In September, members of New York’s City Council called on the city to guarantee the value of Taxi Medallion loans as the industry continues to struggle amid the coronavirus pandemic. Ritchie Torres and 18 other council members made the case in a blistering letter to Mayor Bill de Blasio, arguing for the creation of a medallion relief mechanism similar to the Home Affordable Refinance Program initiated by the Obama administration in 2009.
“A program such as this, modeled after the federal Home Affordable Refinance Program (HARP) – in this case, Medallion Affordable Refinance Program (MARP) – would cost the city as little as $20 million to implement over the next five years, while creating nearly $1.4 billion in new equity value for medallion owner-drivers it would be helping,” the letter said.
The council members are seeking to use the city as a backstop against the leveraged loans that have plunged thousands of yellow-cab owners deep into debt, while setting a price floor on the value of each medallion at $250,000. That would create new equity in those medallions that are valued at less than that amount.
“We are calling for the city to immediately establish a Medallion Asset Relief Program 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,” the letter stated.
The average medallion loan is roughly $500,000; the average medallion is now valued at less than $150,000. The debt levels have driven thousands of taxi drivers who purchased medallions to default on their loan. Some even committed suicide.
The letter argues a city-supported backstop of the MARP would create a mechanism to bring down the interest rates on the loans, allowing drivers to make lower payments more in-line with the current industry.
A spokesperson for the mayor referred to an Aug. 4 comment made by de Blasio where he expressed sympathy for the plight of yellow medallion taxi drivers, but implied the city can’t fund their recovery without federal dollars coming from a Congressional stimulus package, as the city faces its own financial crisis.
The recovery of medallion value is of paramount importance to the drivers who carry the loans, as well as the city, which has lost money on their decline in value.
Crain’s previously reported on the TLC’s failure to regulate app-hail companies according to the letter of a law passed by the council and signed by de Blasio in 2018. Transportation industry insiders argue the TLC is to blame for allowing a valuable revenue source for the city to dry up under its watch.
Source: Crain’s New York Business