NYC Taxi Medallions

March 30th, 2004

Each of New York City’s 12,000 taxi cabs has a tin medallion affixed to its hood. It represents the owner’s right to operate a bright yellow car as a cab. In April, for only the third time in the city’s history, New York will increase the number of medallions on the street. For drivers, owning a medallion is about more than just driving a cab. It’s about owning a lucrative piece of property. Joel Meyer reports…

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NARR: Raynal Alam moved to the U.S. from Bangladesh in 2000, leaving behind a job as a business manager. He started driving a taxi one month after the September 11th terrorist attacks. Five days a week, Alam rents a cab from a fleet garage and works a twelve hour shift from 5 PM to 5 AM. To break even, he must earn 110 dollars a night. But to start earning real money, Alam needs to own a taxi medallion.

TAPE: EVERYBODY WHO WANTS TO DRIVE, HE DREAMS FOR A MEDALLION, BUT IF HE HAS AN AMBITION OF SWITCHING TO A GOOD CAREER IN SOMETHING ELSE, I THINK HE ALSO HAS TO THINK WHETHER HE WANTS TO OWN IT OR NOT.

NARR: Alam plans to submit a bid in next month’s sealed-bid auction. If his is among the 300 highest bids, he’ll own an small, cold object that he sees as his ticket to prosperity.

TAPE: EVENTUALLY, YOU ARE SECURE — FINANCIALLY AS WELL AS MENTAL SATISFACTION.

Alam would drive his medallion cab for few years, but he says he would sell it to finance his budding career in real estate. Other owners may opt to lease their medallions to licensed drivers, much like a landlord rents an apartment.

On Tuesday afternoon, the Taxi and Limousine Commission held an information session for potential bidders. Two hundred people packed a room in Queens Borough Hall, most of them cab drivers who lease their cabs from medallion owners. All of them wanted to become entrepreneurs.

AMBIENCE: Meeting pre-sounds “six percent”

NARR: As at other meetings held throughout the five boroughs, a second session had to be added to accommodate the crowd waiting outside. Commission officials say one thousand people have attended the meetings so far.

AMB: Are you going to use that chair?…

NARR: The minimum bid for an owner-operated medallion like the one sought by Raynal Allam is $230,000. That type can fetch $300,000 on the open market right now, and the value of medallions is expected to increase. If the Commission has its way, it will sell a total of 900 medallions over the next three years, generating more than $200 million for the city. But Commissioner Matthew Daus told the crowd that the Commission is doing this for other reasons.

TAPE: THE MONEY THAT COMES FROM THE SALE, IT DOESN’T GO TO THE Commission. WE WANT TO SERVE THE PUBLIC. WE WANT MORE CABS OUT THERE. AND WE WANT TO OPEN THE DOORS OF OPPORTUNITY FOR PEOPLE WHO HAVE WORKED VERY VERY HARD.

NARR: Daus told drivers who own little more than their hack licenses that they have the opportunity to turn a corner.

NOBODY EVER MADE A NICKEL RENTING FROM ANYONE. THE PEOPLE WHO MAKE MONEY ARE THE PEOPLE WHO BUY HOMES, NOT THE PEOPLE WHO RENT HOMES. UNLESS YOU TAKE A STAKE AND GET PROPERTY YOU’RE NEVER GOING TO GO TO THAT NEXT LEVEL…UNLESS YOU WIN THE LOTTO.

NARR: Buyers can expect to pay up to $50,000 in startup costs. Many will have to purchase new vehicles and convert them for use as taxis. For many at Tuesday’s meetings, the money involved in medallions was staggering. Those who choose to bid will likely seek out lenders specializing in medallion financing. Due to the influx of medallions, brokers are offering as little as five percent down on some loans. After the meeting, drivers swarmed around Commissioner Daus with concerns about buying cars, obtaining licenses, and pooling resources.

AMB: Can I ask a question?

NARR: A medallion owner can expect to make about $40,000 a year after operating expenses. They stand to earn even more if a proposed 26 percent fare increase is approved next month. The Commission insists that the medallion sale and fare hike are independent projects. Commissioner Daus says extra cabs and higher fares will also benefit New Yorkers searching for a ride home from work.

DAUS: We’re also proposing putting into place peak hour pricing, which is an additional dollar that would be charged during rush hour. We’re hoping that drivers who ordinarily go off duty before rush hour will stay on to help people go where they need to go.

NARR: Parked on Second Avenue in Greenwich Village, Raynal Alam says a cab driver’s earnings may be modest to some, but it’s real money for new New Yorkers.

IT’S A VIBRANT CITY ORGANIZATION. IT’S VIBRANT IN ECONOMICS AND IN EMPLOYMENT AS WELL. AND ALSO HELPING THE NEW IMMIGRANTS LIKE ME WHO CAN HAVE A TRANSITION CARRIER, EASY TO GET A HACK LICENSE, EASY TO PAY YOUR BILLS, AND THEN SWITCH TO THE NEXT.

NARR: One final note: If Alam wins the right to hundreds of thousands of dollars for right to operate a cab, he’ll still have to pay for the tin medallion itself. It costs ten dollars. The cost of this ride was $3.10.

AMB: Taxi Meter

NARR: For Columbia Radio News, I’m Joel Meyer.

AMB: Sound of receipt ripping

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