NEW YORK, N.Y.—The city’s program to help taxi owner-drivers overwhelmed by hundreds of thousands of dollars in debts is grossly inadequate, more than 10 drivers unanimously testified at an online city Taxi and Limousine Commission hearing Sept. 27.
“We are just fighting for our lives. Your proposal does not go far enough,” owner-driver Augustine Tang told the panel, calling in from a cabbies’ vigil on Broadway near City Hall. “You are handcuffing drivers to the wheel.”
Even if his debt was reduced to $275,000, driver Ugyen Pema testified, “I do not have enough income to pay $1,700 a month and my expenses.”
Individual drivers own roughly 40-45% of the city’s 13,587 yellow medallion cabs, the only ones allowed to pick up street hails in central Manhattan. For decades, owning a medallion was a ticket to a career for cabbies, enabling them to work for themselves instead of leasing from a fleet, and an asset for their retirement. But the inflation of medallion prices, followed by the decimation of drivers’ incomes by app-based services including Uber and Lyft, put individual owner-drivers in a double bind. They couldn’t bring in enough money to make their loan payments, and their medallions had depreciated so much that if they sold them, they’d still be personally liable for hundreds of thousands in debt.
The TLC’s Medallion Relief Program, unveiled in late August, would provide $65 million in grants to such distressed owners. It would give them $20,000 for down payments to lenders to restructure loan principals and set lower monthly payments, plus up to $9,000 to help with monthly payments during the first year. Drivers can choose between larger reductions in the principal they owe and lower monthly payments: If the principal is reduced by at least 40%, payments would be up to $2,000 a month, while taking a 20% reduction would lower the payment to $1,500 or less.
So far, 26 drivers have received relief, and nearly 1,000 are receiving legal and financial advice from the program’s Owner-Driver Resource Center, TLC chair Aloysee Heredia Jarmoszuk told the hearing.
“What you have is a Band-Aid on a gunshot wound,” New York Taxi Workers Alliance head Bhairavi Desai responded. “Our people deserve to get their lives back.”
The TLC proposal would allow lenders to reduce debt to $330,000. That is more than the $275,000 that Marblegate, the investment firm that is leading holder of medallion debt, has offered drivers, Desai told LaborPress after the hearing, sitting at a table in the drivers’ vigil.
“The city’s program does not put any pressure on the lender to bring that amount down,” she added.
Marblegate also wants payments of $1,600 a month. “We can’t make that,” driver Dorothy Laconte told LaborPress.
NYTWA’s proposal, meanwhile, calls on lenders to reduce medallion debt to $125,000, either as a cash settlement or as loans refinanced for no more than 20 years, with payments not more than $800 per month. It also wants Mayor Bill de Blasio to require lenders to reduce debt in order to receive payments from the $29,000 grants, and restitution of up to $150,000 for owner-drivers who were over 62 years old when the value of medallions crashed.
That is “simply not fiscally possible at this time,” Heredia Jarmoszuk told the hearing. When commissioner Lauvienska Polanco, noting that the drivers’ frustration and anger was palpable, asked if the city could get more money than the $65 million already appropriated, Heredia Jarmoszuk answered that “it is what was available to the city.”
The city can’t use federal COVID relief and stimulus funds directly to aid drivers, the TLC chair added, and it would take two years to develop another program.
Apps Burst the Bubble
The crisis has two causes. First, the city in the early 2000s began increasing the number of medallions — limited by a 1937 law intended to ensure that drivers wouldn’t have too much competition to make a living wage — and auctioning them off. Values inflated rapidly. An individual medallion that sold for $198,000 in 2001 went for more than $600,000 in 2011, $800,000 in January 2013, and more than 1 million in 2014.
The city was happy to collect that revenue. When it auctioned off 168 medallions in February 2014, it set the minimum bid at $850,000 — and touted the sale with leaflets boasting “It’s Better Than the Stock Market.”
Second, the city in 2013 began allowing app-based taxi companies such as Uber and Lyft to operate, obliterating the limits intended to ensure that there wouldn’t be 25 cabs on a block chasing after one fare. Drivers’ incomes plummeted immediately, and “the medallions were going down right after,” owner-driver Basia Osowski told LaborPress.
“I lost my savings from taxi,” Mohammed Hossain, who bought a medallion for $854,000 in 2014, told the TLC. “I need to keep my medallion. The city robbed me. I want to keep my family alive. I don’t have the money to pay my mortgage. Please help me!”
Driver Ahmed Abdellatif, who bought his medallion in 1994, testified that he’d been doing well “until the launch of apps.” He said he’d gotten his payments reduced from $2,700 a month to $2,000 in 2016, but that still left him with $69,000 in expenses on $77,000 in fares — $8,000 a year in profit.
“That’s less than minimum wage,” he said.
There are about 12 major lenders who hold 4,000 to 6,000 medallion loans, says Desai, and most of them are not the original lenders, but bought the debt at a discount.
In February 2020, the National Credit Union Association sold its portfolio of medallion loans to Marblegate. The NCUA has refused to reveal the price or how many loans it sold, but the Wall Street Journal reported that Marblegate paid $350 million for more than 3,000 loans — about $115,000 each, Desai said.
The TLC said it did not have details on the sale. Marblegate has offered to reduce drivers’ principal to $275,000 —far less than what it paid for the debt, Desai says.
At the end of the hearing, TLC commissioner Steven Kest said he was dismayed by the unanimous opposition from drivers, and that the monthly payments resulting from writedowns “are still not sustainable in the long run.”
“This is the proposition that’s on the table,” commissioner Thomas Sorrentino said, urging drivers to “take advantage of what’s available now,” and push for more relief in the future.
Polanco said drivers should “keep the pressure” on the city government.
“The TLC’s supposed to help us,” driver Richard Chow said, speaking at the cabbie vigil by City Hall Park. “We are already under the water. They are letting us drown. We lost our retirement. We lost our exclusive rights.”
He paid $410,000 or his medallion in 2006. His younger brother, Yu Mein Kenny Chow, paid $700,000 for his — and committed suicide in 2018, one of nine cabbies to do so between late 2017 and 2019.
“I ask the city, ‘You want my heart? You want my arm? You want my neck?’ We lost everything,” Chow says. “The mayor must fix the problem. It’s a crisis the city created. We need real debt relief.”
“Our proposal is reasonable, it’s been vetted by the comptroller, and the mayor has the funds and the authority to implement it quickly,” Desai says. “We’ve come too far to settle for anything less. We have too much to lose.”