Medallion Owners Get City Guarantee & Better Restructuring Deal. Is Yellow Cab Crisis Over? 🚖

Deal with Marblegate, largest holder of yellow cab medallion loans, is a major inflection point that could mark the beginning of the end of the taxi medallion crisis

Nov 4, 2021

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Is this the beginning of the end of the yellow cab medallion crisis?

After weeks of protests and a hunger strike, NYC Mayor Bill de Blasio, NYC TLC Chair Aloysee Heredia Jarmoszuk, and Senator Chuck Schumer announced an agreement between the City, the New York Taxi Workers Alliance (NYTWA), and Marblegate Asset Management (Marblegate), the largest taxi medallion lender.

NY Taxi Workers @NYTWA

Victory!!! Debt relief plan includes a city backed guarantee and affordable monthly mortgages putting an end to 46 days of protest and 15 days of hunger strike.

NY Taxi Workers @NYTWA

Thank you so much @NYCMayor for your leadership. You fixed a wrong that was inherited and it will save lives. Drivers have a fighting chance now and know that you made it possible. We thank you and your whole team for your work on making this new dawn possible.

Mayor Bill de Blasio @NYCMayor

Our taxi workers are the backbone of our city and we refuse to leave them behind. I’m proud to have worked with the @NYTWA, @SenSchumer and Marblegate to come to this agreement. To our drivers: congratulations on a well-earned victory. https://t.co/07DckFv9e2

Chuck Schumer @SenSchumer

Big news: My office, @NYTWA, & @NYCMayor reached a deal that includes city backstop to ensure DESPERATELY needed debt relief for our taxi workers This is a real victory—Thank you to the brave hunger strikers and extraordinary movement of NYers for coming together for our cabbies

Alexandria Ocasio-Cortez @AOC

2 years ago (clip below) we began our fight for justice & relief for NYC taxi drivers targeted in predatory medallion schemes. The plan was called naïve, “too expensive,” & unfeasible. But we kept going: called hearings, ran numbers, organized. Today, @NYTWA drivers won. 🚕💪🏽

Brian M. Rosenthal @brianmrosenthal

New: @AOC is joining the push for a government bailout of New York City taxi drivers trapped in exploitative medallion loans. She's the most prominent politician so far to call for a bailout: https://t.co/ICXZDZSGJm

🤝The Marblegate Deal

The new agreement builds upon the existing Medallion Relief Program (MRP) being implemented by the NYC TLC. Marblegate (reminder: largest medallion lender) will restructure outstanding medallion loans to a principal balance of $200,000. Remember, the average outstanding medallion debt for a driver-owner is reported to be about $500,000, so that’s ~$300,000 write-off or 60% of the average total debt! (Note: Marblegate likely bought the loans at distress prices as well from the original medallion lender(s)). The City will then make a $30,000 payment (grant), resulting in a $170,000 City guaranteed loan. To be clear, under this deal, the City will guarantee the principal and interest for medallion loans held by Marblegate. The terms of the new loan will include:

5% interest rate
20-year, fully amortizing term
Debt service payments cap of $1,122 per month 💵
NOTE: This deal is specific to Marblegate, but does not yet include other medallion lenders who are reported to hold ~60% of the other driver-owned medallion loans. The hope is that other medallion lenders will accept the terms that Marblegate accepted.

“I’m proud to have worked with Senator Schumer, NYTWA, and Marblegate to reach an equitable, sustainable solution that builds on the success we’ve achieved in reducing debt burdens for the hard-working drivers who keep our city moving.” - Mayor Bill de Blasio

"The TLC's top priority is all its Licensees and the health of the Industry. We remain committed to strengthening the Taxi segment and look forward to building on the success of the Medallion Relief Program in collaboration with Industry stakeholders and elected officials." - TLC Commissioner & Chair, Aloysee Heredia Jarmoszuk

“Today’s agreement is a win for taxis, which are a critical piece of New York City infrastructure. It is also a testament to Ms. Desai and the many taxi drivers who have been tenacious advocates and who, along with the de Blasio Administration and Senator Schumer, have delivered meaningful debt forgiveness and a sizable reduction in drivers’ monthly loan payments.” - Andrew Milgram, Managing Partner and Chief Investment Officer of Marblegate Asset Management

“The medallion debt crisis has gone on for years, taking lives and livelihoods. I commend Mayor de Blasio for his leadership, the New York Taxi Workers Alliance for their steadfast advocacy, and Marblegate for their good-faith effort to forge a workable solution. Together, we will bring this ongoing situation to a just resolution for the thousands of cabbies who work every day to serve this City.” - Senator Chuck Schumer

📕 The End of the Medallion Crisis?

While the other ~60% of medallion lenders outside of Marblegate need to sign up to the latest restructuring deal, this does feel like the beginning of the end of the medallion debt crisis that has taken many twists and turns over the years. Sure, there will be an argument in some quarters that there are still too many Uber and Lyft cars on NYC roads, but with the FHV License Pause (aka TLC Plate Cap) now firmly established and NYC trip demand recovering from the pandemic, the future for everyone in this industry looks brighter than ever before. I made the case recently (and now feel even more strongly about), that present day taxi medallion values of ~$100,000 will, in the fullness of time, be close or near to the bottom of the medallion market. In fact, you may see medallion values strongly re-rate upwards after the announcement of the Marblegate deal and in the years ahead.

With visibility on how the medallion debt crisis ends, a new era seems to have begun in the TLC industry. It’ll be interesting to see how it develops as the years progress and something I’m looking forward to track and report on. My best guess is the next major topics to dominate the TLC industry will relate to EVs and how the NYC for-hire industry electrifies and down the road, perhaps 5 to 10 years (or more) from now, a discussion regarding AVs (Autonomous Vehicles) (we’ll talk more about Waymo’s recent announcement in NYC).