Amid new scrutiny over the crippling debt crisis faced by New York City taxi drivers, city lawmakers have introduce a package of bills aimed at mitigating predatory lending practices that have left thousands of drivers penniless and spurred several suicides.
Taxi medallion prices surged to extraordinary heights between 2002 and 2014 before plummeting with the swell of app-based, for-hire vehicles such as Uber and Lyft. Drivers who once looked to medallions, which allow operation of a yellow taxi, as a means to the American dream have become saddled with insurmountable debt to pay off private loans for medallions that are now worth significantly less than they were when purchased.
At a Monday hearing, lawmakers grilled officials with the city’s Taxi and Limousine Commission (TLC), which regulates the taxi industry, stressing more should have been and must be done to shield taxi drivers from the crisis. The new bills would be a step forward on that path.
“The city had no interest in reining in the market, and breaking up the party because there was money to be made,” said Bronx City Council member Ritchie Torres, who is the chair of the council’s oversight and investigations committee. “Drivers who were promised the American dream have been given a nightmare, and the city that sold them that American dream ultimately sold them out.”
A two-part New York Times investigation published in May explored the crisis, shining a light on how TLC played a role in spurring skyrocketing medallion prices. Although TLC does not oversee lending practices to taxi drivers, the agency benefited from the soaring price tags. Between 2001 to 2013, the Bloomberg administration auctioned 1,260 medallions with a maximum winning bid of $524,000; in 2014 the de Blasio administration auctioned off 200 medallions with the highest winning bid at $965,000, city data shows. Advocates and elected officials say TLC ignored warning signs and did not do enough to prevent the speculative bubble.
One taxi driver, who originally immigrated from west Africa, said when he purchased a medallion it was some $700,000 dollars and now it’s worth less than $100,000—now he is drowning in debt and fears he will lose the Bronx home he intended to pass on to his children.
“What’s going on in the industry is not American, it’s not New York, I can even say it’s not humane,” said Mouhamadou Aliyu, a long-time taxi driver. “It’s brutal.”
The looming threat was predicted in a 2011 report compiled by Gary Roth, who was hired by the city in 2010 to analyze taxi policy, warning that if the city did not take action, the loans drivers were taking out to pay for medallions would become unsustainable and the market would fold. Acting TLC commissioner Bill Heinzen, who has been with the agency since 2015, said the report only surfaced recently and that it was only made available to him last week. Council members requested a copy from TLC three weeks ago, but received the report three hours before Monday’s hearing, according to Torres.
Heinzen said he and other TLC officials feel “pain and sorrow” over the dire circumstances many taxi drivers now find themselves in, but denied “moral culpability.” After repeated questioning, Heinzen acknowledged that TLC has played a role in the crises but emphasized the responsibility of lenders—including predatory lenders and the National Credit Union Association—and state and federal regulatory agencies.
“Yes, I accept responsibility for what TLC has done for what I have done to make this crisis worse,” Heinzen said. “I have tried to explain today my belief, I know you don’t want to hear it, but that other people are also responsible. The main cause of this is the banks and credit unions.”
One of the new bills, drafted by Torres, would create a department within TLC to evaluate the taxi industry’s financial stability. Another bill brought forward by Council member Ydanis Rodriguez, the chair of the transportation committee, would require TLC to “evaluate the character and integrity of taxicab brokers, agents, and taxicab licensees.” A third bill, introduced by Council member Adrienne Adams, would require the agency to review annual financial disclosures from those who are interested in a taxi license. Lastly, Council member Francisco Moya is sponsoring a bill that would restrict the sale or transfer of a taxi license unless TLC reviews the funds that are being used.
The legislation is the latest in a flurry of recent bills to address the current crisis and to prevent future ones. In 2018, the City Council, passed a cap on for-hire vehicle licenses, and lawmakers have floated the idea of exempting taxi drivers from forthcoming congestion pricing.