QUEENS, N.Y. (CN) - New York's taxi industry is on the brink of collapse because the city is letting services like Uber trample territory reserved for medallion holders, credit unions claim in court.
Melrose Credit Union and three others brought a petition last week in county supreme court to make the New York City Taxi and Limousine Commission uphold the laws that give taxi-medallion owners the exclusive right to accept street hails.
"The time for warnings is now over," the 37-page filing states. "The crisis is upon us. The TLC's shocking disregard for the facts, and its inexplicable refusal to enforce the hail laws against Uber, have driven New York City almost to the point of no return-the unprecedented destruction of an industry brought about by the same people entrusted to uphold the law."
With billions of dollars in financing for taxi-medallion sales on the line, the credit unions says Uber's popular smartphone service of electronic or "e-hails" flies in the face of a New York City's Hail Act.
This law explicitly states: "It shall remain the exclusive right of existing and future taxicabs licensed by the TLC as a taxicab to pick up passengers via street hail ... No driver of any for-hire vehicle shall accept a passenger within the City of New York by means other than pre-arrangement."
"Moving faster than the speed of regulation, Uber has engineered an unprecedented, broad daylight heist of the taxicab hail market," the credit unions claim.
Throughout April 2015, the credit unions allegedly contacted various New York City officials to have them commit to enforcing the hail-exclusivity rights of taxi-medallion owners. The credit unions say the city has the power but fails to penalize Uber and other non-medallion companies that continue to take e-hails.
The TLC itself has allegedly acknowledged that e-hails are basically just a newer form of a street hail.
Indeed the definition of "hail" included in e-hail rules that the TLC adopted on Jan. 29, 2015, demonstrates that "an on-demand e-hail accomplishes exactly the same thing as a traditional street hail - on demand services for passengers ready to travel," according to the petition.
At the end of April, however, the credit unions learned that the TLC found that e-hails by Uber and other similar car services do not violate medallion owner's hail-exclusivity rights, and that the TLC was not planning to enforce any rules against Uber for its e-hails.
The credit unions filed their petition on May 27.
With about 15,000 for-hire vehicles (FHVs) on the streets of New York, Uber has put medallion taxis in the minority but still plans to more than double its vehicle army, according to the petition.
And as Uber continues to grow, the market value of a taxi medallion has dropped from about $1 million to under $675,000, while TLC data shows a rapid decline in taxi rides and revenues, the credit unions say.
Foreclosures are looming as borrowers begin to default on their medallion loans, foreshadowing the possible collapse of both the medallion market and the taxi industry, the lenders warn.
Montauk Credit Union, Progressive Credit Union and Lomto Federal Credit Union joined Melrose in the petition.
They name the New York City, the TLC, TLC chairwoman Meera Joshi, Mayor Bill De Blasio and New York State Attorney General Eric Schneiderman as respondents.
Chicago's principal medallion lender made similar claims of industry doom in a May 19 complaint against Capital One.
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