NYC’s Taxi Regulations Are Obsolete. How Should They Change?

The de Blasio administration’s proposed slowdown in new for-hire vehicle licenses for a one-year study period could be the opening move in a major rewrite of the rules governing the city’s taxi and livery industry. The current system is an anachronism, and a big overhaul could harmonize the city’s growing array of medallion taxis, green cabs, and Uber-type services in a way that lessens the need for private car ownership without contributing to congestion in the city core. But what, exactly, would that system look like?

Green, yellow, black? Does it matter? And do they reduce congestion or make it worse? Photo: Johannes Ortner/Flickr
How should yellow taxis, green cabs, and black cars be regulated to lessen dependence on private cars without making Manhattan congestion worse? Photo: Johannes Ortner/Flickr

It’s a big task. Set aside, for a moment, the merits of a one-year cap on new for-hire cars. Let’s start with the basics and go from there.

First off, New Yorkers use car services in vastly different ways. “New York City is two worlds,” said Elliott Sclar, a city planning professor and director of the Center for Sustainable Urban Development at Columbia University’s Earth Institute. “There’s Manhattan below 96th Street, and then there’s the rest of the city.”

Outside the Manhattan core, car service options consist mainly of black cars and, more recently, green boro taxis. They tend to serve journeys that would be indirect and slow using transit. And congestion outside the city center is mainly due to private vehicles, not car services, so there’s not much reason to discourage new taxis and black cars in most of the city.

Meanwhile, sky-high demand for travel in the Manhattan core is like a black hole sucking in for-hire drivers from across the city. Most taxi customers in or near the Manhattan core have a decent transit alternative, but they hire a car for speedier service or a more luxurious ride. According to TLC, 94 percent of yellow taxi pick-ups are either in Manhattan or at the airports, and the fastest-growing for-hire companies, powered by e-hail apps like Uber, do 72 percent of their business in Manhattan south of 60th Street.

The result is a crush of taxis and black cars driving around the central business district.

The de Blasio administration says it needs to slow down the increase in for-hire licenses to study congestion, but given the large campaign contributions the mayor received from the yellow taxi industry, the surface explanation is hard to swallow. In the end, the one-year cap on new for-hire licenses might have more to do with navigating tricky political waters, where the administration faces hard-charging Uber on one side and medallion interests on the other, than with alleviating Midtown congestion.

It’s possible that the city will seek to create a uniform set of regulations governing all types of for-hire services. “I can’t rule that out,” TLC Commissioner Meera Joshi said after a City Council hearing last month. “From a consumer’s perspective, that’s the way it’s going to look, and the regulatory and legal frameworks behind that may eventually mirror what consumers see.”

The cap on Uber and other for-hire competitors “might be a way to get medallion owners on board with this process” of rethinking taxi regulations, said Rich Barone, director of transportation programs at the Regional Plan Association. “There’s a lot of stakeholders, a lot of voices here. A lot of powerful voices.”

Ultimately, the need to manage Manhattan congestion may still be a big factor in the city’s long-term regulation plan. “The reason we have medallions in the first place is that the taxis were choking the city in the 1930s,” Sclar said.

“I do think we’re going to have to look at numbers here,” Barone said, “to see what we think is a healthy number of vehicles the core can handle.”

Even with fewer regulatory distinctions between types of taxis, the city could pursue a number of strategies to address differences between the core and the outer boroughs. Options include capping the number of for-hire vehicles that can pick up fares in the core while allowing unlimited growth in outlying areas, or adding high surcharges to trips in the core.

Another major question that’s bound to surface is how and whether to regulate prices. Will TLC set how much each trip costs, like with yellow taxis, or will it allow car services to compete on price, like Uber does?

Before it can rewrite the rules, the city needs to crunch data and get a handle on how car services are being used.

Bruce Schaller served as traffic and planning commissioner at NYC DOT before departing city government last year. His consulting work now includes taxi policy analysis outside New York. “Until we have a much better idea of what’s happening, we’re just kind of throwing darts in the dark in terms of talking about policy options,” he said. “The question to ask is what we want this to look like five years from now, and that’s going to take a bunch of analysis and some careful thinking.”

  • Alexander Vucelic

    South of 59th Travel soeeds ( including wait Time )

    cycling 12 MPH
    Subway 10 MPH
    Bus 7 MPH
    for Hire 7 MPH
    Walk 5 MPH
    Private Car 3 MPH

  • rao

    Well, Taxi of Tomorrow is certainly looking rather last century, isn’t it?

    One of the problems with black cars from this stakeholder’s perspective is that they are oversized and polluting. The city ought to put a cap on them–but exempt electric cars and hybrids that achieve very high MPG in city driving.

  • Jeff

    Where is this data from? And what’s with the discrepancy between for-hire and private cars? Walking to where the car is parked plus the time to find parking plus the time to walk from destination parking to the destination?

  • Alexander Vucelic

    Yup – private cars need to park.

    from where Is ‘data’

    35 years of in depth Level study representing more than 8,000 hours of research taking some 200,000 datapoints Into account. ????????

  • Ari_F_S

    You didn’t really answer the question.

  • Alexander Vucelic

    Humor – notice The emoji ?

  • Matthias

    Average bus speeds are 3-5mph, and an average adult’s walk speed is 3-4mph. Cycling goes down to 6mph if you wait at every red light for the full cycle.

  • datbeezy

    Personally, I think Taxi’s are a good thing. For a good number of New Yorkers that presently have cars, they would save money by replacing every one of their private auto trips with a combination of taxi and carshare trips. Although each vehicle spends more time on the road than a private auto, a meaningful reduction in private autos would increase available curb space (or space for bus-only and bike lanes) and implementing environment/accessibility/etc fleet standards becomes that much easier.

    So why not tie the number of medallions and car share vehicles to a likewise reduction in the number of private autos entering the city? Essentially, using BTA, estimate a target congestion coefficient, and then issue new medallions when we’re below that level? You’d create a political constituency that would benefit from congestion pricing and other vehicle ownership reduction programs [parking pricing, etc].

  • Kevin Love

    The concept of induced demand means that if your target congestion coefficient allows car driving to be faster than riding a bicycle, we will never, ever get there. See:

    http://www.wired.com/2014/06/wuwt-traffic-induced-demand/

  • JGrant

    This article reads like paid-for Uber corporate propaganda.
    Uber – a law-violating criminal enterprise that it is – clearly shows that it will stop at nothing to promote its criminal unethical tax-evading “business” agenda.
    With billions at its disposal – Uber could compete fairly with thousands small taxicabs businesses and drivers – but apparently it prefers to lie deceive and hide behind an app that it factually didn’t even invent.
    This is not a technology question anymore. It’s a (huge) legality question.

  • AndreL

    Medallions are an immense and outdated form of regulatory rent-extraction and should be eliminated, no matter how painful the measure might be for those invested on it. Paying hundreds of thousands of dollars for the privilege of operating a vehicle for hire is unacceptable.

  • Joe R.

    Quite true. It’s also worth noting in case anyone might be tempted to feel sorry for those invested in medallions that this was never their intended purpose. They were meant to be franchises for individuals to drive a taxi as their own business. Once that person no longer wished to drive, the medallion would be given to someone else. NYC should have taken care of partnering medallions with prospective drivers through some kind of waiting list system. Those who wished to be drivers would pay a small fee to wait for the next available medallion. When a driver retired, their medallion would be given to the next person on the waiting list. Nobody could get back on the list once they received a medallion unless they first relinquished it.

    The original intent of the medallion system was distorted beyond all recognition by allowing medallions to be bought and sold on the free market. It’s only fitting those who hoarded medallions will end up as big-time losers if the system goes to something like I just described.

  • Greg Costikyan

    I think the smart thing here is to embrace market solutions.

    Get rid of the medallion system, and let anyone who wants to operate a for-hire vehicle in Manhattan, and passes a test establishing reasonable safely standards to do so.

    Also, charge anyone who wants to operate a for-hire vehicle in Manhattan a fee, variable by hour, and subject, like Uber fares, to surge pricing, setting the fee to bring traffic volumes to reasonable level and minimize delays.

    While you’re at it, establish bus-only lanes on major mass transit routes, camera-enforced. Congestion pricing of other vehicles will keep the traffic moving despite devoting the space to moving transit users.

    If people with money want a private black car to take them somewhere, fine; let them pay the full price of their use of congested public roadways.

  • AndreL

    The best comparison I can make with medallions is if regulated professions such as lawyers, medical doctors or civil engineers had some system whereby a fixed number of professional licenses where available and, after passing all qualifications and requirement checks, a prospective doctor (for instance) had to put up hundreds of thousands of dollars do buy a specific license from someone else, before start working.

    It is also absurd if we use a closer analogy: suppose bike messengers were regulated to a maximum number, and the city hall tightly controlled the “stickers” messengers would need to use, such that a “messenger sticker” costed several times more than the bikes themselves.

    The problem is that medallion-business became very entrenched. There are handful of small-ish financial companies with dozens of millions invested on medallions, which they then rent to drivers, and they donate heavily in elections.

    Individual drivers who mortgaged family homes, and more often had several relatives helping out with money to make a downpayment on a medallion loan (so that he/she could work) would instantly be sad stories of how the government “took everything” from them if medallions were just abolished.

    In Washington, there are no medallions and taxis operate normally. Several other US metros have some sort of cap on taxi numbers without the use of “lifetime transferable licenses”.

    As it is now, one can think of the medallion as a “40% surcharge” affecting all taxi fees, to the benefit of private parties often unrelated to taxi business altogether.

    it is “rent extraction” on its purest form.

  • Matthias

    Comparing taxis with either doctors or messengers is flawed in that neither is a public accommodation. People carefully consider the choice of a doctor (within the constraints imposed by their insurance companies) and businesses choose messenger companies based on things like price and services offered. None of these apply to hailing a taxi. For just about everyone, a taxi is a taxi, and protecting the public requires significant regulation. In Washington DC, there are no limits on taxis and consequently drivers have more difficulty staying busy. Taxis are also less well-regulated, so there are major differences in vehicle quality, etc between companies, and you never know what you’re going to get when you hail one. All this is not to say that the medallion system is without flaws (the cap is arbitrary and an accident of history, for example), simply that there are good reasons for it.

  • The taxi situation requires a radical solution: there should be no private taxis — no medallions, no private owners, no Uber. Taxis would be best managed as a branch of the local transit agency, in our case MTA and New York City Transit. The agency would purchase, maintain, and deploy the vehicles. It would also employ all the drivers, who would be members of the TWU. The fares would be standardised and graduated (for example 0-5 miles at one price, 5-10 miles at another price, etc.; standard rate to/from an airport; half price for disabled and elderly riders), and would be payable by the MetroCard and whatever payment method eventually takes its place.

    This would require extensive legislative reform that would ban most forms of car hiring. A category of legal private for-hire cars would have to be so specifically defined (i.e., price floor; car length) as to limit it to luxury limousines. In practice, such vehicles would be used by ordinary people only a few times in their lives (prom, wedding, or other party); they would be used also by celebrities and by other fatcats who don’t mind wasting money. The result would be that there would be far fewer of these ostentatious vehicles than there are now.

    Here in New York City, few public MTA taxis would be found in Manhattan south of 96th Street during the day, simply because there is no need for them. The article notes that people in that part of New York City use taxis “for speedier service or a more luxurious ride”. This is only half right — there is no speed advantage over the subway for most of the day in that part of town. Only during late nights and overnights, when subway headways increase and the street traffic dissipates, can taxis compare to the subway on travel time in that section.

    The fundamental point is that taxis are a form of mass transit. A transit agency can allocate cars rationally, thereby alleviating the oversupply that so negatively affects streets in Manhattan’s core, and also going a long way to solving the issues faced by the few but significantly-sized transit deserts in New York City, such as eastern Queens, southern Brooklyn, and most of Staten Island.

    Of course, the effete ninnies who consider themselves too good for the subway and who use taxis for all trips would not like this; they would be unable to continue their anti-social practice, as the only for-hire cars available would be luxury limousines. But for the rest of us, such a scheme would bring a huge benefit.

  • J_12

    No, because in his proposal I think price is free to float, so as travel times go down, price per trip goes up. Targeting a “congestion coefficient” is a little too wonky and technocratic for my taste, but in general I would favor a system that makes car trips fast, convenient, and expensive.

  • datbeezy

    I wonder how safe taxi trips are, on a per-mile basis, compared to private drivers. If the streets were empty and drivers could go at free-flow speeds everywhere, my gut tells me I’d rather have a professional driver (one who is relatively easy to target, education-wise, and whose right to drive is easily regulated, and whose driving activity can be easily monitored) than a private on in these scenarios.

  • Rob

    First, get rid of criminal tax-evading Uber. Then let’s think about the rest.

  • Rob

    Outdated according to whom?? Uber???
    A multibillion dollar mega-corporation that has $55 billion dollars yet refuses to pay and compete like taxicabs do?
    Laws must be equal for all. Uber is TAXI with an app. That’s all it is.
    What’s next? A pharmacy that has an app – doesn’t require a pharmaceutics license?? Doesn’t need to pay taxes? Follow laws??
    People paid for medallion because it turned them into SMALL BUSINESS OWNERS!!! Do you understand that or not??
    Then came the Uber criminal monopoly that didn’t pay even a penny for the same right to operate and ruined the industry.
    That’s all it is – a CRIMINAL MONOPOLISTIC TAKEOVER.

  • Rob

    NOT TRUE!
    Original intent of medallion system was to control SUPPLY, set standards, benefit local municipality, let every driver make a decent living AND prevent concentration of power in the hands of criminal entities.
    Did you even know that 40% of ALL NYC taxicabs are INDIVIDUALLY-OWNED – by LAW!!
    And another 30-40% belongs to SMALL LAWFUL mini-fleets running between 2-8 vehicles!!??
    The rest was owned by 15-20 medium to large-size fleets.
    Where do you see a monopoly???

    You know where?? LOOK AT UBER !!!!!

  • Rob

    Yellow taxi rides are safest on a per-mile basis.
    Research on this was done few years ago.
    You probably can web search it.

  • Joe R.

    Regardless of the original intent, the system has been distorted beyond all recognition by allowing selling medallions as commodities. It would be like me having to pay a fee of hundreds of thousands of dollars just to start working as an engineer. We’ve had people profiting off the medallions themselves, rather than from the job of driving a taxi. Arguably, it was never the original intent of the system to have people make money passively by investing in medallions. That’s why the system needs to be dismantled, even if it means current medallion owners, or rather the banks which loaned them money to buy medallions, end up taking a steep loss.

    Note also that you can easily distort a market even by controlling a small percentage of a commodity, as the fleet owners did with the medallions they held. Frankly, the large fleets ARE criminal entities.

  • Joe R.

    A pharmaceutical license, or any other business license, isn’t bought and sold by speculators on the open market, resulting in it costing hundreds of thousands of dollars. If medallions could be bought for a small fee by putting your name on a waiting list for the next available medallion then the system would be fine. People shouldn’t have to mortgage their homes to drive a taxi.

  • AndreL

    That might have been the origins of the medallion, but today is has become just a very expensive “fee” that investors charge on whomever wants to drive a taxi. Take a look at market prices for medallions, and think who can buy them outright? Certainly not people who would drive a taxi themselves!

    Hence almost every taxi driver “rents” a medallion from some other entity/investor.

  • yongky sunyoto

    abolish uber, and all ppl who want to get medallion must drive it, so there will be no more cartel, i think its will be the solution

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