Resort Raises Taxi Medallion Transfer Fee

OCEAN CITY — Amid concerns of possible collusion on its taxi medallion sale prices, resort officials this week voted to create a flat transfer fee paid to the town when a medallion is sold from one operator to another.

Earlier this year, the Mayor and Council voted to adopt a buy-back program for its taxi medallions, essentially a limited number of licenses to operate cabs within the resort. Through the buy-back program, the city intends to reduce the number of medallions on the streets, thereby increasing the demand and, as a result, increasing their value.

In the first phase of the buy-back program, the Mayor and Council agreed to purchase 18 taxi medallions at $4,000 each, or a total of $72,000. The $4,000 figure was determined to be fair value based on the recent trends in sales between private operators. When one operator sells a medallion or block of medallions to another operator, the city receives a transfer fee equaling the greater of $500 or 25 percent of the sale price.

However, it has come to light some operators might be reporting the sale price of a taxi medallion to the city at a much lower rate than the actual sale, thereby lowering the amount of the transfer fee paid to the resort. For example, a sale could be reported to the city at $2,500, when an operator actually sold the medallion to another operator at say $4,500.

In the interest of tightening up the process and eliminating the possibility of false sales price reporting, City Manager Doug Miller on Tuesday suggesting raising the minimum transfer fee to $900. Miller said he derived that figure by looking at the three-year average for medallion sales prices, which came in around $3,500. By setting the minimum fee at $900, that reflects the average sale price of $3,500.

“Right now, when one operator sells a medallion to another operator, the town gets either $500 or 25 percent of the sale price,” said Miller. “I think there was some concern there might have been some manipulation of the sales prices to maybe lessen what is paid to us.”

Miller suggested raising the minimum transfer fee to $900 could eliminate some of the suspected collusion. However, Councilman Wayne Hartman took it a step further and suggested the minimum transfer fee be set at $1,000, which would reflect the $4,000 sale price the city recently paid for the 18 medallions through the buy-back program. Essentially, Hartman reasoned the $1,000 flat fee represented 25 percent of the established $4,000 value for a medallion. He made a motion to establish the transfer fee at $1,000 and eliminate the 25 percent part of the equation.

“I’d like to see that as a flat fee,” he said. “I think that would eliminate whatever could be going on with deterring the values. If we set it at $1,000, we can see what the true value is because people would have no reason to declare otherwise. There would be no brown bag of extra cash. It’s just what it is because they’re going to report the real price. What I’m doing is allowing the prices to go up and we find out the real truth by saying this is the flat fee. We just bought 18 medallions at $4,000 and took those medallions off the market for the reason of increasing their value.”

Not all agreed though. Councilman Tony DeLuca questioned how raising the flat fee to $1,000 would help the challenging taxi industry in the resort under increased pressure from alternative transportation options, such as Uber and Lyft, which is the intent of the buy-back program in the first place.

“If they had to pay less of a transfer fee, maybe they could put more money back into their cabs and their companies,” he said. “Maybe they could get GPS or iPhones or credit card readers. For us, this is another example of putting politics ahead of market forces.”

After considerable debate, the council voted 4-1 to establish the $1,000 flat transfer fee with DeLuca opposed and Councilmen Lloyd Martin and Dennis Dare absent.

About The Author: Shawn Soper

Alternative Text

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.