Bloomberg’s battle to create more taxi medallions is rebuffed by the courts

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June 2, 2012 By Steven Greer

The out of control livery cabs that have plagued the streets on New York City are the byproduct of the battle between Mayor Bloomberg’s administration and the powerful companies that own the existing medallions. If more taxi medallions are issued, then the existing owners of the medallions would see their assets diluted. On one hand, there is a critical shortage of yellow taxis at certain times of the day. On the other hand, the cash payment livery cabs are a buyer-beware proposition, where crime and hustling are commonplace.

The Bloomberg administration had succeeded in bypassing the special interests that control City Hall and succeeded in a state law passed in Albany that allowed 2,000 new medallions to be issued, and permitted new livery cab services in the areas of New York where it is difficult to get a yellow cab. On Friday, the NY Supreme Court overturned that law.

The WSJ reported, “The restraining order brings a sudden halt to the roll-out of new “borough taxis.” The Taxi and Limousine Commission had initially planned to begin accepting applications for the new licenses as soon as Monday, one reason for the haste of the judge’s order.

The ruling also halts the planned auction of the 2,000 new yellow-taxi medallions, since the legislative deal required that they couldn’t be sold until the new borough taxis were in operation.

Michael Cardozo, the city’s corporation counsel, said the city would explore an appeal of the decision, and noted that the city budget depends on $1 billion in anticipated revenue from the sale of new medallions.

The City Council has controlled the supply of taxi medallions in the city since the Great Depression, Justice Engoron noted. When the council last raised the total number of medallions, in the mid-1990s and 2004, it also adopted a “home rule message” each time.

Attorneys for the city and state had argued that a significant state interest was at stake: broadening access to taxi service to residents outside Manhattan, who aren’t served as comprehensively by yellow cabs. Roughly 80% of the city’s residents live outside Manhattan. In oral arguments, attorneys for the state noted that taxis serve resident from outside the city as well, but Justice Engoron said that argument “simply proves too much.”

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