♿🚖 WAV TIF Proposals Appear To *REDUCE* Overall Payments To Drivers
♿🚖 WAV TIF Proposals Appear To *REDUCE* Overall Payments To Drivers
Yesterday's public hearing & AM conversations with industry experts indicate TLC's new TIF proposals might *REDUCE* overall WAV TIF-related payouts. Public testimony should be reflected in new rules
Going into yesterday’s public hearing, our initial thoughts were TLC’s newly proposed Taxi Improvement Fund (TIF) rules & payouts amendments were going to be a net positive for the taxi medallion industry and would encourage the adoption of wheelchair accessible vehicles (WAVs) via increased financial incentives. We were wrong.
After listening to yesterday’s public testimony and speaking to several industry operators and experts, it actually appears TLC’s proposals reduce (👀) overall payouts to drivers and medallion owners that “hack up” WAVs. If the proposed rule changes are passed, as currently written, it would be yet another misstep by David Do’s Taxi & Limousine Commission (TLC).
Similar to what happened with the passage of the Green Rides Initiative that essentially ignored a lot of the public testimony, our fear is Chair Do and his Commission will not adjust their proposals based on public feedback.
Taxi Improvement Fund (TIF)
Let’s quickly go over the basics, what is TIF, what are TIF payments and how are they funded?
What is TIF and what are TIF payments?
TIF payouts are meant to incentivize taxi medallion drivers and fleets to adopt WAVs to help meet vehicle accessibility requirements (50% of yellow cabs must be WAVs). For example, in the early 2010s it cost over $10,000 to convert a popular used van like a Toyota Sienna into a WAV. It also costs more to maintain WAVs given the additional moving parts and equipment.
Given these facts, the TLC very reasonably passed rules that would:
Reimburse drivers and medallion owners for the initial upfront capital cost to convert a vehicle into a WAV
Send drivers and medallion owners frequent “operational payments” to reimburse them for the additional costs of maintaining a WAV vs. non-WAV
So, the status quo (as in what is currently being offered) is:
$14,000 reimbursement for “hacking up” a WAV
$16,000+ in total operational payments: $4,000 per year (or $1,000 per quarter) in operational payments for four years (& beyond)
Therefore, the total value of TIF benefits could be seen as $30,000+
How are TIF payouts funded?
TIF payouts are funded by surcharges on every yellow cab trip.
About a year ago, the TIF surcharge more than 3x’d from $0.30 to $1.00 as part of a long overdue taximeter increase.
*NEW* TIF Proposals
The way the TLC marketed the new TIF proposals even fooled us. It appeared like overall TIF payouts would be increasing.
Firstly, TLC is proposing the $14,000 reimbursement for hacking up a WAV should be increased to $20,000. This seems great, but then you realize.
The $14,000 is an early 2010s figure and almost all industry operators agree the cost is now $25,000+ (see hearing highlights below)
TLC seems to be proposing a reduction of overall operational payments by 75%!!! 👀, reducing the status quo $4,000 per year operational payments to $1,000
Therefore, the total value of TIF benefits could be seen as decreasing from $30,000+ to $25,000+ or 16.7% from a early 2010s figure (inflation adjusted the “real” decrease is more)
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If the TIF surcharge more than 3x’d, why are overall TIF payouts being reduced…
If we had to guess, the short answer is yellow cab trips, as we’ve overviewed, are still way down from pre-pandemic levels. However, since the TIF surcharge more than tripled, it’s confusing why the payouts are being reduced from a early 2010s figure! When you layer on TLC’s recent (surprise) policy error that is set to add another ~10,000 non-WAVs to NYC streets, it is just another reminder of how misinformed and broken TLC policymaking continues to be.
Additional Points
As you’ll hear in the highlights (see below), two dealership representatives that sell WAVs to TLC drivers, fleets and agents, raised additional concerns about how quickly they would be compensated by the TLC. For example, let’s say a dealer gives a [$20,000] discount to a driver buying a WAV, assuming they’ll receive the one-time TIF grant at the time of the purchase or very shortly after. If it takes several months to receive the money, they have to come out of pocket (including interest), until they receive the TIF money. This is impractical for most dealerships, so they might exit the WAV business or increase the cost of the vehicles.
Another interesting point that was brought up during the hearing, is the potential impact of the new rules on drivers in “Driver-Owned Vehicle (DOV)” leasing arrangements. In DOV arrangement, a driver typically rents a taxi medallion, but over the course of three to four years will gain full ownership of their vehicle (in this case a WAV). The garage or agent the TLC driver rents the medallion from is required to reimburse the driver for the TIF payouts they earned on a weekly basis and then wait for the TLC to pay them (garage or agent) back.
If TLC operational payments decrease, many drivers might not enter into DOV arrangements or adopt WAVs which could (1) prevent inactive WAV medallions from becoming active and (2) also impact medallion values given medallion accessibility requirements (i.e., WAV-only medallion) that aren’t applicable to other FHV sectors. There was also concern related to the trip requirement to receive TIF operational payments increasing from 250 trips to 500 trips.
Finally, to TLC’s credit, the ability to use a three model year old (or less) pre-owned WAV with less than 50,000 miles could reduce overall costs, but it’s unclear if that’s really offsetting the tremendous loss in TIF operational payouts.
We Need Details…
TLC needs to show more math and logic on how they are coming up with these numbers, because it (once again) seems like not enough analysis is being done. It almost seems like numbers are just being proposed to see what sticks 🤷. For example, when every single industry participant (i.e., basic diligence) who testifies is saying it costs at least $25,000 to convert the popular Toyota Sienna into a WAV, why did TLC propose $20,000? Why would operational payouts be reduced by 75% (📉), when auto repair & maintenance 👩🔧 costs have significantly increased since the early 2010s?
Hearing Highlights
It also should be noted, at the start of the hearing, TLC Chair David Do announced long-time TLC employee (and former acting TLC Commissioner), First Deputy Commissioner Ryan Wanttaja, will be leaving the Taxi & Limousine Commission to take up a new role as General Counsel for NYC’s Department of Transportation (DOT).
As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.
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