NEW YORK–Following a two-week hunger strike by a dozen cab drivers, the New York Taxi Workers Alliance (NYTWA), New York City, and Marblegate Asset Management—the company that bought the portfolio of taxi medallion loans from NCUA--have announced an agreement they said is aimed at helping ameliorate the crushing debt burden of many of the city’s approximately 6,000 medallion taxi owner-drivers.
As CUToday.info reported here, a group of taxi medallion owners in New York City had gone on the hunger strike as a means of drawing attention to the debts held on loans they took to purchase the medallions, which once were worth more than a million dollars each but which now are worth about a tenth of that.
“After a long and painful journey, we made it home to victory,” Bhairavi Desai, the executive director of NYTWA, said in a released statement. “Drivers will no longer be at risk of losing their homes, and no longer be held captive to a debt beyond their lifetime. The city we love had our back and so today we can say, we have won.”
New Arrangement
Marblegate Asset Management, the private equity firm the union negotiated with, will now supplement the New York City Medallion Relief Program with a city-backed guarantee to reduce principal and monthly payments on medallion debt and restructure existing loans. The firm controls almost one-third of the city’s taxi medallions and earlier forgave $70 million in debt and extended loan payment deadlines several times over the pandemic.
In early 2020, NCUA announced it had sold its portfolio of approximately 3,500 medallions from New York City and Chicago that it had come to own as the result of the failure of a half-dozen CUs that specialized in loans for medallions. The conservatorship of about a half-dozen of those medallion-lending credit unions cost the NCUSIF approximately $750 million.
Greenwich, Conn.-based Marblegate acquired the portfolio for approximately $350-million just ahead of the pandemic, which led to office workers staying home and taxi ridership to plunge.
Taxi medallions had earlier sunk in value due to the rapid rise in services such as Uber and Lyft.
Terms of Agreement
According to a statement released by the city, under the agreement, Marblegate will restructure outstanding loans to a principal balance of $200,000, which will be constituted as a $170,000 guaranteed loan, plus a City grant of $30,000. The terms of the new loan will include a 5% interest rate and a 20-year, fully amortizing term. This restructuring will cap debt service payments at $1,122 per month for eligible medallion owners.
The City will provide funding for a guarantee on the principal and interest for these loans and will work with all other medallion lenders to achieve the same terms.
This agreement follows an earlier $65 million Medallion Relief Program, which has helped 173 owner/drivers to achieve $21.4 million in debt forgiveness in just five weeks, according to the city.