June 3, 2020
The collapse of the New York City taxi medallion market will be
remembered as one of the greatest government failures in Gotham’s
history. The bankruptcies and foreclosures, the suffering and the
suicides were not the consequences of market forces beyond the city’s
control. Instead, this enduring crisis is the product of a deregulated,
overpriced, over-leveraged market that the city not only failed to
regulate, but also helped create through auctions, advertising and
approvals of predatory transactions.
As the city wrestles with how to uplift the hundreds of thousands of New
Yorkers whose lives and livelihoods have been devastated by COVID-19,
we must never forget that among those hit hardest are the more than
21,000 yellow and green taxi drivers who have been struggling to stay
afloat well before the outbreak of coronavirus. Far from being an excuse
for delay, COVID-19 is a call to action on behalf of all working
people, and especially those taxi workers who were already underwater
with crushing debt.
To that end, I am calling for the city to immediately establish a
Medallion Asset Relief Program (MARP) to reset medallion values to
$250,000 for the 6,250 medallion owner-operators, or those who own and
operate 20 medallions or fewer, through a government guarantee of every
taxi medallion in NYC. A program such as this, modeled after the federal
Home Affordable Refinance Program (HARP), would cost the city as little
as $20 million to implement over the next five years — a small
investment that would ultimately create nearly $1.4 billion in new
equity for drivers that would help them for decades to come.
While the average medallion loan currently holds a value of about
$500,000, the actual value of those medallions averages less than
$150,000. By resetting these values to $250,000, which is a much more
accurate value for a working business, this would give owner-drivers the
opportunity to restructure their loans at considerably more favorable
rates, lowering their monthly payments to just over $1,000.
Simply, MARP would rehabilitate the medallion as an asset, enable the
affordable refinancing of medallion loans, lower monthly loan payments
for owners and restore confidence in the medallion market. It is a win
for all parties but the profiteers, who are deservedly denied a bailout.
By creating a city-supported backstop to cover missed payments by
drivers, the interest rates on these loans would immediately go down,
substantially lowering payments for drivers to a value far more
consistent with what their businesses earn, leading to a lower default
rate.
The status quo for New York’s taxi industry is immoral and untenable, as
our city continues to abide a system that condemns over-leveraged
medallion owners to debt slavery with no end in sight. Moreover, MARP is
significantly more cost-effective than a bailout, a venture the city
would have to spend hundreds of millions — if not billions — that we
simply cannot afford.
As the city weighs various proposals to help the countless New Yorkers
across every industry who are struggling, it is critical we remember
that among those hit hardest by the current pandemic are the taxi
drivers, who were already fighting to stay afloat for years before
coronavirus took hold of our city and economy. They played by the rules
set by the city and are now enduring extraordinary financial hardships
made even worse by the pandemic. Both the financial and human toll
brought on by the medallion debt crisis cannot be overstated.
It is clear that the pandemic has exponentially exacerbated the
financial problems that drivers faced before the outbreak, making this
not just the perfect opportunity for the city to step up and take
sweeping action to save the drivers and fix the industry, but the only
viable option for saving the jobs and businesses these drivers have
poured their lives into.
MARP is an elegant solution to a long-standing crisis that has been compounded by COVID-19.
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