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By JEREMY OLSHAN Transit Reporter

June 23, 2006 -- Taxi medallions set a record yesterday - with two of them going for $554,157.50 each at a city auction.

A total of 254 medallions - which have to be used on hybrid taxis - were up for sale and took in a total of $116.2 million.

But more important, officials said, the sale is a first step toward cleaning up the emissions of the city's fleet of 13,000 cabs by increasing the number of fuel-efficient taxis from 27 to 281.

"Today, New York City's yellow-taxicab fleet has become cleaner and greener," Taxi and Limousine Commission Chairman Matthew Daus said.

"Drivers greatly appreciate the increased fuel economy, and passengers appreciate a more environmentally conscious mode of transportation."

The auction also proved that taxi medallions continue to outpace the stock market, real estate and virtually every other investment, offering average returns of more than 12 percent each year - and that's before the cabs even start picking up passengers.

Yesterday's auction was divided into two parts, in order to maintain the ratio of fleet to driver-owned cabs.

Medallions for fleet cabs went for an average of $514,327.81, with the lowest winning bid just over half a million dollars.

Individually owned medallions went for an average of $403,613.98. The highest bid was $425,101 and the lowest-bidding winner paid $390,099 - figures that baffled some experts and longtime drivers.

"Holy cannoli," said Cliff Adler, who has been driving his taxi for 32 years. "The prices are really getting out of hand."

Adler paid $105,000 for his medallion - some 20 years ago. Like many drivers, he's also concerned about the added competition.

"They're allowing too many on the road," he said. "It just makes drivers more and more hungry and it makes it harder to make a living."

Transportation consultant Bruce Schaller disagreed, and said he believes the city should add more capacity.

But he contends the prices of the medallions may be artificially inflated by how infrequently they are sold.

"Far fewer change hands each year," he said.

The city had not held a medallion sale for more than 50 years prior to 1996.

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