City Council offers to buy back some taxi medallionsLimited-time proposal to ‘keep industry strong,’ as Uber oversaturates market
(April 21, 2017) Concerned with the falling value of taxi medallions, the Ocean City Council revealed plans Monday night to buy back 10 medallions at an undisclosed price.
“The taxi industry has been inundated with Uber cabs, and with the saturation, the price is coming down,” Council President Lloyd Martin said. “We want them to have a viable business, and by buying back medallions, we’d increase the value of the taxi cab company. Our concern is keeping the industry strong.”
The decision was reached behind closed doors last week, with an apparent 6-1 vote, with Councilman Tony DeLuca dissenting. The city manager’s office sent letters that solicited offers to cab companies on Monday.
Sealed offers must be made in person to OCPD Records Section Manager Michelle Monico at the Public Safety Building at 65th Street by May 4 at 11 a.m. The city reserves the right to reject or accept any offer.
In 2010, Ocean City increased its already substantial regulation of the taxi industry by selling taxi medallions as licenses to operate as New York City has done since the late 1930s.
All 175 taxi medallions were sold that year at $1,500 with a payment plan, adding more than $262,000 to the city’s treasury. The program also required each medallion owner to pay a $500 medallion renewal fee every year. Medallion owners also could sell these licenses, with the city taking 25 percent of the price.
With the advent of ride-hailing services like Uber in the resort, however, medallion values have fallen across the nation. In New York City, a taxi medallion that went for $1.3 million in 2014 is now worth $240,000 today.
In comparison, the average sale price for Ocean City medallions was $7,788 in its peak in 2015. That average value plummeted to $4,200 last year. So far, there have been six resales in 2017, with the average going rate at $3,708.
To date, 142 medallions are still in service, with the city holding the remaining 33. Of that amount, roughly 24 medallions were revoked from Ocean City Taxi Company last year because the business did not pay the $500 renewal fee per permit.
The city gained $71,000 in permit renewals and $9,500 in medallion transfers in 2016.
During Monday night’s session, Councilman Matt James decided to get a jump-start on buying back medallions. Instead of approving a transfer between Abdalla Yousif of Safari Taxi to Abuelhassan Balla Abdelmagid for $4,000, he made a motion to buy back the medallion at the asking price.
Although he had backing from Council Secretary Mary Knight and Councilman John Gehrig, the motion died for a lack of the majority. Martin and DeLuca voted against the motion, and Councilmen Dennis Dare and Wayne Hartman were absent.
In a later interview, James said moving forward with the buy-back program makes sense as a way to stimulate the market and a way to ensure the city gets its cut. There have been concerns among the council that cabbies are recording lower resale values with the City Clerk’s office than the medallion’s actual sales price.
“If you look at the payment of Uber rides, the demand hasn’t increased, there’s just a different service,” he said. “There’s just more medallions out there. If you lower supply, demand goes up.”
Ocean City also collects 25 cents per Uber ride, which amounted to $31,145.75 last year. That means there were 124,580 Uber fares.
DeLuca, who opposed the buy back program, said the issues run deeper than just market saturation.
“I think we need to look at leveling the field between taxis and Ubers. Once everyone has the same regulations, it’s all just competition on who provides the best service,” he said. “I’m not sure that the medallion system works and buying back in is a solution. It’s a complicated subject and we need more information on it.”