As we have hit the one-year mark of the pandemic, we must address the disparities head-on with real action for New Yorkers who need our help most.
We have a responsibility to take action. And now we have the tools to act. The just-passed American Rescue Plan will deliver at least $4.3 billion in federal money to New York City.
The city must strategically use the funds to relieve the suffering of New Yorkers. One critical way to do that is to bring justice to the thousands of taxi medallion owners and drivers who have been crushed under a mountain of debt.
The medallion proposal Mayor Bill de Blasio announced this month is a disgrace. The plan fails to deliver the significant relief drivers deserve. Nor does it address the full extent of families’ devastation and pain.
For decades, driving a cab in New York City was a road to the middle class, especially for striving immigrants from around the world. But today, a taxi medallion, which once promised prosperity and stability, is a financial sinkhole.
In the early 2000s, speculators and unscrupulous lenders distorted and drove up the price of a medallion to more than $1 million. Owner-drivers, pushed by lenders operating in a kind of regulatory Wild West, took on massive debt.
Then came the advent of app-based, for-hire companies including Uber and Lyft, which treat their workers as independent contractors. That further upended the market, and it popped the speculative medallion bubble.
For-hire vehicle trips increased twelve-fold from 2015 to nearly 750,000 prior to the pandemic. During the same period, the number of yellow taxi trips fell by nearly half, from more than 400,000 daily trips to just 217,000.
For years, drivers and their families bore the consequences with no relief from the city. Many drivers lost their home, suffered health complications and couldn’t afford to send their children to college.
Predatory lenders took drivers for a ride and left families in the wreckage of financial distress and despair.
In one 12-month period, nine drivers committed suicide. Nine. They were fathers, sons, brothers, uncles. These heartbreaking tragedies — and the preventable circumstances that precipitated them — must move us to do everything we can to prevent further pain and loss.
When COVID-19 arrived, the bottom of the industry truly fell out. Between February and April last year, ride-sharing trips fell by 80 percent, but taxi trips fell 96 percent to virtually nothing.
Since then, through January, ride-sharing trips have come back to better than half their pre-pandemic levels, but taxis have recovered only 20 percent of their lost business.
The taxi medallion crisis is a test of our commitment to fighting poverty and preserving pathways to the American dream. We have a moral obligation to the drivers, and we have a fiscal obligation to get this right.
The city Comptroller’s Office analyzed a proposal from the New York Taxi Workers Alliance and found it effective and fiscally sound, and now we have legislation in Albany.
Here’s how the proposal would work:
With the collapse in medallion prices, many owners have been left underwater, meaning their loan balance exceeds the market value of their medallion. Lenders would write down outstanding loans to a maximum of $125,000, allowing medallion owners to repay on reasonable terms they could afford.
This approach would give drivers manageable loan payments and free them of the threat of financial ruin.
The strategy offers assurance and stability for all parties involved: drivers, lenders and taxpayers. Empire State Development (ESD) would put a floor under loan losses by guaranteeing purchase of any medallions that borrowers default on, giving lenders the certainty they need about the value of their medallion loan portfolios.
In the event of a default, ESD would take possession of the medallion and be able to sell it to recoup part or all of its cost.
The proposal’s sound risk-management approach would limit future exposure and liability for taxpayers.
The mayor’s plan instead would provide only $29,000 in loans to drivers to pay down debt. It is a $65 million bailout for lenders that leaves drivers in debt. It spends more money to forgive less debt.
It’s time for a better approach. It’s time to restore peace of mind to New Yorkers who are suffering through hard times by no fault of their own.
It’s within our power to solve the problem. We don’t have to throw up our hands and look away from the despair and desperation. We have the means, we just need the will to meaningfully act.
We can change the lives of New Yorkers on the brink. We must meet our responsibility — and the moment — and immediately implement the New York Taxi Workers Alliance proposal.
This op-ed originally ran in Crain's. Scott Stringer is city comptroller, Jessica Ramos represents the 13th District of Queens in the State Senate, and Clyde Vanel represents the 33rd District of Queens in the Assembly.