Having advised lenders on medallion values in recent years in NYC, Chicago, Philadelphia, Miami and San Francisco, I have found there is one obvious trend. Prior to Uber and Lyft, medallions were an oligopoly and government regulation was designed to protect the investment of the Medallion holder and the value of the Medallion.
The Medallions were like real estate in San Francisco City: they never lost value. Or so it seemed. The regulation in many cities focused not on convenience and need but on limiting new Medallions, thus ensuring that existing Medallion holders got top value for their assets and that lenders who lent on that value had very little risk.
Uber and Lyft changed everything. In New York, for example, there was a cap of about 13,000 medallions. Fares could rise, Medallion holders could raise lease costs and everyone except the taxi rider was happy. When Uber came, shared rides went from the 13,000 taxis to more than 40,000. So even if the Taxi and Limousine Commission ("TLC") ends up regulating Uber and Lyft, the cat is out of the bag and we'll never go back to a scarcity.
The same is true in Chicago. Service is better and more universal. The losers are the Medallion owners and the banks who over-leveraged Medallions and never required a paydown or pay-off.
