San Francisco Taxi Medallion Program Expands Niche for CUs
o A handful of credit unions are the first lenders to participate in a San Francisco taxi medallion sales program.
o The program aims to bring in up to $20 million for the city of San Francisco.
However, for all its strong points, the program at first lacked the ability to finance the transaction. That's where New York-based, $118 million Montauk CU came in. Having offered the option for decades, the credit union is considered an expert in taxi medallion financing. Louis Jimenez, president/CEO of Montauk, and Mike Turano, vice president of lending, were instrumental in helping develop the financing mechanism for San Francisco's medallion program, Hayashi said.
Jimenez said it makes sense for credit unions to get involved in this kind of lending. "It's a win for credit unions because they're able to help people with their business," he explained. "With the lack of credit, here's an example of how to get past that."
Hayashi said while CUs are the first signees, the medallion program is open to state and federally chartered institutions that do not charge prepayment penalties for loans and sign the SFMTA's qualified lender agreement, which lists several requirements. In addition to the four CU lenders already signed, two other CUs and three banks have expressed interest in the program, but are not currently participants. Since the program is still new, Hayashi said some financial institutions may be taking a wait-and-see approach. Others might not be comfortable or familiar with the taxi medallion lending model, she added.
"I suspect that in due time we will have other institutions who want to participate once the dust settles," Hayashi said. "Because the fear in the San Francisco industry was that taxi drivers would never be able to afford these loans, the flexibility and energy that the credit unions put into defining easy qualification terms, a simple loan application package and the variety of excellent loans that they made available made this program successful."