ATLANTIC CITY — “That’ll be $40."

After a ride of less than a mile in Atlantic City, that’s not what a passenger expects to hear from a cabdriver.

Turns out the man behind the wheel was not a taxi driver, despite his place in the row of sedans-for-hire lined up before a casino entrance where three high-heeled young women walked out of the building and, engrossed in conversation, got into the black Town Car. One briefly directed the driver, then resumed the debate over where to go later that evening.

None noticed that the black sedan bore no medallion and had no meter running, at least not until they reached their destination and the driver quoted his rate.

Startled at the price, the group offered $20 and refused to pay more.

The driver relented. Barely midnight on July 4, the city was brimming with locals and tourists, all potential fares, so this one might not have been worth the trouble. He also had no recourse, because operations such as his are illegal under Atlantic City code.

His car did not have a medallion on the outside or meter inside. Both indicate that a vehicle has a license to operate as a taxi in the city, which includes picking up passengers hailing a ride from the roadside. Limousine licenses do not permit that, but limo drivers are doing it anyway. They also are responding to calls for a cab and charging as much as two or three times the maximum taxi rates allowed by the city.

These violations have been ignored. One reason: A city official ordered his inspectors to leave the limos alone, saying he feared lawsuits if he enforced the code.

Reforms have been proposed. City Council has failed to act on them despite calls from the industry and within City Hall.

While taxi business is being poached by limousines, limo owners argue the city is being manipulated by the Yellow Cab Co., the dominant local taxi presence that many say is operating a legal monopoly.

Meanwhile, passengers are left unprotected.

“The customer is oblivious to these little intricacies and distinctions,” said Anthony Cox, director of licensing and inspections. “After calling the taxi number, they just know a car showed up. Until they get the fare, and you realize, ‘No, I’m not in a cab.’ We want to make it clear and distinct right from the door, so people aren’t spending more than they’re willing.”

The practice could hurt city tourism if visitors, who are the most likely to be affected, decide not to return to Atlantic City after feeling cheated, said Vonnie Clark, president of the Greater Atlantic City Concierge Association.

“It could be the smallest thing that keeps a visitor from coming back,” she said. “That’s right up there with going to a restaurant and having a bad meal. The problem is, with (the questionable limo services), you don’t get much of a chance to redeem yourself.”

Broken system

Unlicensed taxis have long operated in Atlantic City. But the extent of the practice has grown during the past two years. Yellow Cab Co. owner Paul Rosenberg blames lax enforcement.

“The number of illegal cars out there has expanded,” Rosenberg said. “You combine that with what everybody knows is a slumping economy here in Atlantic City, and the drivers are feeling the pressure.”

City inspectors employed to regulate the cabs also have felt some pressure. Jack Imfeld, former head of the city’s Mercantile Division, sent a memo to his inspectors in December 2008 ordering them to stop issuing summonses against drivers operating limousines as taxis. Any such summonses, the memo stated, would require his permission.

Instead, Imfeld told inspectors to file a “legible report” of their observations and contact information of complainants to him personally. Not only did the citations end, but inspectors never filed any observation reports either, he acknowledged.

Imfeld said his directive was designed to avoid a lawsuit against the city if the practice continued, claiming the inspectors were being overzealous and ticketing limo drivers with little proof of a violation.

“There was no doubt this stuff was going on, but it was very hard to prove it,” he said. “I just didn’t want the inspectors arbitrarily writing tickets that were going to get thrown out in court.”

City Hall employees even complained about calling Mutual Taxi and Limousine for a taxi, only to get an unmetered car and higher fare, Imfeld said.

“We could have easily gone after them, but we need the person to testify,” Imfeld said. “That’s when we ran into a wall. They didn’t want anything to do with that.”

Betty Lewis, a clerk in the city’s Planning Division, has been taking taxis home from City Hall for years, and just recently encountered her first problem: She called for a taxi and an unmarked sedan arrived instead.

“It just happened the other day,” she said.

Cox has encountered his own obstacle as he attempts to bolster regulations on the limousines: City Council. The director presented a lengthy proposal months ago. Provisions in the latest version included restricting limos from picking up a customer with less than five minutes advance notice, denying limo licenses to cars that are more than 10 years old (to ensure their luxury status) and prohibiting limo services from using the word taxi in their advertising.

Some taxi drivers argue the immediate response to calls for a ride is an on-demand service that only taxis can legally provide. Opponents say the act of placing a phone call constitutes prearrangement of a ride, so limos can respond to a call placed by a customer who assumes or is led to believe by advertisements that the company provides taxi services.

Georgina Gonzalez, 44, said taxi drivers have frequently overcharged her to ride between the casinos and her house in Margate. When they hear she’s going beyond city limits, they turn off their meter, she said.

“It happens all the time,” she said.

Gonzalez asks about the cost first but sometimes feels forced by the late hour or lack of options to pay more, she said.

“When you’re at the casinos in the middle of the night, you have to take it,” Gonzalez said.

Gonzalez said she has paid as much as $35 for a ride that should cost no more than $25. That ceiling is calculated by applying the $13 maximum for rides within Atlantic City, then adding the cost for going the distance traveled beyond city limits based on the rate posted on the side of the cab: $3.80 for the first 10th-mile and 40 cents for each 10th-mile thereafter, as per local ordinance.

No one, however, denies the illegality of unmetered vehicles engaging in impromptu, street-side pickups and charging fees that often exceed the $13 in-town maximum taxi fare and the rates each limo driver or employer must predetermine and file with the city.

Matthew Hale, an associate professor and department chair at Seton Hall University’s Center for Public Service, said regulating industries can never be perfect.

“It’s like eating soup with a fork,” he said. “You’re going to get some stuff covered, but there will always be things that slip through the cracks. It’s never an easy process setting regulations, and there will always be people there to try to take advantage of the cracks.”

Reform resisted

Cox’s proposed reforms are backed by the Greater Atlantic City Chamber and the Limousine Association of New Jersey but are criticized by a portion of the local limousine industry.

Mutual Taxi and Limousine owners Greg and Derek Brock contend the 15-minute minimum wait will negate the advantage city limo businesses have over operations based outside the city.

“It’s ludicrous. It doesn’t make any sense,” Greg Brock said. “It opens the door for other individuals to get business from Atlantic City. If I’m in EHT (Egg Harbor Township), like Avalon Limousine, for them to jump on the (Atlantic City) Expressway to come pick up a fare in 15 minutes, they can do that easily. We’re right here on Kentucky Avenue, and it takes us three, four minutes to get to the casino.”

The Brock cousins have run Mutual for more than a decade. With 35 vehicles, the 50-year-old operation places a distant second to Yellow Cab in the resort’s car service, or livery, industry. Yellow Cab has 92 medallions for its fleet. Yet as the stewards of two well-known companies in an eight-square-mile city, the Brocks and Rosenbergs have faced off repeatedly over the years.

The Rosenbergs accuse the Brocks and their drivers of knowingly breaking the law, which the Brocks deny.

The Brocks say they tell their drivers to follow city ordinances and furnish them with copies of the laws. Part of that compliance includes refraining from taking unscheduled passengers off the street, unless the driver is one of six or seven taxi medallion holders among 65 drivers working for Mutual.

The Brocks do not advertise taxi service in the phone book. But Mutual does send nonmetered vehicles to people who call for immediate service. To them, that phone call means the request is prearranged, not on-demand, as hailing from the sidewalk would be. The proposed ordinance would clarify that. The ordinance has been before City Council, but council members have refused to vote on it without explanation.

Cox, who began working to reform the limo business in May, put a moratorium on limo application and renewal processing as he hashed out and proposed the ordinance, figuring that applying the new rules uniformly would prevent confusion, inconsistency and duplicated efforts. The ordinance remains stalled, and limo licensing fees have gone unpaid since the end of 2009, costing the city $15,000 in licensing revenue.

Councilman Aaron “Sporty” Randolph, who heads the panel’s Licenses and Inspections Committee, recently said council members have delayed a vote because they want to go about the changes carefully.

“We’re being thorough,” he said.

Last week, council members were scheduled to vote on Cox’s ordinance, but a flood of public opposition from those in the local limousine industry prompted Randolph to table the ordinance again without explanation.

Yellow Cab’s Rosenberg said City Council’s inaction is the sign of a broken government. But opponents of Yellow Cab say the Rosenbergs are just unpracticed in not getting what they want.

A Yellow monopoly?

Rosenberg said his family business is “the only really organized taxicab organization in the city” and “by far the largest dispatch service.” About the naysayers? “They’re jealous,” he said.

The Rosenbergs, now in their third generation of operation, have owned Yellow Cab Co. for more than 60 years. It began with the late Paul Rosenberg’s purchase of the company in 1950. He left the business to his son, Murray, when he died in 1974. In 2008, Murray Rosenberg retired and made his son, also named Paul, the boss.

The history of the company has allowed Yellow Cab Co. to either own or manage 92 taxi medallions in Atlantic City, more than three times as many as their competitors are legally allowed to possess. Why are the Rosenbergs the exception? Because they’ve been around longer.

The family owned or managed the medallions before the city changed the laws to limit medallion owners to 25 each as of 2006. The law was designed to prevent a monopoly in the industry, but a grandfather clause keeps Yellow Cab’s competitors at bay.

“It ends up protecting them,” said Tom Orler, owner of AC American Transportation, a limousine service. “Now, no one else can compete with them.”

Cox acknowledged the arrangement is unfair.

“It kind of keeps them as the king of the mountain and prevents others from trying to be king,” he said.

Despite that view, Cox has been accused by opponents in the limousine business of being reluctant to try to break up Yellow Cab’s power because of his history with the Rosenberg family.

Records show Cox served as vice president of MARC Auto Sales Inc., a used-car dealership based in Atlantic City and owned by the Rosenberg family. He also has engaged in private transactions with Murray Rosenberg, including a $13,000 loan from Murray Rosenberg to Cox and his wife, Angela, in June 2000, a mortgage document shows.

Cox acknowledged his past business relationship with the family but produced documents showing he severed ties with MARC Auto Sales in late February 2008 when he was first appointed director of licenses and inspections, formerly known as neighborhood services. Cox said he resigned to erase the appearance of a conflict and that he has never had any involvement with the family regarding taxis or limousines.

“I never worked for a taxicab or limousine service,” he wrote in an e-mail. “I never bought, sold, financed or leased vehicles for taxicab or limousine use. I have had zero business relationship with Murray (and anyone else) regarding taxicabs and limousines.”

Asked why he chose to regulate the limousines before examining whether anything should be done about the alleged monopoly of Yellow Cab, Cox said, “There’s a lot to be done in this industry. I’ve got to fight one battle at a time.”

On his list: A close look at existing laws and an audit of the medallions and their owners.

Currently, about a dozen parties — families, individuals and small-business partnerships mainly associated with the Rosenbergs — control nearly half of the 250-medallion pool. The remaining 111 are divided among 82 owners, documents from the city division of licensing and inspections show.

Murray Rosenberg has 40 of them. Paul Rosenberg owns 21. The family’s attorney, Samuel Krantz, owns three more medallions. The Rosenbergs also manage 31 medallions on behalf of owners who are disconnected from the local industry. In that capacity, they act as an intermediary between drivers and medallion owners leasing out the privilege to operate the taxi in Atlantic City. Yellow Cab does not get money from the lease but does charge for using the company’s trademark and dispatch services. Some drivers complain the costs impede their ability to make a living.

Drivers stalled

Taxi driver Zanvwar Bukhari said he and his partner pay about $300 each per week to lease the medallion and the right to operate a taxi during their alternating 12-hour shifts. That amounts to paying $2,400 monthly to the owner of the vehicle, a standard arrangement in the city, Bukhari said.

The owner of their cab does not drive. He also does not own the medallion but leases it for $1,800 a month, in addition to paying dispatch and trademark fees to Yellow Cab, Bukhari said.

Typically, lease, dispatch and trademark fees total about $1,260, Paul Rosenberg said. That estimate, however, comes from the leases he and his father administer directly. Owners of medallions they just manage — and those they do not — could charge more.

Whatever the fees, the vehicle owner puts the remaining money paid to him by his drivers toward insurance, maintenance and, ultimately, profit.

Ideally, drivers save money and progress to owning a car, then a medallion, cutting out middlemen and gaining income and autonomy in the process.

But for now, all of this means that Bukhari, who arrived in Atlantic City from Pakistan 25 years ago, does not start making money each day until he has given several rides at maximum fare: $13 or 2.3 highway miles, according to the fare formula set by law.

Bukhari says it means those fees result in a greater hardship for drivers than the unlicensed cabs do.

“There are particular people, they (have) owned the mercs for years and years,” Bukhari said. “The lease should be fixed by the city, not by these people. They’re making money, just like ...” He then trailed off, shaking his head.

Bukhari and similarly frustrated drivers could get some relief soon.

Despite the criticism, Cox said he has no intention of backing off his efforts to reform the cab and limo industries.

He insists that medallion ownership is an area he wants to look into and also wants to discuss the possibility of establishing a uniform color for city taxis.

“I don’t care what color they are — black, silver, yellow, green — but they should all be one color,” he said, noting that a uniform color would make plain limousines acting as taxis.

He also continues to lobby City Council members to at least agree to a vote on the drafted ordinance.

“Just vote it up or down,” he said, “but give it a chance to be heard.”

Contact Emily Previti:

609-272-7221

Contact Michael Clark:

609-272-7204


Findings

- The majority of licensed limousine companies in Atlantic City provide and, in some cases, advertise taxi services while charging more than the maximum allowable fares.

- The practice has gone unchecked since the former head of the city’s Mercantile Division ordered inspectors to stop citing limousines for violating the law by operating as taxis.

- A reform proposal has languished before City Council, which has failed to act.

- Council’s delays have cost the city $15,000 in missed licensing revenue since the end of 2009.

Locations