The announcement was a victory for drivers who stopped eating to protest an earlier bailout plan they said did not go far enough.
New York officials said Wednesday they had struck a deal with the largest holder of taxi loans in the city to help rescue thousands of cabbies who have been crushed under paralyzing debt after years of exploitative practices in the industry.
The move was a major win for drivers: As part of the deal, officials agreed to significantly expand a financial relief program that they had announced earlier this year that many drivers had criticized as insufficient.
In all, the city could spend $100 million or more in a bid to potentially eliminate hundreds of millions of dollars in debt owed by the drivers. The final cost has not yet been determined.
Mayor Bill de Blasio announced the deal with Senator Chuck Schumer, the majority leader, whose father-in-law once drove a cab in New York City. They reached the agreement with the Taxi Workers Alliance, the largest group of drivers, and Marblegate Asset Management, the largest holder of loans.
“Taxi workers have worked tirelessly to make New York City the most vibrant city in the world, and we refuse to leave them behind,” the mayor said in a news release.
Under the agreement, Marblegate will reduce the amount that each cabdriver owes to $170,000, from an average of about $500,000 per driver. It agreed to terms that will lower each driver’s payments to a maximum of $1,122 per month.
In return, the city will give the lender a cash payment of $30,000 for each driver and also guarantee every loan, agreeing to repay if the driver ever defaults.
In recent weeks, the Taxi Workers Alliance staged a hunger strike to urge city officials to agree to the guarantee, which was not part of the city’s earlier relief program.
The new plan has not yet been adopted by other lenders in the taxi industry, who carry about 60 percent of the loans taken out by drivers to buy medallions, the tin plates bolted onto the hoods of yellow taxis that allow them to pick up street hails.
If other lenders agree to the same terms, it would effectively amount to the bailout that drivers have sought since the debt crisis jumped into the spotlight in 2018, when several drivers facing financial devastation began to die by suicide.
“Drivers will no longer be at risk of losing their homes, and no longer be held captive to a debt beyond their lifetime,” said Bhairavi Desai, the head of the Taxi Workers Alliance, which says it represents about 20,000 drivers.
All drivers who own their medallion are eligible, even if they are not part of the group.
The roots of the crisis began about two decades ago, when a group of industry leaders began steadily and artificially inflating the price of medallions, which are regulated by the city.
As the price soared to $1 million, drivers who wanted to own their own cab, instead of working for a taxi fleet, took on hefty loans that they could not afford, while lenders pocketed hundred of millions of dollars, The New York Times reported in a 2019 series.
The market collapsed in 2014, leaving drivers in debt they could not repay. Hundreds went bankrupt. Industry leaders have long denied wrongdoing, blaming the crisis on ride-hailing companies like Uber and Lyft, which entered New York near the bubble’s peak and eventually took some revenue from cabs.
(Marblegate, which began acquiring loans after the medallion bubble burst, did not engage in these practices.)
Mr. de Blasio announced his original relief plan in March. That program, which was estimated to cost $65 million, provided individual medallion owners with up to $29,000 apiece in grants to help them negotiate with their lender to lower their outstanding debt. It did not provide a loan guarantee or persuade any lenders to reduce its loans en masse.
Supporters of a more aggressive rescue plan — who included Mr. Schumer and the city’s entire congressional delegation — had pointed out that the city played a role in the plight of the cabdrivers. During the bubble, the city exempted the industry from regulations and filled budget gaps by selling new medallions and running ads promoting them as an investment that was “better than the stock market.”
The Taxi Workers Alliance began camping out at City Hall to push for more aid in September, and about a dozen drivers began the hunger strike on Oct. 20.
Mr. Schumer called Mr. de Blasio directly to press him to negotiate, and the senator’s staff participated in the talks.
“The taxi is a symbol of New York,” Mr. Schumer said in an interview Wednesday. “They have been suffering, and to not help them would have been a blow not only to the drivers, but to all of the city of New York.”
Talks to find a solution began in earnest last week, according to a Marblegate spokesman. On Wednesday, the parties met again to finalize the deal. Then, Ms. Desai walked outside, where hundreds of drivers were waiting, including several who had not eaten for 15 days.
“We won,” she exclaimed.
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