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Council to Examine City’s Role in ‘Taxi Medallion Crisis’


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(photo Credit: Edward Reed/City Council)


Amid a new flurry of attention to challenges faced by taxi drivers in New York City, the City Council will hold an oversight hearing Monday on the city’s Taxi and Limousine Commission’s “role in the taxi medallion crisis.”

As a New York Times two-part investigation published in May helped bring back into extensive public conversation, taxi medallion prices rose to extreme heights between 2002 and 2014 – as high as $1.3 million – before crashing down amid a boom in the launch of the app-based for-hire vehicle sector. Thousands of medallion owners are in immense debt with their medallions, which allow them to operate a city-sanctioned yellow taxi, worth far less than at point of purchase, when they bought them from the city through loans provided by private banks.

Reporting prior to the Times’ exposé had already documented the mounting debt crisis for medallion owners, connecting it largely to the rise of ride-hailing apps such as Uber and Lyft. All of the city’s 13,587 taxi medallions took significant hits in value, both those owned by individual drivers themselves and those constituting larger taxi fleets. The City Council passed and Mayor Bill de Blasio signed a cap on new for-hire vehicle licenses and new wage guarantees for drivers amid a series of driver suicides in 2018, tragedies that pushed the medallion crisis into public view.

Now, the Times’ investigation has caused a new flurry of legislation after it showed how the Taxi and Limousine Commission (TLC) was instrumental in the extraordinary inflation of medallion prices. Though the TLC was not directly involved in the reckless lending practices that led to the taxi drivers’ debt, it stood to benefit from skyrocketing prices at medallion auctions and chose to ignore signs that the market was highly unstable. The TLC is charged with regulating the taxi industry, and the Mayor oversees it and the city budget, which has included and relied on revenue from medallion sales.

While much of the Times’ reporting focused on other culprits, including predatory lenders and the National Credit Union Association, medallion owners and their representatives have laid a lot of blame on city government.

Sergio Cabrera and Carolyn Protz, two medallion owners, wrote in a scathing Crain’s New York Business op-ed that “the real scandal...is how the Taxi and Limousine Commission, as well as elected officials, played a pivotal role in taxis’ demise.”

Bhairavi Desai, executive director of the New York Taxi Workers Alliance, similarly charged that “the city raked in profit while working-class immigrant drivers of color were swindled and pushed into financial despair.”

Many elected officials agree. In an interview with City & State, City Council Member Mark Levine stated that “the city itself also bears responsibility for this, because we were selling medallions with the goal of bringing in revenue to the city and we were promoting them and pumping them up in ways that I think masks the true risks that drivers were taking on.”

The hearing on Monday, which will be jointly held by the Committee on Transportation and the Committee on Oversight and Investigations, will likely feature significant grilling and criticism of the TLC, as well as testimony from non-governmental parties, like medallion owners, pointing the finger at city government. On its website, the Taxi Workers Alliance has already promised to “pack the hearing room.”

Council Member Ritchie Torres, who will be leading the hearing as chair of the Oversight and Investigations Committee, said in a phone interview with Gotham Gazette that “the purpose of the hearing is to examine TLC’s role in creating a speculative bubble in the medallion market, and to identify the regulatory failures, the policy failures, that led to the collapse of the medallion market and the resulting humanitarian crisis.”

“There’s a sense in which TLC was functioning both as a market regulator and a market purchaser, and there is a conflict of interest between those two parts,” Torres said, echoing concerns outlined in the Times articles.

Although his committee began an investigation into the commission in November of 2018, “TLC has [since] been insufficiently cooperative with the City Council,” and the hearing is intended as a continuation of this inquiry. Despite the TLC’s stonewalling, Torres did disclose that the investigation has been productive, saying “there’s more evidence that the City is culpable than even the New York Times exposé suggests.”

In addition to the oversight portion of the hearing, which will begin at 10 a.m. Monday, four new bills aimed at mitigating the crisis will be introduced and discussed.

The first, from Council Member Ydanis Rodriguez, chair of the Transportation Committee, would require the TLC to “evaluate the character and integrity” of medallion brokers. Another, from Torres, would create a department within the TLC to evaluate the financial stability of the industry. This could theoretically prevent another bubble from forming based on false assertions of taxi market infallibility.

A third bill, sponsored by Council Member Adrienne Adams, would require the TLC to collect annual financial disclosures from individuals with interest in a taxi license. Finally, Council Member Francisco Moya is introducing a bill to prohibit the sale or transfer of a taxi license unless the funds used have been reviewed by the TLC.

These four bills are far from the only ones being drafted and discussed. On May 21, Rodriguez and fellow Council Member Fernando Cabrera proposed an exemption for taxi drivers from congestion pricing to lower their costs, saying that legislators had a “moral obligation” to do so.

Rodriguez also recently saw the City Council pass his bill to reduce the commercial motor vehicle tax on medallion owners from $1000 to $400. In a statement, he pledged to continue “to find ways to ensure that Taxi Medallion owners receive the justice they deserve.”

Meanwhile, in the state legislature, State Senators Jessica Ramos and Leroy Comrie have proposed a bill that would establish a taxi medallion guaranty program to help medallion owners who are unable to pay off their loans.

For some activists and lawmakers, these proposed changes don’t go far enough. Levine, writing in the Bronx Free Press, proposed “dramatic plans” to buy back medallions and forgive taxi drivers’ debt to augment smaller changes such as waiving fees and establishing task forces; City Comptroller Scott Stringer has expressed support for a similar solution.

The Taxi Workers Alliance, one day after the Times article was published, proposed a slightly less drastic plan. It would create a Council-appointed task force to determine the proper current value of taxi medallions, and any loan amounts exceeding that value would be forgiven (the specifics of how the loans would be forgiven have not been made clear).

Unlike Levine’s proposal, this would still likely leave many drivers hundreds of thousands of dollars in debt. And as transportation expert Bruce Schaller pointed out to City & State, many medallion owners have already spent hundreds of thousands of dollars to pay off their loans, money that a debt forgiveness program would not help them reclaim.

Any debt forgiveness bill may also face a difficult path under the de Blasio administration. Though the mayor has embraced investigations of lenders and higher wages for drivers, he dismissed the possibility of bailouts in an interview with Brian Lehrer, calling the crisis a “private market reality” that the city is not culpable for, mostly side-stepping city government’s role in selling such inflated medallions and TLC’s lack of oversight. De Blasio did acknowledge that the city allowed something of a bubble to develop, but cited his administration’s efforts to stop selling medallions and to cap app-based for-hire vehicles (a 2015 push by de Blasio to cap FHVs failed, only to be achieved three years later).

The June 24 Council hearing comes at a time of upheaval at the TLC. On June 18, de Blasio announced that Department of Veterans’ Services official Jeffrey Roth will become the new TLC commissioner. He replaces Meera Joshi, who departed the agency in March.

Joshi, for her part, was concerned that direct bailouts would benefit banks too much and drivers too little. Her preferred solution instead was to encourage banks to take a loss and downsize the loans. That way, the banks could “at least have a good live loan at the right price, [rather] than have someone who’s out of work and the bank with a loss.” Roth, who will need to be approved by the City Council before he becomes commissioner, does not yet have a stated position on the issue.

Though relief for medallion owners is likely still a long way off regardless of policy direction, Council Member Torres hopes that the upcoming hearing can begin the process of recovery. “My overall message is this: the city has been part of the problem, and it’s time to make the city part of the solution.”

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by Joey Fox, Gotham Gazette

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Council Hears 3 Campaign Finance Bills to Enhance Low-Dollar Impact, Limit Criminals, Curb Conflicts


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Council Member Keith Powers (photo: John McCarten/City Council)


The City Council’s Committee on Governmental Operations held a hearing Wednesday to discuss three bills related to campaign finance reform. Two of the bills would prohibit candidates convicted of felony corruption or misuse of public funds from receiving public matching funds and reduce the matching funds contribution minimum from $10 to $5. They are sponsored by Council Members Fernando Cabrera and Keith Powers, respectively. Cabrera is the chair of the governmental operations committee.

The third bill, also sponsored by Powers, would amend the definition of “business dealing with the city” to include an earlier trigger in the land use review process. That bill would make those entities with uncertified applications under the Uniform Land Use Review Procedure (ULURP) and zoning text amendments part of the “doing business” database that severely limits what they can give to political candidates, with the goal of decreasing the influence of large real estate contributions in elections and the opportunity for pay-to-play politics.

The hearing included testimony from representatives of the New York City Campaign Finance Board (CFB), which runs the city’s public matching system and trains, monitors, and audits campaigns; and Reinvent Albany, a good government advocacy group. Each of the bills is based upon recommendations filed by the CFB in its 2017 post-election report.

Prohibition of Funds for Felons
Currently, the campaign finance act prohibits candidates from receiving public funds if they have been convicted of felony fraud in the course of program participation. It does not prevent candidates convicted of fraud or corruption more broadly from receiving public funds.

In 2017, a candidate participating in the city’s matching system, Hiram Monserrate, who received public funds had previously served 21 months in prison for using government funds to pay campaign staff.

“Ensuring individuals with a track record of fraud do not receive public funds is not only good public policy but is fundamental to the integrity of the matching funds program,” CFB Executive Director Amy Loprest said at the hearing.

While supportive of the bill, Loprest suggested that the Council could do more to ensure that public funds are not given to those who have a track record of misusing them. She encouraged the Council members to extend the bill to cover misdemeanors related to corruption, and to specify the language of the bill to explicitly tie previous crimes to an individual’s actions as a candidate or office-holder.

Loprest also suggested that the committee implement sunset clauses of five years for misdemeanors and 10 years for felonies, after which a candidate would again be able to receive matching funds.

Lowering of Matching Funds Contribution form $10 to $5
To qualify for the city’s public financing program, candidates must meet a two-part fundraising threshold. Depending on the office sought, candidates must receive a certain number of contributions of at least $10. This bill would lower the requirement to qualify for the threshold from $10 to $5.

Currently, all contributions are eligible for public matching, but contributions under $10 do not count towards meeting the threshold to receive public funds. Critics of the current system argue that a minimum contribution of $10 can impose too significant a burden on New Yorkers from economically-disadvantaged areas of the city. For candidates seeking to represent these areas in local elections, achieving the minimum number of contributions to reach the threshold can be a challenge exacerbated by the high minimum.

The campaign finance board discussed lowering the minimum to $1, but determined that $5 was “a balance between showing serious support and the financial burden from people from certain districts,” Loprest said at the hearing. The city typically encounters few $1 contributions, she said.

During the 2017 election cycle, just 186 contributions to Council candidates, or 0.72 percent, were under $10, and 30 contributions, or 0.12 percent, were under $5, according to a review by Reinvent Albany.

“Lowering the amount to $5 would allow more residents to participate in helping their favored candidates qualify for matching funds, and more candidates would be able to meet the threshold sooner in the election year,” Loprest said at the hearing.

“For large-scale elections in the city it would be an easier way to encourage people to get into the matching funds program,” Council Member Powers said of his bill.

Amending the Definition of “Business Dealings”
The third bill discussed would place limits on contributions to candidates running for office from persons with “business dealings” with the city.

Included in “business dealings” is applications for approval under ULURP and applications for zoning text amendments, but currently only after the City Planning Commission has certified an application as complete. Often, these applications are filed months or years before they are certified by the City Planning Commission. Those who file applications can thus make maximum contributions after filing their application for land use changes but before it is certified, providing more opportunity for a pay-to-play culture and undue influence, or at least the appearance of it.

Persons seeking land use approvals made up less than 1% of individuals doing business with the city during 2017 election cycle, but they were significantly more likely to make campaign contributions. Nearly 20% of those seeking land use contributions made contributions to candidates during the cycle, according to the CFB. Currently, there are 87 ULURP and land use applications in the city that remain uncertified, according to the CFB.

Amending the definition of “business dealings” will allow the city to include those who have filed an application but have not yet been certified by the City Planning Commission to hold them to the same standard as those who have already been certified. Maximum contributions to candidates vary based on the office sought, as do the much lower doing business limits. For example, the maximum donation someone on the doing business list can give to a candidate for mayor is $400.

Including applications that are not yet certified in “business dealings” is “an effective way to ensure that the matching funds program is doing everything it can to curb both corruption and the appearance of corruption,” Loprest said at the hearing.

In all other “business dealings,” with the city, people are compiled into and remain in the city’s doing business database for one year after the end of the transaction. This management system allows the campaign finance board to determine if a contribution is within the applicable limit. Loprest testified that land use application under the ULURP coverage period should also remain in the database for one year.

“If we’re going to have a system where we limit contributions for those doing business we should limit contributions when those business discussions begin,” Powers said at the hearing.

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by Noah Berman, Gotham Gazette

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City to Launch 5 Cross-Agency Projects to Fight Poverty-Related Challenges


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(photo: Demetrius Freeman/Mayoral Photography Office)


The de Blasio administration is hoping to address challenges faced by struggling New Yorkers and fight poverty by improving access to city services through five new initiatives that will launch July 1, the start of the next city fiscal year.

The five projects, overseen and funded by the Mayor’s Office for Economic Opportunity, cut across city agencies and involve a diverse set of goals: increasing school attendance for students in temporary housing; expanding education services for adults leaving jail and prison; improving staff training at and design of domestic violence shelters; improving how the city tracks services for homeless people living on the street; and enhancing the city’s family support service system.

“Many folks in the world of social services, whether at nonprofits or city agencies…are all in general agreement that silos are bad,” said Matt Klein, executive director of the Mayor’s Office for Economic Opportunity, which uses data and research to fight poverty-related challenges faced by New Yorkers. “Issues related to poverty are multi-faceted and complex so this is an effort to put into operation the principle that we should serve people more holistically as opposed to single isolated interventions.”

Klein’s office put out a call to city agencies last September to solicit ideas about improving collaboration and overcoming “service silos” to provide more efficient and well-rounded social services. The projects will receive a total of $6 million over the next three years from NYC Opportunity’s Innovation Fund, a $28 million pot of money that the office uses to test new projects and ideas to tackle poverty. The office also publishes its own measure of poverty, which takes into account additional cost of living factors in the city to provide a more coherent picture of poverty than the federal measure.

Though Mayor Bill de Blasio has committed to fighting poverty and income inequality in the city, having won office on that platform in 2013, any city administration has somewhat limited tools to directly achieve what is largely affected by macroeconomic factors.

The mayor has taken many related steps to support the lives of no-, low-, and middle-income New Yorkers, including enacting universal pre-kindergarten, various workplace protections like expanding paid sick leave, increasing the minimum wage for city employees to $15 (before the state followed suit for all workers), funding lawyers for many tenants facing eviction, and a large affordable housing program. De Blasio has also claimed success, announcing earlier this year that there were 236,500 fewer people living in poverty or near poverty in 2017 than in 2013. Poverty rates have been falling nationwide, owing to strong and stable economic growth over the last decade, and it’s hard to attribute the effect solely to city policies. The fact that the minimum wage jumped quickly over the last few years has been a significant factor in New York.

NYC Opportunity’s projects are intended to make improvements in the systems that the city does control, in providing social services and easing access to them. The projects include:

A partnership between the Department of Education and Department of Homeless Services to increase coordination and data-sharing to increase attendance rates for thousands of students living in 25 homeless shelters across the city.

Improving 15 domestic violence shelters through environmental design changes and better training for staff to provide trauma-informed care. That project will involve the Department of Health and Mental Hygiene, the Human Resources Administration and the Administration for Children’s Services.

ACS and DOHMH will also work together to analyze how families interact with city services to find ways to “refine referral pathways, improve families’ access to services, and promote positive child outcomes.”

The CUNY John Jay College of Criminal Justice Prisoner Reentry Institute and the SUNY Manhattan Educational Opportunity Center will collaborate to provide individuals who leave city jails and state prisons with high school, college and career preparation services as well as individual support.

The Department of Homeless Services will improve how it tracks street homelessness by expanding its StreetSmart tracking and case management system to Drop-In Centers and Safe Havens which provide services to those outside of the shelter system. DHS will also give nonprofit service providers better access to data to improve services.

The projects are meant to be scalable and to provide lessons in best practices. For instance, the domestic violence shelter project acknowledges “both the relation between physical design and programmatic effort to address trauma,” said Klein. “That could also be precedent setting in the development of public spaces. All of these have potential for very meaningful operational change.”

David Berman, the office’s director of programs and evaluation, added, “As part of the selection criteria, we particularly focused on projects that could have a big impact on low-income residents but also to potentially transform systems or provide informative learning for other city agencies so that they would have a bigger impact.”

Berman said the office will apply performance tracking measures to each of the projects to measure process and outcomes, and will publicly report the results. “We’re continuously working with our agency partners to monitor the programs as they go,” he said.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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