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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Heather Barnum, Chief Communications Officer |
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PRESENTER(S): |
Heather Barnum, Chief Communications Officer |
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Neal Gatherum, Lamar Transit Advertising (vendor) |
TITLE:
title
Revenue Contract: Transit Vehicle Commercial Advertising (Lamar Transit Advertising)
end
AGENDA ITEM TYPE:
Procurement Contract/Change Order
RECOMMENDATION:
Approve and authorize the Executive Director to execute the five-year base contract and associated disbursements with Lamar Transit Advertising for Transit Vehicle Commercial Advertising Services with a guaranteed annual revenue to UTA of at least $2,175,000. Approval of option years will require future board approval.
BACKGROUND:
Board of Trustees and UTA policy allow for the selling of space, printing, and installation of third-party advertising on bus and light rail (exterior and interior), and commuter rail (interior) fleet as a source of revenue for operations. This contract went through a competitive bid with the incumbent vendor, Lamar Advertising, being selected. Lamar is a long-standing partner of UTA and provides transit advertising services to hundreds of transit agencies across the country.
DISCUSSION:
The contract is for five years with three additional one-year option periods, not exceeding eight years total. The contract includes a projected revenue to UTA of $18,100,000 over eight years, which accounts for 68 percent of the sales by Lamar. Minimum annual guaranteed revenue begins at $2,175,000 in Year 1 and increases each year over the life of the contract by the amount of $25,000. There are no budgeted or expected expenses for this contract. UTA staff will seek Board approval prior to exercise of each of the three one-year options.
The salable space available for advertising was changed from the RFP after it was awarded with no reduction in minimum revenue to UTA. The change was informed by discussions with the Board, Customer Experience, Lamar, Civil Rights, and the Committee on Accessible Transit (CAT) leadership, as well as a review of other transit agencies for best practice in advertising and customer experience. The decision of no front windows (25 percent) curbside on bus and only 50 percent coverage on light rail was acceptable and negotiated at no loss to UTA. The 25 percent wrap on bus constitutes an average of about 10 percent of the fleet advertising demand.
The vendor also commits to follow the revised policy and SOP adopted by the Board in October 2023, that includes clarification on what can be advertised on UTA vehicles, and that customer experience is a factor in advertising placement (referenced above). Each advertisement is approved by the Chief Communications Officer.
CONTRACT SUMMARY:
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Contractor Name: |
Lamar Transit Advertising |
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Contract Number: |
23-03689CG |
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Base Contract Effective Dates: |
April 1, 2024 - March 31, 2029. |
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Extended Contract Dates: |
Three out year option periods: April 1, 2029 - March 31, 2032. (requires future board approval) |
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Existing Contract Value: |
NA |
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Amendment Amount: |
NA |
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New/Total Contract Value: |
$11,125,000 minimum (for the 5-year base contract) |
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Procurement Method: |
RFP |
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Budget Authority: |
Within approved operating budget. |
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ALTERNATIVES:
The alternatives to this contract are not provide advertising space on or inside UTA fleet or hire internal resources to sell and install advertising.
FISCAL IMPACT:
If the decision is made to not provide advertising space on or inside UTA fleet, the loss would be the projected minimum advertising revenue of $18,100,000 over the next eight years. A significant reduction in scope of advertising space for salable inventory may also require a new RFP and would result in diminished revenue and opportunity costs. Vendor costs are included in the minimum guarantee.
ATTACHMENTS:
UTA Contract 23-03689CG