HomeMy WebLinkAboutPW Transit Shelter Advertising AgreementSAN RAFAEL Agenda Item No: 44.
THE CITY WITH A MISSION Meeting Date: May 1, 2017
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Public Works
Prepared by: Bill Guerin City Manager Approval:
Director of Public Works
File No.: 18.10.08
TOPIC: ADVERTISING TRANSIT SHELTER AGREEMENT
SUBJECT: ADOPT A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AUTHORIZING
THE CITY MANAGER TO EXECUTE AN AMENDMENT TO THE ADVERTISING TRANSIT
SHELTER AGREEMENT WITH OUTFRONT MEDIA LLC EXTENDING THE TERM BY FIVE YEARS
AND MODIFYING PAYMENT TERMS
RECOMMENDATION: Staff recommends that the City Council adopt the resolution authorizing the City
Manager to amend the existing contract for transit shelter advertising and maintenance services with
Outfront Media, Inc. and extend the term by five years.
BACKGROUND: On September 7, 1993, the City entered into an Advertising Transit Shelter Agreement
with Gannett Outdoor Co. for a term of 15 years, commencing on the date the first shelter was put into
operation. In the original agreement, in exchange for "the exclusive right to erect and maintain
advertising transit shelters on City property" the Contractor agreed to pay a portion of its advertising
revenue to the City of San Rafael. This amount was originally specified in 1993 as the greater of $90 per
shelter per month or 18% of advertising revenue.
Since then, Gannett was succeeded by Outdoor Systems then by CBS Outdoor, and now by Outfront
Media, the current contractor. The original 15 -year agreement expired in 2008; however, the City and
the Contractor continued to operate under the terms of the original 1993 agreement until the
agreement was formally amended and approved by City Council on November 21, 2011; raising the
payment to the City to $150 per shelter per month. Six months later, on May 7, 2012, Public Works
returned to Council to reduce the payment terms in the 2011 agreement from $150 to $126 per shelter
(or 25% of gross revenues, whichever was greater), citing the recession and resulting financial hardship
impeding the company's ability to make the higher payments. This last amendment to the agreement is
set to expire on May 7, 2017.
FOR CITY CLERK ONLY
File No.: 4-10-271
Council Meeting: 05/01/2017
Disposition: Resolution 14317
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
While the 2012 agreement has stated that Outfront Media shall make payments to the City equal to the
greater of $126 per shelter per month (adjusted annually for inflation based on CPI) or 25% of
advertising revenue, historically, Outfront Media and its predecessors have always employed the former
method in annual compensation paid to the City. Since 2012, the City has collected $46,872 (31 shelters
x $126 x 12 months) in revenue from the agreement on an annual basis, with an adjustment to the $126
rate based on inflation.
It is important to note that in addition to managing advertising services on San Rafael's bus shelters,
Outfront Media also incurs the cost of erecting and maintaining the bus shelters. Under the current
terms of the agreement, Outfront Media maintains the shelters on a weekly basis, or more often if
necessary to keep shelters and the surrounding area free of litter, graffiti, posters and debris. Shelters
are high pressure washed once a month. Importantly, Outfront Media is also responsible for the cost of
repair to any damages to the shelters, including responding to any dangerous conditions within 24 hours
of notice. There is a telephone contact number posted in all City bus shelters for purposes of
notification.
Public Works staff have reported that Outfront Media and its predecessors have consistently maintained
bus shelters in a highly satisfactory manner as described above. The City has received minimal
complaints, and Outfront Media has responded to damages and hazards reported in shelters within 24
hours. Bus shelters have been an important and enhanced service the City has been able to provide to
transit riders, and one that the City likely would not be able to afford to maintain were it not for the
partnership with Outfront Media.
Additionally, under the current agreement, the City is allowed use of unsold bus shelter advertising
space, at no charge to the City. The agreement outlines that Outfront Media shall give the City 30 days'
notice when unsold space becomes available, and will post City messages at no cost. This is an enhanced
and free service for the City to utilize in communicating with the public.
ANALYSIS: Due to the upcoming expiration date of the agreement of May 7, 2017, the City Council is
being asked to extend and amend the current agreement with Outfront Media for another 5 year term,
with the option to extend for another 5 year period on the same terms by written agreement of the
parties.
Outfront Media has reported that advertisement business within the entire advertising industry has
declined significantly since the agreement with City was last amended, and they cannot afford to
continue to provide maintenance services at the existing level while making a guaranteed annual
minimum payment to the City at the existing rate. For the last several years, Outfront Media has
experienced financial loss maintaining San Rafael's shelters, as maintenance costs and the payment to
the City have outpaced advertising revenues. Therefore, in renewal of the contract for another 5 year
term, and to ensure we can continue to provide transit riders with well-maintained bus shelters, City
staff and Outfront media propose to eliminate the provision which provides that the City will be paid the
greater of the monthly payment of $126 per shelter or 25% of gross advertising revenue received; and
replace it with a provision which states solely that the City will receive 25% of gross revenue received.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
Under a 25% of revenue payment model, the City anticipates that it will receive payments totaling
between $25,000 and $35,000 annually. Outfront Media has reported that gross revenues from 2014-
2016 have ranged from $89,060 to $134,332.
Changing over to a solely percentage -based model would likely mean a $10,000-$25,000 decrease in
revenues to the City. However, other cities throughout the region which partner with Outfront Media
for their bus shelter maintenance services, including most recently the City of Concord, have shifted
over to the percentage -based model; acknowledging that the cost and duty to maintain the shelters, in
addition to committing to a minimum annual payment of $46,872, can cause the contractor financial
loss. The maintenance costs for the advertising bus shelters in San Rafael is estimated at $90,000 per
year, and as described above, are fully incurred by Outfront Media under the current agreement. Were
it not for the current agreement, the Department of Public Works would have to incur the costs of
cleaning and maintaining the existing shelters, including maintaining a 24 hour response to unsafe
conditions and graffiti removal. Additionally, since Outfront Media owns the transit shelters for the term
of the current agreement; were the City to end the current agreement, San Rafael transit riders may be
left without bus shelters if the City cannot afford to take ownership of and maintain the shelters.
FISCAL IMPACT: Revenues will likely decrease $10,000-$25,000 per year under the amended
agreement.
OPTIONS:
1. Approve the resolution authorizing the City Manager to execute an amendment to the
Agreement with Outfront Media Inc. to eliminate the minimum monthly payment of $126 per
shelter per month, and establish the new monthly payment as 25% of gross advertising
revenues. The new agreement will be set for a 5 year term, with the option to extend for
another 5 year period on the same terms by the written agreement of the parties, subject to
the written approval of the City Manager.
2. Direct the Department of Public Works to develop an RFP and request proposals from
operators to provide new, or purchase the existing bus shelters and operate and maintain the
shelters for the City through revenue generated from advertising. Outfront Media would likely
be the successful offeror because they own the existing shelters but their proposal may not
match the existing negotiated agreement recommended in 1 above.
3. Do not authorize the amendment described above. Direct the Department of Public Works to
take possession of the shelters from Outfront Media and provide maintenance of the existing
bus shelters, as well as manage the advertising on the shelters (should Council pursue additional
revenues from that service). This option will place a burden on the Department of Public Works
and cause the City to incur shelter maintenance costs.
ACTION REQUIRED: Adopt Resolution and authorize the City Manager to execute an amendment to the
Agreement.
ATTACHMENTS:
1. Resolution
2. Exhibit A to Resolution —Amendment to Agreement
3. Letter from Outfront Media LLC
RESOLUTION NO. 14317
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AMENDMENT TO THE ADVERTISING TRANSIT SHELTER AGREEMENT WITH
SUCCESSOR IN INTEREST OUTFRONT MEDIA LLC.
WHEREAS, the parties entered into an Advertising Transit Shelter Agreement, dated
September 7, 1993 ("Agreement"), under which CONTRACTOR assumed the obligation to
install and maintain transit shelters in the CITY's right-of-way, on which CONTRACTOR could
place advertising in exchange for compensation paid to the CITY; and
WHEREAS, Outfront Media LLC, the CONTRACTOR, is the successor in interest to
CBS Outdoor, Inc, which was previously the successor to Outdoor Systems, Inc, which was the
successor in interest to the original contractor, Combined Communications Corp. dba Gannett
Outdoor Co. of Northern California; and
WHEREAS, on May 7, 2012, the parties agreed to an Amendment of the Agreement to
amend Paragraph II (Duration of the Contract) to provide for an extension of the term of the
Agreement for an additional period of 5 years through May 6, 2017, with an option for renewal
for another 5 years, under the terms of the original 1993 Agreement, except for a revision to
Paragraph V (Payment) to provide for the payment of $126 per shelter per month (adjusted
annually by CPI change) or 25% of gross advertising revenues, whichever was greater; and
WHEREAS, the parties wish to amend Paragraph II (Duration of Contract) of the
Agreement to extend the term for an additional period of 5 years, May 7, 2017 through May 6,
2022 and, by written agreement of both parties, for another 5 year period on the same terms,
subject to the written approval of the City Manager; and
WHEREAS, the CONTRACTOR has demonstrated to the City that the guaranteed
payment to the CITY of $126 per shelter per month, along with the costs of maintaining the
shelters, has resulted in financial hardship for the CONTRACTOR; and
WHEREAS, the CONTRACTOR has performed regular and satisfactory maintenance
and upkeep to transit shelters located within the City Right of Way, providing enhanced service
for San Rafael transit riders; and
WHEREAS, the parties wish to amend Paragraph V (Payment) of the Agreement to
change the amount paid to the CITY by the CONTRACTOR to be Twenty Five (25) percent of
the gross advertising revenue; and
WHEREAS, the parties wish to amend Paragraph XII (Notice) of the Agreement to
revise the recipients of notices as follows:
CITY: City Manager
City of San Rafael
14005 th Street
San Rafael, CA 94901
CONTRACTOR: Outfront Media LLC
450 Lexington Ave.
New York, NY 10174
WHEREAS, all other terms and conditions of the Agreement shall remain unchanged
and in full force and effect for the term of this Agreement, as amended.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL
resolves that it approves and authorizes the City Manager to execute the Amendment to the
Advertising Transit Shelter Agreement, attached hereto as Exhibit A, and by this reference made
a part hereof, subject to approval as to form by the City Attorney .
I, ESTHER BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing
Resolution was duly and regularly introduced and adopted at a regular meeting of the City
Council of said City held on Monday, the 1St day of May, 2017 by the following vote, to wit:
AYES: COUNCILMEMBERS: Bushey, Colin, Gamblin, McCullough & Mayor Phillips
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
- 'e- 'C&w -
ESTHER BEIRNE, City Clerk
SECOND AMENDMENT TO ADVERTISING TRANSIT SHELTER AGREEMENT
This Second Ame dment to Advertising Transit Shelter Agreement (the "Amendment") is made
and entered into this 291ay of May, 2017, by and between the CITY OF SAN RAFAEL ("CITY") and
Outfront Media LLC, f/k/a CBS Outdoor, Inc, f/k/a Outdoor Systems, Inc., which was successor in interest
to the original contractor, Combined Communications Corp. dba Gannett Outdoor Co. of Northern
California ("CONTRACTOR").
RECITALS
WHEREAS, CONTRACTOR and the CITY are parties to that certain Advertising Transit
Shelter Agreement, dated September 7, 1993 under which CONTRACTOR assumed the obligation to
install and maintain transit shelters in the CITY's right-of-way, on which CONTRACTOR could place
advertising in exchange for compensation paid to the CITY, ; and
WHEREAS, Outfront Media LLC the CONTRACTOR, is the successor in interest to CBS
Outdoor, Inc, which was the successor to Outdoor Systems, Inc, which was the successor in interest to
the original contractor, Combined Communications Corp. dba Gannett Outdoor Co. of Northern
California; and
WHEREAS, the parties agreed to an amendment dated May 7, 2012 extending the Term for an
additional period of 5 years through May 7, 2017, with an option for renewal for another five (5) years
(together, the "Agreement"); and
WHEREAS, the parties now wish to amend Paragraph II (Duration of Contract) of the
Agreement to extend the Term for an additional period of five (5) years from May 7, 2017 through
May 6, 2022 and to permit, by written agreement of both parties, a renewal of the Agreement for
another subsequent five (5) year period on the same terms as set forth herein, subject to the written
approval of the City Manager; and
WHEREAS, the CONTRACTOR has demonstrated to the City that the guaranteed payment to
the CI'T'Y of $126 per shelter per month, along with the costs of maintaining the shelters, has resulted
in financial hardship for the CONTRACTOR; and
WHEREAS, the CONTRACTOR has performed regular and satisfactory maintenance and
upkeep to transit shelters located within the City Right of Way, providing enhanced service for San
Rafael transit riders; and
WHEREAS, the parties wish to amend Paragraph V (Payment) of the Agreement to change
the amount paid to the CITY by the CONTRACTOR to be Twenty Five (25) percent of the gross
advertising revenue; and
WHEREAS, the parties wish to amend Paragraph XII (Notice) of the original Agreement to
revise the recipients of notices as follows:
CITY: City Manager
City of San Rafael
1400 5`h Avenue
San Rafael, CA 94901
1
CONTRACTOR: Outfront Media LLC
450 Lexington Ave.
New York, NY 10174
WHEREAS, all other terms and conditions of the Agreement shall remain unchanged and in
full force and effect for the term of this Agreement, as amended.
AMENDMENT TO AGREEMENT
NOW THEREFORE, the parties agree as follows:
Paragraph II (Duration of the Contract) of the Agreement is amended to read:
"This Agreement will be extended for a five (5) year period commencing
May 7, 2017 through May 6, 2022, and may be extended for another subsequent
five (5) year period on the same terms and conditions set forth herein by the written
agreement of the parties, subject to the written approval of the City Manager."
2. Paragraph V (Payment) of the Agreement is hereby deleted in its entirety and replaced with
the following:
"CONTRACTOR will pay CITY twenty-five percent (25%) of the gross advertising
revenue (gross sales minus agency commission) received by CONTRACTOR from the sale of advertising
on the advertising transit shelters per month. CONTRACTOR will provide CITY with a written monthly
accounting of the gross advertising revenue received from the sale of advertising on the advertising transit
shelters and the payment owed to CITY. CONTRACTOR will submit the required payment to CITY
within thirty (30) days following the conclusion of each month. No minimum flat fee or other amount shall
be payable by CONTRACTOR in connection with the advertising transit shelters."
3. Paragraph XII (Notice) of the Agreement is amended to revise the recipients of notices as
follows:
CITY: City Manager
City of San Rafael
1400 5t' Avenue
San Rafael, CA 94901
Contractor: Outfront Media LLC
450 Lexington Ave.
New York, NY 10174
4. All other terms and conditions of the Agreement shall remain unchanged and in full force
and effect for the term of this Agreement as amended.
17
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day, month and
year first hereinabove written. �
CITY OF SAN RAFAEL:
Jim SchutCit Manager
ATTEST:
f2 eg+ G -
Esther C. Beirne, City Clerk
APPROVED AS TO FORM:
C - lei
Robert F. Epstein, City Att ey
3
LLC:
Printed Officel Name: Richard Ament
Title: SVP Business Development
and,
Pripted(0 icer Name: drew R. Sriubas
J
Title: E `Strategi lanning & Development
CONTRACT ROUTING FORM
INSTRUCTIONS: Use this cover sheet to circulate all contracts for review and approval in the order shown below.
TO BE COMPLETED BY INITIATING DEPARTMENT PROJECT MANAGER:
Contracting Department: Public Works
Project Manager: Talia Smith
Extension: 3354
Contractor Name: Outfront Media
Contractor's Contact: Frank Sandusky
Contact's Email: frank.sandusky@outfrontmedia.com
❑ FPPC: Check if Contractor/Consultant must file Form 700
Step
RESPONSIBLE
DESCRIPTION
COMPLETED
REVIEWER
Date of Council approval
DEPARTMENT
DATE
Check/Initial
1
Project Manager
a. Email PINS Introductory Notice to Contractor
5/1/2017
NLG
TS
Attorney with printed copy of this routing form
4/18/2017
b. Email contract (in Word) & attachments to City
6 City Attorney
Review and approve hard copy of signed
S�221 �I
Atty c/o Laraine.Gittens@cityofsanrafael.org
NTS
2
City Attorney
a. Review, revise, and comment on draft agreement
Click here to
and return to Project Manager
enter a date.
® TS
8 City Manager/ Mayor
Agreement executed by Council authorized official
b. Confirm insurance requirements, create Job on
Click here to
9 City Clerk
Attest signatures, retains original agreement and
PINS, send PINS insurance notice to contractor
enter a date.
M _LG_
3
Project Manager
Forward three (3) originals of final agreement to
5/1/2017
NTS
contractor for their signature
4
Project Manager
When necessary, * contractor -signed agreement
❑ N/A
agendized for Council approval
*PSA > $20,000; or Purchase > $35,000; or
Or
NTS
Public Works Contract > $125,000
5/1/2017
Date of Council approval
PRINT
CONTINUE ROUTING PROCESS WITH HARD COPY
5 Project Manager
Forward signed original agreements to City
5/15/17
TS
Attorney with printed copy of this routing form
Hard copy sent
5/22/17
6 City Attorney
Review and approve hard copy of signed
S�221 �I
agreement
7 City Attorney
Review and approve insurance in PINS, and bonds
(for Public Works Contracts)
8 City Manager/ Mayor
Agreement executed by Council authorized official
L 71_l/> 17AV
9 City Clerk
Attest signatures, retains original agreement and
forwards copies to Project Manager
,A
as
0UTFR0NT-1w*%-b
media
Talia Smith
Senior Management Analyst
City of San Rafael
Department of Public Works
April 18, 2017
Dear Talia:
Outfront Media Group LLC. Is pleased to advise you that all of necessary approvals are in place in order to move forward
with our agreement based on the following criteria:
1. Effective Date of May 1, 2017 or as soon as practical after approval by the City of San Rafael
2. Five (5) year term
3. Revenue of 25% of net revenue collected will be paid to the City of San Rafael.
All of the other terms from the original agreement will remain in effect.
Sincerely,
Frank Sandusky
VP Business Development Western US
Direct: 657.221.2762 Cell 714.325.5679
2100 W.Orangewood Ave. Suite 160
Orange, CA 92868
OUTFRONTmedia.com
ROUTING SLIP / APPROVAL FORM
INSTRUCTIONS: Use this cover sheet with each submittal of a staff report before approval
by the City Council. Save staff report (including this cover sheet) along
with all related attachments in the Team Drive (T:) --> CITY COUNCIL
AGENDA ITEMS 4 AGENDA ITEM APPROVAL PROCESS 4 [DEPT -
AGENDA TOPIC]
Agenda Item #
Date of Meeting: 5/1/2017
From: Bill Guerin
Department: Public Works
Date: 4/21/2017
Topic: ADVERTISING TRANSIT SHELTER AGREEMENT
Subject: ADOPT A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
RAFAEL AUTHORIZING THE CITY MANAGER TO EXECUTE AN AMENDMENT TO THE
ADVERTISING TRANSIT SHELTER AGREEMENT WITH OUTFRONT MEDIA LLC.
EXTENDING THE TERM BY FIVE YEARS AND MODIFYING PAYMENT TERMS
Type: ® Resolution ❑ Ordinance
❑ Professional Services Agreement ❑ Other: Staff Report
APPROVALS
® Finance Director
Remarks: Approved -Van Bach
® City Attorney
Remarks: Approved with recommended changes to Staff Report, Resolution and Agreement.
ETD. 4/24/17
® Author, review and accept City Attorney / Finance changes
Remarks: Accepted changes - TS
® City Manager
Remarks:
FOR CITY CLERK ONLY
File No.:
Council Meeting:
Disposition: