The New York Taxi Workers Alliance has declared victory in its struggle with the city government that had made millions artificially inflating the price of taxi medallions and then left taxi drivers to suffocate under debt as those prices plummeted in the age of Uber.
Here is the head of the NYTWA breaking the news on Wednesday afternoon, saying that under these terms thousands of families “can get their life back.”
For those of you not familiar with the taxi debt crisis, here is a brief recap from March of this year, when taxi drivers were protesting across the city, shutting down bridges and highways:
Here in New York, you don’t just paint your car yellow and start picking people up off the street. You need a special taxi medallion for your car to be a taxi and pick up hails, and the city limits the number of medallions out there. As you can imagine, with limited supply and strong demand, the value of a medallion could rise. As Uber and Lyft have completely reshaped the taxi landscape here in the city, that value plummeted, and yellow cab drivers are now underwater, struggling to pay off loans on medallions now worth a fraction of what they started as.
Over the past two decades, the city not only watched as these prices skyrocketed, but encouraged it. To put some figures on that, medallion prices shot up 455 percent from 2001 to 2014 (the last city auction for medallions), as the New York Times reported, only to quickly drop again. That meant medallions “went from $200,000 in 2002 to over $1 million in 2014, then crashed to less than $200,000 soon after,” as City and State NY put it.
The city initially only offered to let drivers borrow yet more money to pay off the loans on their artificially-inflated taxi medallions. Now the city will be giving taxi drivers $30,000 off the bat, as the city states in a press release:
Mayor de Blasio, New York City Taxi and Limousine Commission (TLC) Commissioner and Chair Aloysee Heredia Jarmoszuk, and Senator Charles Schumer today announced an agreement between the City, the New York Taxi Workers Alliance (NYTWA), and Marblegate Asset Management (Marblegate), the largest medallion lender, to supplement the City’s Medallion Relief Program (MRP) with a City-funded deficiency guarantee to achieve greater principal reduction and lower monthly payments.
Under the agreement, Marblegate will restructure outstanding loans to a principal balance of $200,000, which will be constituted as a $170,000 guaranteed loan, plus a City grant of $30,000. The terms of the new loan will include a 5% interest rate and a 20-year, fully amortizing term. This restructuring will cap debt service payments at $1,122 per month for eligible medallion owners.
Much of this debt has been locked up by Connecticut hedge fund Marblegate, so it is entertaining to read its statement in the NYC press release, declaring that this is somehow a victory for taxis themselves:
“Today’s agreement is a win for taxis, which are a critical piece of New York City infrastructure,” said Andrew Milgram, Managing Partner and Chief Investment Officer of Marblegate Asset Management. “It is also a testament to Ms. Desai and the many taxi drivers who have been tenacious advocates and who, along with the de Blasio Administration and Senator Schumer, have delivered meaningful debt forgiveness and a sizable reduction in drivers’ monthly loan payments.”
This deal is not a complete debt forgiveness, but it does mean that taxi drivers struggling with their debt won’t fear losing their homes. Such was the case with the family of city council hopeful Felicia Singh, defeated in yesterday’s election in Queens.
The bitterness of the NYTWA’s struggle is only a reminder of how strong was its opposition, and how sweet is its victory for organized labor.
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