Yana Kiziryan has two children. The youngest, Eddy, looks just like his grandfather, Edward Agababian.
Yana’s family is Armenian. They emigrated from Baku, Azerbaijan, during the pogroms in 1991. As the Soviet Union was crumbling, Azerbaijan’s government was rounding up and killing Armenians.
Yana’s family feared for their lives. Her dad, Edward, filed for refugee status. “We’re really lucky America took us in,” Yana says.
Yana’s father was 32 when the family arrived in the U.S. He didn’t speak English well, but he was determined to make a middle-class life for his family. In San Francisco, he found out he could make OK money driving a taxi. So, he started driving a cab. And he loved it.
Edward liked meeting new people. He liked the community of other cabbies. And he loved all the driving. Whenever the family took trips, he insisted they drive instead of fly. He was a driver by nature, Yana says. He was also competitive by nature. A trait that really came out whenever he went to work at the airport.
A bunch of taxi drivers at San Francisco International Airport used to play chess. Back when Edward started driving, they never had to wait that long for a fare. So they played speed games. Yana said Edward never lost. After his shifts, Edward would come home and play against Yana. To make it easier on her, he would play without his queen. Then, when she was about to lose, he’d turn the board around and play as her. No matter the odds, he’d still find a way to win.
Driving a cab was helping the family get by, but Edward wanted to ensure a secure future after he was gone. So Yana says he invested in the stock market. Twice he took a huge hit. Once in the dot-com boom. Then again in the 2008 financial crisis. His last big play was buying a taxi medallion.
A Safe Bet and a Retirement Plan
Before Uber and Lyft, the medallion was extremely desirable for taxi drivers. A driver could lease the medallion to other drivers and make passive income on the medallion. Between that and driving the cab themselves, a taxi driver could make somewhere between $5,000 and $7,000 a month. Medallions were the de facto retirement plan for drivers. That’s exactly how Edward thought of it.
“He thought if anything ever happens to me,” Yana says, “if I were to die, the family would be set. It was his insurance plan and his retirement plan.”
San Francisco taxi medallions used to be awarded to drivers on a seniority basis. Drivers would wait on a list for their chance to get one. It could take 10 or even 15 years for your name to come up.
Then in 2010, amid transit budget shortfalls, then-Mayor Gavin Newsom took a page out of the New York City playbook. He encouraged the San Francisco Municipal Transportation Authority (Muni) to “monetize” the medallions.
The SFMTA started selling medallions for $250,000 a pop. The city needed a lender to provide low-interest loans to cab drivers, many of whom were immigrants with limited credit history. So, it turned to the San Francisco Federal Credit Union, a local institution that usually lends its money in the community.
Since 2010, the SFMTA has sold around 700 medallions to drivers. The credit union, which financed almost all of these medallions, estimates that the city brought in $64 million from selling them. That money helped alleviate budget deficits that had accumulated after the 2008 financial crisis.
The medallions were a boon for the city, but they quickly became toxic for the credit union and the drivers who bought them.
The Destruction of an Industry and a Way of Life
Edward was one of those roughly 700 drivers who bought a medallion. He made a down payment and took out a loan with the credit union to get his in 2011. At first it was great. But then Lyft and Uber really started taking off.
The SFMTA did not require Lyft and Uber to buy medallions for their drivers. Unlike taxis, there was no cap on the amount of vehicles these venture-backed companies could put on the road. And they took advantage of that.
A spokesperson for the SFMTA says it did not have the authority to require Uber and Lyft to purchase medallions. It categorizes the companies at TNCs (Transportation Network Companies) instead of taxi companies. TNCs are regulated by the California Public Utilities Commission (CPUC). The TNC classification is controversial. Taxi drivers argue the city could have pushed back harder against the CPUC and taken more of a charge in regulating Uber and Lyft.
Uber and Lyft burned billions of dollars in venture capital to grow quickly. They put thousands and thousands of drivers on the road, which allowed them to offer cheap rides and quick pickups. The number of taxis meanwhile were capped by the medallion program, and the fare rates fixed, which ensured steady pay for the drivers. Lyft and Uber completely undercut the industry.
Uber and Lyft engaged in a price war to gain customers, and as the cost of their rides went down, so did driver earnings. While customers were enjoying the ability to zip cheaply around the city on low prices subsidized by investment capital, drivers for taxis, Ubers and Lyfts were making less and less and less.
Those who bought medallions were trapped in the industry. They had to make those loan payments. So even though his earnings were plummeting, Edward kept driving. Soon he was going out on the road, logging eight, 10 or 12 hours just to break even on the loan for his medallion.
“Edward became increasingly restless and nervous,” Yana says. “There were months were they didn’t have quite enough to make all their bills.” Sometimes she had to chip in to help out her parents. Yana said Edward even signed up to drive Uber and Lyft, just to try and get some extra rides.
Yana started worrying about her father’s health. “He internalized everything,” Yana says, “and I am sure it did not help with his blood pressure problem, and just overall health.” But Edward kept driving.
Persistence and Loss
About two years ago, Yana and her whole family left for a short trip to the East Coast. Edward stayed home to drive. He went to the airport, like he did every day. There were so few fares at that point, drivers could sit for hours in their car waiting for a passenger. That’s where Edward’s friends found him.
“His friends at the airport right away noticed something was wrong,” Yana says. “They looked at him and he was green.” Edward said he wanted to go home. “They were like, 'no',” Yana says. “'You’re going to the hospital.'”
An ambulance came and rushed him to the hospital. Edward’s aorta had torn. He was bleeding internally. Soon after getting to the hospital, he passed away.
“The doctor told us that when he got to the hospital, they asked him if he wanted to call his family,” Yana says, “and apparently he said, ‘I don’t want to make them nervous.’ And so we didn’t even get to say goodbye or anything.”
A Toxic Asset and Family Debt
Edward was 59 when he died. Even though he was gone, the family was still burdened by the medallion debt. The loan for the medallion was outstanding and would be counted against any inheritance. The family wanted to sell the medallion to recoup their losses, but there were no buyers. The market was totally frozen.
Yana could not believe her family was still being plagued by this medallion that they could not get rid of it. “For a while we kept calling the SFMTA and sending them emails and trying to understand what was going to happen,” Yana said.
Under SFMTA rules, the medallion is inoperable after its owner dies. That means the family couldn't even lease out or drive on the medallion.
Yana said the family felt they had no options except to stop making the loan payments. So they defaulted, taking a hit on their credit score. “We’d never not paid for something when it was due,” Yana said. “It was a very uncomfortable feeling to know that you’re neglecting a payment.”
A Frozen Market and a Slow-Moving Lawsuit
The San Francisco Federal Credit Union, which financed almost every one of these medallions, is relatively small, handling around just $1 billion in assets. It mostly invests locally, and the medallions seemed, at the time, like a great partnership with the city.
Jonathan Oliver is the CEO of the credit union. He said the credit union agreed to give low-interest loans to taxi drivers with limited credit history because the city assured that it would maintain the viability of the medallion market.
Oliver says the SFMTA wrote both in its transportation code and the agreement with the credit union that it would buy back the medallions if it ended the program — if it stopped allowing medallions to be sold. "Prohibited the retransfer," is the exact language in the transportation code.
No one has bought a taxi medallion since 2016. The market is totally frozen. This is the central piece of a lawsuit the San Francisco Federal Credit Union has filed against the SFMTA.
The credit union is arguing that the SFMTA has failed to maintain a viable market for medallions, effectively putting an end to the program. The SFMTA is arguing that it hasn't officially ended the program, and therefore doesn't have to buy back the medallions.
The lawsuit is in the discovery phase, and the credit union expects it will take until next summer for some action on the suit. That is a long way off for drivers who are struggling every month to make their loan payments.
Even if the credit union wins or the city settles, it is unclear what will happen to the drivers and their individual debts. Or all the millions they have already paid into the loans.
No Relief in Sight
Yana's family is not alone. Over 150 families have defaulted on taxi medallions, and more taxi-driving families are defaulting every month. The head of the taxi program for the SFMTA, Kate Toran, said if she could wave a magic wand, buy back the medallions and make this problem all go away, she would.
Toran estimates that it would take $160 million to buy back all of the medallions. That’s probably not going to happen, she says. The SFMTA has been having meetings to discuss ways to make the taxi industry more viable. Nowhere has it discussed buying back the medallions.
At a recent meeting, the city proposed six reforms. Things like allowing corporations to buy medallions, which the city hopes would unfreeze the market. Right now, only licensed cab drivers can buy one.
Cab drivers who attended the meeting were supposed to stick up post-it notes with their comments on each reform. Almost all of them said the same thing: Please buy back our medallions.
Yana’s family has struggled for years with this medallion. Her father died. The family defaulted on their loan. They lost all the money they sunk into the medallion. What Yana wants now from the city is just some accountability, some admission that the program failed.
It is too late for her father, but she hopes something will be done for all the other families and drivers who are still on the hook for their loans.