Council Agrees To Sale Of Five Taxi Medallions

OCEAN CITY — Resort officials wrestled this week with its new policy on voluntarily buying back taxi medallions in order to increase their value in the face of stiff competition from Uber, but ultimately agreed to approve each of the requested transfers.

The Mayor and Council had before them on Tuesday a request to transfer five taxi medallions in three separate transactions and initially decided to allow two and reject three, the latter because the proposed cost of the transfer of the three medallions at $2,000 was considerably lower than their original price, perhaps illustrating the financial impact of ride-sharing operations, such as Uber, on the resort’s cab industry.

In the other two independent transfers, the sale price for one medallion was $4,000 while the other was $4,100. The council quickly approved the latter two requests, but struggled with the request to transfer three medallions for a total of $2,000. After considerable debate, they ultimately agreed to the three-medallion for $2,000 transfer by a 4-2 vote with Councilman Matt James and Wayne Hartman advocating for the town to buy back the three medallions.

In 2010, Ocean City adopted a taxi medallion system in an attempt to better regulate the resort’s cab industry and as a means to generate revenue. In that first year, the town sold 170 taxi medallions to various cab companies and independent operators for about $1,500 each through a lottery system. The intent was to limit the number of cabs that operate exclusively on the island, eliminate rogue cabs from out of the area to operate in the resort at peak times and to add stronger regulations in the interest of public safety.

As expected, the limited number quickly drove up the price for one of the coveted medallions, the taxi industry on the island was better regulated and the town had its steady revenue stream. However, the proliferation of Uber, for example, has steadily chipped away at and even surpassed the regulated cab industry in Ocean City, ostensibly lowering the value of the limited number of medallions.

As a result, the Mayor and Council recently decided to buy back taxi medallions when a transfer is proposed or a sale is offered in an attempt to reduce the number of available medallions and essentially increase the demand and, therefore, the price.

Before the vote, James urged his colleagues to strictly follow their recent policy to exercise the city’s right of first refusal when transfers are requested and buy the medallions back.

“Three weeks ago, we met and agreed we wanted to buy back medallions if they went below a certain price,” he said. “Most of these fall below that price point. We’re trying to increase the value of our medallions by reducing the number of medallions on the street. The city has the right of first refusal, so I don’t know why we would consider allowing these transfer as such a low price.”

However, Council President Lloyd Martin said if the city bought back the medallions requested for transfer, it was essentially interfering in private enterprise. If there was a willing seller and a willing buyer, then the city should not interfere and block the sale by buying the medallions, according to Martin.

“I disagree,” he said. “This is small business and I don’t think the government should be involved in small business. I’m okay with the voluntary buy back, but I’m not okay with taking them away from small businesses. They think they have a viable business and we buy them back if they think they can make it work.”

James questioned whether Martin, who served on the council at the time the medallion program was implemented, had changed his tune.

“You were on the council when the taxi medallion program went into effect,” he said. “At that point, did you think it was a good idea for government to get involved in small business.”

Martin explained the nexus for the taxi medallion program seven years ago, pointing out the taxi industry was widely under-regulated.

“We were trying to regulate the taxi industry,” he said. “It was like the wild, wild west out there. The whole process was something that was needed. It was more of a public safety issue than anything else. I’m not sure we should buy these back.”

Nonetheless, three medallions for sale at $2,000, or an average of just over $700 each, represents a considerable decline in value.

“We’re looking at three medallions for $2,000,” said James. “I think in this case $2,000 is far below the threshold we agreed to and it might be the lowest cost for a transfer in years.”

Councilman Wayne Hartman suggested buying back the medallions when they fall below the agreed-upon price represented an opportunity to bolster the taxi industry in the resort.

“I know the issue we had when Uber came to town,” he said. “I think anybody would tell you the taxi business has been greatly affected. We have to make sure the taxi industry survives. One of our responsibilities is increase the value of the medallions and make sure the taxi industry survives. A lot of people who come to Ocean City and rely on the cabs don’t have the Uber app or access to Uber.”

Councilman Tony DeLuca said Uber was likely watching the town’s actions on the buy-back program closely.

“I think we’re interfering with small business,” he said. “Uber is a corporation. If they see Ocean City just took three taxis off the streets, they will have six more Uber cars in Ocean City the next day to fill the void.”

About The Author: Shawn Soper

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Shawn Soper has been with The Dispatch since 2000. He began as a staff writer covering various local government beats and general stories. His current positions include managing editor and sports editor. Growing up in Baltimore before moving to Ocean City full time three decades ago, Soper graduated from Loch Raven High School in 1981 and from Towson University in 1985 with degrees in mass communications with a journalism concentration and history.