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HomeMy WebLinkAbout1991-10-22 - AGENDA REPORTS - 40 ADVERTISING BUS SHELTERS (2)FITe �� t NI $ UNFINISHED BUSINESS DATE: October 22, 1991 SUBJECT: 40 ADVERTISING BUS SHELTERS DEPARTMENT: Public Works City Mana, IteWto be Dennis Limpens On September 24, 1991, Council considered a request to award a contract for the installation of 44 bus shelters and 20 bus benches at various locations throughout the City to Bustop Shelters. At the meeting, Council was presented an anonymous letter which questioned Bustop Shelters ownership, company investment practices, and the legality of signing bonuses. During its investigations, staff discovered that these allegations were sent anonymously by Gannett, Bustop Shelter's competitor to discredit Bustop Shelters. Gannett has voluntarily withdrawn its proposal to the City. Attachment I is the letter from Gannett advising of such. However, subsequent conversations with Gannett suggest they are interested in providing shelters if the City requests them to. Attached as Attachment II, is a copy of staff's background check of other cities who have contracts with Bustop Shelters - all of which are positive. Staff has checked with the City Attorney's office and finds that a signing bonus is legal and acceptable. Other cities on the background list have also accepted such bonuses. This presents a method by which the City can recover its administrative costs. Bustop Shelters does use a marketing arrangement which allows private investors to purchase bus shelters in a sale -lease back program. Attachment III describes this in greater detail. Staff has checked with the City Attorney's office and the State Department of Corporations and finds this is a permissible investment practice. The Department of Corporations also finds no claims or suits against Bustop Shelters of California, but does believe Bustop Shelters should be registered with the Securities Exchange Commission (SEC). Although Bustop Shelters is not currently registered with the SEC, this is not a violation of any security laws. Staffs concern with the shelters being leased back to investors is that if poor economic conditions forced Bustop Shelters to go out of business, the remaining shelters could potentially be left to the responsibility of 40 investors. Although the City would not be fiscally responsible to the owners, the City would be left to remedy maintenance and the sale of advertisement on the shelters with the potential 40 owners. APPROVED Agenda ftemw.*45 40 Bus Shelters October 22, 1991 Page 2 To resolve this concern, Bustop Shelters has agreed to solely own the proposed shelters located in the City of Santa Clarita. This option gives the City a firm position in solving legal or maintenance issues should Bustop Shelters chose not to stay in business. The City, in this case, would have to deal with one entity rather than many investors. Other options are available to the City and are . described on attachment IV. Staff believes the recommended option is the best value for the City. It provides the most shelters and benches, while maintaining and repairing the cities seven existing shelters. The September 24, 1991_ Agenda Report compared Bustop Shelters' proposal to Gannett's. Gannett's proposal offered $48,000 more revenue over a 10 -year period, but Bustop Shelters offered a package of more value to the City over the 10 -year period. The extra value is estimated at $215,000 and contains four optional advertisement shelters, 20 benches, the maintenance of these items and the seven shelters owned by the City with the option of placing advertising in them. Staff has estimated that it would cost the City $1,501,620 over 10 years to purchase, install and maintain the same proposal offered by Bustop Shelters. The Bustop Shelter proposal guarantees $612,000 in revenue to the City over 10 years and a total value of $858,700. See Attachment V. A copy of a draft agreement between the City and Bustop Shelters is available for review in the City Clerk's office. • •Stu ►0 1.41 Authorize the Mayor to sign a 10 -year agreement approved by the City Attorney with Bustop Shelters of California, Inc. to install and maintain 44 bus shelters and 20 benches. 2. Not allow Bustop Shelters to sale/lease back the shelters to investors. 3. Amend the Council's direction of July 11, 1989 to include advertising bus shelters to phase out bus bench advertising. ATTACHMENTS Letter from Gannett II Background Check III Description of Lease Back IV Alternative Options V Bus Shelter Cost/Benefit VI September 24, 1991 Agenda Report DEL:gmm 40SHELT G E n WMOOR REcE►vED (ti1 1 lea' . p179'. W7R,45DEF G.. f . F t: NTA C ✓F .' Ci'Y cou.. . _.. . CITY hi'dNACc"2, CIT;' D41:C October 8, 1991 :t EC. -IV The Honorable Carl Boyer, Mayor AGI 0 8 1991 and Members of the City Council Cit of Santa Clarita CITY COL-UCA City CITY OF $A.NTA CLARITA 23920 W. Valencia Boulevard, #300 Santa Clarita, CA 91355 RE: Anonymous Letter Re Bus Shelters Dear Mayor Boyer and City Council Members: During the week of September 23-27, 1991, each Council Member was sent an anonymous, undated, handwritten letter regarding the Bus Shelter Proposals. Gannett Transit has now learned this note was sent by one of its employees. The letter was not authorized, reviewed, or known by anyone in Gannett Transit, but was the unapproved act of a single individual. Attached to the anonymous note was a handwritten letter dated July 27, 1991, and signed by an "Earl Johnson"; Gannett has no knowledge of,- or information about Earl Johnson. Gannett apologizes to the City of Santa Clarita and withdraws its proposal to provide bus shelters for Santa Clarita. Ve ruly yours, RONALD W. BEA Vice President/Legal Council RWB/mlr !/ 6 Carl Boyer, Mayor �� Jill Klajic, Mayor Pro Tem Jo Anne Darcy, City Council.Member Jar} H. Heidt, City Council Member Howard "Buck" McKeon, City Council Member George Caravalho, City Manager and City Clerk Gannett OutdoorCo.,Inc.ofSouthernCalifornia \V U 1731 Workman Street Los Box les. Terminal Annex90051 Los Angeles, California 90031 GAbNM Los Angeles. California 90051-1159 (213)222-7171 ATTACHMENT H -A RANDOM CHECK OF REFERENCES LISTED BY BUSTOP SHELTERS OF CALIFORNIA Contact Person: David Moore (714) 834-5707 Comments: The County has had no problems with Bustop Shelters of California and is satisfied with the contractual agreement. Contact Person: Charles Janiel (714) 860-2489 Comments: Bustop Shelters of California has responded in a timely fashion to clean up graffiti or repair damaged shelters. The company representatives have been very responsive and cooperative. Contact Person: Marlin Dixon (714) 384-5122 Comments: The City is satisfied with the performance of Bustop Shelters of California and is currently expanding the shelter contract. City of Hesperia Contact Person: Kenneth Hubler (619) 947-1000 Comments: Initially, the city had some problems with Bustop Shelters of California; shelter sites were left in a messy state after shelter setup, traffic controls during construction of shelters were not properly followed and some shelters displayed alcohol or tobacco ads in direct violation of the. contract. Bustop Shelters has performed better as time has gone by, especially regarding clean up of graffiti and repair of damaged shelters. Contact Person: Judy Fukishima (213) 866-9771 Comments: The city has recently signed a contract with. Bustop Shelters of California and the company is in the initial stages of setting up the shelters. The city is pleased with the company's responsiveness thus far and has not encountered any problems. Contact Person: Steve Larson (714) 279-3516 Comments: Bustop Shelters has been very responsive.. The shelters are well maintained and graffiti is removed promptly. ATTACHMENT II -B RANDOM CHECK OF REFERENCES LISTED BY GANNETT TRANSIT El Segundo Contact Person: Chuck Wesley (213) 3224670 Comments: Gannett Transit defaulted on their contract with the City of El Segundo during the initial phase, but the problems were worked out and Gannett Transit has since provided good service to the city. Contact Person: Robert Meyers (213) 781-6924 Comments: Gannett Transit bought out Target Media and has provided good service to the city. Contact Person: Charles Adams (213) 485-2400 Comments: The City of Los Angeles originally had a'contract with Shelter Media but renegotiated a contract with Gannett Transit. Gannett Transit has been very responsive and has established a good working relationship with the City. City of Santa An Contact Person: Stewart Chuck (714) 565-4048 Comments: The City of Santa Ana is very happy with the responsiveness of Gannett Transit and the general maintenance of the bus shelters. Contact Person: Lennox Anunwah (213) 5285 Comments: Gannett Transit has performed well and has been very responsive to the City's needs. 40 Shelters Attachment III Staff was not able to acquired the information from Bustop shelters before the posting of tonight's agenda. Staff prefers that Bustop explain how the shelter investment system works rather than possibly describing the policy incorrectly. In respect to Santa Clarita, all shelters will be owned by Bustop shelters, outside investors will not be able to own shelters located in the City. More information on Bustop's investment procedures will be given to Council at tonight's meeting. Bustop will be available to respond to any questions. 40 Bus Shelters Attachment IV Page 1 of 2 1. Publish a new RFP for bus stop shelters POSHIVE ♦ Since no bids were received on the original RFP, staff could re -advertise and compare bid proposals rather than negotiate proposals. NEGATIVES ♦ Installation of shelters delayed.by 120 days. ♦ Possibility of no bids received again. FISCAL IMPACT ♦ Loss of potential advertising revenue (est. $7,800). 2. Develop a non -advertising shelter program whereby shelters would be owned and maintained by the City. POSITIVE ♦ Shelters would be owned and controlled by the City. ♦ Advertising is not necessary. NEGATIVE ♦ City has responsibility for repairs. ♦ City has responsibility for maintenance. ♦ City has responsibility for installation costs. ♦ Option of adding more shelters without cost eliminated. FISCAL DAPACT ♦ Net impact $1,680,600 for maintenance, purchase and loss of revenue over 10 years, approximately $168,000 per year. 3. Develop an incremental non -advertising shelter of 10 shelters per year for the next four (4) years. POSITIVE ♦ Same as Alternative two. �.VW_Krj__� ♦ Sets back the siting of needed shelters in some locations four (4) years. ♦ Same as Alternative two. 40 Bus Shelters FISCAL IMPACT Attachment IV Page 2 of 2 ♦ Saves $500,000 in maintenance costs. ♦ Net impact $1,180,600 for maintenance, purchase and loss of revenue. 4. Take no action. POSITIVE ♦ No additional cost. [WLxd:M1 V/ M ♦ Local and commuter riders will not have additional shelters. ♦ Ridership could be reduced due to lack of protection that shelters provide from weather and darkness. ♦ Complaints from residents that riders are on their property to get shade and rest. 5. Request Gannett to negotiate with City. POSITIVE ♦ If Gannett responds with same offer, City receives $48,000 more over 10 years for advertising on 40 shelters. NEGATIVE ♦ City loses additional services and 20 benches, 11 shelters and the option not to use advertising. FISCAL HAPACT ♦ No cost to City. ♦ City receives over $600,000 in advertising revenue for 40 shelters over 10 years. ♦ Loss of $246,700 in services and shelters/benches which the Bustop proposal contains. 40 Bus Shelters BUS SHELTERS COST/BENEFIT Attachment V Proposal for 40 Advertising Shelters over 10 Years BUSTOP SHELTERS GANNETT CITY Ad Revenue $ 612,000* $ 660,000 $ 0 Maint Cost/ Benefit 0 0 (705,600) Shelters 0 0 (375.000) Total 12 A-6 1.080.6001 *Includes signing bonus of $30,000 Additional Proposal by Bustop Shelters 10 years Four New Shelters $ 40,000 $ 0 ($ 37,500) 20 Benches 10,000 0 (8,720) 20 Trash cans 2,500 0 (6,040) Maint 20 benches 78,000 0 (175,200) Maint City's 7 benches 85,000 1� 23,000) Subtotal: $215,500 $0 ($350,460) Subtotal Benefit/ Cost to City $827,500 $660,000 ($1,431,060) Maint. 4 Shelters $ 31,200 $0 ($70,560) Total Benefit/ Cost to City $6¢Q ($1.501,6201 City Manager Approval Item to be presented by: UNFINISHED BUSINESS DATE: September 24, 1991 SUBJECT: CONTRACT F(JR 40 TRANSIT SHELTERS DEPARTMENT: Public Works After evaluating proposals from Shelter Concepts, Gannet Outdoor Advertising and Bustop Shelters of California, staff recommended at the August 27, 1991 Council meeting that Bustop Shelters be awarded the contract to provide 40 advertising bus stop shelters. Representatives from both Gannett and Bustop addressed the Council on the merits of their respective proposals. The Council, observing the desire of these two companies to compete with one another to provide the City advertising bus shelters directed staff to renegotiate the original proposal. After meeting with Bustop and Gannett, staff has summed the 10 year value of both proposals. and 20 Benches 163,000 0 TOTAL VALUE: $660,000 $077,5oa' During the renegotiation, Gannett stated that they were not ready to offer any more than what they had previously submitted in their original proposal, a 10 -year value of $660,000. Bustop offered ten more non -advertising bus benches during the renegotiations (value $5,000) for a total of 20 benches. Bustop's proposal would give the City a grand total of 71 stops where riders could rest on seats and have trash receptacles available. All shelter benches and trash receptacles would be made of recycled material. A break down is listed on the following page. BUS TOP NN TT Ad Revenue $582,000 $660,000 Signing Bonus 30,000 0 4 Shelters/20 Benches 50,000 0 Trash Containers/Benches 2,500 0 Maintain City's 7 Shelters and 20 Benches 163,000 0 TOTAL VALUE: $660,000 $077,5oa' During the renegotiation, Gannett stated that they were not ready to offer any more than what they had previously submitted in their original proposal, a 10 -year value of $660,000. Bustop offered ten more non -advertising bus benches during the renegotiations (value $5,000) for a total of 20 benches. Bustop's proposal would give the City a grand total of 71 stops where riders could rest on seats and have trash receptacles available. All shelter benches and trash receptacles would be made of recycled material. A break down is listed on the following page. Contract for 40 Bus Shelters Page 2 Ad Shelters 40 40 Optional Ad Shelters; City owned old 7 0 City owned new 4 0 Non -Ad Benches 20 0 TOTAL: n _4Q After meeting with both Gannett and Bustop, staff requested both to respond to specific conditions originally set in the RFP. Attachments I and II provided side by side comparisons of their responses. The Council was also addressed by a representative from Coast United Advertising relating to the above proposals. Coast outlined a proposal whereby they would place approximately 100-150 advertising bus benches. Annual guaranteed revenue from this proposal is estimated between $3,000 and $4,500. Staff recommends that the Council continue its policy set July 11, 1989 of phasing out advertising bus benches with non -advertising benches. Staff desires to amend this policy by phasing out advertising benches with bus shelters as well as non -advertising bus benches. Additionally, at the August 24, 1991 meeting, the Council directed staff to investigate the placement of more shelters in Canyon Country. Staff has spoken with representatives of this area for the assignment of more shelters. At the time of writing of this report; specific locations have not been sited, but dialogue has been initiated and staff expects to meet the needs of Canyon Country residents. A copy of the agreement approved by the City Council is on file in the Clerk's office. 1. Authorize the Mayor to sign a 10 -year agreement with Bustop Shelters of California, Inc. to install and maintain 44 bus shelters and 20 benches. 2. Amend the Council's direction of July 11, 1989 to include advertising bus shelters to phase out advertising. Bus Shelter Comparison Chart I Bus Shelter Comparison Chart II JEM:del:gmm AGENBUS 1. Quality of Proposals 2. Qualifications of Firm 3. References 4. Term of Contract 10 Year 5. Maintain City Shelters 6. Public Service Announce. 7. Preplacement Review of Advertising Copy 8. Solar 9. Recycled Materials 10. Maintenance 11. Signing Bonus 12. Free Shelters 13. Free Benches 14. Percent Revenue to City 15. Guaranteed Income to City: - Signing Bonus - 4 Free Shelters - 10 Free Benches - Free Trash Receptacles - 10 Yr. Maintenance of City -owned Shelters - 10 Year Maintenance of Free Benches - First Year - Second Year - Third Year - Fourth Year - Fifth Year - Sixth Year - Seventh Year - Eighth Year - Ninth Year Tenth Year ATTACHMENT I BUSTOP SHELTERS GANNETT OF CALIFORNIA Excellent Very Good Very Good 10 Year Yes 5% Yes Yes Yes Twice/Weekly Yes Yes Yes 18% $30,000 40,000 10,000 2,500 85,800 78,000 31,200 37,200- 43,200- 49,200-- 55,200- 61,200 1 7,200- 43,20049,200r55,200.- 61,2001 67,200- 73,200- 79,200 7,200- 73,200-79,200 v TOTAL ESTIMATED REVENUE FOR THE 10 YEAR CONTRACT: $828,300 Very Good Very Good Very Good Yes 5% No No Yes Twice/Weekly No No No 20% N/A NIA N/A N/A N/A N/A 57,600 57,600 57,600 57,600 57,600 74,400 74,400 74,400 74,400 74,400 Attachment H TERM OF CONTRACT Bustop Shelters of California would prefer a ten (10) year contract with the City, but they are willing to negotiate a five (5) year contract. Gannett Outdoor requests a minimum ten (10) year contract with the City. FREE NON -ADVERTISING BUS SHELTERS Bustop Shelters of California will give the City of Santa Clarita four free non -advertising bus shelters to be installed at locations to be determined by the City. Bustop Shelters will clean and maintain the shelters at no cost to the City and will place revenue-producing advertising in these shelters at the City's request. Gannett Outdoor has not offered free non -advertising bus shelters to the City. FREE NON -ADVERTISING BUS BENCHES Bustop Shelters of California will give the City of Santa Clarita 20 free non -advertising bus benches to be placed at locations to be determined by the City. Bustop Shelters will clean and maintain the benches at no cost to the City. Gannett Outdoor has not offered free non -advertising bus benches to the City. CITY -OWNED BUS SHELTERS Bustop Shelters of California has agreed to assume maintenance, repair, liability and advertising (if revenue-producing advertising is requested by the City) for the seven existing City -owned bus shelters. With or without advertising, this service will be free to the City. Gannett Outdoor will be willing to assume the maintenance, repair and display of advertising in the City -owned shelters at no charge as long as Gannett Outdoor has an opportunity to sell advertising on these shelters. Bustop Shelters of California will install additional bus shelters, beyond the 40 shelters agreed to in the contract, as requested by the City. ' Gannett Outdoor would be willing to negotiate additional shelter sites only after they have performed.' t ;' Daily Effective Circulation STudies for each respective location requested by the City. s PREPARATION OF PUBLIC SERVICE ADVERTISEMENTS FOR THE CITY r Bustop Shelters of California will aid the City in preparing public service announcements to be posted ' in the bus shelters. e1 Y Gannett Outdoor has indicated they cannot provide this service. �'