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This page contains a summary of calendar item 15 of the SFMTA Board meeting of September 4, 2007.
SUMMARY OF TRANSIT SHELTER CONTRACT:
- The City entered into an Advertising Transit Shelter Agreement in 1987 with a term of 15 years. The Agreement was extended twice by the City, to December 9, 2007.
- On January 16, 2007, the SFMTA Board adopted Resolution No. 07-011, authorizing a Request for Proposals (“RFP”) for a new Advertising Transit Shelter Agreement. The SFMTA issued the RFP on February 1, 2007, and received three proposals.
- After a thorough evaluation process, Clear Channel Outdoor, Inc. (“Clear Channel”) emerged as the highest-ranked proposer. On June 19, 2007, the SFMTA Board adopted Resolution No. 07-097, which authorized the Executive Director/CEO to begin negotiations for a new Transit Shelter Advertising Agreement with Clear Channel.
- The SFMTA has received extensive input from the public on the proposed transit shelter designs, including 1,025 completed public comment forms. These comments will be considered in the SFMTA’s final decisions on designs.
- The final designs must be approved by the Arts Commission. SFMTA and Clear Channel are working closely with the Arts Commission to ensure that design approval is received by March 2008.
- If approved by the SFMTA Board, the Agreement will be submitted to the Port Commission and the Board of Supervisors for final approval.
Negotiations have been completed and the main provisions of the Agreement, which is attached (Calendar item 15, version 6 accessible PDF, 1.2 meg), are as follows:
Structures and Construction:
- All approximately 1,100 existing shelters and 39 kiosks must be replaced with new shelters and kiosks no later than six years from the Agreement effective date; however Clear Channel is required to install at least five new Shelters within 12 months from the date the designs are approved by the Arts Commission.
- During the term of the Agreement Clear Channel may install an additional 400 shelters and 111 kiosks with the approval of SFMTA and the required permits from DPW.
- Shelters will include technology to allow visually impaired persons to hear the NextMuni information, a beacon for waiting passengers to notify approaching transit vehicles, recycled and sustainable materials, solar power, and the most technologically advanced materials available to deter or withstand graffiti.
- Clear Channel will provide alternative shelters if requested. For example, there have been requests by the public to place benches at certain stops rather than a full shelter. Also, many locations do not have adequate space for a full shelter.
- Clear Channel will install 3,000 bus poles with solar-powered signs at transit stops where there are no shelters within seven years from the date the designs are approved by the Arts Commission.
- Clear Channel will provide up to 1,500 covers for signal control equipment.
- Clear Channel will provide a construction schedule to be approved by the SFMTA. The priorities to be considered in constructing shelters and other structures are the volume of passenger boardings from each shelter, efficiency of construction, and distribution throughout the areas of the City.
- Clear Channel will be responsible for removing the current NextBus equipment and placing them on the new shelters.
- Clear Channel will provide quality control and quality assurance staff during construction and seek SFMTA’s approval for construction activities during peak service periods.
Maintenance Services:
- Clear Channel must inspect each shelter and kiosk at least twice per week, except shelters and kiosks on Market Street, which must be inspected at least three times per week. In the course of each inspection of a shelter or kiosk, Clear Channel is required to remove all graffiti, stickers, posters, litter, dust, dirt, and weeds from each shelter or kiosk, and from a five-foot radius surrounding the structure, exclusive of private property and rail right-of-way.
- The Agreement requires Clear Channel to make daily inspections of all platforms and pick-up trash, remove graffiti, clean and wash each boarding platform; inspect LED signs and lighting fixtures, and replace defective lights.
- SFMTA may also request that Clear Channel extend the twice per week inspection to three times per week for the Union Square/Tenderloin Area (bounded by Market Street, Sutter Street, Polk Street, and Grant Avenue) shelters for an additional amount.
- Clear Channel will perform maintenance twice a week and repairs to low-level boarding platforms (with or without Shelters) for an annual rate of $300,000, to be deducted from payments to the SFMTA.
- Within 24 hours of notification, Clear Channel must repair, replace or remove as appropriate any damage to a structure that is of a hazardous nature (e.g., broken glass) or any damages to light sources.
- Clear Channel must maintain a web-accessible database to SFMTA staff and the public designating (a) the location, design, and features of each structure; (b) all inspection, cleaning and maintenance activities required to be performed under the Agreement and (c) any complaints about or reports of required maintenance and repairs, as well as the status of each complaint or report.
Rights Granted and Ownership:
- Clear Channel will have the exclusive right to sell print advertising on transit shelters and kiosks, including on property under the jurisdiction of the Port, subject to the provisions of SFMTA’s advertising policy.
- The Agreement allows for the expansion of transit shelters for new jurisdictions during the term of the Agreement (e.g., Presidio, Treasure Island), subject to an authorizing agreement between the SFMTA and the relevant public entity.
- The Agreement ensures that Clear Channel’s rights are incidental to the SFMTA’s transportation services, which may undergo changes affecting the advertising rights granted.
- SFMTA will transfer title of the existing shelters and kiosks to be purchased from CBS Outdoor to Clear Channel. Clear Channel will own the shelters and kiosks that they construct during the Agreement. SFMTA retains ownership of any other structures covered under the Agreement (e.g. platforms, transit poles).
- The Agreement allows for experimental advertisements on a limited basis, subject to the prior approval of the SFMTA.
Term and Payments:
- The Agreement is for a 15-year term, with one five-year option to extend the Agreement.
- Clear Channel will pay $5,000,000 upon execution of the Agreement.
- Additionally, Clear Channel will make annual payments of $500,000 in administrative fees, $200,000 in marketing fees, and $265,000 for the Arts Commission. All these fees will escalate annually according to the Bay Area CPI.
- The negotiated Agreement includes two Minimum Annual Guarantee (MAG) payments, depending on Clear Channel's total annual gross revenues from the contract:
* Assumes exercise of option to extend Agreement for five years.
Fiscal Year |
Annual Gross Revenue |
MAG if
Annual Gross Revenues Reached |
MAG if
Annual Gross Revenues Not Reached |
2007-08 |
$ 21,000,000 |
$ 10,318,000 |
$ 6,909,000 |
2008-09 |
$ 23,000,000 |
$ 11,553,000 |
$ 7,614,000 |
2009-10 |
$ 25,000,000 |
$ 12,607,000 |
$ 8,232,000 |
2010-11 |
$ 27,000,000 |
$ 13,237,000 |
$ 8,644,000 |
2011-12 |
$ 29,000,000 |
$ 13,899,000 |
$ 9,076,000 |
2012-13 |
$ 31,000,000 |
$ 14,595,000 |
$ 11,812,000 |
2013-14 |
$ 33,000,000 |
$ 15,324,000 |
$ 12,339,000 |
2014-15 |
$ 35,000,000 |
$ 16,090,000 |
$ 12,893,000 |
2015-16 |
$ 34,000,000 |
$ 16,895,000 |
$ 13,474,000 |
2016-17 |
$ 36,000,000 |
$ 17,739,000 |
$ 14,084,000 |
2017-18 |
$ 38,000,000 |
$ 18,626,000 |
$ 15,577,000 |
2018-19 |
$ 41,000,000 |
$ 19,558,000 |
$ 16,293,000 |
2019-20 |
$ 42,000,000 |
$ 20,536,000 |
$ 17,044,000 |
2020-21 |
$ 44,000,000 |
$ 21,563,000 |
$ 17,834,000 |
2021-22 |
$ 46,000,000 |
$ 22,640,000 |
$ 18,661,000 |
2022-23* |
$ 48,000,000 |
$ 24,637,000* |
$ 21,082,000 |
2023-24* |
$ 50,000,000 |
$ 25,869,000* |
$ 22,073,000 |
2024-25* |
$ 53,000,000 |
$ 27,162,000* |
$ 23,114,000 |
2025-26* |
$ 56,000,000 |
$ 28,521,000* |
$ 24,207,000 |
2026-27* |
$ 59,000,000 |
$ 29,946,000* |
$ 25,353,000 |
Total |
|
$ 381,315,000 |
$ 306,315,000 |
- Late payments are subject to compounded daily interest at the prime rate plus three percent.
- By September 1 of each year, Contractor will provide the SFMTA with information regarding the total amount of Gross Revenues the Contractor received for the previous fiscal year. If the total required payments (MAG plus other payments) made to the SFMTA for the fiscal year are less than 55% of the Gross Revenues received by the Contractor, the Contractor will pay the difference to the SFMTA. In years 15 through 20, the SFMTA will receive the greater of the MAG plus other required payments and 57% of the Gross Revenues.
- If during the term of the Agreement the number of commercial shelters (including displays on high-level platforms) and kiosks decreases below 770 for at least 90 days, then the MAG payment would be decreased according to whether the loss was in Zone 1 (downtown and the northern part of the City) or Zone 2 (the western and southern part of the City) based upon a per shelter amount. The SFMTA would be able to designate another site for the commercial shelter or kiosk in order to avoid a decrease in the MAG.
- Late payments are subject to compounded daily interest at the prime rate plus three percent.
Other Programs under the Agreement:
- The Agreement also requires Clear Channel to provide a Bicycle-Sharing Program at SFMTA request, details of which will be negotiated in an amendment to the Agreement.
- At SFMTA's request, Clear Channel will design and provide canopies over the subway entrances, subject to BART and various City approvals. Details of this program will be negotiated in an amendment to the Agreement
SBE Goal
- Clear Channel has voluntarily committed to maintaining an SBE goal of 15% of the supplies and services, including construction services, to be subcontracted by Clear Channel.
Performance; Security Deposits:
- The Agreement contains liquidated damages provisions should Clear Channel fail to perform its obligations. Liquidated damages may be imposed for maintenance breaches, construction schedule breaches, failure to submit an annual financial report, failure to remove shelters and kiosks when requested by the City, and failure to cure audit deficiencies.
- Clear Channel is also required to provide a performance bond and letter of credit in the following amounts:
- A performance bond of $10,000,000 for the first 15 years of the contract, increased to $20,000,000 for the last five years if the five year extension option is exercised by the City; and
- A $2,000,000 letter of credit renewed each year of the Agreement.
Termination of Contract:
- If the contract is terminated for convenience, or at the expiration of the term, the SFMTA may either order that the shelters and kiosks be removed and that the sidewalks be restored, or the SFMTA may purchase the shelters and kiosks at their depreciated value – the costs of fabricating and installing them, less depreciation at an annual rate of 10%.
- If the contract is terminated for default, the SFMTA may purchase the shelters and kiosks at under a formula based on the date of termination. If the date of termination is within five years of the effective date of the contract, the SFMTA would pay 25% of the cost of the shelters and kiosks, less depreciation; if the termination occurs more than five years from the effective date, the SFMTA would pay 50% of the cost of the shelters and kiosks, less depreciation. SFMTA would also be assigned all outstanding advertising contracts.
Design Approval Process
- The final transit shelter and kiosk designs must be approved by the Arts Commission. Any new designs on property under Port jurisdiction are subject to the approval of the Port Commission.
- The Arts Commission approval process for the transit shelters will involve obtaining the approval of the Civic Design Review Committee, followed by final approval by the full Arts Commission by March 2008. The first meeting of the Civic Design Review Committee will be in September.
- The SFMTA has an agreement with CBS Outdoor to purchase the existing shelters, kiosks, and associated spare parts for $3,500,000.
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