Name: San Francisco taxi drivers lose dream, face foreclosures as pandemic jolts business
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San Francisco taxi drivers lose dream, face foreclosures as pandemic jolts business

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This is a carousel. Use Next and Previous buttons to navigateThey thought they had bought the ticket to the American Dream.Then the world changed.Anyone who’s ridden a cab through San Francisco knows the city’s taxi drivers have stories to tell. Common themes weave through them: Many came here as immigrants. They fell into driving cabs and found they enjoyed the work despite the long hours.A decade ago when the city started selling taxi medallions, they dug into savings, tapped friends and family, and took out loans to buy the $250,000 permits to operate their own cabs.Owning medallions made drivers entrepreneurs. They now could run their own small businesses in an industry they knew well. With a medallion, they could drive when they chose and rent out the precious permit the rest of the time.But soon cheaper rivals Uber and Lyft arrived, and taxi revenues sank. Many drivers struggled to make payments on their medallion loans. Feeling mired in debt, some sought to sell — but there was no market. No medallion has sold in San Francisco since April 2016. Dozens of medallions went through foreclosure.It got worse when the coronavirus arrived. Even before Bay Area officials imposed sweeping health restrictions, taxi drivers felt its presence as airlines canceled flights, organizers pulled events and some of the city’s largest employers, like Twitter and Salesforce, let employees stay home to work. After shelter-in-place began, passengers disappeared.More for youThough some travel demand returned as the state eased stay-home orders, the latest pandemic surge and accompanying strictures have reversed that. Only a fraction of the city’s cabs even ply the streets now. Taxi rides are down 80% in San Francisco and 90% at the airport, according to the city.San Francisco Federal Credit Union, the lender backing most of the medallion loans, offered drivers two months’ forbearance in June and July. But after that, drivers were stuck.They could make their monthly payments, generally around $1,000, even though their only income might be unemployment benefits. Or they could stop paying and the credit union would foreclose on their medallions.Since the pandemic started, 91 San Francisco cab drivers have had their medallions foreclosed upon. Another 33 are seriously behind on their loans.“I put $50,000, all of my savings account” as a down payment to get a medallion in 2011, said Yoseph Awoke of Oakland. “I’d been a driver every day since 1999. (I thought) better to have your own medallion and start a little business.”Awoke, an Ethiopian immigrant who supports his wife and 12-year-old daughter, stopped driving during the pandemic since there was no business. He soon fell behind on the $1,020 monthly medallion payments. In November, the credit union foreclosed and took his medallion, he said.By the numbersSan Francisco's tax industry:1,214 medallions373average currently operating269 foreclosed, including 91 since March33 medallions with loan payments more than 60 days late543medallions seeking buyers0 medallions sold since April 2016Sources: SFMTA, San Francisco Federal Credit UnionBesides the down payment, he paid thousands of dollars on the loan over the years and is crushed to see all that money disappear. He did tap the equity once, in 2015, for $8,000 as a down payment on his own cab, a hybrid Ford Escape.How will Awoke survive?“I have no clue,” he said. “I am just living at the mercy of God. I don’t know what to do, what to do.”Drivers can rent a medallion to work, but those who’ve had the experience of running their own business say that’s a big comedown, and they’ll earn even less money. Losing a medallion to foreclosure also affects drivers’ credit scores.Tesfaye Mekuria of San Francisco, who also immigrated from Ethiopia, started driving in 2003 and bought a medallion early on.He feels obligated to keep making medallion payments, even though he’s stopped driving because of the risk of contagion and the plunge in business. The $850 a month consumes a big chunk of his unemployment benefits and his wife’s salary as an accountant.“All the time, the way I live growing up, taking responsibility is in my family,” he said.But he, like Awoke and many other medallion owners, feels that San Francisco has a responsibility to them. They say that when the city launched its medallion sales program, the San Francisco Municipal Transportation Agency promised drivers that their investments were guaranteed.Drivers used to get medallions for free after years — sometimes decades — on a waiting list. San Francisco, under then-mayor Gavin Newsom, created the paid medallion program in 2010.As drivers see it, the city reaped millions by selling them medallions and then helped ravage their industry by supporting upstarts Uber and Lyft, which were more lightly regulated.The blame may be misplaced. Though some city officials sought to impose rules on Uber and Lyft, the companies successfully argued that they should be regulated by the state Public Utilities Commission instead of local officials. It is not clear what, if anything, the city could have done to overrule state regulators; in legal filings, San Francisco Federal Credit Union has argued it should have fought harder.Still, taxi drivers resent what they view as unequal treatment.“It’s not right to mislead cab drivers into buying taxi medallions at the very same time the mayor opens the door for a vast oversupply of Ubers and Lyfts,” said longtime driver Marcelo Fonseca, who has one of the earlier, free medallions. He said San Francisco sought to “balance the MTA’s budget on the backs of hard-working cab drivers.”It’s not just drivers pointing fingers at the SFMTA. San Francisco Federal Credit Union, which backed the lion’s share of medallion loans totaling $125 million, the agency, saying it let the taxi market collapse even though it had promised to guarantee the medallions’ value. The lawsuit, filed in March 2018, seeks to have the city repurchase all the medallions and pay damages. It is set for trial this summer.Ratings for the Bay Area and California, updated every 10 minutesThe transit agency, which said the credit union rejected a settlement offer of $15 million, claims in legal filings that the medallion program is still operating.“The SFMTA understands the plight of taxi drivers, and that’s why we continue to explore policy options to support purchased medallion holders,” agency spokesperson Erica Kato said in an email.Those efforts include programs to subsidize cab rides home for essential workers and to provide discounted taxi trips for seniors and people with disabilities. Paid medallion holders get priority for airport pickups and all taxis have access to some transit lanes. During the pandemic, the SFMTA has waived taxi fees, increased a clean-air rebate and suspended a full-time driving requirement. The agency requested that taxi drivers get the coronavirus vaccine shot as soon as possible and plans a $250,000 campaign to market taxis.Drivers don’t place much faith in those changes. Instead, they’re looking to the lawsuit, hoping that a credit union win — and a finding that the medallion program is kaput — could result in them being repaid what they’ve put into medallions. City code says that if SFMTA ends the medallion program, it shall repurchase medallions for their original price at the holders’ request.“We want to get our money back,” Awoke said. “The problem is the lawsuit will go forever. I can’t wait.”Credit union CEO Jonathan Oliver said he understands why many taxi drivers “have lost complete hope.”But he spurned a Board of Supervisors resolution urging the credit unit to extend its two-month payment deferral for at least another three months. Oliver said the credit union has no choice about foreclosing because of financial regulations and accounting principles. To offer further loan forbearance “you have to be reasonably assured you’re going to get (paid) eventually,” he said. That is not the case. The loans have deteriorated so quickly and continuously that the credit union took a $33.5 million loss on them in September, he said.When a bank forecloses on a home, it gets title to the real estate and can sell it, even if it’s for less than is owed. But when the credit union forecloses on a medallion, it gets a piece of tin that it cannot sell because the price, set by the city, is still $250,000, even though nobody has paid that in five years.“You can’t do anything with it, which makes it essentially worthless,” Oliver said.San Francisco’s approach for setting medallion prices differs from other cities such as New York and Chicago, which relied on market forces. In those cities, medallion values shot up only to collapse, similar to the housing market during the foreclosure crisis.Oliver held out a slim bit of hope. For now, drivers can reclaim foreclosed medallions by paying back the outstanding balance to bring the loan current and resuming payments. Fees and penalties, if any, would be determined on a case by case basis, according to the credit union’s lawyers.But only three drivers have reclaimed their medallions.Awoke, for instance, was unaware of the possibility, but said it was impossible to come up with many months of past-due payments.“I can’t pay them that much money,” he said. “I wish. If I had money, I’d have paid earlier.”Carolyn Said is a San Francisco Chronicle staff writer. Email: Twitter:Ratings for the Bay Area and California, updated every 10 minutes

This is a carousel. Use Next and Previous buttons to navigateThey thought they had bought the ticket to the American Dream.Then the world changed.Anyone who’s ridden a cab through San Francisco knows the city’s taxi drivers have stories to tell. Common themes weave through them: Many came here as immigrants. They fell into driving cabs and found they enjoyed the work despite the long hours.A decade ago when the city started selling taxi medallions, they dug into savings, tapped friends and family, and took out loans to buy the $250,000 permits to operate their own cabs.Owning medallions...

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Carolyn Said

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San Francisco taxi drivers lose dream, face foreclosures as pandemic jolts business

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