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New plan to bail out New York City’s indebted taxi drivers receives backing from senior city and state officials – but critics say the numbers don’t add up and say it threatens to destroy the market that definitely finances yellow taxis. .
Under a proposal unveiled this month by the New York Taxi Workers Alliance, a group that represents drivers, the city would try to reduce the value and debt of taxi medallions – the expensive permits issued by the city that are needed to operate taxis – at $ 125,000. The city would act as a safety net, responsible for any accounts that might still go missing.
Brought to you by the group’s executive director, Bhairavi Desai, the plan would drop taxi drivers’ monthly payments below $ 800 over 20 years with an interest rate of 4%. That’s well below the $ 3,000 and $ 4,000 per month payments that criticized some taxi drivers after the medallion market briefly exceeded $ 1 million in 2013.
The sweeping refinancing – which comes as taxi drivers face a year before the city returns to normal with the help of a COVID-19 vaccine – has caught the attention of a few senior city officials .
“The Taxi Workers Alliance’s Groundbreaking Proposal Offers a Responsible and Necessary Approach to Relieving Crushing Driver Debt and Lowering Costs to Taxpayers,” said Scott Stringer, New York City Comptroller and 2021 mayoral candidate , in a statement to the Post. “We need to embrace this plan and get to work now because we have a fiscal and moral obligation to fix this.”
New York Attorney General Letitia James – who in February filed an $ 810 million lawsuit against the city, alleging that the artificial inflation in the value of lockets between 2004 and 2017 amounted to fraud – also supported the new rescue proposal, claiming on Nov. 18 that she would ditch her costume if the city adopted Desai’s plan.
In recent times, the medallions have changed hands well below the $ 200,000 mark, helping to spark widespread bankruptcies and at least nine suicides.
“I believe it is essential that we move forward on this back-up plan immediately to mitigate the damage already done,” said James.
Industry analysts, however, estimate that the plan – which would reduce the collective debt of taxi drivers to $ 75 million, from $ 500 million in a bailout proposed by city officials just weeks before. that the pandemic hits in March – ignores a key part of any deal to bail out locket owners: namely the private lenders who hold their debt.
The biggest player in this market is Marblegate Asset Management, based in Greenwich, Connecticut, which owns more than 4,000 medallions and rents out, the largest collection ever. Earlier this year, Marblegate collected 3,000 medallions with an average estimated value of $ 110,000. The fund denied the accuracy of this figure, but declined to give further details.
“Desai should recognize that there is a more important player in this field, and that player is Marblegate,” warned medallion owner Sergio Cabrera. “Why would Marblegate, with all her leverage, buy into this plan when they’ve already paid for it?” The numbers should work for everyone. “
Marblegate declined to comment for this article, but previously said he was acting in good faith throughout the pandemic, providing $ 70 million in relief so far for locket owners unable to make a profit in the pandemic. .
“They twisted an arm here or there, but it’s a slight twist,” Cabrera said of Marblegate.
Some experts agree that Marblegate’s interests cannot be ignored by the city, even though business remains down more than 80% from pre-pandemic levels.
“Just picking a number is absolutely ridiculous,” said Dean Barr, chief executive officer at Eagle Alpha and author of a March report on the current state of taxi medallions. “If they go ahead and create this so-called bargain by re-valuing the medallions, they’ll destroy this market.”
According to Barr, lowering the value of the lockets to $ 125,000 would seriously undervalue them as assets in the future. This, in turn, could deter investors from the sector and limit access to capital. In addition to the increase in defaults, existing and potential locket owners might find it impossible to borrow money in order to redeem lockets seized from the city.
“Who’s going to lend money to get people to buy lockets?” Nobody, ”Barr said.
Meanwhile, a third taxi rescue plan, called the Medallion Asset Relief Program, was introduced in May by Bronx City Councilor and Congressman-elect Ritchie Torres. Under the so-called MARP plan, which has the backing of 20 council members, the city would work with lenders and other private sector players to rebalance the value of the lockets to $ 250,000.
This valuation, proponents of MARP suggest, would give medallion owners a chance to build equity in their loans at a valuation that lenders like Marblegate could agree to. Monthly payments would be around $ 1,100.
Torres and Marblegate both declined to comment on Desai’s gaining popularity proposal. In previous conversations with The Post, Torres has expressed concerns about Desai’s plan and his failure to create a lasting impact for the yellow cab industry. He has publicly considered securing federal funding for MARP when he visits Congress in early 2021.
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