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Brian Lehrer: It's the Brian Lehrer Show on WNYC. Good morning again, everyone. At this point, everyone pretty much agrees that the massive debt owed by many of New York City's taxi drivers is unconscionable, but there remains disagreement over who should be responsible for shouldering that debt incurred because of the lack of rules for Uber and other newer ride-hail companies, and the City allegedly encouraging bad loans for medallion owners, and how much the City should step in and cover the costs.

The City, for its part, is moving ahead just in the past few weeks with a $65 million plan that would offer grants to drivers to help them restructure their debt. They say many drivers should expect to see over $200,000 in debt forgiveness, and monthly payments reduced to $1,500. Sound like a good start, but not according to many drivers and drivers advocates, they say much more debt reduction is needed. There have been protests, maybe you've even seen them if you've been downtown, yellow cabs around City Hall. They say the City should step up and become the guarantor of the medallion value.

They say if the cab drivers default on the loan, the City, not the assets of the drivers and their families, should guarantee the value. Also, in support of that plan, Senator Chuck Schumer and local Congress members like Alexandria Ocasio-Cortez, and Richie Torres, they agree with the drivers. With me now is someone representing many drivers, and that second view, Bhairavi Desai, Executive Director, and founding member of the New York Taxi Workers Alliance, a union representing taxi and Uber drivers in New York City. Bhairavi, welcome back to WNYC. Thanks so much for coming on.

Bhairavi Desai: Thank you, Brian. Good morning.

Brian Lehrer: Let's take a step back. Remind us how yellow cab drivers got into so much debt as a group in the first place.

Bhairavi Desai: The City auctions off the medallions, and the medallions are literally just a permit that allows yellow cabs to have a street hail exclusivity in New York City. The City auctions off new medallions and add an auction, they actually set the opening bid. There is a Pulitzer Prize-winning investigation by the New York Times which documented that the City, through the years, particularly throughout the Bloomberg administration, inflated the value of the medallion. They advertised it to be higher than they knew it to be. There was like direct mailing, direct advertising to mostly immigrant drivers to make this investment.

Even going as far back as 2014, there were advertisements that said, "This is more secure than the stock market, get a bite of that big apple," and really encouraged drivers. Meanwhile, there were seven government agencies at the city, state, and federal level, which all had internal reports that the price was being inflated, but they did nothing about it, and they allowed drivers to invest everything they had into that purchase instead.

Brian Lehrer: Before Uber and Lyft and other new competitors like them, was it a monopoly in the sense that there was-- maybe monopoly is the wrong word, but a fixed market in that the number of medallions was set by the City, so people couldn't just come in and set up a competing taxi service if you wanted to compete with the yellow cabs. There were only X number of medallions, and that was a fixed number, and therefore, there was scarcity and that made the value so high.

Bhairavi Desai: The fixed number was really in response to congestion that without fixing that number, you just had such a large proliferation of vehicles. That's really where the cap comes from. In terms of the inflation of the value, I think there are a couple of factors. One, when the Taxi & Limousine Commission would set the opening bid and would advertise the value, there was a lot of fudging there with those numbers.

There were also banks that were no longer allowed to loan in the housing market after 2008, that entered into the medallion market, working with what are called medallion brokers to encourage drivers to bid higher and higher.

You combine those reports with the direct solicitations by those in power over drivers, all of this is what began to inflate the value. Then, of course, many of the same City Hall officials, or TLC officials in particular, then allowed in Uber and Lyft unregulated. Once those cars hit, and you had over 100, 000 at one point, the number affairs on the revenue really started to come down.

By 2019, yellow cab revenue, when adjusted for inflation, had dropped by about 44% compared to 2011. It's this combination that really has led to this crisis, whether you're looking at the inflation or you're looking at the crashing from the deregulation, the one central play here remains the City of New York.

Brian Lehrer: The encouraging of high bidding prices and the allowing in of Uber and Lyft and others without a cap originally, it seems like such an unconscionable combination. On the one hand, the City was telling the drivers, "Look, these medallions, this right to own and operate a yellow cab, is so valuable because the number of medallions is fixed, and so you're guaranteed just about a really good income from this."

Then at the same time, they're allowing Uber, and Lyft, and others to proliferate, completely destroying that model because so many competing cars are on the road. It's unbelievable that those two things were happening at the same time.

Bhairavi Desai: It really is so unconscionable and there's been so much destruction. There are thousands of people that have lost their retirement because they would've been banking on that value to go up, or at least they would've been looking to lease out the medallion once they themselves retired. Instead, they're now looking at a debt beyond their own lifetime. Brian, even though owner-drivers represent about 2% of the workforce, they were the segment of the drivers that were the closest to a stable middle-class life.

In the race to the bottom that all drivers have been struggling under over the past couple of years, owner-drivers have absolutely hit the worst of the bottom while they're looking at a lifetime of debt, and day-to-day working under the minimum wage.

Brian Lehrer: Talk a little bit more about the difference between the driver-owners and other drivers. I think you just said it's only 2% of the drivers because I think the general public that doesn't think about the industry might casually assume, "Oh, well, a taxi driver goes to work and works a shift, and the car is owned by some big company that owns a whole fleet of them, which is the case for a lot of people.

Then there are also these individuals really who we're talking about here, who as individuals, take out these loans, like a mortgage on your house, they're so big, to get the medallion and then try to run a business with just you and your car. Right?

Bhairavi Desai: That's right. They invested in the City. The City of New York made $850 million off of these medallion auctions. Now owner-drivers tend to be the steadiest drivers. Particularly I remember after the downturn after 9/11 or after Hurricane Sandy, even when this gasoline prices skyrocketed after Katrina, owner-drivers have always provided the most steady service in the industry. There are about 3,000 of them out of the 13,580 medallions on the streets, 3,000 drivers who own the medallion and the vehicle. Then another 3,000 individuals who may be leasing, may be working only part-time because most of them are retired drivers.

They've been the steadiest forces in this industry. They tend to have some of the best customer service and driving records. They also tend to be more on the older side. They're the men and women who invested in this City. They believe that a Taxi & Limousine Commission, which would fail their vehicle for not having the right shade of yellow, would be able to keep their word when they said to the drivers, "This is the most secure investment that you can make in this City."

Brian Lehrer: Another way to look at the imbalance, and again, a lot of people never think about this, they are users of taxis. The owner-drivers of Uber because those are owner-drivers too, people use their own cars and they register them with Uber, it doesn't cost very much. They have to follow certain standards, et cetera, but they don't have to pay for the right to use their own car like the Medallion owners who have to participate in that auction with the City. It's another way that they're just two completely separate systems out there, and one is so advantaged and the other is so disadvantaged in recent years.

Drivers, we want to let you in on this, driver-owners, in particular, as we talk about what to do to help these taxi medallion owners, you taxi medallion owners, who have been so disadvantaged by market forces and City policy, get out of there unconscionable debts. We'll get to the policy options in a minute. We've been talking so far about the background of what the situation is and how we got here. Driver-owners, you're going to get first priority on the phones, We see a few of you are calling in. We also see a lot of other people are calling in.

Heads up, we may bump some of you, especially some of you regular callers, to let drivers in on the segment that's going to be primarily for them on the phone. 646-435-7280, 646-435-7280. Do you own one of the city's nearly 12,000 taxi medallions? We invite you in to tell your story and say what you think the policy should be for debt relief. 646-435-72810, 646-435-7280. I am with Bhairavi Desai from the Taxi Workers Alliance, who represents a lot of you. You can hear, you can hear the advocate speak. It's an honorable thing, Bhairavi, you've been doing this for a number of years now to represent taxi drivers. You feel strongly about it. Right?

Bhairavi Desai: The best people in the world, they've helped raise me.

Brian Lehrer: Let's go to a phone call right away. Here is, let's see. I think it's Muneer in Queens. Muneer, you're on WNYC, thank you for calling in.

Muneer: Hi, Brian. How are you?

Brian Lehrer: Good. You're a single medallion owner?

Muneer: Yes. I like your shows.

Brian Lehrer: Thank you.

Muneer: My question is simple. I'm a single medallion owner, and I've been there long time. I'm just asking. My question is to run the yellow taxi in Manhattan, I had to invest almost half a million dollars. On the other hand, I see TLC and mayor whoever, they gave the free play to the Uber to do the same job. why this kind of injustice? That is only my simple question.

Brian Lehrer: It's a rhetorical question, I don't know if it's a rhetorical question. Stay there for a minute, Muneer, because I want to ask you what you think the solution is. I guess we can ask the why question, we've been laying out what the injustice is, Bhairavi. Muneer is asking why. Why did they come up with such a dual-track system that disadvantages the people who've been doing it?

Bhairavi Desai: I think that, Uber and Lyft are multi-billion dollar corporations backed by Wall Street, whereas owner-drivers are mostly largely immigrant workers. Uber and Lyft spent more money on lobbies in 2017 than Walmart, Microsoft, and Amazon combined. Brian, at this point, the City has to answer for the current reality, and the plan that they put forth, it does not solve this crisis. It's still a pathway to bankruptcy. What we're looking for is a real solution.

The City needs to guarantee these loans in order to incentivize the banks, to bring them down to no more than $145,000, no more than $800 a month. This is how you allow owner-drivers to complete this debt, not being a lifelong struggle, and to not remain under poverty shift after shift. It is a low-cost, low-risk plan for the city, but it is life-saving for the drivers.

Brian Lehrer: Muneer, can I ask you, you said you invested almost half a million dollars in order to obtain your medallion, what would you say the market value of it is now?

Muneer: 100,000, maybe 120, 000, less than that sometimes.

Brian Lehrer: What would happen if you defaulted on that loan? Would you lose your car?

Muneer: Yes, I'm going to lose my car, of course, but luckily, my one is an individual owner, so I keep negotiating with him. He understands the situation.

Brian Lehrer: The owner of your loan?

Muneer: Yes.

Brian Lehrer: That's good if he's being a human being about it.

Muneer: Yes, at least. It is a simple thing, how could they do that? You have an existing one who paid for it to do the job in Manhattan, and on the other hand, you giving hundreds of thousands of free play to do the same job to people, then how we can survive? What happened to my investment?

Brian Lehrer: What do you think the proper solution is, Muneer?

Muneer: I think the proper solution is if you want to do the same job, Uber and all the Lyfts and other company, you buy the medallion too, or just do something, same rules should be applied. Then you do other ways, you drop like Green Card, go out the city, don't pick up. If you want to pick up, you do the same things I do, invest the money.

Brian Lehrer: Single standard. Muneer, thank you, and best of luck to you. The City's program, Bhairavi, which is in effect now, offers up to $29,000 in individual grants, effectively acting as down payments to help medallion owners restructure their loans with lenders. Additionally, the City will help drivers negotiate with lenders, claiming many drivers will have over $200,000 in debt forgiven. We heard from Muneer's story that it is sums of money at that level that are in play here.

The loan payments, in many cases, the city says, would be reduced to about $1,500 or less per month, relatively affordable. The City says their plan is gaining momentum, and that so far nearly 60 loan restructuring deals have been approved, and 1,000 more deals are in progress. The plan is clearly attracting some drivers. Who does this relief program work well for, and who doesn't it in your opinion?

Bhairavi Desai: First of all, it does not work for the drivers because the average debt is $550,000, which the City now denies, but according to a report that they themselves released in 2019, and given 2020 was a COVID year, the numbers would not change very much. Their own reports of the average was like $550,000. A $200,000 relief is still going to leave you at a lifetime debt, a debt you cannot pay off over your lifetime. On top of that, the average $1,600 a month that they've been saying, given the average earnings of today, drivers are going to be left with less than $10 an hour if they have to pay $1,600 on monthly mortgage.

The City's own rules allow the lenders to do up to $2,000 a month, which will leave drivers at less than $8.30 an hour. By the way, Brian, it's 20,000 for the cash down payment, the additional 9,000 is a subsidy because the city knows that after their restructuring plan, drivers will not be able to make these payments, and so they factored in a subsidy to help you make them for six months. We're not looking for subsidies, we're looking for a solution.

We want to end the bankruptcies and the foreclosures. We have a simple solution that is being supported by the entire New York City congressional delegation and the Senate Majority Leader, many other City and state officials. It objectively will bring down the loans to no more than $145,000. You don't need subsidies, you need real relief so the workers can actually survive and not be dependent on the same city that is responsible for this crisis.

Brian Lehrer: Let's hear another driver's story. Augustine, near City Hall. Augustine, you're on WNYC, thank you for calling in.

Augustine: Hi, how are you doing? I'm a medallion owner-driver and I've been a number of New York taxi Workers Alliance for a very long time, let's just say. I just have to say that what the City has been doing is basically holding a gun to the owner-drivers' heads and telling them to pay their plan because they've been dragging their feet on trying to adapt the plan that will actually help rectify and solve this crisis. For many of us, I myself, owe $495,000, and that's not even including the interest that has accrued throughout the pandemic. For now, I don't understand why that the City is willing to drag their feet and, in the process, have these medallion owners for clothes and enter into bankruptcy.

For many of us, we were out here for 24/7 and this is day 24. Just take a look at the timeline, in March, we had a bill that was gaining momentum that was sponsored by state Senator Jessica Ramos, and five days later, the TLC came out with their own proposal of $65 million. They dragged it on for six months in order for us to even have any type of rules that they came out with. Then when they came out with the rules, we found out that does not go far enough. It doesn't matter. There's no way--

Brian Lehrer: Let me ask you why you think it doesn't go far enough. I was just going over some of the numbers, which I know can make people's eyes glaze over, but the basics of $29,000 as a grant, effectively acting as a down payment for restructuring the loan, and then saying many drivers will have over $200,000 in debt relief. Then loan payment is reduced to about $1,500 or less per month for most drivers. That's the city's plan and some of their projected numbers for how the plan will work. Why isn't that sufficient in your opinion or in your case?

Augustine: What people don't really understand is operating a yellow taxi, it comes with a lot of costs. Not only just for a vehicle purchase, vehicle payments, but you also have insurance. If you have another driver, you have a workers' comp, you have gas, you have maintenance, you have all these credit card fees. On top of that, the state has put in another $2.50 on top of the surcharges for congestion surcharge since, I believe, February of 2019. With all that coming through, we just can't sustain. We just don't make enough on the street.

The competition is already here. Unless there's a way for the City to try to limit the amount of cars that could come into the City, it's impossible for us to make ends meet when there's so much traffic in the city and the able, unless we want to drive 12 hours a day, seven days a week.

Brian Lehrer: Augustine, thank you for checking in good luck to you. Bhairavi, to your alternative relief proposal, a cornerstone of your more aggressive plan, I see, is reducing the value of a taxi medallion to a fixed $145,000. That would be the principal costs, which, for some drivers, is at $500,000 or more as we heard from Muneer in his case, and that's common, depending on when they bought their medallion. Reducing the maximum monthly payment to $800, that's in your plan. First, how do you come to that number, $145,000 as the true value of all taxi medallions?

Bhairavi Desai: We should know it's not the value of the medallion, it's the value of the loan. When you run the numbers, like Augustine was just saying, as to how much all the other expenses and what the typical revenue is, and those revenue numbers are based on data that the Taxi and Limousine Commission releases. In order for drivers to earn a self-sustaining income, meaning where they're above poverty, and where they can earn above a minimum wage, you need to balance what the monthly payment is with all the other expenses and what that revenue. At $800 a month, drivers have a fighting chance of survival.

The going rate of the medallion, as Muneer was saying earlier, right now, it's around $100,000. You can't have loans be so underwater just really completely drown people out. We've looked at how drivers can survive, and particularly owner-drivers, Brian, they have no pathway to things like workers' compensation if they themselves are injured on the job or pay time off or any subsidies that other workers have including pathways that other drivers in the industry could have owner-drivers, as sole proprietors, will be locked out of all of that.

Brian Lehrer: With $145,000, if we heard from Muneer, and I think from what I've read, that his numbers for himself were fairly representative of what's the case for a lot of drivers out there. He had like a $500,000 loan for his medallion, where that was the purchase price, a lot of which is a loan. Now, it's crashed to about $100,000 in value. Let's say somebody owes $400,000 on their medallion, and your plan would have the government set the new value of the loan at only $145,000, what happens to the rest of the money that was lent?

Would banks and other private lenders have to eat it or would the City taxpayers subsidize all that difference? How would that actually work if a driver owes $400,000 on a loan, say, and the city comes up with your plan, passes it, and says, "All loans now are only $145,000 in arrears"?

Bhairavi Desai: The banks, the lenders would absolutely have to eat it. That's part of what's happening right now already, even under the City's plan. Under the City's plan, it just doesn't go far enough. Someone like Muneer, for example, would end up at $275,000 under the City's plan if his loan was with the biggest lender in the industry. In fact, that's actually what the lender is willing to set it at. If the lender wanted to, the City's own rules would allow that lender to even keep the loan at $330,000.

That's not workable. Under our plan, what the City would do is they would say to the lenders that if they reduce the debts to actually $175,000, then the drivers would get the $30,000 in grants, and I know it's 29, we'll round it up to 30,000. The whole thing, the 20 plus the 9, would be used as a down payment to bring down the mortgage, which is different from how the City is using it now. The $175,000 would be reduced by, say, $30,000. Then the new $145,000 balance is what the drivers would pay off at a rate of $800 a month. To incentivize this would guarantee that loan of $145,000.

If I could just explain what that means, by guarantee, what I mean is that let's say into the future the owner-driver, for whatever reason, default on the $145,000, if they missed the payment, they're not able to keep it up. The bank would take the medallion back. Let's say at the time that they default, they still have a balance of $100,000. The bank would take the medallion back and they would sell it. The owner-driver has lost their medallion, so they've suffered a consequence here. Once the bank sells it back, let's say they sell it for $90,000, only the $10,000 balance that was left on that loan, that's the only amount the City is responsible for.

We've run a risk model, which the City Comptroller has found to be fiscally sound. The state Attorney General has also vetted it along with Congress officers and Majority Leader Schumer. According to this risk model analysis, the highest cost of this program would be about $3 million a year. That's a fraction for the City of New York, which has an annual budget of $96 billion and received $6 billion in COVID aid, which is $2 billion above the deficit, and mind you, took in $850 million during just what? 12 years of medallion sales.

Brian Lehrer: If it's really $3 million a year, that really is very little money in the scheme of things to make whole all these drivers. I want to take one more call before we run out of time, and it's Felicia in Ozone Park. I think this is Democratic City Council nominee, Felicia Singh, who's a daughter of a taxi cab driver, and almost certain to be elected on Election Day in November because it's an overwhelmingly Democratic district. Felicia in Ozone Park, are you Felicia Singh?

Felicia Singh: Hi, Brian. Hi, Bhairavi. Thank you for letting me share a little bit about the medallion crisis. First, a big shout-out to my New York Taxi Workers Alliance family. Outside of Chambers and Murray right now, it's Day 24 and they've been outside 24/7 demanding debt relief. I'm so proud to call them my family. I was actually on your show, Brian, back in February 2021 in the middle of my primary, when I called up during Ask the Mayor.

I asked the mayor to adopt the New York Taxi Workers Alliance’s plan for debt relief because my story is one that we don't want to continue where the medallion causes the eviction of people who live in their homes or renters. My father used to be an owner-driver until he filed for bankruptcy in 2019. His medallion was seized in April 2020, and then the United States Bankruptcy Court put a For Sale sign on our house on February 5th, 2021 without notice. This is what happens when the City is deeply negligent in taking responsibility for a crisis that could have been prevented. We don't want this to happen to more families down the line. That’s why I-

Brian Lehrer: Felicia, let me jump in because we're almost at a time in the segment. Do you think that after Election Day when the new City Council is elected and most of the 51 seats are going to turn over and it's expected to be a more progressive City Council in general, do you think this is something that City Council will act on and overrule the Mayor's plan by an act of law, or it doesn't work that way?

Felicia Singh: It could be possible, but right now we are pushing the Mayor to take action now before he leaves in about 83 days. He needs to be responsible and take responsibility and not pass this on to another council or another mayor. This is something he has been deeply negligent in following through, and now he needs to fix the plan that's just not going to work.

Brian Lehrer: Felicia, thank you for your call. You get the last word. We also thank Bhairavi Desai, Executive Director and founding member of the New York Taxi Workers Alliance. Bhairavi, thanks a lot, and good luck to everybody in your membership.

Bhairavi Desai: Thank you so much, Brian.

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