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Attorney General James may sue NYC over cost of taxi medallion permits

Yellow cabs travel along East 86th Street in

Yellow cabs travel along East 86th Street in Manhattan in April 2017. The value of the medallion permits needed to operate taxis in New York City has plummeted. Credit: Charles Eckert

State Attorney General Letitia James on Thursday threatened to sue New York City for $810 million, claiming the city had artificially inflated the cost of taxi medallion permits, once billed as can't-lose investments, and their value tumbled with the dawn of ride-hailing apps.

James also claimed the city allowed "collusive bidding" for the taxi permits, hid an internal analysis that the permits' cost outpaced their value and disseminated other misleading information.

The press secretary for Mayor Bill de Blasio said James' action was a "frivolous investigation" into a mayoralty long "working tirelessly to clean up the carelessness and greed of others."

In a six-page notice of claim signed by James' senior enforcement counsel Shamiso Maswoswe and filed with City Comptroller Scott Stringer, whose office receives such notices, the attorney general's office said the regulator, the New York City Taxi & Limousine Commission, "wrongfully obtained" profits and caused the damage between 2004 and 2017, "with harm continuing to present."

In one example, medallions cost about $283,300 in 2004, and $965,000 in 2014, James' office said in a news release.

The value of the medallions, required since at least 1937 in New York City and considered an investment that could only rise in value, has gone down as app-based ride-hailing services such as Uber and Lyft debuted and expanded their reach across the city.

According to the notice of claim, the city marketed the medallions as "a solid investment with steady growth … better than the stock market."

As values have gone down, at least eight drivers died by suicide by 2018.

Taxi commission spokesman Allan Fromberg referred inquires to de Blasio's office, whose press secretary Freddi Goldstein wrote in a statement: “We have spent the last six years putting money back into the pockets of drivers and attempting to curb the harm from Uber years before anyone else wanted to recognize the threat. This crisis has been ours to solve — working tirelessly to clean up the carelessness and greed of others. If the Attorney General wants to launch a frivolous investigation into the very Administration that has done nothing but work to improve the situation, this is what she’ll find.”

Goldstein added: "We inherited and carried out a Bloomberg-planned sale barely weeks into the start of our Administration and never had another auction again. This crisis has been ours to solve, but the decisions that led to it precede us."

A spokesman for Michael Bloomberg, de Blasio's predecessor who is running for president, could not be immediately reached for comment.

James' office said that the commission's actions constituted a scheme to defraud, a violation of Article 23-A of New York's General Business Law, common law fraud and unjust enrichment.

A notice of claim is the first step to suing a government agency. 

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