Ocean City To Buy Back 18 Taxi Medallions For $72K

OCEAN CITY — In an effort to bolster a sagging taxi industry hampered by the proliferation of ride-sharing companies, resort officials this week agreed to buy back 18 taxi medallions at a cost of $72,000.

The Mayor and Council had before them a request to buy back 18 taxi medallions held by private cab companies and ultimately approved the purchase to the tune of $72,000, or $4,000 each, despite the concerns of at least one councilmember. In an effort to support and strengthen the local taxi industry struggling to compete with the proliferation of Uber and Lyft, for example, the town’s elected officials announced in April a decision to buy back 10 taxi medallions on a first-come, first-served basis at the lowest price, in this case $4,000 each.

The voluntary buy-back offer was presented to each resort taxi medallion holder and two sealed offers were received including one from Nite Club Taxi for six medallions ranging from $4,400 to $4,800, and one from Ocean City Taxi for eight medallions at $6,666 each.

Because the sell-back offers exceeded the $4,000 the council considered fair market price for the medallions, each cab company was asked to come back with a different offer. As a result, Ocean City Taxi offered 10 medallions at $4,000 each, while Nite Club Taxi offered eight medallions at $4,000 for a total of 18, which exceeded the council’s original expectation of buying back just 10.

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 175 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 operating at peak times and to address public safety concerns.

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, specifically, 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 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. On Tuesday, City Manager Doug Miller said of the original 175 medallions, 142 were still active.

Miller said the council had authorized him to buy back 10 medallions, but 18 were now being offered at a total cost of $72,000. It’s important to note the town receives pass-through revenue from the state from ride-sharing companies and nearly $37,000 had been remitted in the current fiscal year.

Council President Lloyd Martin said buying back the requested 18 medallions could help shore up the resort’s struggling taxi industry.

“I thought 175 medallions were too many,” he said. “I always thought 125 was more appropriate. I want to make sure we continue to have a viable taxi industry and when we created the program, it was all about public safety.”

Councilman Wayne Hartman agreed with the notion Uber and Lyft were significantly impacting the resort’s cab industry and also pointed out not everyone has access to the internet-based ride-sharing companies.

“From my understanding, the cab business has been impacted by about 30 percent,” he said. “Not everybody has access to Uber and Lyft and we want to make sure there are alternatives. In addition, Uber and Lyft drivers aren’t always around in the offseason. It’s important that we have a viable taxi industry.”

However, Councilman Tony DeLuca said he couldn’t support the buy-back program for a variety of reasons and called spending $72,000 on buying back taxi medallions a waste of money.

“I’m really against this,” he said. “I don’t think it’s going to help the taxi industry and it could have the reverse effect. I’m against any government interference in the private sector and market trends. I can’t support wasting $72,000.”

Council Secretary Mary Knight, however, said a strong taxi industry in the resort provided alternatives to Uber and Lyft, for example.

“I think it will protect our tourists and visitors,” she said. “You hear and read all the time about problems with regulation Uber drivers. I would much rather have my 28-year-old daughter get into a well-regulated cab then an Uber or Lyft.”

Hartman said the buy-back initiative was a better alternative than simply lowering the fees to help the cab industry.

“I think we’re supporting the industry with this,” he said. “If you lower the fees, you just help them for a day. It’s like the saying give a man a fish and he’ll eat for a day, but teach a man to fish and he’ll eat for a lifetime.”

The council voted 4-1 to buy back the 18 taxi medallions at $72,000 with DeLuca opposed and Councilmen Dennis Dare and John Gehrig absent.

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.