Credit Union Sues San Francisco Over Taxi Driver Loans
SAN FRANCISCO (KPIX 5) -- Holding a bag full of troubled loans driven by a taxi industry on the skids, the San Francisco Federal Credit Union is suing the city of San Francisco for $28,000,000. "These are damages the credit union has suffered, and that number could go up," says Jonathan Joseph, an attorney for the credit union in an exclusive interview with KPIX 5.
This is, of course, a collision the city has been speeding towards for years. "The city should give us our money back," laments Chris French, just one of the drivers who bought a taxi medallion valued at $250,000, an investment that fell apart for him with the arrival of tens of thousands of unregulated ride-hailing service drivers. "Unfortunately, he's not the only one who feels like he's been stabbed in the back," adds Jonathan Oliver, CEO of San Francisco Federal Credit Union. "We partner with the city in many different avenues, this is one where we felt they left us holding the bag, and that's why we're filing the lawsuit."
When the city asked the credit union to be its lending partner for the medallion program, it jumped on board, offering what were considered favorable loans for drivers. Now, the credit union has about 600 such loans on the books, but 99 of them are now in foreclosure. The city, which manages the medallion transfer program, has not been able to sell a medallion in nearly two years.
"If you're going to sell transferable medallions," says Joseph, "you have an obligation to maintain an active market." And that's the case spelled out in the lawsuit. Over dozens of pages is alleges that the city spent years failing to enforce its own transportation code when it didn't crack down on companies like Lyft and Uber. It's a lawsuit that could make for a blockbuster trial focused on issues the city has wrestled with for years.
Just what was the city's responsibility to the medallion market it created, and what responsibility does it have now that the market has collapsed? "The promise was actually quite simple," adds Joseph. "If the market fails, or it collapses, the SFMTA said we shall repurchase the medallions."
The San Francisco Municipal Transportation Agency, which is named in the lawsuit, directed questions to the San Francisco City Attorney's office. That office said it is reviewing the lawsuit.