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Ocean City

Commission hears views on taxi rate ceiling increases

(May 2, 2014) The Town of Ocean City is continuing to consider a taxi rate ceiling increase, although it was made clear this week that a sharp division exists on the issue amongst taxi owners themselves.

The city’s Police Commission, which also serves as the regulatory body for taxis, held a formal session this week for taxi medallion holders to lodge their opinions on raising the cap on taxi fares.

The commission has not made any formal recommendation, but will submit its findings at an upcoming council session, according to Councilman and Commission Chair Doug Cymek.

“We’re going to send everything we gathered to the full Mayor and Council and vet it with everyone,” Cymek said. “Generally, there is a consensus that there should be some adjustment, although probably not as much as is being sought.”

Cabs operating in the resort are permitted to charge up to $3 for boarding, followed by a per-mile rate. The current $2.20 maximum rate was established in 2009; originally, when the city first instituted taxi regulations in 2000, the rate had been $3 per mile, but this was subsequently lowered.

Taxi companies are still free to charge less than the legally-proscribed maximum if they so wish. The rate structure and ceiling was established by the city in order to prevent price gouging of visitors who may not be savvy to the taxi system, and thus protect the resort’s image when it comes to transportation.

Earlier this year, at least three cab companies got behind a pitch to raise the rate to $3.70, which they said was based off a 50 percent rise in gas and maintenance costs, as well as a 20 percent rise in cost-of-living for drivers.

Several others got behind the idea this week.

“We’re asking for an increase because of the cost of repairs and maintenance, which are pretty high,” said Nelson Stepanyn of Coastal Cab. “In Ocean City, the job is only three-and-a-half months long…you have to be able to fix your cabs and still make enough to get through the winter.”

“The rates have been the same forever,” said Jerry McPherson of Century Taxi. “With gas going up, we support an increase. It’s something that should’ve already happened.”

However, there is an apparent divide between the larger and smaller taxi owners on the issue, with the larger outfits preferring that the city keep the rates low.

“The two largest cab companies were against an increase, and some of the smaller companies openly questioned why that was so,” Cymek said.

In order to solicit fares originating in the Town of Ocean City, cabs must possess one of 170 city medallions currently in circulation, creating a rather limited market. Smaller cab companies have often alleged that low prices play to larger companies, since taxis are an economy of scale.By keeping rates low, smaller cab companies have less of an ability to generate the liquid capital needed to purchase medallions and expand their operations. Instead, their business stagnates and their medallions are bought by the large companies who have the resources to do so.

“It’s going to get harder and harder to survive, and they’ll end up selling to someone else,” Stepanyn said.

When the city first began regulating taxis in 2000, the 170 medallions were sold for $1,500 each. Since then, trading between owners has seen the average price rise to around $5,000, of which a 25 percent surcharge goes to the city upon sale.

“Several owners stated that they were looking to buy more medallions,” Cymek said. “We all realized up front, with 170 medallions, that the market was going to seek its own level.”

The major concern previously voiced by city officials was that a rate hike would be a shock to those who rely upon taxis for necessary transport, as well as discouraging tourists from using the service.

But McPherson said that most consistent local customers do not pay the maximum fare.

“We do have a decent year-round business and we give a discount to locals in order to do that,” he said.

Further, the majority of cabs’ summertime business consists of tourists going to and from nights on the town – if a person is already dropping a considerable chunk of money on food and drinks, a marginal increase in taxi fare is unlikely to dissuade them.

“It’s a whole lot cheaper to take a cab, even if you raise the rate, than it is to hire a lawyer after you get a DUI,” McPherson said.

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