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Taxi Task Force Proposes $600 Million Fund For Struggling Cab Drivers Affected By Medallion Crisis
By
Stephen Nessen
and
Elizabeth Kim
Published Jan 31, 2020
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Adrian8_8 / Flickr
By
Stephen Nessen
and
Elizabeth Kim
Published Jan 31, 2020
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A task force created to address New York City's taxi medallion crisis recommended the creation of a public-private fund that could pay as much as $600 million to bail out debt-ridden taxi drivers.
The report, which came out Friday after six months of meetings and discussions by panel members, includes a swath of ideas from working with banks to restructure the loans, to considering surge pricing. It was spurred by a devastating New York Times investigation into how taxi medallion value skyrocketed with the help of city officials and investors, and then plummeted, leaving drivers on the hook for exorbitant and often predatory loans. The yellow taxi industry has been further shaken up by the emergence of ride hailing apps, which also likely contributed to foreclosures on medallion loans.
The average outstanding debt on medallion owners is $700,000, according to Councilmember Stephen Levin, who was on the task force and declined to use the term "bailout" to describe the report's biggest recommendation.
“We’re not proposing a bailout because that would indicate we’d be using public money to reduce this debt," Levin told Gothamist/WNYC. “We’re talking about addressing the reality on the ground right now.”
Levin says the loans are already being sold for pennies on the dollar, like medical debt to a debt collector, because banks know they’ll never collect the full value. He said medallions are now valued at between $150,000 to $200,000. He said he is hoping banks will use their “mission driven” capital, funds they can use for community projects, to help buy back the loans, “instead of letting them go to a debt collector.”
“We can restructure the loan and that outstanding debt between the face value of the loan right now and the amount it's purchased for; that difference can be forgiven and never has to be collected on. That’s how we can get the situation under control," he said.
Levin said California did a similar thing for truck drivers whose vehicles needed expensive upgrades to comply with new environmental requirements.
Mayor Bill de Blasio has been consistently against a bailout, saying it would cost the city too much money.
On Friday, a spokesperson for the mayor signaled that the administration was open to some of the report's suggestions. “Our top priority is ensuring that hardworking drivers can make a living," the statement read. "There are new ideas out of this task force that could make a real difference and we’re already diving in to determine which ones we can make viable as soon as possible. The public-private model is definitely promising.”
Bhairavi Desai, the executive director of the New York Taxi Workers Alliance which has lobbied for a bailout, praised the recommendations.
"After years of fighting the injustice of driver debt caused by lax regulations and unscrupulous lenders, and after watching our brothers die from suicide and despair, for the first time, drivers now feel real hope that this crisis of debt and poverty can be resolved,” she said in a statement. “In a city paved by taxi drivers' labor, we know this work can get done. Together, we will set a precedent to address the working-class debt that has become endemic to our economy."
The task force also makes recommendations for ways yellow taxis can be more competitive with their ride hailing app rivals Uber and Lyft.
“Users of app-based services may be willing to pay higher fares for the convenience of being picked up in a precise location at a precise time. That advantage could also be reduced by broader adoption of taxi app services,” the report notes.
Many taxis use the apps Curb and Arro, but the report notes 99 percent of the people who use it are paratransit riders who only pay $2.75 for their ride.
Augustine Tang, a 35-year-old taxi driver who inherited his father's medallion, along with its $500,000 debt, said the current apps employ dated technology and that the public has heard very little about them.
"We have apps, but we have no help marketing them," he said.
Jason Gross, Vice President of mobile at Curb Mobility says the task force doesn’t recognize that it is the largest app for taxis in the US, available in 65 cities. Gross said he’s hoping Curb will launch a program soon where users can see the full cost of taxi ride before getting in a taxi, like Uber and Lyft.
The task force recommends the TLC explore using a new ride hailing app for taxis.
The next steps are up to the lawmakers and banks, as the report notes, “With this report, the Task Force hopes to spark immediate action among policymakers and the private sector to address the burdens of medallion debt, and for it to serve as a foundation for ongoing conversations regarding the future of the medallion taxi industry in New York City.”
Taxi drivers urged the city to adopt the task force’s recommendations, namely its creation of a bailout fund, which they have argued would save lives.
“Today is a big day,” said Mohamadou Aliyu, a taxi driver who was among those who testified before the task force last year. “This is a huge crisis. [Drivers] are dying because of this crisis, because they are not able to make ends meet.”
Aliyu estimated that he owes roughly $632,000 on his medallion. Having fallen behind on his payments, he said he works 12-hour shifts, seven days a week. Every morning, he receives a call from a collection agency. Competition from ride-hailing app companies like Uber and Lyft have only made the industry tougher. Cabbies, he said, had initially viewed the medallions as “an exclusive right to do our jobs.”
“What crime did I commit to be punished this way?” he asked.
The only answer, Aliyu, an Ivory Coast native, concluded, was being an immigrant and an egregious lack of protections.
"This is not America," he said. "I know better."
Stephen Nessen
Stephen Nessen covers transportation. Since 2008 he has reported on everything from Occupy Wall Street, the rebuilding of the World Trade Center site, Hurricane Sandy, to Trump’s campaign for president. His transportation reporting has taken him everywhere from the MTA’s secret Rail Control Center to the gleaming subways of Seoul. Got a tip? Email [email protected].
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Elizabeth Kim
Elizabeth Kim is a reporter on the People and Power desk who covers mayoral power. She previously covered the pandemic, housing, redevelopment and public spaces. A native of Queens, she speaks fluent Mandarin. Got a tip? Email [email protected]
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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