OCEAN CITY – The current price for taxi medallions has confirmed for the City Council last year’s changes have resulted in exactly what was desired — they are a valuable asset.
In order to operate a taxi within town limits, a taxi fleet owner or independent driver is required to purchase a taxi medallion. The council initiated the concept in hopes to bring professionals forward in the business.
“Their [Mayor and City Council] intention was to bring forward the true business people,” Deputy City Clerk Kelly Almond said. “The ones who are in business … and not the people that just get into a vehicle to drive people around.”
City Manager Dennis Dare added the town worked toward a method to solve issues within the industry, such as varying fees and accommodations, as well as limiting the number of cabs on the road to give a fair chance for all drivers to make a living.
“By having a medallion system and regulating the number of cabs, everybody has a chance to make a decent living to give some money to re-invest in and they are taking it to buy new equipment and attracting good drivers,” Dare said.
This week a taxi medallion transfer was approved by the Mayor and Council between two independent cab owners, in which the buyer paid $6,500. The town code sets a transfer fee at 25 percent of the mutually agreed purchase price, which allowed the town to collect $1,625 in revenue on the transaction.
“I am glad to see that these [medallions] are finally starting to reach their true value,” Councilman Doug Cymek said.
Mayor Rick Meehan pointed out that it was only a little over a year ago when the council finalized the taxi franchise in town.
“That does show what we initially anticipated,” he said. “That they would become a commodity, they would become valuable, and it would give taxi companies and individual drivers something of value that they could redeem, or trade, or sell in the future.”
The new law required taxi companies to purchase taxi medallions from the town, priced at $1,500 each, in order to operate a cab within town limits.
Dare explained the city estimated the medallions were worth at least $2,000. The council set the legislation that a transfer of medallions would be paired along with a 25 percent transfer fee, or a minimum of $500.
In addition, taxi drivers were required to take random drug tests administered by the town and the town keeps correspondence with the taxi’s insurance provider to ensure no lapses in coverage. The council added the last minute conditions to ensure public safety and industry improvement.
The town placed 175 medallions up for sale on March 1, 2010. All were purchased on that date, adding $262,500 to the year’s proverbial bottom line. Taxi fleet owners bought 148 of the medallions while the remaining 27 went to independent drivers.
Dare said the council originally sold the medallions under market but once the initial purchasing took place taxi owners began transferring the medallions at the price of $2,000.
“What we were looking for was ways to make the taxi business liable and it looks like taxi medallions are now worth $6,000,” Dare said. “So evidently they are making enough money to be able to increase the value and hopefully we see friendly courteous safe drivers.”
According to Almond, the buyer and seller negotiate the medallion price before they meet with the city clerk. Almond evaluated the transfers of medallions since their inception and found that from March 2010 to April 2011, medallion prices ranged from zero dollars to $2,800, plus the mandated transfer fee. In June 2011, medallion prices increased in range from $3,000 to $6,500.