QUEENS, N.Y.–An already depressed market for New York City taxi medallions continues to suffer.
An auction of 16 medallions last week came to an early end, with just three sales and a top price of $138,000 reported Crain’s New York Business. That’s a far cry from the days when taxi medallions sold for as much as $1.3 million and numerous credit unions made loans assuming those valuations would never decline.
Borrowers, too, as a recent report from the Mayor’s Office discovered, borrowed for everything from mortgages to vacations using the medallion values as collateral.
The crushing debt on many borrowers and the cratering of values has left borrowers with deep financial problems (leading many to file for bankruptcy) and caused the closure of a half-dozen credit unions at a cost of nearly three-quarters of a billion dollars to the CU insurance fund.
No Takers
According to Crain’s New York, at the most recent auction bidding for the three medallions started at a floor price of $130,000. Once the bidding moved to a group of medallions with a floor of $140,000, there were no takers, and auctioneer Richard Maltz halted the proceedings, according to two people who attended, Crain’s New York Business reported.
The 16 medallions had been foreclosed on by Aspire Federal Credit Union, which set the reserve prices.
“Medallions can have different reserve prices based on the requirements of investors who may have been involved in their financing,” Crain’s New York Business reported. “The second and third medallions sold for $137,000 and $136,000. The final prices will include a ‘buyer's premium’ payment of 6% of the sales figure.”
One year ago, at a similar auction, the hedge fund Marblegate Asset Management paid $170,000 apiece for a bulk sale of 131 medallions. At separate auctions in 2018, medallions sold for $175,000 to $185,000.
Chain Reaction
Recent private sales of individual medallions have gone as low as $100,000, according to the Taxi and Limousine Commission website, noted Crain’s new York Business.
The declining value of medallions, which reached a peak price of $1.3 million just five years ago, has triggered a chain reaction of personal bankruptcies and suicides of taxi owner-drivers. The loss of the medallion's value has been attributed to competition from app-based services Uber and Lyft and a pricing bubble that drove purchase figures to unsustainable heights.
CEO Arrested
Last week’s auction took place at the same time Alan Kaufman, former CEO of Melrose Credit Union, was arrested by the FBI for allegedly taking bribes from the owner of a fleet of taxi medallions in order to approve loans. Prosecutors allege Kaufman gave personal approval of more than $185 million in questionable loans, and in return received free luxury trips and other travel for himself and his wife from the New York Jets and other vendors, was given a free residence, and had access to free limousine rides for himself and family members.