Blaz aims to give hacks fair chance
Mayor de Blasio on Monday announced a plan to crack down on taxi medallion brokers, who critics say for years took advantage of lax regulations to rake in boatloads of cash while burdening yellow cab owners with crippling debt.
Brokers will have to be more transparent with medallion buyers, de Blasio says. Under his plan, the city will establish a new office at the Taxi and Limousine Commission to make sure brokers follow the rules.
De Blasio’s plan for new regulations was accompanied by a report on dubious practices by several brokers. City officials said those brokers helped falsely inflate medallion prices over a decade. Cab owners borrowed money against those inflated values — landing thousands of them deep in debt.
The city collected information on debts carried by 302 medallion owners, who on average owe nearly $500,000 each.
Those owners bought their medallions for an average of $340,000 — and their debt ballooned because of refinancing, high interest rates and plummeting incomes in the increasingly competitive business of driving people around the city.
Their loan payments ranged from $2,500 to $4,000 per month — in 2018 an average yellow cab medallion brought in $10,200 per month, data shows. The additional costs of buying cars, maintenance, insurance and other expenses leaves many medallion owners scraping by.
Half of the medallion owners surveyed said they struggle to pay bills on time, and one in four said they are considering bankruptcy.
Paying off debt is all but impossible for many who own and drive medallion cabs. Of those surveyed by the mayor’s office, three said their lenders offered to write off their loan balances in exchange for a onetime $200,000 cash payment. None were able to come up with that kind of dough.
Driver advocates see the new regulations as a positive step to help beleaguered cabbies. But Bhairavi Desai, executive director of the New York Taxi Workers Alliance, says the city should consider a plan of debt forgiveness for cabbies who own medallions.
“The mayor’s recommendations don’t include debt forgiveness for a workforce facing an economic crisis that has already pushed three ownerdrivers to suicide, and thousands to bankruptcy,” Desai said.
“The mayor’s office grossly miscalculates the amount it would take to refinance loans and forgive medallion debt for struggling owner-drivers, estimating $13 billion,” she said. “But our own calculations show that debt forgiveness would actually cost between $1.8 billion to $2.7 billion.”
De Blasio told reporters on Monday that paying off all of the loans wasn’t in the cards.
“The honest truth is, it’s something we can’t reach,” said de Blasio. “We do not have the capacity as a city to provide that. I wish we did, but we don’t.”
One factor that led to inflated debts and medallion prices was a lack of transparency among brokers, the report released Monday shows.
Many brokers failed to give documents summarizing agreements for loans and purchases of medallions. When they did provide such documents, they were often confusing or incomplete.
The TLC will force brokers to be more transparent with medallion buyers, including providing a clear summary of loan and purchase agreements that are translated into the city’s top 10 non-English languages.