OCEAN CITY — Illustrating the changing landscape of the transportation business in the resort, a seemingly innocuous request for a taxi medallion transfer from one business to another this week touched off a larger debate about the future of the industry.
In 2010, Ocean City adopted a taxi medallion system in an attempt to better regulate the town’s cab industry and as a means to generate revenue. At the peak of the system, there were 175 town-issued tax medallions on the streets in town. In those first years, the taxi medallions were sold to 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 other areas that showed up during peak times and 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 ride-sharing operations such as Uber, for example, have 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 last year initiated a medallion buy-back program when a transfer was proposed or a sale was proposed in an attempt to reduce the number of available medallions and essentially increase the demand and therefore the price. The town bought back dozens of medallions at $4,000 each and the number on the street was reduced from the existing 175 to the target goal of 125.
However, the proposed transfer of a taxi medallion from one operator to another this week for the asking price of $2,000 appears to run counter to the less-is-more approach adopted last year by the city. Councilman Wayne Hartman pointed out on Tuesday the proposed $2,000 transfer illustrated the buy-back program was not achieving the desired results.
“My understanding is we were going to continue to downsize, or right-size, the cab fleet,” he said. “It doesn’t look like what we’ve done is working at this point if they are transferring them for $2,000.”
Hartman said it could be time to reconsider the entire medallion system.
“I think we need to look in the near future where the taxi industry is and where it’s going because this $2,000 price tells me there are still problems in the industry,” he said. “Times change and the medallion system and the way we oversee it may not be the most effective thing at this point.”
Hartman said the resort cab operators are put at a disadvantage because the regulations, inspections and fees are more onerous than what Uber and Lyft operators face.
“With the regulation and oversight that we have, is that effective for us?” he said. “With all of the obstacles and extra costs that taxi cabs have to operate in town, we now have somebody coming and doing the same thing with a different name without all of those costs.”
While he agreed the medallion process might need to be reviewed, Mayor Rick Meehan said the system had achieved the desired results in terms of better service and public safety.
“I haven’t received any complaints lately with taxis and I think the real issue was safety,” he said. “If you watch and follow the news, there certainly are a lot of complaints about other providers of that service because they don’t have some of the same requirements that we have. I think what we’ve done is certainly bringing some integrity into our town with our taxi system. We have taxis that are safe, reliable and better vehicles and I think that’s been important.”
Meehan said the medallion system likely preserved the cab industry at a time when it was coming under increased pressure.
“I agree we need to continue to look at it, but I think what we’ve established has probably saved our taxi industry and given the public more confidence in what they’re receiving when they ride our taxi system,” he said. “I think what some of the other providers are doing have come back to haunt them somewhat.”
From the beginning, Councilman Tony DeLuca has been staunchly opposed to the town’s medallion buy-back program and reiterated his concerns.
“As you all know, I am really, really, really against the whole medallion buy-back,” he said. “To me, this is a business-to-business transfer. This is two businessmen transferring a business. Here we are as a city interfering with business. You say it’s Uber money, but I say Uber money and Lyft money is taxpayer money. What we’re doing is using taxpayer money to influence businesses. What we’re doing is indirectly helping Uber and Lyft.”
Hartman said his main concern was the continued apparent drop in the price for the medallions being transferred.
“What I’m saying is we got to the goal of 125 and the price is down to $2,000,” Hartman said. “I think there are still problems in the industry. I think there are extra steps that the other providers don’t have to take with the inspections, the fees and all of the other things.”
After considerable debate, the council voted 6-0, with Councilman John Gehrig absent, to approve the medallion transfer.
