CHICAGO -- With nearly half of the city's 6,999 licensed cabs in foreclosure or idled, Chicago's taxi drivers are considering a plan that would cap the number of ride-sharing licenses -- to keep taxi fleets on the streets.
New York City approved a measure last month that places a one-year moratorium on new ride-share licenses for Uber and Lyft drivers. Support is growing among Chicago cabbies for a similar move. Adrian Tudor, owner of Taxi Town on Chicago's far North Side, said such a move would help the taxi industry compete, particularly on weekends, when part-time ride-share drivers flood the city looking for fares.
"Things are getting worse every day," said Tudor, 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."
City officials 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 spokesman 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 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 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.
Business on 09/06/2018