SAN FRANCISCO-When other financial institutions passed on working with a local agency on a loan program to help drivers purchase a taxi medallion, the $770-million San Francisco Federal Credit Union stepped up.
The San Francisco Municipal Transportation Agency (SFMTA) had developed a pilot program that would allow individual taxi drivers to purchase a taxi medallion, recalled Steven Stapp, president and CEO of San Francisco FCU. But the program was missing a source of financing for the individuals seeking to purchase the medallions that are necessary to operate a taxi.
"Credit unions were the only financial institutions that expressed an interest in working with SFMTA to develop the program," Stapp said.
SFMTA issues medallions to people on a waiting list when one is returned due to revocation or the death of the owner. More than 3,000 names are on the list, and wait an average of 15 to 20 years to obtain a medallion. Unlike other taxi medallion programs, Stapp said San Francisco's is unique in that an individual driver must own and operate the medallion. This was creating a public safety issue as some drivers became too old to drive safely but still had to meet minimum driving requirements or surrender the medallion to the SFMTA to be reissued to the list.
"San Francisco Federal Credit Union saw this as an opportunity to serve the community," Stapp said. "We worked closely with two credit union partners, San Francisco Police Credit Union and San Francisco Fire Credit Union. Over several months, we worked closely with the SFMTA on establishing the operational details of the Medallion Sales Pilot Program, including developing agreements between the SFMTA and lenders, lenders and taxi companies, and lenders and individual drivers."
The credit union also partnered with CU Business Group, Portland, Ore., to provide business loan documents, analysis and underwriting.
San Francisco taxi medallions cost $250,000, with $37,500 paid to SFMTA as a transfer fee and $12,500 paid into a fund for the future benefit of taxi drivers. The price is established by the SFMTA and guarantees are in place that protect the value of the medallion. Stapp said a key element of the program was to keep the loan payments affordable, loan programs that include three- and five-year balloon loans amortized over 15 or 25 years, along with fully amortizing loans with terms ranging from three to 12 years.
Stapp said Rebecca Reynolds Lytle, VP of lending for San Francisco CU, designed the taxi medallion loan program for the credit union. The program officially launched on Aug. 4, 2010, with the first medallion loan sale. In the first 11 months, San Francisco FCU funded 100 taxi medallion loans for a total of $20 million. Lytle said through Oct. 31, 2011, 158 loans have been funded for $32.2 million.
In addition, loan participation sales have been completed to SF Police CU and SF Fire CU totaling $10 million. The program has paid $8.25 million SFMTA and $1.97 million to the drivers' fund.
"The best part of this whole program is the difference it has made in the lives of these people who have bought and sold medallions," said Lytle. "We get to talk to them face-to-face and we get to know them through the process. The sellers get to exit with money for retirement and the buyers now own their own small business, so it is a life-changing event for them."
The credit union's benefit does not stop with loans, Lytle continued. She said the program has helped it build relationships with a new slate of members.
"We help these people with all aspects of their financial life, so for us it is about the relationship with the member, not just funding taxi medallions. It is very satisfying and I really enjoy it."
