OCEAN CITY – What was believed to be a taxi medallion conspiracy last week was clarified this week as details of the sale were explained.
Last week the Mayor and City Council denied the transfer of a taxi medallion when the price tag didn’t meet expectations.
The council reviewed two transfers that day approving the first that sold for $5,000 but when independent taxi medallion holder Ruben Ortega’s transfer to AA Beach/Nite Club Taxi came to the table significantly less at $3,000 the council became suspicious and concerned.
The council decided to exercise its right under the town’s law to deny the transfer and instead purchase the medallion, which would then be stored in the town’s own inventory.
This week Ortega came before the Mayor and City Council following Monday evening’s legislative session to explain the circumstances of the sale and ask for the council to reconsider denying the transaction.
Ortega lost two vehicles during Hurricane Sandy, his personal vehicle and the taxi cab. According to Ortega, the Maryland Automobile Insurance Fund (MAIF) denied Ortega funds to repair the cab because it was not a claim to protect another car damaged or the people inside of the taxi due to an accident.
“It was a total loss,” he said.
With the damage on top of a failing business, Ortega decided to get out of the industry altogether and looked to sell medallion. He reached out to friends in the industry and made a deal with AA Beach/Nite Club Taxi, which would purchase the medallion for $3,000 and the damaged cab for $1,000 as well as loan Ortega a car for personal use until March 31, the date he had paid the medallion fees up to.
The purchaser also paid the transfer fee owed to the city, 25 percent of the sale, which was $750.
“The city sold it [taxi medallion] to me for $1,500 less than three years ago … so to have this deal completely nixed, I thought I did a good business deal,” Ortega said. “I would just like you to reconsider.”
Councilman Doug Cymek explained to Ortega that based on what he had filled out on the application the council had the right to believe that the whole sale was $3,000. Cymek said the city has the right to deny the transfer based on the amount.
“You get the same amount of money either way, if you were fully stating the full consideration of the transfer,” he said.
Mayor Rick Meehan asserted if anything the full consideration of the sale should have been $3,750 since the purchaser was paying the transfer fee as well.
“Other items that might have been used or given to Mr. Ortega as a result of that purchase is really not defined in the code that they would be part of the cumulative total,” the mayor said. “It is a little vague as far as that is concerned.”
City Solicitor Guy Ayres agreed with the mayor but added the sale of the cab should also be part of the consideration if the vehicle sold for more than the scrap value and should be included in the percentage of the transfer fee as well.
“This is what we want to make sure doesn’t happen … the real compensation that should have been recorded and the percentage paid off should have been based on $3,750… what the city solicitor is saying is that [sale of car] was part of the consideration of the payment of the taxi medallion,” Meehan concluded. “Do I think that was done intentional? Absolutely not. Do I think maybe we could be a little clearer on the form so that this doesn’t happen in the future? Absolutely so.”
Councilwoman Margaret Pillas asserted she is unaware of any other business license in Ocean City that is required to come before the Mayor and City Council and explain in detail how it conducts business.
“When I raised my hand to put a medallion forward, it was for the cabs to be more regulated because we were getting input from customers that abuses were occurring, having air condition and making sure meters were running, but I never thought that we would include business,” she said.
Pillas pointed out that in the past taxi medallions have sold for less than $5,000 during the off-season.
“I think you are more in line with what the off-season price is,” Pillas said. “I am in sympathy with you sir and I understand.”
Council President Lloyd Martin attempted to clear the air.
“I know that the previous council talked about pulling some of the taxi medallions before because they weren’t as lucrative as the businesses were saying they were,” he explained to Ortega. “You said yourself you were a failing business, and we were looking to try to bring the dollar values of these medallions up.”
Cymek made a motion to allow Ortega to re-submit his taxi medallion transfer application to include all considerations in the sale, which will again be subject to the council’s approval. The motion was seconded by Council Secretary Mary Knight.
Pillas interjected Ortega’s 25 percent transfer fee paid to the town will now increase.
“It is never going to end,” she said. “You will have to pay the additional fee if you take it up to that [$3,750] … This will set a precedent now. If you sell your taxi, that is part of the medallion price. If you sell your light off the top, that is part of the medallion price. Anything you do when you get rid of your medallion … pay your town more money.”
The council voted 4-2, with Pillas and Councilman Brent Ashley in opposition and Councilman Joe Mitrecic absent, to approve the motion.
Following the vote, spokesperson for Citizens For Ocean City Joe Groves spoke in disagreement with the majority of the council and even offered to pay for an attorney for Ortega.
“You guys should have a heart … I don’t think the man tried to do anything intentional and you are hurting him right now at the worst time of the year that we can hurt somebody,” Groves said. “I really wish that you think when he re-submits things because Margaret is 100 percent right … it is the one business that I think is so regulated. I understand about making a buck … but I think it gets to the point where at times you are hurting the business.”
Cymek responded the council has a heart by allowing Ortega to re-submit the application and that the council has an obligation to protect other taxi medallion owners and the value of their business.