NYC and taxi drivers have very different ideas for how to tackle medallion debt
The city is sticking with its grant program despite scathing criticism from taxi drivers who say it’s not nearly enough to give them relief.
For over a week, a group of New York City taxi medallion owners have protested outside City Hall, calling for the city to take additional steps to aid drivers burdened by debt from their medallion loans. On Monday morning, the commissioner and chair of the city’s Taxi and Limousine Commission affirmed that it would be sticking with its current relief plan – a grant program that protesters say won’t 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 inflating the price of medallions, Mayor Bill de Blasio announced a $65 million relief fund for taxi medallion owners in debt. 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 fully restructure their loans to the tune of over $5 million in combined debt forgiveness. Nearly 1,000 other medallion owners are working to restructure their debts through the program. The city has said that many drivers should expect to see over $200,000 in debt forgiveness and monthly payments reduced to $1,500.
But for cab drivers owing upwards of $500,000, even that amount of debt forgiveness wouldn’t be enough, some medallion owners said. It could leave some drivers still hundreds of thousands of dollars in debt, with monthly payments they say are too high. “It’s just not sustainable in this market, where our income is very uncertain,” said Augustine Tang, a taxi medallion owner who said he owes about $490,000 on his loan.
The New York Taxi Workers Alliance, which represents around 21,000 for-hire vehicle drivers, is advocating for a more aggressive relief plan. Their proposal calls for all medallion loans to be restructured to principal amounts of no more than $145,000, with owners making monthly payments of no more than $800. To incentivize lenders to accept these terms, the plan would have New York City essentially serve as a guarantor on the medallion loans and step in if an owner defaulted.
But that proposal has yet to gain traction with the city. At a public hearing Monday morning, the Taxi and Limousine Commission affirmed that the city won’t be changing its approach to debt relief, dealing a harsh – if unsurprising – blow to the medallion owners who have been protesting nonstop for significant changes to that approach.
Still, at the end of the hearing, which featured emotional testimony from underwater medallion owners calling for a stronger life raft, several commissioners on the TLC’s board raised questions about the city’s current program. “I myself have a hard time moving forward with this proposal in the face of almost unanimous opposition from drivers that we have heard today,” said Commissioner Steve Kest. “It concerns me greatly that this proposal is viewed by the drivers as totally insufficient.” Another commissioner, Thomas Sorrentino, said that the current plan was a policy from de Blasio’s office, and that it wasn’t within the power of the TLC to change it.
“Of course the city wants feedback from the people who are impacted by public policy. And of course the mayor’s office is involved in the formation of major programs and initiatives,” de Blasio spokesperson Mitch Schwartz wrote over email in response to those comments. “The facts speak for themselves: the Medallion Relief Program is working.” Medallion owners testifying at Monday’s hearing argued otherwise, saying that the restructurings negotiated under the city’s program are still unmanageable.
The TLC has said that under the plan proposed by the Taxi Workers Alliance, the value of a taxi medallion would be unfairly fixed at $145,000, diminishing the potential value of the medallion – even for owners who aren’t in debt. But it’s unclear just how many of the roughly 6,000 people who individually own taxi medallions are in debt, or how high their debts go. In an interview with City & State last week, TLC Commissioner and Chair Aloysee Heredia Jarmoszuk said that from the almost 1,000 loans that they’ve started to look at through the debt relief program, the average debt is about $300,000. Previous surveys estimated the median outstanding debt was around a staggering $500,000.
Jarmoszuk said that the proposal advocated for by the New York Taxi Workers Alliance is not feasible for the city. “The plan that the city has put forth is the only plan that’s available right now,” Jarmoszuk said. “The city is not in a position to do a backstop,” she added, referring to the aspect of the Taxi Workers Alliance plan which would have the city serve as a guarantor on medallion loans. Under the Taxi Workers Alliance’s proposal, the city would step in to pay the difference if a loan defaulted and the medallion sold for a lower value. “I don’t know of an entity that would be able to serve as a guarantor for an entire industry,” Jarmoszuk said. “That carries a lot of risk and is cost prohibitive.”
The New York Taxi Workers Alliance and medallion owners advocating for that proposal, however, have touted endorsements of the plan from 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 the NYTWA’s plan.
“Predatory lenders took drivers for a ride and left families in a wreckage of financial distress and despair,” he said in a statement at the time. “We have a fiscal and moral obligation to make this right – and embracing this plan is a start. My office has vetted the proposal from the New York Taxi Workers Alliance and found it fiscally sound.”
A host of other elected officials have voiced their support of the NYTWA’s plan and showed up at last week’s protest, including Council Member Brad Lander – the Democratic nominee for comptroller. Others have said that the city’s current program is inadequate. Senate Majority Leader Chuck Schumer appeared with protesting drivers last week, calling for the city to adopt an alternative to its $65 million relief fund.
The debate over how to rescue medallion owners in debt certainly won’t end in the waning days of the de Blasio administration. A spokesperson for Brooklyn Borough President Eric Adams, the Democratic nominee for mayor, did not respond to a request for comment on how his potential administration would pursue debt relief. State Sen. Jessica Ramos, meanwhile, has a bill in the Legislature that would enact a program similar to what the New York Taxi Workers Alliance is proposing, having the state serve as a backstop on loans. “If the city doesn’t hear us by December – and obviously in January we’ll have a new mayor – we’ll make a huge push if that’s what’s needed,” Ramos told City & State.
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