SAN FRANCISCO–San Francisco FCU has filed suit against the city of San Francisco seeking $28-million in damages it alleges have been caused by ride sharing services on the value of taxi medallions.
In its suit San Francisco Federal alleges the plunge in taxi medallion values has been caused by the ride sharing services and left it with numerous troubled loans. In addition, SFFCU said at the invitation of the city of San Francisco it entered into a lending partnership for an expanded taxi medallion program.
“We partner with the city in many different avenues; this is one where we felt they left us holding the bag, and that’s why we’re filing the lawsuit,” SFFCU CEO Jonathan Oliver told KPIX5.
According to Oliver, in partnership with the city San Francisco FCU has made approximately 600 taxi medallion loans, 99 of which are now in foreclosure, KPIX reported. The credit union has classified the remaining taxi medallion loans as “impaired.”
In addition, the city, which manages the medallion transfer program, has not been able to sell a medallion in nearly two years, the report added.
The $1-billion San Francisco FCU reported $9.8-million in reportable delinquent loans as of Dec. 31, 2017. It posted a net worth ratio of 9.84% at year-end and a net loss of $4.066 million.
Taxi medallions, which have sold for more than $1 million in markets such as New York, have not hit those kinds of peaks in San Francisco but have nonetheless plummeted to values far below the funds borrowed to purchase them. KPIX estimated there are tens of thousands of “unregulated” Uber and Lyft drivers in San Francisco. Uber actually first launched in San Francisco approximately five years ago.
“If you’re going to sell transferable medallions, you have an obligation to maintain an active market,” SFFCU’s attorney, Jonathan Joseph, told KPIX 5.
The credit union’s lawsuit alleges the city has not enforce its own transportation code, allowing the Uber and Lyft drivers to proliferate.
Joseph alleged that the city promised that if the market ever collapsed the San Francisco Metropolitan Transportation Authority would repurchase the medallions.