City Hall and Union Clash Over Debt Relief for Cab Drivers
By Ted Clifford and Madeline Fixler
Outside City Hall in early October, New York Taxi Worker Alliance (NYTWA) supporters were on day 29 of their round-the-clock protest, beating pots and pans and blaring sirens. In quiet moments, drivers shared plates of daal, tea, and cookies at a long table set up next to Broadway, now lined by yellow cabs with strike placards in their windows.
“We’re going to be here as long as it takes,” said Wain Chin, a three-year NYTWA member from Myanmar. Chin says he owes $572,773 on his medallion and pays a $2,349 monthly mortgage. His friend, Yu Mein “Kenny” Chow, also from Myanmar, was one of the drivers who died by suicide in recent years. His name is one of eight on the shrine at the camp.
A City Council hearing on Oct. 8 laid bare the lack of driver support for the Taxi and Limousine Commission’s (TLC) Medallion Owner Relief Program (MRP), a $65 million initiative aimed at reducing debt for medallion-holders. Legislators and activists criticized what they described as the TLC’s plan’s fuzzy math and limited scope, and pushed for the adoption of a more expansive vision of debt relief.
Both plans aim to tackle the hundreds of millions of dollars in debt held by as many as 6,000 owner-drivers — many of whom, at the city’s urging, took out expensive loans in order to purchase medallions.
The relief plan aims to reduce the drivers’ crushing debt by offering $20,000 grants to 2,250 owner drivers whom the TLC has calculated are at risk of insolvency. The grants are intended as a down payment, to help drivers renegotiate their medallion mortgages, which are held by private financial institutions, including private equity funds and credit unions.
Additionally, the relief plan offers drivers $9,000 to assist with mortgage payments for up to one year.
However, that plan has received blistering criticism from activists and some legislators. During the hearing before the Committee on Transportation, council members said that while the plan has helped some medallion holders, the relief package lacked breadth and was created without input from the Council and the drivers themselves.
“City Hall has failed by not engaging the Council with this plan,” said Transportation Committee Chairman Ydanis Rodriguez.
“It’s a classic misstep of the de Blasio administration,” added Council Member Carlos Menchaca.
“It’s beyond shocking,” said Bhairavi Desai, the founder and president of the NYTWA, who singled out the year-long $9,000 grant as far too little to make a real difference. “The TLC itself knows that the numbers are unsustainable,” said Desai. “It’s a bridge to bankruptcy.”
NYTWA has proposed that New York City guarantee the loans, and that grants only be disbursed to lenders who restructure the overall medallion mortgage down to no more than $145,000, with monthly payments capped at $800.
The TLC has largely dismissed NYTWA’s plan. “The city is not prepared to pay the market value for every medallion if there is widespread default,” said Allan Fromberg, deputy TLC commissioner.
Testifying before the Council at the hearing, TLC Commissioner Aloysee Heredia-Jarmoszuk defended the city’s relief plan, noting that 90 owner-drivers have received assistance over the three weeks the plan has been in action. (The city now says it has helped more than 100 drivers, to date).
“What we have launched is already working,” said Heredia-Jarmoszuk, who maintained that the relief plan could provide assistance to most of its target population by the end of the year.
However, during the hearing, she also said that the TLC had “no data” on the value of the mortgages held by the owner drivers. “We’ve never been able to figure out what the debt issue is,” Heredia-Jarmoszuk said.
But the TLC maintains that information provided by drivers moving through its debt-relief program, along with a new law requiring anyone with a financial interest in medallions to file a disclosure with the city, will finally provide accurate information about the amount of drivers’ debt.
NYTWA’s plan has received widespread support both inside and outside of City Hall, including from the comptroller’s office. On Oct. 6, eight members of the New York congressional delegation, including Senate Majority Leader Chuck Schumer, signed a letter urging City Hall to adopt the plan.
The TLC has argued that NYTWA’s plan would amount to price fixing that would both treat the medallion as a speculative asset and reduce its value. “We’re hoping the medallion continues to be an important asset,” said Heredia-Jarmoszuk.
The current debt crisis is the result of a speculative bubble in medallion prices created by a small group of investors that drove up medallion prices and pushed drivers into taking out high-interest loans. The crisis was exacerbated by the rising popularity of ride-share apps, like Uber and Lyft.
At the height of the bubble in 2014, the average price of an independent medallion bought at TLC auction had ballooned to $863,742, an almost five-fold increase from 1996 when medallions in the first auction fetched $177,000. In 2014, a package of corporate medallions was sold at auction for an average price of $1,164,378 each.
As of November 2019, the average sale price for medallions had plummeted to $164,518. However, many drivers purchased their medallions on the unregulated, private secondary market.
Medallion drivers maintain that the city profited from them and are now abandoning them in their time of need. The city made $855 million from the sale of medallions and collecting taxes on private sales during the Bloomberg and de Blasio administrations.
Testifying before the commission, Richard Chow, Kenny Chow’s older brother, said that the relief plan had done little for him. His mortgage holder, a Greenwich-based asset management company named Marblegate, agreed to reduce his loan to $275,000 from $389,000. Chow is still paying $1,600 a month in mortgage payments.
NYTWA, which is the first union of independent contractors to become a part of the AFL-CIO, fought for the passage of a minimum wage for ride-share drivers. No such protections exist for yellow cab drivers.
Desai estimated that an owner-driver working 60 hours a week and paying $1,600 a month for a medallion would earn as little as $9 an hour, after paying expenses like car payments, insurance and city-mandated surcharges.
Tide-sharing apps have also depressed business. According to the Taxi Medallion Task Force, in 2018 medallion taxis made approximately 296,000 trips a day, down from an average of 485,000 in 2014. Drivers for ride-share companies were making 600,000 trips a day.
NYTWA, meanwhile, has no plans to leave City Hall. “It is tiring but we have no choice,” said Chin. “We are fighting for our survival.”
