After failing twice to enact a system that would enrich a handful of private companies by screwing riders and destroying D.C.'s unique owner-operated cab industry, D.C. pols are at it again. And they've wisened up: There's no "medallion bill" to get riled up over. Instead, they buried it in a few sentences at the end of a piece of legislation that's supposed to "modernize" the industry.
The nation's capital currently enjoys an unusually free and open cab industry dominated by independent drivers who set their own hours and pocket most of their own revenues. That's not to say anyone can break in. The supply of cabs is limited by a licensing exam for drivers that's been closed since 2010. (D.C.'s taxi commission receives calls "all day, everyday" from people who want to sign up for the exam, according to one employee of the commission.)
But the supply of taxis isn't limited, and that's a key distinction. It means the cabs themselves are worth about as much as any other car with a meter. That's what's made it possible for D.C. cabbies to be free entrepreneurs since they don't have to make a major capital investment before they can start driving. All they have to do is buy or rent a car.
That would change if section 5, article K of a new bill co-sponsored by Councilmembers Mary Cheh and Tommy Wells becomes law. That provision would empower the Taxi Commission to "establish a public vehicle-for-hire licensing quota which provide that the number of new taxicab vehicle licenses may be limited."
This would create a medallion system, plain and simple. Limiting the number of taxi permits means they'll become expensive and scarce. It's the very same arrangement that's caused endemic cab shortages (see New York City), handed control of an entire industry to one company (see Milwaukee), and forced cabbies to arbitrarily give the lionshare of their revenues to big companies (see Boston).
This bill is also a giant gift to companies that own taxi fleets. Today, those firms make most of their income by renting vehicles to drivers. It's not an exceptionally lucrative business because essentially they're just providing drivers with a car and a meter. But all existing cabs would be grandfathered in under the new system, so all those cabs for rent would suddenly have medallions attached to them. This would boost the value of those fleet companies many times over, since now drivers would have to rent a car and a medallion. (In New York City, a single taxi medallion, i.e. the right to drive one cab, sells for about $750,000.)
In a phone interview, I asked D.C. Taxicab Commission Chairman Ron Linton, who helped write the new bill, if he has considered how a medallion system will enrichen big cab companies at the expense of owner-operators.
"It's an interesting point and a fair point and we're going to have to take a hard look at it because that's not the intent," he said.
New York City taxi medallions make for a lucrative trade on Wall Street, but some cities do restrict the sale and purchase of taxi medallions.
Linton said he isn't sure what the policy would be in D.C. "That's a good question," he said. "It hasn't been brought up."
Are taxi magnates like Jerry Schaeffer, who literally hired the lobbyist who wrote the last medallion bill, behind this latest cab grab? Taxi cab reporter Pete Tucker discovered that Linton met privately with the owners of D.C.'s biggest fleet owners earlier this month. Linton told me that the purpose of the meeting was largely technical and had to do with other aspects of the bill.
"I don't get a sense of a great opposition from fleet owners coming down the line, but I don't get a sense of great support either," he said.
Linton says the new system will empower the commission to bring the number of cabs on D.C.'s streets "in line with market demand." If D.C.'s medallions become too valuable and scarce, he says, he can always break the cartel by increasing the supply of medallions. What he doesn't acknowledge is that his medallion system will create an interest group determined to protect its assets. I recommend he read up on New York City's never-ending battle to increase its supply of medallions, which were first set in the 1930s.
For more on how a medallions system will hurt everyone except a handful of politically connected companies, check out our Reason.tv report from July, "D.C. Taxi Heist."