Thursday, a sea of yellow taxis passed the brooklyn bridge while the taxi medallion owners demanded action on a plea they had been making for months, if not years: “debt cancellation now”.
About 6,000 of New York City’s yellow taxi tags – the metal plates that authorize someone to drive a cab – are independently owned by so-called driver-owners. And while taxi medallions were once seen as a good long-term investment for these drivers – many of whom are immigrants – they have become an overwhelming burden as their value has plummeted. The value of a locket rose from $ 200,000 in 2002 to over $ 1 million in 2014, then collapsed to less than $ 200,000 soon after. At the time, much of the blame was on the rise of largely unregulated ridesharing apps, such as Uber and Lyft. But carpooling alone was not to blame.
For years, taxi industry leaders and lending institutions have engaged in deceptive or risky lending practices, artificially increasing the value of medallions and leading independent owner-drivers to take on bad debt. . A Pulitzer Prize winner New York Times survey in 2019 revealed the details of some of these practices – and the extent to which industry leaders and government agencies have participated in, encouraged or overlooked these subprime lending practices. This survey calls solicited national and local lawmakers to help vulnerable medallion owners exit underwater loans and prevent similar actions in the future.
Some action has since been taken, including a lawsuit filed by State Attorney General Letitia James against the New York City government for contributing to the artificial inflation of locket values and owner fraud. of medallions. But for the most part, plans for bailout owners or long-term industry reforms have been put on hold as the city grapples with the coronavirus pandemic. Efforts to alleviate the debt of New York City taxi drivers may have been scrapped in the past six months, but taxi drivers are again asking for help, reminding lawmakers that their debt crisis before the coronavirus was only exacerbated by the pandemic. Yellow taxi rides were down 92% in June compared to the previous year, according to data from the Taxi and Limousine Commission. Since January, average debt Medallion owners were faced with approximately $ 700,000.
Thursday’s caravan of yellow cab drivers demanding debt relief was just the latest – and most interesting – in a series of similar protests they have waged in recent months in an attempt to attract attention to how the pandemic has turned their crisis from bad to worse. “This is a serious humanitarian crisis in the making,” said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, a group that represents taxi and rental vehicle drivers in the city. “Debt cancellation alone is not the answer to determining how many repairs the industry needs and what drivers need to get out of poverty. But without forgiveness, this industry collapses – period. “
In addition to the fact that the city’s taxi drivers are largely made up of low-income New York immigrants, Desai said many were also at higher risk of COVID-19, with many owner-drivers having more. 62 years old. Forty percent of the owner-drivers we surveyed said they had (COVID-19) or were quarantined because someone they lived with had (COVID-19), ”he said. she declared.
Desai and the Taxi Workers Alliance have argued for a plan that she said would encourage banks to refinance driver’s medallion loans to an amount manageable for drivers by having the city step in as a sort of guarantor of the driver. ready. According to the proposal, if a locket owner were to default on their loan and the locket was seized and auctioned at a public sale, New York City would agree to place a minimum bid equal to the loan balance multiplied by 105%.
But this offer to make the city a safety net would extend only to loans restructured at $ 125,000 and refinanced at no more than $ 750 per month over 20 years. The proposal, Desai said, would prompt lenders to restructure on these terms – knowing that the city would be in danger if the locket owner defaulted, the locket was foreclosed and no other bidders intervened.
This week, The Wall Street Journal reported that Marblegate Asset Management, an investment firm that is currently New York City’s largest taxi locket loan holder, has granted locket owners a “loan leave” every month since mid-March and has , in some cases, depreciated loans to $ 300,000, subtracting hundreds of thousands of dollars in debt. But Desai said loans, even as large, are unrealistic and unmanageable for drivers.
Mark Levine, New York City Council Member has pushed for the city to step in to help buy and refinance loans since last year, and has said it agrees with a proposal like Desai’s. “The city, by providing a floor to the market with a loan guarantee, could encourage lenders to refinance at real value,” Levine said, estimating that some sort of loan guarantee program could be put in place for around. tens of millions of dollars. (A “worst-case” estimate from Desai, which includes assumptions that 6,000 loans are underwater and the value of a locket does not exceed $ 75,000, puts the cost of their proposal at $ 75 million over 20 years.)
Levine said establishing this type of program probably wouldn’t require city council legislation, but there is debate about it. “It is not clear whether we need to create a new entity like a nonprofit or if we could do it through existing entities like (the New York City Economic Development Corp.),” he said. -he declares.
But with New York City facing its own budget crunch, Mayor Bill de Blasio’s administration has yet to bite this proposal. In response to a question of whether the city would support such a plan, de Blasio spokesman Mitch Schwartz highlighted the mayor’s comments in early August on the need for a federal stimulus to support any kind of bailout. “In terms of bigger efforts, it really has to come with federal dollars, especially in light of our budget crisis,” de Blasio said at the time.
Earlier this year, just before the pandemic hit New York City, a Taxi Medallion task force that was convened to come up with solutions to the debt crisis published a report with recommendations for immediate solutions to the debts of locket owners and long-term reforms to help keep the taxi industry afloat. That report contained a proposal for a public-private partnership to buy and restructure debt – possibly up to $ 600 million.
City council member Ydanis Rodriguez, who co-chaired the task force, said the proposals in the task force report remain as important as ever – including the bailout – but said a some of that support should come from the federal government. Another step Rodriguez said the city could take would be to fund “driver resource centers” that provide legal and financial advice to drivers. One of those centers opened in May and by the end of July had served 500 TLC licensees, according to Schwartz.
In the meantime, the locket owner-drivers are continuing their advocacy and organizing for debt relief – in part thanks to a weekly three-hour Zoom call and a WhatsApp group that keeps them connected. “We just don’t want people to give up and be demoralized,” Desai said, mentioning the taxi drivers. who died by suicide in recent years. “We never want to see this nightmare again.”