Taxi medallion owners under water and drowning
Few tears are being shed for taxi medallion owners but there’s no denying they’re being squeezed into oblivion by Uber and Lyft.
But the ripple effects are going beyond, with banks that hold mortgages on the one-time valuable medallions foreclosing on the loans or eating the principal and taking interest-only payments to try to recoup some value back on their assets, the Boston Globe reports.
It’s an issue that has been lurking since the first ride-hailing company arrived in Boston and began disrupting the monopoly that cab owners and drivers had in the city.
The 1,825 medallions in the city were gold, with prices reaching more than $700,000 just a few years ago, before anyone thought Uber was anything more than a German superlative. Now the value of medallions have plummeted to half that and there’s no bottom in sight.
Many say not only are their operations losing money, they can’t find drivers to lease the cabs, as many are now opting to use their own cars and drive for a transportation network app. Part of the problem in Boston is not only are fares regulated, but the city’s Hackney Division governs leasing rates as well, with a minimum amount cab owners must charge. Some try to lease out for less but not only is that forbidden, they still have trouble finding drivers at the cut rate price.
And that’s the nub of the issue. The costs of medallions skyrocketed when cabs were the only transportation game in town. But now that ride-hailing drivers are ubiquitous – there are an estimated 22,000 in the Boston area – and essentially unregulated, they can drive circles around taxis.
Regulators have done little to protect cab drivers and their investments, while doing even less to level the playing field by enforcing regulations on Uber, Lyft, and others. Some cities are looking at buying back medallions they once mandated as a way to bail out the regulated cab industry.
But not here. Opponents say buying a medallion is akin to purchasing a house, that it’s a risk you take that the economy will protect your investment, and if it tanks, tough luck. But that overlooks the fact that you don’t have to own a house to live in the city; you can’t drive a cab without a medallion.
State officials have been dragging their feet and a compromise bill has yet to emerge from the Legislature with just six weeks remaining before the end of the term. The lack of a bill is not hurting the transportation network companies but it’s killing cab owners.
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