Cambridge Taxi Medallion Owners ‘Underwater’ As More Face Bankruptcy

By Natalie Handy
nhandy@wickedlocal.com
Wicked Local Cambridge
December 23, 2015
http://cambridge.wickedlocal.com/news/20151223/cambridge-taxi-medallion-owners-underwater-as-more-face-bankruptcy-
In the last year, the value of taxi medallions has dropped 60 percent, prompting local leaders to pick up their efforts in helping to preserve the industry as more and more cabbies file for bankruptcy.

Ride-sharing companies like Uber and Lyft are quickly wiping out the cab industry, which is fighting stricter regulations, according to Anthony Galluccio, former state senator and city councilor who is a member of the newly formed Cambridge Taxi Advisory Committee.
The Cambridge cab industry is not giving up without a fight, however. They held a daylong strike in August to protest lack of regulations with Lyft and Uber, and more recently, some companies have launched taxi-hailing Smartphone apps like Ambassador Brattle or Origa. While the apps are a step in the right direction, according to veteran cabbie Michael Gervais, they’re not a perfect fix.

For instance, a taxi app could receive 600 calls, but might only have five available cabs on hand, Gervais said. In all of Cambridge, there are only 257 cabs, and in addition to responding to app requests, they also do street work.

“It’s like having 10 people answering 1,000 phones. You can’t do it,” Gervais said. “These apps are never, ever successful unless there are lots and lots of cabs on them, and if the public accepts them. You need hundreds, almost thousands of cabs for them to be any good.”

Uber has almost 10,000 cars on the roads in Boston, according to Galluccio. In addition to taking business away from cabs, it also presents an environmental problem. There are many restrictions that prevent cabs from idling, so drivers park and stand outside in the cold instead of running their cabs, Galluccio said. There are no rules to prevent Uber or Lyft drivers from leaving their cars running, however.

Another major issue is that many cab drivers are medallion owners, and the value of medallions has dropped drastically in the past year. In July of 2014, medallions in Cambridge were valued at $525,000, and have since plummeted to $200,000, according to Donna Blithe-Shaw, staff representative of the Boston Taxi Drivers Association.

“It’s no different than the housing bubble of 2009, when you owned a home for more than it was worth. These owners are underwater. They’re going into bankruptcy and foreclosure, and they have no choice. Even if you wanted to sell your medallion, no one will buy it,” Blithe-Shaw said.

History of regulations

In 1934, the state Legislature gave broad-range authority to the city of Boston and its police commission to regulate taxis, which is when the medallion system was established, Blithe-Shaw said. A medallion gives taxi drivers exclusive rights to pick-up and provide hired transportation.

Following rules and regulations, medallion owners charge a city-issued rate and are given jurisdictional rights, she said. Only medallion owners could pick up fares or sit at cab stands, until Uber and Lyft came along.

Ride-sharing companies don’t have to comply with established taxi industry rules and regulations, and medallions are basically worthless now, Blithe-Shaw said. The need to regulate ride-sharing companies is the same as the need to regulate companies like FanDuel and DraftKings for gambling.

“Everyone is up in arms [about gambling] because there’s a lot more money involved, and more political power with casino owners than taxi owners,” she said.

In Cambridge, taxi drivers who rent medallions have to pay around $70 for every 12-hour shift, and since it’s a pay-to-work system, drivers are basically stuck, Blithe-Shaw said.

Some cab drivers have sold their medallions or given them back to banks, and others have left the industry to join the ride-share companies.

From an advocate’s perspective, Gervais said he wants equal rights for all drivers, including those of ride-sharing apps. Gervais said he and other advocates are calling for a transformation of all industries so that they might work together in peace. They want cars to be inspected on a regular basis and drivers to pass safety measures and be properly insured.
“For many cab drivers, they’re dealing with very rough times economically. They’ve got to ride the storm. They’ve gone through rough times before, but they’re not giving up,” Gervais said.

Cambridge Taxi Advisory Committee formation

Gervais, who founded the Cambridge Taxi School and is considered by some as the chairman of the cab industry, said the city has been very supportive in the desired transformation of the industry.

According to Gervais, City Manager Richard Rossi has developed an ongoing committee to address transportation issues, headed by Elizabeth Lint, executive director of the License Commission. The committee includes Galluccio, who Gervais said has given a voice to the cab driver community and is “like a manager to a bunch of punched-out fighters.” The committee also includes representatives from the cab industry, Uber, Lyft, the hotel and tourism associations, and insurance and banking institutions.

The Cambridge Taxi Advisory Committee, which was formed in November, has met twice thus far. Rossi is working as chair of the group while negotiating with mayors from several cities about changes that would be in the best interest of the commonwealth, Gervais said. Some issues that will be examined specific to taxis are re-evaluating surcharging and flat rates.

The Cambridge Police Department has also provided supportive services to aid the industry, according to Commissioner Robert Haas.

“It is clear that as the transportation system continues to evolve, it is now presenting some very unique challenges for the taxi industry, which will require it to progress in order to maintain its viability,” said Haas.

As far as future goals, Gervais said many positive changes will be seen within the next few years. Drivers are becoming more responsible and making changes from within, Gervais said.

He hopes for some deregulation, so that Cambridge cabs can pick up in Boston and vice-versa. Gervais said he is also very strongly in favor of enforcing statewide education for all professional drivers. Rather than have the Cambridge or Boston taxi schools, Gervais said it’s important that all professional drivers are required to have the same education.

“Uber drivers get into cars and think they’re professional cab drivers, and they’re not. I could go to a costume factory and put on a doctor’s uniform, but I don’t think you want me to do heart surgery,” Gervais said.

If the industry goes under, Galluccio said there would be a huge impact on seniors, working-class people and those who use cabs for short fares.

“[Uber] is not going after underserved markets. The cab industry isn’t perfect at all, I understand why Uber presents an attractive choice, but I want people to think about longterm and what’s the end game,” Galluccio said.

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