The Taxi Medallion of New York City
The New York City Taxi Medallion is an interesting form of property. It represents a transferable right granted by the City to pick up passengers, but through regulation the dollar value of this right is now nearing a million. In Fact, Some of the Richest Workers In America are Taxi Drivers In New York City.
Trading in the price range of $600,000.for the individual medallion, and almost three quarters of a million for the coveted corporate or “mini” fleet medallion, the New York City Taxi industry has seen its overall value increase by almost five-hundred percent since the turn of the century.
The Taxi Medallion is a special license plate affixed to the hood of a New York City Yellow Taxi cab. It represents the license for picking up passengers from the streets. No other transportation service has this right.
The medallion system began in the 1930’s. In the 1960’s all medallion taxicabs were required to be painted yellow.
The medallion number is must be clearly visible on the taxicab roof light, license plates, as well as on the door exterior, and in the vehicle interior.
There are different types of “Medallions”. The individual, the corporate or fleet medallion, and the Handicap Access Medallion.
The individual medallion requires the owner (post 1990), to operate the yellow taxicab 210 nine-hour shifts per year. This underlying requirement guarantees the availability of taxi transportation. It is not unusual for two taxi drivers to form partnerships and share the medallion, or for an individual owner to lease out the taxi for the shifts he is not working.
The corporate or fleet medallion does not need to be operated by the owner. In fact, the owner need not have a NYC Taxi operator’s license at all. The fleet medallion can be leased, and often is on a shift-by-shift basis, twice per day, for as much as $140 per twelve hour rental.
There is a network of brokers and agents who manage and lease taxicabs and medallions to independent taxi drivers under daily, weekly, and long-term arrangements for investors.
As an investment, the most interesting aspect of the New York City Taxi Medallion is the anti-cyclical valuations. In2009, as the US and world economies are shrinking, medallion value is soaring.
When banks and stock brokerages, construction companies and retailers lay off workers, one of the first places the unemployed workers seek income is in the taxi industry. So, as the general economy suffers the number of available taxi cabs shrinks as more people seek them and those already working are forced to work more shifts as competition for fares increases.
There are a limited number of medallions. Currently just over 13,200. This number was constant at 11,787 for more than sixty years when in the 1990’s then Mayor Rudolph Giuliani approved NY City Taxi & Limousine Commissioner Christopher Lynn to conduct three auctions, selling four hundred medallions.
The sales netted the City approximately one hundred-million dollars. The politics behind the sales was very intense and telling, as shortly after the sales were completed the industry applied for and received a rate of fare increase. After a few short years another proposal for new medallion auctions was approved by Mayor Michael Bloomberg.
The successive medallion sales created slightly more than one thousand-forty new medallions. During these auctions the Handicap Access Medallion was introduced at a substantial discount to regular market prices. This was to entice owners to pay the extremely high price of retrofitting vehicles with automatic ramps to accommodate wheelchairs. They were all sold, and on a percentage basis have risen in value more than other medallions.