In Montgomery County we have Passenger Vehicle Licenses (PVL), our equivalent to New York City's taxi medallion. The taxi medallion is a form of pseudo-property that gives its owner the right to pick up passengers. It can also be worth close to one million bucks in New York City. In this column, I will talk about why they can be so pricey, who sells (issues) them, and who buys them...
Why so pricey? Let's start with the basics. The medallion owner has the right to put a taxi on the street and pick up passengers. A medallion owner buys a car and has it retro-fitted to be a taxi. The medallion owner leases out his cab to a driver for a flat rate of $200 per shift. The driver hits the mean streets of NYC and picks up 40 fares in a 12-hour shift, bringing in about $400. The driver gets $200, the medallion owner gets $200. Multiply that by two shifts per day, six days per week, 52 weeks per year, and the medallion owner rakes in $200 x 2 shifts x 6 days x 52 weeks = $124,800. Factor in some expenses, but suddenly a million bucks doesn't look too bad for the rights to the medallion.
Back to home -- certainly a Montgomery County cabbie does not get forty $10 fares in a twelve hour shift. They probably get a couple longer airport trips and 7-8 trips around town, taking in about $200-$300 per day for fares, on both shifts. A Passenger Vehicle License holder in Montgomery County can turn around and charge the cabbie a flat rate of $80-$120 per day depending on the arrangement. But, we also have to account for costs that include the vehicle, its maintenance, the company fixed and variable costs (like a mandatory dispatching center). I will let you do the math, but we certainly could not sell the rights to our medallion for a million bucks.
Who issues the medallions? In New York City, medallion numbers hovered around 11,700 for sixty years but then surged to 13,200 medallions by 2009. The need for new medallions was determined by the city taxi department in the 1990s through an intense process of politicking, researching, lobbying, etc... At a city auction, initial sales from 400 new medallions netted $100 million in revenue to the city.
In Montgomery County, our Passenger Vehicle Licenses also get issued by the county based on need, researching, politicking, lobbying, etc.. Instead of sold at auction, these PVLs are issued to specific drivers or specific fleets (an additional level of regulation). But the owners or fleets can still buy and sell the PVLs that they have been issued by the county taxi office (with county approval).
Who buys them? Medallions and PVLs may be bought and sold by the local drivers, by local fleets, speculators, investors, etc... There is almost always a demand because regulators keep the number of available medallions or PVLs at an artificial low (regulators consider their available number to be a sweet spot based on sound research), there is always an abundance of passengers in need and drivers seeking work. Interestingly enough, as the overall economy gets worse, there are more laid off workers looking to drive a cab, so the fare rates and shift rates increase thereby driving up the cost of the medallion or PVL (but more on that in a future column).
Here's a couple relevant links:
Montgomery County Taxicab Unit: http://www.montgomerycountymd.gov/tsvtmpl.asp?url=/content/dot/transit/taxi_reg/taxi_user.asp
NYC Taxi and Limosine Commission: http://www.nyc.gov/html/tlc/html/home/home.shtml
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