City Hopes for Windfall From Taxi Medallion Victory
NEW YORK—With the state Court of Appeals ruling in favor of New York City on June 6, New Yorkers will see an influx of 2,000 yellow taxi medallions and the city is expecting a big budget windfall.
The city hopes to generate $1 billion in revenue over 4 years from the medallions that fetch upwards of $1.3 million apiece.
In addition to the new yellow cabs, the victory allows Mayor Michael Bloomberg to proceed with plans to open a new class of taxi service in underserviced areas in boroughs outside Manhattan.
Despite the pending decision, Bloomberg felt confident enough in the outcome that he included $300 million in medallion sales revenue in the fiscal year 2014 budget. Depending on how lucrative the medallion sale is, the city could see more in this fiscal year.
“[T]here will be a little bit of a cushion for the future administration that follows,” Mayor Bloomberg said a press conference on June 6. He did not specify how much.
The city will not see the money all at once. In October, the Taxi and Limousine Commission (TLC) will hold the first auction for the new medallions. TLC Commissioner David Yassky said he did not anticipate putting all 2,000 on the market at the same time.
“We want to sell them at a pace that we make sure we don’t disrupt the market and assimilate the supply in an orderly way,” Yassky said without elaborating.
The Mayor said he did not know how much the new medallions would go for, but cited the increase over the last several years from $800,000 to the current $1.3 million.
Andrew Murstein, President of Medallion Financial, a taxi medallion lending company, said typically when medallions hit the market, prices do increase. He said the city sets conditions at the auction to ensure the best possible price.
“They want the highest price possible when they sell medallions because they are getting all the money for it,” Murstein said. The city only receives 5 percent on a medallion resale.
Murstein says the city may not get everything they hope for with these particular medallions, however.
The medallions set to be released this fall require the owner to make their taxi wheelchair accessible. The Nissan NV200, also called the Taxi of Tomorrow, is expected to roll out at the same time the medallions go on sale. The NV200, the new model for all new yellow cabs, needs a $14,000 retrofit to make them wheelchair accessible.
“These will sell for less than the normal medallions because they are handicap medallion, and there will be a higher expense operating them,” Murstein said. He said in the past, wheelchair accessible medallions sold for close to the regular medallion, but expects a slight dip this time around.
With the influx of 2,000 medallions in the market, Murstein said he believes prices will remain flat for several years, then once the market absorbs the new medallions, prices will rise again.
“Whatever gets thrown at this industry, they have a great way of bouncing back,” Murstein said.