Taxicab Fare and Lease Cap Rule Updates
Proposed Rules: Closed to Comments
The Commission held a biennial review of the current fare and lease cap structure on April 2, 2015, as required under §52-04(b)(3-4) of the TLC Rules. The proposed rules are based on testimony and written comments received at the hearing, the review and analysis of Taxicab and Street Hail Livery (“SHL”) operations by TLC staff, and the solicitation of additional feedback from Drivers, taxi garage owners, and leasing Agents.
The proposed amendments to the Medallion Taxicab Service rules:
Allow Medallion Owners and Agents who offer an “all-in” lease, which includes both the lease of the Medallion and the conditional purchase of a vehicle, to extend lease terms beyond the current 156-week maximum and enable lessees to make smaller weekly payments;
Cap the total amount that can be charged for the conditional purchase of the vehicle;
Require lessors to produce and maintain more detailed receipts for payments towards the vehicle purchase;
Remove the optional gasoline surcharge for Medallion Owners or Agent lessors;
Permit non-cash payments from lessors to Drivers, provided that any alternative payment method is offered at no additional cost to the Driver; and
Provide for an evening rush hour surcharge for Flat Rate trips between John F. Kennedy Airport (“JFK”) and Manhattan.
The proposed amendment to the SHL Service rules provides for an evening rush hour surcharge for Flat Rate trips from Manhattan to JFK.
Lease Caps for All-In Leases
The proposed changes amend the rules for long-term leases to allow Medallion Owners and Agents to extend lease terms for leases that include both the lease of a Medallion as well as the conditional purchase of a vehicle (commonly referred to as the "all-in lease"). Currently, Medallion Owners and Agents may charge a weekly amount, which is capped by TLC rule, for up to 156 weeks for an all-in lease. This weekly cap includes both the Medallion portion of the lease as well as payments towards the conditional purchase of the vehicle. Once all payments are made at the end of the current 156-week term, the vehicle title can pass to the Driver if the Driver so requests. Medallion Owners, Agents, and Medallion Drivers have expressed interest in extending payments over longer periods of time to reduce weekly payments under the all-in model.
Under existing rules, lessors cannot enter into conditional purchase agreements with Drivers that require more than 156 weekly payments. Accordingly, lessors are unable to offer lower weekly payments over a longer period of time. The proposed rules permit lease terms to be extended beyond the current 156-week maximum and enable lessees to make smaller weekly payments. The proposed rules also establish a cap on the total amount that may be charged for the vehicle portion of the all-in lease. The current all-in lease cap, after the removal of the Medallion portion of the lease, permits up to$42,900 in total payments over the course of 156 weeks for the purchase of the vehicle. Under the proposed rule, no Owner or Agent lessor would be allowed to charge more than the total amount of $42,900 for the vehicle portion of an all-in lease, irrespective of the term of the all-in agreement.
To protect drivers from lease overcharges, TLC proposes an additional itemized weekly cap of $275 for the vehicle portion of the lease. TLC also proposes amending rules on the receipts lessors must give Drivers for weekly payments and maintain in their records for Commission inspection. Under this proposed change, lessors must provide weekly to Drivers the following information:
Receipt of that week’s payment, itemized by the Medallion portion of the lease and the conditional vehicle purchase portion of the lease;
The cumulative amount of payments toward the conditional purchase of the vehicle;
The remaining balance on the conditional purchase of the vehicle; and
The estimated number of remaining payments required for the conditional purchase of the vehicle under the current contract terms.
If lessors fail to include this information, they will be fined $200. To ensure that lessors retain these documents, which TLC must inspect to investigate allegations of overcharges, lessors will be fined $100 penalty for each missing document.
In 2012, TLC adopted rules providing for an optional gasoline surcharge that could be offered to Drivers leasing Taxicabs on a daily or weekly basis. The proposed rules remove this optional surcharge after outreach conducted by TLC staff indicated that it is not utilized by Taxicab lessors.
Non-Cash Payment Methods for Owner and Agent Lessors
Medallion Owner and Agent lessors are required to remit to Drivers all passenger fares paid by credit card. TLC rules currently require that these payments be made in cash. Both Drivers and lessors have requested that these payments be permitted in forms other than cash. Given security concerns associated with requiring lessors to have large sums of cash on hand as well as similar concerns with Drivers leaving garages after having been paid out in cash, the proposed Rules would permit other forms of payment, such as payment by debit card, bank transfer, or check, so long as the other forms of payment are provided at no cost to Drivers. Cashless payment can help streamline operations, allowing Fleets and Agents to reduce shift change times and enabling the exchange of vehicles between Drivers at off-site locations, both of which can help to expand Taxicab service to passengers at rush hour and provide additional fare opportunities to Drivers. Additionally, Drivers have responded positively to cashless payment provided in other sectors of the City’s for-hire industry. To ensure payment is made at no cost to Drivers, the proposed rule would add to the existing fine a penalty for an Owner or Agent who violates the rule to pay restitution to the Driver in the amount of any additional cost incurred by a Driver for payment. The proposed rules would also permit Drivers who lease Taxicabs on a weekly basis to choose to be paid out on a weekly basis, which conforms to current industry practice.
Rush Hour Surcharge for Flat Rate Taxi Trips between Manhattan and Kennedy Airport
In 2004, the Commission established an evening rush hour surcharge for weekday trips between 4:00 PM and 8:00 PM. The intent of the surcharge was to encourage Drivers to provide taxi service when supply is insufficient to meet passenger demand. However, the current evening rush hour surcharge does not apply to Flat Rate trips between Manhattan and JFK. Because of the amount of time it takes to make the round trip to JKF, including time spent waiting in the central hold lot, Drivers lose out on money they could have made via the surcharge on metered fares. These losses are amplified by the additional travel time to JFK during rush hours as compared to non-rush hours (56 minutes vs. 41 minutes). Including waiting time at JFK between fares, the average amount of time spent traveling to JFK and returning back to Manhattan during the evening rush hours totals 3 hours.
To adequately compensate Drivers for the additional time it takes to complete trips between Manhattan and JFK during the evening rush hour, TLC proposes an evening surcharge for these trips. TLC staff calculated that Drivers can complete 9 regular metered fares, netting an additional $9 in rush hour surcharges, during the time it takes to complete a trip to and from JFK during the evening rush hours. The proposed rules provide a surcharge of $4.50 per trip on all Flat Rate trips between Manhattan and JFK on weekdays between 4:00 PM and 8:00 PM.
In 2014, Taxis completed on average almost 2,000 trips between Manhattan and JFK each weekday between the evening rush hours of 4:00 PM and 8:00 PM. A rush hour surcharge on the JFK Flat Rate will adequately compensate drivers as they meet this high demand for transportation to JFK.
Rush Hour Surcharge for Flat Rate SHL Trips from Manhattan to Kennedy Airport
The SHL Service Rules provide rates of fare for Hail Trips that mirror those in the Medallion Service Rules. Accordingly, the SHL rules provide for an evening surcharge for all metered trips on weekdays between 4:00 PM and 8:00 PM. Additionally, the SHL rules provide a Flat Rate for trips from the Manhattan Hail Zone to JFK. A review of LPEP records reveal a similar increase in the amount of time it takes a SHL Driver to complete a Flat Rate trip to JFK during rush hours as compared to non-rush hours. To adequately compensate SHL drivers as they complete Flat Rate trips from Manhattan to JFK during the evening rush hours, the proposed rules provide a surcharge of $4.50 per trip on weekdays between 4:00 PM and 8:00 PM.
The Commission’s authority for these rules is found in section 2303 of the New York City Charter and sections 19-503 and 19-511 of the New York City Administrative Code.