Monday, January 22, 2018

Wishful thinking on future NYC medallion sales

Last month, New York State Comptroller Thomas P. DiNapoli issued a report on New York City’s financial plan for FY 2018 through FY 2021.  In the report, DiNapoli discusses NYC’s repeated postponement of the sale of 1,650 medallions because of the weakening market due to ride-hailing apps like Uber and Lyft, and NYC’s dubious assumption that these medallions will sell for $728,000 apiece (while an auction held on January 16th averaged about $175,000 per medallion).

A couple of observations about NYC’s financial plans with respect to medallion sales:

1. No person or entity will pay $728.000 for a NYC medallion!
2. Currently medallions are selling for approximately $185,000 per medallion and a $728,000 selling price is unobtainable.
3. With the number of Uber, Via, and Lyft cars on the road, there is no need for NYC to sell additional medallions!
4. In fact, maybe NYC should consider buying back existing “under water” medallions from owners whose medallions are “under water” due to Uber, Via, Lyft and NYC’s actions and inaction.
5. If NYC were to sell an additional 1,650 medallions, the price of existing medallions will drop precipitously in value and will result in a further decrease of existing medallion owners’ earnings.

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