The Black Car Fund may have swerved out of its lane

The Black Car Fund may have swerved out of its lane

On a desolate block of Long Island City sits a vacant warehouse, its entrances padlocked and doorbell defused. A FedEx tag for an undelivered package, dated 5/23, has been stuck to a barred doorway for at least 11 months. Visible through filthy second-floor windows is a small sign that reads simply The Black Car Fund.

Created to cover injured drivers’ medical costs and lost wages, the fund tacks a fee on to every Uber, Lyft and traditional black-car fare. But records show the fund, now reaping nearly $100 million in surcharges annually, has used the empty Queens building and other means to spend about $2 million intended for ailing workers on lobbyists, politicians, dinners and entertainment.

New York state passed the law creating the New York Black Car Operators Injury Compensation Fund in 1999, ending years of dispute over whether the independent contractors who chauffeured corporate clients around the city in sleek Lincolns could receive workers’ compensation. Under the statute, the Black Car Fund—as it styles itself—became the legal employer of anyone who drove for a black-car base and began assessing a surcharge on every fare to compensate hacks hurt while on the road. Since 2013 that fee has been 2.5%.

Unlike other nonprofits, as a state-chartered entity the Black Car Fund need not file yearly disclosures to the attorney general’s Charities Bureau. Instead, it only must submit an annual accounting of income and expenses to the governor and both houses of the state Legislature. But despite being a creature of state law, answerable to state officials and authorized to impose fees upon the public, the fund is in the power of private interests:

Of the nine directors on its board, five are chosen by the Black Car Assistance Corp., an industry group. The governor selects three—two at the recommendation of the Assembly speaker and the state Senate majority leader. The governor’s secretary of state controls one.

Several observers told Crain’s that the Black Car Fund’s activities appear inextricable from those of the Black Car Assistance Corp. Not only do representatives of the coalition of black-car bases make up a majority of the fund’s board, but the two entities share an executive director: Ira Goldstein. Described as an affable and sophisticated operator in the for-hire-vehicle field, Goldstein spent the 2000s as a Taxi and Limousine Commission attorney and as chief of staff to Matthew Daus, who helmed the agency.

Black cars mostly served the city’s business elite at the time, and their workers’ compensation provider was a modest insurance concern. Then the future arrived. When Uber came to New York City in 2011, the Black Car Fund took a hostile posture toward it, industry insiders recalled. But the Taxi and Limousine Commission soon classified e-hail vehicles as black cars, bringing them into the fund’s payment pool. Via and Lyft came along in 2014, and Juno in 2016. New Yorkers by the thousands began using their smartphones to summon rides, and the Black Car Fund’s revenues exploded.

The black-car sector—mostly Town Cars—included only 16 app-based vehicles at the start of 2012. That year the 2.5% fee on rides yielded $14.2 million for the fund, disclosures to the Assembly show. Six years later more than 70,000 app-based cars were tooling around the five boroughs, and the fund reaped $93.4 million off its surcharge. When the apps expanded to upstate in 2017, so did the Black Car Fund.

Payouts to injured drivers swelled from $12.3 million in 2012 to $65.4 million five years later. But with the fund’s revenues growing faster, insiders speculated that it needed to spend more to keep the state from reducing the surcharge.

Disclosures for 2017 show revenues from fees and investments exceeded $97 million and a net income of $2.6 million. The fund spent $4 million on payroll and fringe benefits, up from $2.3 million in 2012. Its office expenses more than doubled, reaching $363,251, and board meeting expenses more than tripled, to $52,441. Its tab for meals and entertainment was $49,404, up from $22,918 half a decade before.

The Black Car Fund modified its legally mandated plan of operations to increase offerings to drivers, spending $1.7 million on safety classes in what a spokesman called an effort to prevent injuries and lower workers’ compensation costs. It also established a $50,000 death benefit. And in February 2016 the fund, long lodged at 30 Wall St., purchased the warehouse in Long Island City—the heart of the city’s for-hire-vehicle industry—for $8.1 million with the help of a $6 million mortgage. It announced plans to raze it and erect a glassy 5-story headquarters with a parking garage and training rooms.

Last year it modified its plan of operation again, rolling out vision coverage and a telemedicine program. It also joined a lawsuit to block city regulations aimed at increasing the number of wheelchair-accessible for-hire cars. It spent liberally on government relations, most recently retaining three powerhouse firms to represent it at the statehouse and City Hall: Pitta Bishop & Del Giorno, Greenberg Traurig and SKD Knickerbocker. According to the state’s Joint Commission on Public Ethics, the fund has spent more than $1.6 million on lobbyists since 2011 and now pays them almost $25,000 a month.

Continue reading: https://www.crainsnewyork.com/features/black-car-fund-may-have-swerved-out-its-lane

  • Did the Black Car Fund swerve out of its lane?

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