Taxi & Limousine Commission (TLC) Chairwoman and Commissioner Aloysee Heredia Jarmoszuk told taxi medallion lenders on a March 31 conference call that she doesn’t think the rescue plan now working its way through the state Legislature would work. The yellow cab medallion bailout plan is currently being supported by the state attorney general and the city comptroller.
“The plan itself, at least sounded good, but was not implementable, and would create a myriad of issues and complications especially around foreclosures,” Jarmoszuk explained. “And the math just didn’t seem to work out.”
In March, the de Blasio administration announced a plan to allow medallion owners to restructure their debt through a $20,000 loan and up to $9,000 in debt payment support through a $65 million fund provided by the federal government in the recent stimulus package.
“We want for this program to achieve meaningful reduction in principle, reduced interest rates and extended amortization periods,” Jarmoszuk told at least six lenders during the conference call.
Taxi drivers who owe more than $200,000 on their depreciated medallion loan have questioned how $20,000 from the city would motivate any lender to reduce a larger debt amount.
“We need all parties, including all of you, to work together on these restructured loans,” Jarmoszuk replied. “The city is actually committing funds. We’re not going to tell you how to value the medallion asset. We know there isn’t a one-size-fits-all solution for medallion debt.”
During the call, Jarmoszuk rejected the competing plan proposed by the New York Taxi Workers Alliance – and supported by both Attorney General Letitia James and Comptroller Scott Stringer – that calls on the city or the state to create a $125,000 price ceiling for the value of the medallion loan that could be amortized at 4% over 20 years so the medallion owners could pay $757 per month to the lenders.
“It sort of backed into a desired principal amount and mortgage payment that wasn’t mathematically based,” Jarmoszuk said. “I personally wasn’t able to understand or explain how that plan would work.”
The attorney general’s office relayed to Crain’s in February that it believed the relief package proposed by the New York Taxi Workers Alliance was the best way to resolve the long-standing fiscal issues plaguing medallion owners.
“This proposal would provide a fiscally fair and responsible way to support the recovery of the taxi medallion industry by guaranteeing loans written down to no more than $125,000 – which is why I have been working with the city to approve it since last year,” James said.
Stringer also spoke in support of the alliance’s proposal during a March 4 hearing with members of the state Senate.
“The New York Taxi Workers Alliance has put forward what my office believes is a fiscally sound approach,” the comptroller said. “We have a financial obligation to fix this, and I believe that embracing this plan is the best start.”
Source: Crain’s New York Business