By Paul E. Kerson
My law practice and law firm, Leavitt & Kerson, has long been devoted to serving people in really hot water, from state prisoners (see Britt v. Garcia, 457 F. 3d 264 [2d Cir. 2006]) to Holocaust survivors (see Nacher v. Dresdner Bank, Mandowsky/Nacher v. Dresdner Bank, In Re Nazi Era Cases, 198 F.R.D. 429 [D.N.J. 2000], 236 F.R.D. 231 [D.N.J. 2002], 240 Fed. Appx. 980 [3d Cir. 2007], cert. den. 552 U.S. 1098 )
In the past few months, six New York City taxi drivers have committed suicide because of severe economic pressure manufactured by the New York City Taxi and Limousine Commission (TLC) : Nicanor Ochisor hung himself in his Maspeth garage. Douglas Schifter shot himself outside City Hall. Danilo Castillo jumped to his death from his Manhattan apartment. The details of Alfredo Perez’s suicide have not been released. Yu Mein Chow jumped to his death by drowning in the East River. Abdul Saleh took his own life in June. All faced massive debt despite working 10 to 12 hour days for years on end.
One by one, by word of mouth, these down-and-out drivers and NYC yellow cab medallion owners have come into my office. I now represent 10 of them. None of my clients have killed themselves. The problem is this: In 1937, there was a limit of 11,787 NYC taxicab medallions, and the fee was $10. This was then thought to be an “adequate” number of “street hail” taxi cabs for a city of 8 million people. The number of legal “street hail” cabs was increased to only 13,587 by 2009.
The TLC was preceded by the Hack Bureau. These “government” agencies completely failed to govern over the years. They allowed the private trade in taxicab medallions to rise from $10 to over $1 million by 2010.
Enter the predatory lenders: Banks and Credit Unions. The scam worked like this: These lenders preyed upon the driver-owners. This was their message to a largely immigrant, striving community: “Cash in your equity in your medallion. Get easy money. Buy the house of your dreams. Send money back to your country. Borrow money from us early and often.”
This absurdity was as clear a violation of New York General Business Law (GBL) Section 349(a) as can be found. Recall that this statute says: “Deceptive acts or practices of any business, trade or commerce or in the furnishing of any service in this State is hereby declared unlawful.”
And so many driver-owners succumbed. They borrowed heavily against an asset that “was foolproof”.
Ah, but they weren’t counting on the fools at the TLC. Of course there weren’t enough “street hail” taxicabs for a city of 8 million people. There never were. Private car services sprang up in every neighborhood. Call a car service on the telephone and one would appear at your home or office maybe a half hour later.
Enter the cell phone age, which produced Uber, Via and Lyft. You can summon a black car with your cell phone, cutting the waiting time to 10 minutes or less.
And back to the TLC. They invented green medallion taxicabs and sold the medallions for approximately $1500, but a green medallion was only good in Queens (excluding airports), Brooklyn, the Bronx, Staten Island, and Manhattan north of 96 Street on the East Side and north of 110 Street on the West Side.
The TLC made no provision for the yellow cab driver-owners who were the victims of predatory lending permitted by the TLC.
It doesn’t take an economic genius to realize that if you add more cabs, the value of each cab will go down. An intelligent, responsible government would plan for fairness for the people who devoted their lives to serving the transportation needs of the residents and visitors to NYC.
Fortunately, there is a solution: THE BALLOON LOAN. The lenders are corporations. The yellow cab medallion driver owners are individuals. A corporation has perpetual life. An individual has only a human life span. These predatory loans must be refinanced so that the monthly payment is within the earning limits of the driver-owners. The balance of the loan can be paid in 20 or 30 years time. At that time, the driver-owner will retire and sell his or her yellow taxicab medallion and the new owner will refinance to include what is left on the balloon payment.
During the homeowner foreclosure crises (still ongoing), I was able to negotiate this deal with banks with the help of the Foreclosure Referees.
Some banks are refusing to listen to my BALLOON LOAN plan for solving the yellow taxicab medallion crisis. The TLC is in the same NYC Government as the Municipal Credit Union (MCU). It is high time for the TLC to show some real TLC (tender loving care) and for the MCU to take responsibility for a core heavily regulated industry of this City.
MCU has 400,000 members and $2.4 billion in assets (See Google, NY MCU History). What is the difference between a City employee and a yellow medallion taxicab driver-owner? Zero. Both serve the City and the City could not exist without them.
Responsible leadership by the Mayor and City Council would be to direct and/or persuade the MCU to take over as many yellow medallion taxicab loans as possible, and to refinance them with balloon payments such that each driver-owner can afford the monthly payments within their earning capacity.
If MCU cannot be persuaded to do its duty, then all the pending yellow medallion taxicab loan cases should be reassigned to the Foreclosure Referees. These judicial officers are more than experienced in persuading banks and credit unions to do the right thing: keep people in their homes through refinancing using balloon mortgages or other refinancing plans.
Undoubtedly, our experienced Foreclosure Referees will do the same for our dedicated yellow medallion taxicab owner-drivers: Keep them in their yellow cabs making a decent living and serving the residents and visitors of NYC.
And the TLC itself? Someone should tell it that 5 County NYC has expanded economically and has no gates. In the field of transportation, we are governed by the 14 County Metropolitan Transportation Authority (MTA) and the 17 County Port Authority. See NY Public Authorities Law Sec. 1284 and NY Unconsolidated Laws Sec. 6407.
It makes absolutely no sense to forbid NYC yellow medallion taxicabs from picking up people in the 9 New Jersey counties and 3 New York suburban counties of the Port Authority and the 7 New York suburban Counties and 2 Connecticut counties of the MTA. The Port Authority already regulates taxicabs at Newark, Kennedy and LaGuardia Airports. The MTA already regulates taxicabs at its hundreds of train stations.
Our yellow NYC yellow medallion taxicabs are regularly dropping people off in all these counties. Why can’t they pick up people in all 17 counties? Uber operates in most of these counties. Why can’t our NYC yellow cabs?
If MCU and the Foreclosure Referees don’t step up to the plate, then MTA and/or the Port Authority should take over from the TLC and buy back all the yellow NYC taxicab medallions at each one’s level of indebtedness. Then MTA and/or the Port Authority can start fresh and issue brand new orange and blue medallions for use throughout the 14 county Metropolitan Commuter Transportation District (MCTD) and the 17 county Port District.
A $1 per ride surcharge for every ride in every yellow and green medallion taxicab, Uber, Lyft, Via, Juno and livery black car ride and for every airplane ticket should cover the cost.
Then the driver suicides might stop because the marketplace of taxi riders will be expanded. But only if TLC, the Port Authority and the MTA is interested in that result, or do they want more blood on their hands?__________________________________________________
Paul E. Kerson is a partner in the Queens County law firm of Leavitt & Kerson and a past President of the Queens County Bar Association.