OCEAN CITY — Resort officials this week voted to create a flat transfer fee for taxi medallions paid to the town when one operator sells a medallion to another.
Earlier this year, the Mayor and Council voted to adopt a buy-back program for its taxi medallions, which are essentially a limited number of licenses to operate caps within the resort. Through the buy-back program, the city intends to reduce the number of medallions on the street, thereby increasing their value.
Each time a taxi medallion is sold from one cab operator to another, the city receives a transfer fee equaling the greater of $500 or 25 percent of the sale price. However, resort officials earlier this year began to get suspicious with some of the sale prices reported for taxi medallions and suspected some operators of reporting lower sale prices in order to lower the amount of the transfer fee paid to the resort.
In the interest of tightening the process and eliminating the potential for false sales price reporting, the council approved on Tuesday an ordinance that would create a flat transfer fee of $1,000.
The $1,000 flat fee was derived from the first phase of the city’s taxi medallion buy-back program. In the first phase of the program, the Mayor and Council agreed to purchase 18 medallions at $4,000 each, for a total of $72,000. The $4,000 figure was determined to be the fair market price for a taxi medallion based on recent trends in sales between private operators.
With $4,000 determined to be the fair market price for a taxi medallion, 25 percent of that figure is $1,000, which was determined to be the new flat transfer fee paid to the city, which was approved by a 5-2 vote on Tuesday with Councilmen Tony DeLuca and Dennis Dare opposed. DeLuca has opposed the proposed transfer fee increase since the issue was first discussed earlier this summer. He has questioned how increasing the transfer fee would help the increasingly challenged cab industry in the resort under added competition pressure from alternative transportation options such as Uber and Lyft, for example.
The intent of the city’s taxi medallion buy-back program was to help stabilize the resort’s cab industry by reducing their number and increasing their value. When Ocean City initiated the program in 2010, a total of 175 medallions were offered for sale. Seven years later, the number now stands around 125.