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Judge rules in favor of CUs on taxi medallions
NEW YORK (8/22/12)--A New York Supreme Court judge Friday blocked a state law that would have allowed the sale of more New York City yellow taxi medallions. The ruling supports a claim by credit union lenders that the state violated the "home rule" provision of the State Constitution.

Taxicab Service Association (TSA)--an association of credit union lenders that finance the yellow taxi medallion purchases in New York--had asked the court to invalidate the Street Hail Livery Law, or Hail Act, which was passed in 2011 to shore up an insufficient supply of taxis in the city and its outer boroughs. The Hail Act allowed up to 18,000 new taxi licenses in the city and its outer boroughs, according to court documents.

New York Supreme Court Justice Arthur F. Engoron ruled that the legislation violated the home rule provision of the State Constitution because New York City taxi service is not a matter of substantial state interest or concern and "a law that shifts power from the city's legislative branch to its executive branch, and micro-manages the exercise of that power, fails to bear a reasonable relationship to any such interest or concern."

The state legislature passed the law at New York Mayor Michael Bloomberg's urging after the plan was rejected by the City Council, which holds the power to issue new medallions.

Engoron also cited the State Constitution's "double enactment" clause. "If plaintiffs are correct that a substantial State interest does not support the subject legislation, then the subject legislation violates the 'double enactment' clause, because it repeals, diminishes, and/or impairs powers granted in the Statute of Local Governments but declares itself to take effect immediately, without a 'double enactment,'" Engoron wrote in his ruling.

On June 1, Engoron issued a temporary restraining order blocking the measure (News Now June 13). New York's Supreme Court is a lower trial court.

The individual credit unions joining TSA's suit include Lomto FCU, Melrose CU, Montauk CU and Progressive CU--all from the New York area.

Taxi medallions are symbols that are usually attached to the hood of New York City cabs. The medallions are licenses that are regulated by the city and allow drivers to pick up curb-side passengers who hail a cab. Credit union service organizations may originate business loans that are used to purchase taxi medallions, the National Credit Union Administration said in a legal opinion released in October 2010 (News Now Nov. 1, 2010).


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