SAN FRANCISCO, CA – The San Francisco Federal Credit Union is suing the San Francisco Municipal Transportation Agency (SFMTA) for allegedly failing to protect the taxi industry in the face of ride share company growth. The credit union allegedly financed the purchase of 700 medallions at $250,000 each on the transit authority’s assurances that it would maintain a secondary market for the medallions. The credit union wants $28 million..
This is a fascinating example of the behind-the-scenes financial arrangements that are largely unknown to the general public and yet, at the same time, driving outcomes. As the story goes, in or around 2009 and 2010, the City sought to change the structure of taxi medallions to raise revenue. Instead of the medallions being sold for a nominal fee, they would be sold for $250,000 each. There would be a limited number in circulation to maintain values, and they would be transferable.
Since no taxi driver could afford the hefty price tag, plaintiff alleges the city approached the credit union to provide financing and, in so doing, made certain assurances and guarantees. The credit union agreed, banking on the secondary market being maintained and taxi drivers/borrowers being able to make enough money to satisfy their financing obligations.
The complaint alleges that SFMTA did little to nothing to stop Uber and Lyft, and the result is that the average medallion-holding taxi driver cannot make enough money to pay back their medallion loan. Specifically, the complaint alleges that taxi drivers were making $8,000 to $9,000 per month driving a taxi and then leasing the medallion to another driver in their off time or to a taxi company. Because of Uber and Lyft, there is no demand for the medallions, and no one to operate the cab when the medallion-holder isn’t using it.
|This blog reports on cases filed in and around the San Francisco Bay Area. The statements made are based on the allegations in court-filed documents. Allegations are just accusations, and may or may not be true.|
|The authors of the blog are attorneys at the San Francisco litigation firm, Wood Robbins, LLP. If you have a legal issue, send them an email. If they cannot help you, they will try and point you in the right direction.|