NYC and Taxi Drivers Have Very Different Ideas on How to Tackle Medallion Debt
For more than a week, a group of New York City taxi locket owners protested outside City Hall, calling on the city to take further action to help drivers in debt with their locket loans. On Monday morning, the commissioner and chairman of the city’s Taxi and Limousine Commission said he would stick to his current back-up plan – a subsidy program that protesters say will not do enough to resolve their crushing debts.
In March, about two years after The New York Times reported on the role of the city and taxi industry leaders in medallion price inflation, Mayor Bill de Blasio announced a relief fund of $ 65. millions of dollars for the owners of the debtor taxi medallions. The program offers up to $ 29,000 in individual grants – effectively acting as down payments – to help medallion owners restructure their loans with lenders.
So far, the city said it has helped 26 people completely restructure their loans to the tune of more than $ 5 million in combined debt relief. Almost 1,000 other locket owners are struggling to restructure their debts under the program. The city said many drivers should expect to see debt relief of more than $ 200,000 and monthly payments reduced to $ 1,500.
But for taxi drivers who owe more than $ 500,000, even that amount of debt forgiveness wouldn’t be enough, some locket owners said. This could leave some drivers still with hundreds of thousands of dollars in debt, with monthly payments they deem too high. âIt’s just not viable in this market, where our income is very uncertain,â said Augustine Tang, a taxi medallion owner who said he owed around $ 490,000 on his loan.
The New York Taxi Workers Alliance, which represents approximately 21,000 rental vehicle drivers, is arguing for a more aggressive rescue plan. Their proposal calls for all locket loans to be restructured to principal amounts not exceeding $ 145,000, with homeowners making monthly payments not exceeding $ 800. To get lenders to agree to these terms, the plan would have New York City essentially act as a guarantor of the locket loans and intervene in the event of a homeowner’s default.
But this proposal has not yet gained ground with the city. In a public hearing Monday morning, the Taxi and Limousine Commission said the city will not change its approach to debt relief, dealing a hard – but unsurprisingly – blow to protesting locket owners constantly for significant changes to this approach. .
Yet at the end of the hearing, which featured moving testimony from underwater medallion owners calling for a stronger liferaft, several commissioners from the TLC board raised questions about the current program of the city. âI myself am having trouble pushing this proposal forward in the face of the almost unanimous opposition from drivers that we have heard today,â said Commissioner Steve Kest. âIt worries me a lot that this proposal is seen by drivers as totally insufficient. Another commissioner, Thomas Sorrentino, said the current plan was a policy of de Blasio’s office and that it was not within the power of the TLC to change it.
âOf course, the city wants feedback from those affected by public policy. And of course, the mayor’s office is involved in shaping major programs and initiatives, âBlasio spokesperson Mitch Schwartz wrote via email in response to the comments. âThe facts speak for themselves: The Medallion Relief Program works. Medallion owners testifying at Monday’s hearing argued otherwise, say that the restructurings negotiated under the city’s program are still unmanageable.
The TLC said that under the plan proposed by the Taxi Workers Alliance, the value of a taxi locket would be unfairly set at $ 145,000, diminishing the potential value of the locket – even for owners who are not in debt. But it is not known exactly how many of the roughly 6,000 people who individually own taxi medallions are in debt, or how much their debts are growing. In an interview with City & State last week, TLC commissioner and chairman Aloysee Heredia Jarmoszuk said of the nearly 1,000 loans they have started reviewing under the debt relief program , the average debt is around $ 300,000. Previous surveys estimated the median outstanding debt to be around $ 500,000.
Jarmoszuk said the proposal championed by the New York Taxi Workers Alliance is not feasible for the city. âThe plan that the city presented is the only one that is available at the moment,â Jarmoszuk said. “The city is not in a position to make a safety net,” she added, referring to the aspect of the Taxi Workers Alliance plan that would make the city the guarantor of the medallion loans. According to the Taxi Workers Alliance proposal, the city would step in to pay the difference in the event of default and the medallion sold for less. âI don’t know of any entity that could act as a guarantor for an entire industry,â Jarmoszuk said. âIt involves a lot of risk and its cost is prohibitive. “
The New York Taxi Workers Alliance and medallion owners defending the proposal, however, have touted the plan’s approval by elected officials who joined the protest last week. And last fall, New York City Comptroller Scott Stringer announced his support for an earlier version of NYTWA’s plan.
“Predatory lenders took drivers for a ride and left families in a wreckage of financial distress and desperation,” he said in a statement at the time. âWe have a fiscal and moral obligation to rectify the situation – and adopting this plan is a start. My office reviewed the New York Taxi Workers Alliance proposal and found it fiscally sound. ”
A host of other elected officials have expressed support for the NYTWA plan and showed up at last week’s protest, including Council member Brad Lander – the Democratic contender for comptroller. Others have noted that the city’s current program is inadequate. Senate Majority Leader Chuck Schumer appeared with protesting drivers last week, calling on the city to adopt an alternative to its $ 65 million relief fund.
The debate on how to save the owners of debt lockets will certainly not end in the final days of Blasio’s administration. A spokesperson for Brooklyn Borough President Eric Adams, the Democratic mayoral candidate, did not respond to a request for comment on how his potential administration would pursue debt relief. State Senator Jessica Ramos, meanwhile, has a bill in the legislature that would enact a program similar to that proposed by the New York Taxi Workers Alliance, making the state a safety net for ready. âIf the city doesn’t hear from us by December – and obviously in January we’ll have a new mayor – we’ll make a huge effort if that’s what’s needed,â Ramos told City & State.