Cabbies defaulting on loans
The last four sales of Boston medallions came through foreclosures by banks
BOSTON CABBIES GETTING hammered by the booming ride-hailing apps are beginning to show signs of being unable to stay afloat as banks have started to foreclose on delinquent loans they hold for the once-valuable medallions.
According to data from the Hackney Carriage Unit of the Boston Police Department, the last four medallions sold in the city went through forced sales after the banks that held mortgages on them foreclosed on the owners who were unable to earn enough to pay their loan.
“I’m surprised there’s not more,” said Donna Blythe-Shaw, a spokeswoman for the Boston Taxi Drivers Association who predicted these are just the start of a flood of foreclosure sales. “They’re all drowning in these mortgages on these valueless medallions. They’re drowning and no one cares.”
According to data from the Hackney Carriage Unit of the Boston Police Department, the voluntary sales of medallions have fallen to a trickle as the ride-sharing services such as Uber, Lyft, and others have increased in popularity. In the first four months of this year, there were 10 sales of Boston taxi medallions, one of which was sold at a foreclosure auction. There were no sales after that until late August when a medallion was auctioned off at foreclosure for $310,000, less than half the average price of $666,547 the medallions fetched on the open market just last year.
Even more alarming for cab owners and drivers is the value of the city’s medallions, which many buyers took out mortgages to purchase and are now hemorrhaging value. The average price of medallions sold this year is slightly more than $400,000 when factoring in the foreclosures, a decline of 40 percent.
An officer with the hackney unit said he did not have data on the previous owner, the bank, or the buyers were, records that are supposed to be maintained by the police department and available to the public.
Blythe-Shaw said she just had a meeting with Police commissioner William Evans and other officers from the hackney unit and they would not give her the names of the buyers and sellers, either, something she said was very concerning.
“They don’t want the taxi industry to collapse,” she said. “Once the information comes out, it will be the death knell for the value of medallions.”
Lt. Thomas Lema of the Hackney Unit had indicated the banks themselves were taking over the medallions but when asked if he had the names of the previous owners and the banks, he simply replied, “No.”
Blythe-Shaw said if the banks are holding onto the medallions, that’s a violation of city regulations, which say a medallion has to be displayed when in use and, if not attached to a cab, stays in possession of the police department. “It can’t be in somebody’s drawer,” Blythe-Shaw said.
Even though the four recent sales represent a fraction of the city’s 1,825 medallions, it is a harbinger of the near-freefall the industry finds itself in as state lawmakers mull changes to try to regulate the exploding ride-hailing business while at the same time throwing a lifeline to the heavily regulated taxi drivers in Boston and surrounding communities who increasingly are unable to compete.
Uber entered the Boston market in the fall of 2011. According to data from the hackney division, there were 13.1 million cab rides in the city in 2010, generating total revenue of more than $214 million. In 2011, cab revenues rose by more than 12 percent to nearly $240 million while the number of rides increased nearly 9 percent to 14.3 million. Both 2012 and 2013 continued to show increases, albeit much smaller, before both revenues and ridership plummeted in 2014. Revenues hit a peak of $257 million in 2013 before dropping nearly 7 percent to $240 million last year. The number of rides hit 14.5 million in 2013, but fell more than 12 percent to 12.8 million in 2014.