New York loses bid to raise $1.4 bln with taxi medallion sale

Aug 17 (Reuters) - New York City cannot raise $1.4 billion by selling 2,000 taxi medallions after a state judge ruled on Friday that a plan to expand city cabs outside of Manhattan violated the state constitution.

State Supreme Court Judge Arthur Engoron, deciding in favor of the taxi club owners who sued, said: “The entire act is null and void.”

Engoron based his decision in part on the failure of Mayor Michael Bloomberg’s administration to get the city council to approve the plan.

Michael Cardozo, the corporation counsel for the New York City Law Department, said the city will immediately appeal the decision and was confident it would prevail.

Taxi cab owners said the value of their medallions would be reduced by the sale of so many new ones.

“The irrational fear of lost profits by medallion owners and lenders should not be permitted to derail these important programs,” Cardozo said in a statement.

A spokesman for Bloomberg was not immediately available to say how the mayor would fill the budget holes created by the court ruling. Bloomberg previously has warned that jobs might have to be cut if the city lost the court battle.

The mayor, a political independent, is relying on selling 2,000 new taxi medallions to raise $635 million for the $68.7 billion budget for fiscal 2013. Another $365 million would be raised in 2014 and $460 million in 2015.

The Metropolitan Taxicab Board of Trade, one of the plaintiffs, said thousands of owner-drivers and hundreds of small business owners were “breathing a sigh of relief that their livelihoods will not be destroyed by this flawed and destructive plan.”

The case is Taxicab Service Association et al v The State of New York et al, New York State Supreme Court, New York County, No. 102553/2012