NYC taxi auction
Drivers wait to pick up passengers at a taxi holding area next to John F. Kennedy Airport on May 6, 2006 in New York City.
KAI RYSSDAL: Suppose I could steer you toward an investment that returns 12 or 15 percent a year? That's a pretty good profit. You could try finding something like that on Wall Street. Or, today, you could've walked a couple of blocks west of there. To the offices of the New York Taxi and Limousine Commission. To operate a cab in the Big Apple, you need a medallion. It's actually a tin seal that's riveted onto to the hood of every yellow cab in the city. And today they were selling for close to a half-million dollars. Each. Here's our New York bureau chief Bob Moon:
BOB MOON: OK, so it's not the floor of the New York Stock Exchange . . . . This is a room full of anxious investors not far away, though, gathered for the opening of bids for 254 new taxi medallions going for close to $500,000 apiece. Taxi Commission Chairman Matthew Daus compares the investment to buying real estate. A successful bidder can own, sell or hand the medallion on to others forever:
MATTHEW DAUS: You can't go wrong. Nobody's ever lost a dime on a medallion. It's a great investment. It's an opportunity available for New Yorkers looking to make a better life for themselves, and it's a piece of the American dream for a lot of people.
About 60 percent are held by fleet owners; the rest go to individual drivers. While returns have averaged 12 to 15 percent a year, David Garber is philosophical about what he was bidding for today. After all, he says, he could always have a wreck, and not be able to make the payments on his medallion loan:
DAVID GARBER: It's a gamble. I don't know if it's 12 percent or 4 percent, but it is money in my pocket. As long as I have money in my pocket and enough to pay the medallion mortgage, I just know that I like to drive and I don't like bosses, so I might as well work for myself.
Just five years ago, taxi medallions were selling for less than half of what they are now. Taxi driver Rajender Ghandani leases his medallion, but told they're now selling for close to half a million, he wishes he could buy one outright:
RAJENDER GHANDANI: Oh my God! I didn't know that! You know, I tried, but you know, somebody can finance me zero percent down, I would have bought the medallion.
Ghandani is like most cab drivers who drive for taxi fleet owners here and don't make a fortune. Maybe, he says, $15 an hour on a good day.
In New York, I'm Bob Moon for Marketplace.