A task force studying New York City's struggling taxi industry called Friday for “mission-driven” investors to help bail out drivers who incurred massive debt once the value of the medallion that allows a person to operate a yellow cab plummeted in the age of Uber and Lyft.
The report also recommends upgrading taxi technology to make it easier to summon a yellow cab by smartphone so that traditional taxis can compete with app-based services.
The 76-page report details how the value of a taxi medallion topped $1 million in 2013 but sank to less than $200,000, leaving many medallion owners hundreds of thousands of dollars in debt and facing foreclosure or bankruptcy.
“Uber, Lyft and other app-based companies were able to come into the market entirely unregulated,” City Councilman Stephen Levin, co-chairman of the task force that produced the report, said at a City Hall news conference. “We saw over 100,000 licenses in the streets within just a few years. What did that do to the million-dollar medallions that the city sold?
When the collateral for a million-dollar loan is suddenly worth $200,000," Levin said, “The lender seeks more collateral. You put up your home, you put up all of your assets, you put up your family’s assets, just to be able to hold on to the investment you saved for your entire adult life.”
City officials adopted a moratorium on new licenses for for-hire vehicles in 2018 and extended it last year, but they have not yet taken action to provide relief to the medallion owners who are buried in debt.
The task force is recommending that the city recruit “mission-driven” investors who would buy the loans, forgive the bulk of the money and restructure the payments.
Bhairavi Desai, the founder of the New York Taxi Workers Alliance and a member of the task force that produced the report, said there are about 3,000 drivers who need debt relief because they owe more on their loans than the medallions are worth. She said the average debt is about $600,000, and she suggested that all but $150,000 of that should be forgiven. “We invested in this city,” Desai said. “We're asking you to invest in our families.”
Levin said debt collectors are already buying up medallion loans at discounted prices but are not providing any relief to the owner-drivers.
Task force members said the size of any debt-relief fund is not known.
Drivers attending the news conference said the rescue plan would be the answer to their prayers.
“If it goes through we’re going to have our life back,” said taxi driver Mouhamadou Aliyu, 47, who said he owes $635,000 on a medallion that's worth a fraction of that.
“Every day I work 7 to 7 and every day I got home empty handed,” said Aliyu, an immigrant from Ivory Coast who bought his medallion for $331,472 at a city auction in 2004. “I keep borrowing from friends because I’m not going to let go of my medallion." He added, “The only way for me to survive would be if we get a bailout.”
Driver Augustine Tang, who owes $498,000 on the medallion he took over from his late father, said, “I'm hopeful that this will work. Because if it doesn't there are going to be a lot of lives at stake.”
While Uber has taken much of the blame for the taxi industry's woes because of its rapid growth and its combative stance toward government regulation, critics have also pointed to the financial institutions that steered immigrant drivers toward risky loans and to New York City officials who promoted medallions as a safe investment.
The report quotes a pamphlet promoting a city auction of taxi medallions in 2014, two years after the first Uber car hit the city's streets, that showed a graph of medallion sale prices under the heading, “It’s Better than the Stock Market.” The city made $855 million on medallion sales between 2002 and 2014.
Olivia Lapeyrolerie, a spokeswoman for Democratic Mayor Bill de Blasio, who took office in January 2014, said some of the task force's ideas “could make a real difference and we’re already diving in to determine which ones we can make viable as soon as possible.”
Asked about the medallions that were auctioned during the first months of de Blasio's administration, Lapeyrolerie said, "Our administration came in just in time for the crash. One of our first actions was halting medallion sales, and we were one of the first and most ardent voices for curbing the rapid growth of corporations like Uber."
Matthew Daus, the head of the city's Taxi and Limousine Commission from 2001 to 2010 under de Blasio's predecessor, Michael Bloomberg, who is currently seeking the Democratic presidential nomination, said the crisis of sinking medallion values “is primarily the result of Uber’s exponential growth after its 2012 market entry."
Daus said the priority for any bailout should be owner-drivers who bought medallions at the three auctions held in 2013 and 2014. “The city benefited from those auction sales by more than $409 million, and should return or find the money somehow,” he said.
An Uber spokeswoman said the company has no comment on the report.