Brookline taxis: can you afford a “medallion” taxi?

High prices: Since the 2007 Brookline Taxi Study prepared by Schaller Consulting, the Board of Selectmen and the Transportation Board have been considering plans to change Brookline taxi licensing from annually renewed “hackney” licenses to high-priced, perpetual “medallion” licenses. The “medallion” licenses would be sold to taxi operators to raise millions of dollars for Brookline.

So far, no one explained where that money could come from. However, there are only three practical sources: (1) increased fares paid by passengers, (2) reduced net incomes of taxi companies and other license holders, and (3) reduced net incomes of taxi drivers who are not license holders. Neither the 2007 Brookline Taxi Study nor any other available report presents an integrated financial view of the Brookline taxi industry.

Business finance and a phantom report: Some estimates can be made from an unsigned, undated report available from the Transportation Division of the Public Works Department (called here the 2012 Taxi Report). According to mentions of the report elsewhere, it may have been drafted or prepared by Richard LaCapra, a consultant on taxi licensing, and it probably was completed in early 2012.

According to the 2012 Taxi Report, 185 taxis were then licensed by Brookline, and revenues from fares in the first half of 2011 averaged $230 per day per taxi. Adding an average 15 percent of fares for tips leads to estimated total 2011 revenue for the Brookline taxi business of about $15 million. Confidential information from Bay State Taxi for 2010 and 2011 suggests those estimates are high. If Bay State were representative, then total 2011 revenue for the Brookline taxi business, including tips, would be about $13 million.

When costs of business are deducted, about $5.5 million per year is left for net personal incomes of drivers, and about $1 million is left for net business incomes of taxi companies and other license holders. The 2012 Taxi Report proposes to take back 37 existing licenses and to sell the balance of 148 as “medallion” licenses over about five years for a combined total of about $10 million, averaging about $2 million per year.

When extrapolated through total conversion from annual “hackney” licenses to long-term “medallion” licenses, the 2007 plan would have brought Brookline about $9.5 million over about 16 years in “medallion” fees–not adjusted for inflation or other financial factors. It would have involved little change in the size of the taxi fleet and represented added cost averaging about $0.6 million per year for the Brookline taxi business.

Bankrupting taxi companies: Unless offset by huge increases in taxi fares, the 2012 Taxi Report‘s plan for “medallion” licenses would extract about 30 percent of the combined annual net personal and net business income (for 2011) from the Brookline taxi business. At the same time, it would force the business to operate with 20 percent fewer vehicles–thus, on average, cutting personal and business income about in half. The likely fallout: companies shutting down and drivers leaving Brookline.

Compared with the 2007 Brookline Taxi Study, the unsigned 2012 Taxi Report lacks a professional approach. The 2007 study reviewed “medallion” programs in several communities and based recommendations on the comparisons, finding an equivalent to about $40,000 in market value for “medallions” in Brookline. In contrast, the unsigned 2012 Taxi Report simply claims that a “market price of $125,000 is realistic.” [p. 4] It presents no evidence to support the claim and fails to consider conflicting evidence explored in the 2007 study.

– Beacon staff, July 20, 2014


Unsigned, Brookline Taxi Report, Transportation Division Brookline DPW, Undated c. 2012

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