Audit of BACP Taxicab Medallion Auction and Safety Inspections

Taxicab regulation generates a significant amount of revenue for the City, in 2013 medallion transfer fees alone generated $6.5 million. OIG’s audit examined taxicab regulation during 2013, focusing on the medallion auction process and taxicab safety inspections.

In 2013 the Department of Business Affairs and Consumer Protection (BACP) held the first medallion auction since 2010, when it generated $11.9 million in revenue. OIG found that BACP designed and implemented an auction that was, as required by Municipal Code, “designed to produce the maximum amount of revenues to the city consistent with serving the public interest.” However, OIG was unable to verify BACP compliance with all applicable rules and regulations because, although the auction closed 17 months ago, BACP has not finalized sales.

 OIG also examined taxicab safety inspections and found:

  • missing or incorrect safety citation records prevented BACP from accurately monitoring inspection compliance
  • although BACP completed almost all semiannual inspections in 2013—inspecting 99.5% of the 6,849 taxicabs needing inspection—broken equipment prevented the Department  from completing brake tests according to its own standards

OIG further received an informed suggestion that the City’s taxicab inspection facility is in need of repairs and new equipment.

Based on these findings OIG recommended that the Department address the broken machine, implement covert and overt audits, and ensure that all safety violations are tracked appropriately.

In response, BACP stated that, rather than replacing the broken brake testing machine, the Department will remove the machine from its standards. BACP also stated that it will conduct overt audits, will update training protocols, and will implement an internal audit to ensure that all taxicabs are in compliance with required annual inspections.

During OIG’s audit BACP switched from managing paper records of citation by hand to managing them by email. While this may have led to some improvements, OIG continued to find errors after the new system was in place. Therefore, the Department has committed itself to examining the process further.