On towing, Baltimore cuts a lousy deal

Our view: Kickback scandal raises questions about towing companies' cozy relationship with the city

Baltimore should seek a bigger share of towing fees

February 28, 2011

Baltimore badly needs to review its practices for awarding towing contracts. If we learned nothing else from the indictment last week of 17 police officers involved in a kickback scheme with an uncertified towing company, it's that there's plenty of money to be made in the business, and the fees Baltimore is collecting from its so-called "medallion towers" are a pittance.

That's why Baltimore Police Commissioner Frederick H. Bealefeld III is to be commended for holding off renewing any more exclusive contracts with the city's tow truck operators until the policy's benefits and costs are thoroughly evaluated. Judging from news reports last week, it doesn't sound like the city is getting anywhere near the best deal on the agreements it's signed.

Just learning that the operators of Majestic Auto Repair, the unlicensed tow company implicated in the kickback scheme, were willing to pay officers $300 under the table for each unwary motorist they steered its way should have been a giveaway that something was wrong with the rates the city was getting from its licensed "medallion" contractors. Those companies tow away about 18,000 disabled and illegally parked vehicles a year from Baltimore streets and charge anywhere from $130 to more than $300 for each tow. That adds up to $4 million-plus in annual business.

Yet aside from the basic license fee of $500 a year plus $100 per truck that is charged to each of the 10 tow companies that hold exclusive licenses to operate in the city, all Baltimore gets out of the deal is a paltry $7.50 for every car its contractors haul to the lot. On 18,000 tows a year, that comes to only $135,000. It probably costs the city more than that just to process the paperwork for issuing the licenses.

The huge volume of guaranteed business and the ridiculously low rates those companies were paying to the city practically guaranteed they'd make a killing.

One of the first questions Commissioner Bealefeld needs to ask is why Baltimore has maintained this system for decades without anyone bothering to ask whether the city could get a better deal for taxpayers by opening up the business beyond the tiny circle of towing companies that now enjoy exclusive rights to engage in the towing business. It would seem a relatively simple matter for officials to issue guidelines describing what qualifications companies must have and the duties they are expected to perform, then award contracts on a competitive basis to the firms that offer the highest payouts to the city.

For that matter, Mr. Bealefeld should also be asking whether the city government should be in the towing business at all. In Baltimore County, for example, the local government requires that all towing firms be licensed, but its contract is with Auto Return, a private management company that directs the actual operation of tow trucks and drivers, who subcontract for the work.

The Baltimore County system also has much more robust safeguards against the kind of extortion schemes Baltimore is prone to because all police requests for roadside assistance have to go through the precinct or district offices rather than directly to the tow company operators. The precinct and district officers deal only with the management company, which makes the final decision about which subcontractor to call. That way, patrol officers responding to a reported accident or illegally parked car can't steer the vehicle to an unlicensed outfit that charges exorbitant rates.

Mr. Bealefeld needs to take all these factors into consideration before he agrees to a two-year contract renewal for any of the tow companies that currently enjoy exclusive rights to operate in the city. Many of the companies are big contributors to the campaigns of local lawmakers, so Mr. Bealefeld will have to tread carefully in searching for ways to restructure the city's working relationship with them without stepping on too many toes. In doing so, he can remind potential critics that it's not just the city's revenues that stand to gain from a revamped policy but the integrity of his force as well. The longer the towing business remains an invitation to corruption, the harder it will be for officers to resist the temptation.

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