By Paul Berger
New York City said Tuesday it will aid struggling taxicab-medallion owners by providing $29,000 in loans to help drivers restructure their debts.
Mayor Bill de Blasio said the program, funded by $65 million of federal coronavirus relief, will help cabbies emerge from a yearslong crisis that has been exacerbated by the Covid-19 pandemic.
Driver advocates criticized the fund. They said it would enrich lenders while doing nothing to help drivers. "It's just a matter of time before everybody ends up in bankruptcy," said Bhairavi Desai, executive director of the New York Taxi Workers Alliance.
A medallion is a metal shield that gives a driver the right to pick up street hails in New York City. Medallions were once worth more than $1 million. Their value plummeted below $200,000 several years ago following an influx of tens of thousands of drivers working for ride-hailing companies such as Uber Technologies Inc.
Many medallion owners owe hundreds of thousands of dollars. Some paid too much for a medallion at city auction. Others borrowed against the medallion's value to finance a home or to put children through college.
City officials say the fund will provide a no-interest loan of up to $20,000 toward a down payment for a debt restructuring. It also will provide a no-interest loan of up to $9,000 toward up to six monthly loan payments of $1,500.
The head of the city's taxi regulator, Aloysee Heredia Jarmoszuk, said officials have been in discussion with lenders, who are receptive to restructuring loans.
A spokesman for Marblegate Asset Management LLC, a Greenwich, Conn., investment firm that holds the largest amount of New York City taxi medallion debt, said in a statement: "This is a surprising, but welcome development," The spokesman, Linden Zakula, said the fund will help stabilize the industry by allowing drivers to lower their monthly payments.
Marblegate, which holds thousands of medallion loans, began offering drivers the option of restructuring in 2019. So far, the firm has forgiven about $140 million of debt attached to about 800 medallions, according to Mr. Zakula.
In many cases, Marblegate has reduced loans by $250,000 or more, the spokesman said. Typically, a medallion owner pays Marblegate a lump sum of about $20,000 to restructure the loan to a maximum of $300,000. The restructuring reduces monthly payments to about $1,500 from $2,800.
Many taxi drivers have had to find new ways of earning a living during the pandemic after ridership plummeted as schools, offices and businesses were forced to close. Drivers have delivered food to seniors and shuttled people who had the virus and were suspected of having the virus to doctors' offices and dialysis centers.
City officials say the taxi industry is starting to rebound. But data suggests it still has a long way to go. About 5,400 drivers operated yellow cabs in the city in January, according to city figures, down from more than 20,000 drivers in January 2020. Average daily revenue per driver in January was $128, down from $169 a year earlier.
The New York Taxi Workers Alliance says the best way to help drivers is to restructure medallion loans to $125,000 and to reduce monthly payments to about $750. The group has called on the city to act as a backstop by guaranteeing the purchase of medallions if borrowers default.
Drivers with the alliance protested outside the mayor's residence, Gracie Mansion, Tuesday afternoon. In a statement they vowed to protest every day until the mayor finds a better solution to their plight.
--Katie Honan contributed to this article.
Write to Paul Berger at Paul.Berger@wsj.com
Corrections & Amplifications
This article was corrected at 7:36 p.m. ET to reflect that New York City will provide a no-interest loan of up to $9,000 toward medallion debt repayments. The original version of this article incorrectly said the funding included low-interest loans.
(END) Dow Jones Newswires