Struggling to survive in the age of Uber and Lyft, the Chicago taxi industry’s hopes may be riding on a legislative long shot.
Nearly half of the city’s 6,999 licensed cabs are in foreclosure or idled, leading to an increasingly desperate call for regulatory intervention — including a newly floated idea to cap the number of ride-sharing licenses in Chicago — to keep taxi fleets on the streets.
“Things are getting worse every day,” said Adrian Tudor, owner of Taxi Town on Chicago’s far North Side, whose fleet of 370 green cabs sits nearly one-third idle on most days. “It’s very difficult. I’m surprised we’re still alive.”
New York City approved a measure last month that places a one-year moratorium on new ride-share licenses. Support is growing among Chicago cabbies for a similar move here, which Tudor said would help the taxi industry compete, particularly on weekends, when part-time ride-share drivers flood the city looking for fares. Ald. Anthony Beale, 9th, and Ald. Edward Burke, 14th, have said they are considering such a proposal.
City officials, however, have no plans to cap ride-sharing services at this time, said Rosa Escareno, commissioner of the Department of Business Affairs and Consumer Protection, which regulates both the taxi and ride-share industries.
“It’s the consumers that are making the choice and the consumers that are driving the type of service that they need and demand,” Escareno said. “We have to listen to that. It was the consumers that drove the change that is here today.”
Tudor and other taxi owners are being overwhelmed by changing consumer habits and the nearly 66,000 active ride-share drivers in Chicago, a number that has grown fourfold in the last three years, according to the city.
While the number of taxi medallions in Chicago is capped, there are no limits on ride-share drivers. Uber and Lyft say that flexibility is necessary to meet growing demand. The taxi industry, which once had a monopoly on offering rides to strangers for pay, is looking for the city to limit the number of citizen cabbies.
“We are heartened by the developments in New York,” said Meg Lewis, a spokeswoman for Cab Drivers United, a union that represents Chicago taxi drivers. “There’s no one who benefits from tens of thousands of vehicles on the street competing in a race for the bottom.”
What is not in dispute is that Chicago’s taxi industry is running on fumes, with medallion foreclosures, declining revenues and a shortage of drivers making once-ubiquitous cabs relatively scarce.
Medallion transfer prices have plummeted in Chicago, dropping from more than $300,000 five years ago to as low as $30,000 in July, according to city data. Banks that financed taxi medallion purchases are aggressively foreclosing on a growing number of owners, who find themselves underwater and unable to make payments on the loans.
“It’s a pretty bleak picture right now for some folks who’ve invested their life savings in medallions,” Lewis said.
City data show that, as of late last month, 1,289 medallions were in foreclosure, and another 1,362 were in violation, a status which may also lead to foreclosure.
Lenders engaged in Chicago medallion foreclosures include Lomto Federal Credit Union, Medallion Financial, Bethpage Federal Credit Union and Capital One Taxi Medallion Finance.
Furqan Mohammed, an Elmwood Park attorney who has represented about 60 Chicago-area cabbies in medallion foreclosure lawsuits and renegotiations over the last 15 months, said Lomto and Medallion have been among the most aggressive in pursuing lawsuits.
“The medallion owners are in foreclosure because it’s simply not sustainable to pay off these huge loans with the income they generate,” Mohammed said.
Lomto, for example has filed 164 medallion foreclosure notices since 2016 in Cook County Circuit Court, according to court records.
Frank Andreou, an attorney representing Lomto, said the lender prefers to renegotiate rather than foreclose on the loans.
“Any lender will renegotiate,” Andreou said.
Medallion, a publicly traded New York bank that was built on taxi medallion loans, has filed 35 lawsuits since June 20 in Cook County against delinquent Chicago cab owners. The bank had 107 Chicago taxi medallion loans with an outstanding balance of $20.2 million at the end of 2017, according to Medallion Financial’s second quarter earnings report, filed with the Securities and Exchange Commission.
In addition, Medallion owns 159 Chicago medallions purchased out of foreclosure in 2003, which appreciated to about $370,000 in 2013, and are now valued at about $36,000 each, according to the report.
Andrew Murstein, president of Medallion Financial, said in an email the surge in Chicago taxi medallion litigation reflects a “more aggressive approach on collections with the portfolio.”
Bethpage and Capital One did not respond to requests for comments.
One high-profile Chicago taxi owner facing plummeting valuations is Michael Cohen, President Donald Trump’s former personal lawyer, who paid $5.7 million to accumulate 22 medallions between 2009 and 2014, according to the city’s Department of Business Affairs and Consumer Protection.
While only nine of his Chicago medallions remain active, according to city data, Cohen’s entire taxi portfolio may be at risk after he pleaded guilty Aug. 21 to eight federal counts of tax evasion, campaign finance violations and bank fraud.
“Based on Michael Cohen’s guilty plea, we are reviewing the case in order to begin a revocation of the 22 Chicago medallions,” Escareno said.
Tudor, a 30-year Chicago taxi veteran who started driving an Evanston cab while in college, launched Taxi Town two years ago, in part to cut costs from more expensive affiliations with other companies.
Since then, the business has been in sharp decline, and he is actively renegotiating medallion loans with several lenders as he is forced to lower lease rates.
Cabs that he leased to drivers for $120 a day two years ago go for about $50 these days, Tudor said. And that’s still too high to lure enough drivers to keep his full fleet on the streets.
Most days, more than 100 of his distinctive green cabs are sitting in his West Rogers Park lot.
“There’s no drivers,” Tudor said. “Some of the drivers quit the business; some went to Uber.”
Uber has more than 30,000 active drivers who live and work in Chicago, while Lyft has “tens of thousands” of drivers plying the streets of the city, a ride-share fleet that dwarfs the number of licensed taxis.
Unlike taxi drivers, most of Chicago’s ride-share drivers chauffeur strangers as a side gig, working less than 20 hours a week, flooding the streets on weekends and evenings, the companies said.
“The majority of our rides — 63 percent — happen in off-peak hours,” Lyft spokeswoman Campbell Matthews said.
Ride-share drivers also tend to work outside of the Loop, the companies said, filling a transportation void in areas traditionally underserved by taxis, such as the South and West sides.
Uber and Lyft fought the ride-share caps in New York — the first enacted by a major American city — and are hoping Chicago won’t follow suit.
“It’s artificial, and it’s unnecessary,” Matthews said. “Wait times would really increase for people who need these rides, who’ve come to rely on them. Prices would increase and (drivers) wouldn’t be able to sign up to earn.”
Chicago passed a number of changes this year aimed at boosting the taxi industry, including extending the life of cabs by three years and reducing fees. Uber spokeswoman Molly Spaeth said the company supported those “thoughtful reforms” but would oppose any move by Chicago to cap ride-share licenses.
“An arbitrary cap on ride-share would restrict access to transportation options and earning opportunities for residents — particularly on the South and West sides — turning back the clock to the old system where only some parts of Chicago were served,” Spaeth said.
Tudor, on the other hand, would like nothing better than to turn back the clock for the taxi industry in Chicago, where cabs that once jammed Michigan Avenue are now few and far between and ride-shares rule the road.
Without some help from the city, he said, flagging a cab may soon be a lost art.
Uber and Lyft Drivers in Chicago Will Hold Rally to Protest Abuse and Low Wages
Uber and Lyft drivers in Chicago will rally at O’Hare airport Monday in protest of abuses they have faced from riders as well as the low wages they receive from their work, the Chicago Sun-Times reported.
Organizers with the group Chicago Rideshare Advocates are working to organize the thousands of drivers across the city to demand better pay and working conditions. Last week the group rallied outside City Hall with a banner that read, “Uber/Lyft Stop Abusing Workers/Cities.”
Mattia Nanfria, a 41-year-old ride-share driver who also organizes with Chicago Rideshare Advocates said she has been propositioned and attacked by riders. She said that after reporting having problems with some riders, Uber didn’t seem to do much to address the issue. “For all I know, they did nothing, which is a little disturbing,” she said.
To make matters worse, Nanfria said there are some weeks when she makes less than the city’s minimum $12 hourly wage. “The weeks where I’m clearing $10 to $12 an hour, that’s what I lose sleep over,” Nanfria told the Sun-Times.
Chicago city officials have considered following New York’s lead and putting a cap on the number of ride-share vehicles in the city, which has quadrupled to nearly 66,000 drivers in the last three years, according to the Chicago Tribune. The Chicago Rideshare Associates are on board with capping the number of drivers, along with increasing wages and drivers’ safety.
“Nobody wants to ban Uber and Lyft. Nobody wants that,” Eli Martin, a co-organizer of Chicago Rideshare Advocates told the Sun-Times. “We all like this, we just have to make it work better.”
Both Uber and Lyft oppose the proposal for a license cap.
The surge in ride-sharing services in Chicago has hurt business for cab and taxi drivers, while also worsening working conditions for Uber and Lyft drivers.
Earlier this year, Uber’s CEO Dara Khosrowshahi suggested that New York City officials should impose a fee on ride-sharing apps to help taxi medallion owners facing financial burdens from the increase of ride-sharing services. But the New York Taxi Workers Alliance called the proposal “a slap in the face to struggling drivers and an attempt to get out of being regulated.”
Chicago officials have proposed raising the average wage for drivers, which is currently less than the minimum wage at $11.53 an hour after expenses.
The group will hold its rally at the O’Hare Transportation Network Providers’ parking lot from 7-10 p.m. on Monday.
More Than 100 Cars Damaged in NYC Mall Parking Garage Inferno; Suspect Arrested: NYPD
Police have arrested a man in connection to a seven-alarm inferno that tore through a multi-level parking garage at Brooklyn’s Kings Plaza Shopping Center Monday, enveloping the entire area in thick smoke, engulfing more than 100 vehicles and leaving nearly two dozen people hurt.
Police say they’ve arrested Avon Stephens, 23, on an arson charge in the fire at a parking garage at the mall on Avenue U and Flatbush Avenue. A motive wasn’t clear, and details on an attorney for Stephens weren’t immediately available.
The fire call came in shortly before 9 a.m. Monday, and the blaze quickly escalated from a two-alarm to a four-alarm fire, then became a six-alarm inferno within an hour. By 11:15 a.m., it was a seven-alarm blaze. It was under control by noon.
Twenty-one people, 18 of them firefighters, suffered non-life-threatening injuries, mostly related to smoke inhalation and heat exhaustion. Four of the victims were taken to hospitals. Fire officials warned the patient total would likely rise.
A law enforcement source said 137 cars were damaged, and 70 of them were burned to their shells, many of them Mercedes.
The garage holds about 4,000 spaces and fire officials said 120 cars are normally stored there by a car dealership. There were some explosions from car tires burning; officials said there is no risk of collapse.
Citizen app video showed smoke spewing from the garage as bystanders crowded near emergency vehicles, seeking shelter from the shroud of smoke.
More than a half-dozen MTA bus lines were running with delays in the area because of the FDNY activity. The department said more than 200 of its members responded.
A mall spokesperson said to avoid the area until further notice. The plaza was closed, though officials said the fire did not extend to any stores.
Kings Plaza has more than 120 stores, including Macy’s, Best Buy, Sears, H&M, Michael Kors, Express and Foot Locker.
In 2013, it became the subject of a controversial order that temporarily banned people younger than 18 without the presence of an adult after hundreds of teens attacked patrons and vandalized the shopping center, forcing it to shut down.
No one was ultimately charged in that fray, nor was anyone hurt.
Council moves ahead on bills to help taxis
After years of failing to address the fallout from an upended taxi industry, the City Council is trying to make up for lost time.
Just a month after leading the way to an unprecedented one-year cap on Uber and Lyft vehicles, the council’s for-hire vehicle committee was back in action today with a hearing on nine more bills.
Overall they’re aimed at addressing the economic plight of roughly 6,000 individual taxi-medallion owners and the wider pool of taxi and ride-hail drivers, who now number more than 185,000, up from 30,000 six years ago. The push for more legislation has been fueled by six suicides in the past year by drivers who grew desperate because of their circumstances—and by a sense that the ride-hail industry has lost the ability it once had to block legislation it didn’t like.
The bills include an effort to establish a task force to study medallion values and recommend policies to increase prices and one to ask the Taxi and Limousine Commission to set up a program to provide drivers with health care and other insurance benefits.
If the bills pass, however, it remains unclear when they would bring relief, what form that relief would take and how it would be paid for. The health benefits proposal calls for adding a surcharge to all taxi and for-hire vehicle fares—which would be in addition to a congestion-pricing surcharge ($2.50 for cabs, $2.75 for app-based services) that will go into effect Jan. 1.
Taxi and Limousine Commission chair Meera Joshi, who testified in support of the bills, said it would be better to find a funding mechanism that didn’t antagonize passengers. The FHV committee chair, Ruben Diaz Sr., also spoke up against the surcharge.
The TLC, which will be developing the rules and carrying out the legislation, also will need to find out exactly what the health insurance needs are for the vast majority of drivers.
“That will be a painstaking study,” Joshi said.
Other bills are aimed at fighting predatory practices by car-leasing operators. They would require the TLC to set a cap on costs, ensure consumer-protection practices and prevent leasing operators from making automatic deductions from drivers’ earnings.
Some medallion owners who blame the TLC for allowing Uber and Lyft to flourish declared that the raft of new bills wouldn’t do much good if Joshi remained in charge of developing and enforcing the regulations.
“In our view, there can be no remedy if the remedy and the implementation are left up to the current TLC regime, which is [composed] of leftovers from the Bloomberg administration,” said Carolyn Protz, a medallion owner, who read from a letter from the Taxi Medallion Owner Driver Association.
Joshi was, in fact, appointed by Mayor Bill de Blasio, and much of the regulatory structure that determined Uber and Lyft’s place in the TLC universe was already in place when she started in May 2014.
In an email, Protz pointed out that Joshi was the TLC’s deputy counsel during the Bloomberg administration and that other senior TLC officials are also Bloomberg alumni.
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