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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Andrea Packer, Communications Director |
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PRESENTER(S): |
Andrea Packer, Communications Director |
TITLE:
title
Change Order: Advertising Services Extension (Lamar Transit Advertising)
end
AGENDA ITEM TYPE:
Procurement Contract/Change Order
RECOMMENDATION:
Authorize the Executive Director to extend the contract with Lamar Advertising for one year and set the Minimum Annual Guarantee at $2,322,000. This action represents the third and final of three option years available per the original contract.
BACKGROUND:
Lamar Transit Advertising was procured in 2013 through a full RFP procurement process. It is a seven-year contract, with up to three option years available. Lamar Transit Advertising was unanimously chosen by the selection committee due to their experience and their financial proposal. The first option year extension was approved by the board of trustees on August 5, 2020.
DISCUSSION:
Lamar is a highly experienced national advertising company, and their performance has been exemplary during the term of their contract. They have been a great partner with UTA.
On July 28, 2021, the UTA Board of Trustees approved the execution of the second option year available on the contract. The terms of the second option year, which expires August 31, 2022, reflected the COVID-19 pandemic’s significant impact on advertising sales. In the first option year (through August 31, 2020) Lamar requested financial relief, but in the second option year, tracking the rebounding of advertising sales, the MAG was almost fully restored from $1,080,000 to $2,160,000. These terms were reviewed and agreed upon by staff. The terms included a mid-year review of advertising sales to gauge any improvement in economic conditions as the community continued to emerge from the pandemic.
Staff is now recommending the execution of the third option year. The mid-year review was completed by Lamar and provided to UTA, with the recommendation to adjust - and improve - the financial terms for this option year.
The terms of the third option year contract extension are as follows:
- Initiate one-year contract extension with modified terms beginning September 1, 2022, through August 31, 2023.
- Set the annual Minimum Annual Guarantee at $2,322,000.
- Continue the full annual prepayment of the MAG in lieu of monthly installments.
- Continue the annual true-up of the contracted 65% revenue share.
As this is the last option year available on the contract, staff will be implementing an RFP process in the coming year.
CONTRACT SUMMARY:
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Contractor Name: |
Lamar Transit Advertising |
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Contract Number: |
UT13-014GL-3 |
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Base Contract Effective Dates: |
September 1, 2013 - August 31, 2020 with three one-year options. |
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Extended Contract Dates: |
September 1, 2022 - August 31, 2023 |
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Existing Contract Value: |
$19,690,000 |
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Amendment Amount: |
$2,322,000 |
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New/Total Contract Value: |
$22,012,000 |
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Procurement Method: |
RFP selection process |
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Budget Authority: |
UTA funds |
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ALTERNATIVES:
Should UTA not move forward with the contract extension a new procurement process would need to be undertaken. This process would take several months, during ongoing economic uncertainties, which would likely result in proposals with reduced revenues over the long-term.
FISCAL IMPACT:
The recommended MAG of $2,322,000 is $328,000 below the original MAG that would have been achieved in Contract Year 10. But has significantly increased during the pandemic and reflects the economic conditions in the advertising industry.
ATTACHMENTS:
-Contract extension document