NEW YORK, NY - On Thursday, November 12 at 12:30 PM, NYTWA will hold a press conference with NYC Comptroller Scott Stringer where he will announce his endorsement of NYTWA's plan for debt relief. Cabbies will caravan around City Hall creating a sea of yellow during the press conference.
Yellow cab owner-drivers have held motorcades, rallied, and shut down bridges to sound the alarm about the debt crisis they face. Public sentiment is at an high for driver support. NYTWA's recent shutdowns of the Brooklyn and Queensboro bridges went viral on social media. A video of the action got more than 3 million views on Twitter.
What: NYTWA Press Conference with NYC Comptroller Scott Stringer
When: 12:30 PM, TODAY, Thursday, November 12, 2020
Where: Broadway & Murray (Outside of City Hall)
Drivers will caravan on Broadway during the press conference creating a sea of yellow taxis.
NYTWA Executive Director Bhairavi Desai said: "We thank Comptroller Stringer for giving our proposal serious attention and applying the time and resources to properly vet its fiscal soundness and policy. We have put together an approach that will allow our families to survive this nightmare, and also allow the city to implement a solution that is low-cost and low-risk. The truth is, the cost of what we need is low - in the worst case scenario, an average $4 million per year over 20 years for a city with a $90 billion annual budget, and where there is already a sitting surplus of $40 million in an industry-specific fund. We have always known that the city not supporting the survival of 6,000 families, and a 100-plus industry that employs over 20,000 workers has never really been about money. But to have the backing of the chief financial officer of the city say the proposal has been vetted and found sound gives us tremendous hope after months of a deafening silence. City Hall can't keep up the charade that "it's the budget, stupid." It's time for the Mayor to follow the Comptroller's lead and move forward with debt restructuring that will save our city's iconic taxi industry and lift thousands of struggling families out of crisis, all at little cost to the city."
NYTWA'S PROPOSAL: We propose to have the city act as a backstop for loans that are restructured to $125,000 and refinanced at no more than 20 years at $757 per month (4% interest rate.) If the loan is delinquent and the medallion is foreclosed and put up for a public auction, the city would place a minimum bid equal to the balance on the $125K at the time of foreclosure and if no one bids higher, only then the city would purchase the medallion and then could sell it to the second highest bidder.
COST TO CITY: We have built a financial tool to assess the potential cost to the city for acting as a backstop. We identify the main factors for assessment: number of loans; probability of foreclosure; market value of medallion if the city has to purchase back foreclosed medallions below market value and then resell them. Even in the highest risk scenario: 6,000 underwater loans, a foreclosure rate of 5%, and a stagnant medallion market value of $75,000, the NET COST to the city as backstop under our proposal would be only $75 Million over 20 years; with $60 Million over the first five years.
For context and comparison, as of Summer 2020, the surplus in the Taxicab Improvement Fund had reached $40 Million. The cost of damages estimated by the New York State Attorney General in a notice of claim filed against the City of New York for defrauding medallion owners during 2002 to 2014 auctions was for $850 Million. While other backstop proposals have envisioned the city guaranteeing 20% on every individual loan, our proposal limits the city’s exposure to $125k loan balances are manageable for borrowers and will be well collateralized when the medallion market stabilizes. Our proposal also spreads out any potential cost to the city over 20 years, with maximum cost over the first five years.
BACKGROUND:
In July, the Taxi and Limousine Commission released a report showing that taxi ridership had dropped by an astounding 92 percent in June with just 20 percent of NYC’s 13,500 yellow taxis still in operation – meaning 80 percent of yellow taxi drivers weren’t able to work at all that month.
According to the report, average gross incomes for yellow cab drivers declined by 70 percent between February and April, and as of the end of July were still 43 percent less than a year ago.
Meanwhile, a post-COVID survey of NYTWA members found that 90% of our members have active loans. Among them, 70% were making all medallion payments in full before March 1st, while another 20% were paying steadily even if not always in full. The drivers leading the protest Thursday have collectively been paying almost $700,000 per month to their lenders with a collective debt of $132,804,824.70.
Our member surveys found that an astonishing 83% of drivers did not having enough money for food and meals or were close to not having enough through the quarantine period. 37% of our owner-driver members, meanwhile, report having gotten sick from COVID-19 or having lived with someone who was diagnosed with the virus. Things have gotten worse, not better, and yet a medallion debt being written down by lenders in their accounting programs remains a stranglehold on thousands of families.
NYTWA members have been campaigning for debt forgiveness and seemed within reach of victory before the quarantine – but have yet to receive relief. NYS Attorney General had just filed notice with the City of New York of litigation seeking in damages the $850 Million the city had collected through medallion sales between 2002 and 2012 after a NYT investigation first reported on fraud by city, state and federal officials who knowingly allowed medallion auctions and sales to continue at inflated values.
In February, a City Council Medallion Taskforce released a report recommending a public-private partnership and called for urgent action. Three of the nine drivers who committed suicide in 2018 were owner-drivers. All of the families reported crushing despair from the economic burden of life-long debt and overnight fall of the medallion. Post-COVID, NYTWA is calling on a "compromise" between the City and lenders whereby the city could play a backstop role for all loans refinanced to no more than $125,000 and at terms such as over 20 years with a monthly mortgage of $757.
Our Demands include:
1. We are calling on lenders to restructure medallion debt to $125,000 and refinance for no more than 20 years at $757 per month (4% interest rate.)
2. We are calling on the City to use its power and resources to support our survival. If, after debt restructuring, the medallion is foreclosed due to non-payment by the borrower and auctioned for sale in a public auction, the city agrees to place a minimum bid equal to the balance of the loan at the time of foreclosure times 105%. (For example, if $80K remains at time of foreclosure, the City bids $84K) If the medallion is bought by a private party, the city loses nothing. The City would play this "backstop" role only for loans that are restructured to $125,000 and done so within 30 days after the city passes a law to play this role.
3. We also call on Congress to set up 0% interest loans and pass Congressman Gregory Meeks' bill (House bill 5617) for tax exemption on medallion debt forgiveness as part of the next stimulus package.
4. We recommit our demand to return foreclosed medallions in storage to the original owner at the same proposed terms.
5. We call on the NYS Attorney General in her lawsuit against the City of New York over its role in fraudulently inflating the value of the medallion to fight for $150,000 restitution for medallion owners over 62 years of age whose retirement was stolen when the market crashed due to city's role in predatory lending and failure to regulate App companies.
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