much congestion and we must pay for it (including outerboroughs btw, has anyone driven in Brooklyn, Queens, Bronx lately…), in another we’re arguing for MORE TLC-plated vehicles? To achieve what exactly, increased NYC FHV electrification to lower emissions via increasing congestion?!

Some other questions to think about?

• Are non-NYC for-hire vehicles exempt? For example, will a Newark cab, New Jersey OL-plated vehicle, Westchester / Nassau County-TLC vehicle be subject to the standard congestion base toll (i.e., $15 toll to cross into central Manhattan)?

• Is Uber and Lyft remitting the congestion surcharge, if it’s NOT on the driver? For example, will the E-ZPass readers recognize that a NYC TLC-regulated vehicle is passing the zone and send bill to driver or vehicle owner or will Uber, Lyft, base, taxi garage be responsible to remit? Currently, bases remit congestion surcharges.

• EV exemption to congestion tolling? Wouldn’t this be a way to drive electrification in the NYC TLC fleet?

As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.

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