Audit Report on the Taxi And Limousine Commission’s Controls Over Taxi Medallions

AUDIT REPORT IN BRIEF

The Taxi and Limousine Commission (TLC) was created in 1971 by Local Law 12 to regulate and improve the taxi and livery services in New York City.¹ The purpose of TLC is the continuance, further development and improvement of taxi and limousine service in New York City. TLC licenses and regulates medallion taxicabs, for-hire vehicles (community-based liveries and black cars), commuter vans, paratransit vehicles, and certain luxury limousines. It also licenses the owners and operators of these vehicles as well as the central facilities, or “bases,” for these vehicles. In addition, TLC licenses and regulates the businesses that manufacture, install, and repair meters used in taxicabs, agents that operate taxicab medallions on behalf of owners, and brokers that assist buyers and sellers of taxicab medallions.

Medallions are aluminum plates affixed to the hood of taxicabs to represent physical evidence of a taxicab license. Chapter 5 of the New York City Administrative Code, Transportation of Passengers For Hire By Motor Vehicles, requires TLC approval for transfers of medallions, and maintains the appropriate proportion of owners of one taxicab to owners of multiple taxicabs. Additional medallions may be sold only through enactment of a local law. Since 2000, the City Council and State legislature authorized an additional 1,050 medallions, which TLC sold through auction.

Currently, TLC classifies a medallion as “independent or “mini-fleet”. During Fiscal Year 2007, the average price for an independent and mini-fleet medallion was $411,083 and $518,875, respectively. TLC licensed 13,085 yellow taxicabs during that period—5,506 independent and 7,579 mini-fleet.

The audit determined whether the Taxi and Limousine Commission maintained adequate controls over the issuance, renewal, replacement, and transfer of existing taxi medallions.

Audit Findings and Conclusions

TLC maintains adequate controls over its cash receipts for renewal fees, and the receipt and storage of medallions. TLC also ensures that waiver letters are obtained from DOF prior to the transfer of a medallion below fair market value. However, TLC should improve its controls over the issuance of temporary and replacement medallions by segregating duties that mutually pose potential risk or error, using prenumbered temporary medallions, and improving its monitoring activities. Additionally, TLC should segregate employee responsibilities over the transfer of medallions. Further, TLC should require medallion owners to satisfy outstanding summonses at renewal. If it had, it could have collected an additional $79,820 in summons payments.

Finally, a review of medallion transfers revealed the possible misuse of a power of attorney privilege which led to the continuing operation of a taxicab six years past the death of a medallion owner.

Audit Recommendations

The audit makes 10 recommendations. Among those recommendations, we recommend that TLC should:

Separate the responsibilities for authorizing, processing, recording and safeguarding temporary and replacement medallions.

Order prenumbered temporary medallions.

Separate the responsibilities for authorizing, processing, and recording of transfers as well as the determination of the fair market value for medallions.

Amend its rules to require medallion owners to resolve summonses before medallions are renewed.

Prepare standard operating procedures for Licensing personnel to ensure medallions with outstanding summonses are not renewed.

Require medallion owners to periodically update power of attorney agreements with agents or personally sign renewal cards.

¹ The Commission consists of nine members to be appointed by the Mayor with the advice and consent of the City Council. The Mayor shall designate one member of the Commission to act as the Chairman and Chief Executive Officer.