OC offers rate increase to help taxis pay for new franchise fee

OC Councilman Joe Hall (Feb. 5, 2010) In an attempt to find common ground between the Ocean City Council and the resort’s taxicab companies, the council on Monday stuck to its plan to implement a high franchise fee for the cab companies but allowed the companies to increase their rates to help them pay the extra cost of doing business.

Last week, the council decided to franchise the taxi companies through a “medallion system” similar to the one in New York City, where cab owners must have a medallion to operate. Every cab would need a medallion to operate in Ocean City and the medallions would be sold by local government to taxi owners at $1,500 each. The city would limit the available number of medallions and charge an annual renewal fee of $500 per medallion.

When council announced their intentions, the cab owners protested what they said were unfairly high fees that could put them out of business. City officials countered saying the system would benefit the taxis because it would limit competition and they could sell the medallions in the future at higher prices.

“I guarantee you, when you’re ready to retire, those medallions are going to be worth more than your taxis are,” Councilman Jim Hall said.

Understanding the financial difficulties companies might have paying the full $1,500 up front, the council agreed to a fiveinstallment payment plan. During Monday’s meeting, the council spread the payment out further by requiring a 10 percent up-front payment and 10 percent the following month, followed by four 20-percent payments.

“I understand it can be a lot of money to be adjusting your budgets along the way,” Councilman Joe Hall said. “This just lightens the load a little bit in the front end.”

If a cab owner fails to make a payment, the city will immediately revoke the medallion, with no refunds.

Some of the taxi owners wrote a letter to the council asking that the medallion cost be reduced to $1,000 and the renewal fee to $300. They also requested a fare increase to help cover the additional costs.

“That would make it more feasible for us to operate,” said Norman Mullinix of Free Taxi. “We’ve never had an increase since we set these rates.”

The cabbies asked for a 25-cent increase to the $2 per-mile rate, but upon learning that the meters in the cabs can only change in 20-cent increments asked for an additional 40 cents per mile.

The council was willing to go halfway on the rate increase, offering a 20-cent per mile increase as well as an additional 20 cents on the $3 pick-up charge. The cab owners continued to call for a 40 cent permile increase, but received little city support.

“The votes are just not here for 40 cents,” Jim Hall said.

The council voted 6-1 to approve the increases and have them go into effect in late March when the taxis receive their new inspection stickers. Councilwoman Margaret Pillas voted against it, because she supported the 40-cent increase request.

Last week, the council decided to set the number of medallions at 160, the current number of licensed taxis. To account for possible growth, this week they increased that to 175 medallions and changed the split of the medallions between taxi fleets and individual cabs from 75 percent and 25 percent to 85 percent and 15 percent to reflect the actual spread of cabs today.

“We’ve got to have some ceiling, or the medallions won’t have value,” Joe Hall said.

The medallions will be sold March 1. Any medallions left over at the end of the day will become the property of the city and it will be up to the the council when to offer any for sale again, and at what price.

The council decided to increase the price of any leftover medallions by at least $500 the day after the initial sale to increase the value of those already purchased. In addition, someone who buys a medallion cannot transfer it to another cab or cab owner until the full $1,500 price is paid.

“This might be a little bit of a hard pill to swallow today,” Council President Joe Mitrecic said. “But I’d love to be able to limit my competition.”

Some council members asked that the city use the approximately $80,000 that will be raised from the $500 renewal fees to increase on-the-spot inspections of taxis during the season. Enforcement of the existing taxi laws has been lacking, said the cab owners.

The council will discuss and vote on the taxi medallion issue one more time on Feb. 15.