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HomeMy WebLinkAbout02/18/1997, 4 - ADVERTISING ON SLO TRANSIT BUSES council j XQen6a nEpout C I T Y OF SAN LU IS O B I S P O FROM: Michael D.McCluskey,Director of Public Works Prepared By: Harry Watson,Transit Manager SUBJECT: Advertising on SLO Transit Buses CAO RECOMMENDATION 1. Approve a resolution establishing a policy that allows exterior advertising on SLO Transit buses. 2. Authorize staff to negotiate an agreement for in-lieu advertising on the exterior of SLO Transit buses and return to Council for final approval. DISCUSSION Background: history The City has not advertised on its buses, bus benches or shelters in the past. Two years ago, the City Council denied a proposal to allow advertising on internally illuminated bus shelter signs. Although not directly stipulated, buses were assumed by staff to be covered by that Council action. Industry Standard(What are other transit operators doing?) The practice of advertising on transit buses has been common practice in other communities on the central coast for many years. Five Cities, Santa Maria, Santa Barbara and Monterey all allow bus advertising. For the past two years, San Luis Obispo Regional Transit has advertised on their buses and for the past year,Ride-On vans have carried advertising in San Luis Obispo. Current Status In the wake of the recent increase in bus fares, it is important to increase the advertising effort to attract new riders, replace those lost to the fare increase and maintain our current customer base. One effective way is to develop an in-lieu agreement with a local media provider offering to advertise SLO Transit on television in return for advertising on the buses. Because of the current financial difficulties facing City transit, staff has investigated various options to increase advertising of the system. Staff has determined the in-lieu advertising value to be approximately$3000 per month. H�/ Council Agenda Report-Advertising on SLO Transit Buses Page 2 Proposal • Allow in-lieu advertising on the bus exteriors. • No advertising on the trolleys, nor on bus interiors. Exterior Bus Advertising As mentioned above, previous Council action denied advertising on internally illuminated bus shelters. Staff believes there is and should be a distinction between exterior bus advertising and bus shelter advertising: Exterior bus advertising is mobile by its very nature, so does not pose a lasting impact on any location in the city. Shelter advertising is stationary. Exterior advertising on the buses will be constrained to the rear two side windows of the bus, preventing the buses from being turned into rolling billboards. Shelter advertising uses billboards. Exterior bus advertising does not pose an issue of sight distance obstructing motorists clear view of the road. Shelter advertising could pose a sight distance problem. Exterior bus advertising is not internally illuminated impacting the area around it. Shelter advertising is illuminated during all periods of darkness. Thus staff feels there is merit in bringing the issue back to Council for separate consideration. The In-Lieu Agreement An in-lieu agreement would be consummated trading the value of exterior bus advertising for a like value of television advertising. The basics of any agreement would have the following: * The City controls the J placemeart and content of all ads(to the extent allowed by law). * The rear most two side windows and the rear window on those buses that have rear windows would be used for advertising (see attachment 1). This would maintain the identification of the bus, as the logo would not be covered up. * Perforated vinyl signs would be used to allow riders to see out while the sign presents a near opaque appearance from the outside. * The advertiser would be responsible for the cost of production and installation of the signs * The term of the agreement would be one year. Council Agenda Report-Advertising on SLO Transit Buses Page 3 Staff has been contacted by three potential advertisers (two TV stations and one phone company) and has tentatively(dependent upon Council action) negotiated an annual in-lieu trade amount of$36,000 with a network affiliate television station, CBS-12. The $36,000 value in spot air time to promote SLO Transit would produce 720 runs in a year. (Followup calls with the remaining TV station and the phone company were not productive.) Why an In-Lieu Agreement rather than selling bus ads for cash? An in-lieu agreement allows for a much greater advertising return for SLO Transit ($3000 per month). In-lieu enjoys a three to one advantage over a cash sale. The option to the in-lieu agreement is to sell the ad space for cash. Staff estimates the cash value to be $1000 per month for our fleet (based on staff's experience with past operations). The selling, billing and collecting of revenues is labor intensive and would most likely best be performed by a professional marketing firm on a commission basis, thus decreasing cash revenue. Regional Transit does not do direct cash sales, but has been successfW using in-lieu agreements. Much larger transit operations such as Santa Barbara, Fresno and Sacramento do sell their advertising for cash. In either case,the sale of ad space or a reciprocal agreement, staff would have the authority to negotiate the most beneficial terms for the City. Interior Bus Advertising Interior bus advertising does not enjoy the leverage necessary to make it attractive as an in-fico option to an advertiser. Interior advertising value has much less economic value due to the size of the audience it impacts. Interior bus advertising could best be sold for cash and, as mentioned above, would be best solicited, sold and invoiced by a professional marketing firm. Estimates are that the gross income from interior advertising for cash would be $3000 to $5000 per year if all "spots" were in use all the time, less any commission. Although this revenue is extremely small, the MTC, in its deliberation, recommended exterior advertising but wanted additional research on interior advertising. Staff; however is not recommending this option since the staff time required to manage interior advertising renders the "net profit"negligible. Current SLO Transit Advertising The total current marketing budget is$12,000. It is currently used as follows: • TV advertising for spring and fall promotion • Radio advertising for winter promotion • Special event advertising in the print media The in-lieu agreement represents an expansion of that effort by three times. Staff would propose to use that portion of the current budget used for TV to lease professionally produced, higher grade TV spots customized for SLO Transit. These spots would replace the locally produced spots we have used in the past. AL' Council Agenda Report-Advertising on SLO Transit Buses Page 4 Advertising on the Trolley The trolley does not lend itself to external or internal advertising due to the small window size, unless the metal logo area of the trolley sides were used. The primary green trolley does not have interior ad space designed into it as do the buses, but the interior side ceiling panels may provide a suitable surface for interior advertising. Modification would be necessary to allow interior ad space. The concept of reserving interior advertising on the trolley to merchants in the downtown core was discussed by the BIA Board and received a favorable response. However, staff feels any potential monetary gain to the system received via advertising revenue would be more than offset by: a) cost of modifying the green trolley to accept interior ad space; and b) a general overall degradation to the character of and what the trolley represents to the downtown and the City in general, and therefore this option is not recommended. CONCURRENCES The Mass Transportation Committee on December 19, 1996 voted unanimously to support bus advertising. The Committee concurred that advertising on the buses should include both exterior and interior advertising. A copy of the minutes of that meeting is attached. FISCAL IMPACT There is no Fiscal Impact, as no funds would be received or expended with an in-lieu agreement for bus advertising. A greater amount of higher quality advertising for SLO Transit would result. ALTERNATIVES 1. Do nothing. Marketing for SLO Transit will continue as it is currently programmed, with a mix of print, radio and television, using short spot ads tied to special events. As in the past (and with any in-lieu), the City will continue to pursue Rideshare participation in our ad campaigns to extend the number of dollars available for the effort. 2. Only advertise on the exterior of the buses. 3. Pursue bus advertising but advertise for cash, using a commission agent. A Request for Proposals would be developed and issued to secure a commission agent to solicit potential advertisers on SLO Transit buses. 4. Only advertise on the interior of the buses Attachments: bus schematic resolution MTC minutes trm on 955 mma(sys/Bams buaadl �.�'IL_I . t / I 11 U9. / u /, 4 �r o o � w o3� �Qw 1 9 b N3¢ .. ~ w E 0 0 1 0 0 o � o IA N G N e e o ° ° O ° e o LO 0 0 RESOLUTION NO. (1997 SERIES) A RESOLUTION ESTABLISHING A POLICY THAT ALLOWS ADVERTISING ON SAN LUIS OBISPO CITY TRANSIT BUSES WHEREAS, the City of San Luis Obispo desires to allow advertising on the outside of City buses;and WHEREAS, the City of San Luis Obispo does not desire to allow advertising on the City trolleys; and WHEREAS, the City of San Luis Obispo does not desire to allow advertising on the interior of City buses. NOW, THEREFORE,BE IT RESOLVED, that the City hereby approves a policy allowing in-lieu advertising on the outside of City buses. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this_day of 1997. ATTEST: Bonnie Gawt City Clerk APPROVED: Mayor Allen Settle JeffJorge City Attorney sf-G CITY OF SAN LUIS OBISPO MASS TRANSPORTATION COMMITTEE MEETING MINUTES THURSDAY, DECEMBER 19, 1996 CALL TO ORDER: The Mass Transportation Committee was called to order at 10:05 a.m. on Thursday, December 19, 1996 in the Planning Conference Room of City Hall, 990 Palm, San Luis Obispo. ROLL CALL: Present: Doris Highland Jack Pisano NUe Spangler Kevin Rice Randell La Vack Jacquie Paulsen Harry Watson Absent: Ken McCracken and Walter Rice Staff: Transportation Technician Reinie Jones Traffic Engineer Deb Larson Also present were Bob Roundtree, Cindy Campbell, and Dan Herron. PUBLIC COMMENT: There were no public comments at this time. COMMITTEE COMMENTS: Vice Chairwoman Highland announced that Chairman McCracken will not be returning and a new chairperson needs to be elected. Ms. Paulsen nominated Mr. La Vack as Chair of the MTC. The election of a new chairperson will be added to the next agenda for action. ACTION ITEMS: 1. APPROVAL OF THE MINUTES: ,7 The Mass Transportation Committee Meeting Minutes of September 18, 1996 were approved as presented. 2. APPROVE THE PURCHASE OF REPLACEMENT BUSES FUELED BY DIESEL: Mr. Watson stated there is an approved grant to purchase up to three buses. The number of buses purchased will depend on how much grant match can be located. He is asking that the Council relieve the MTC from the mandate to buy CNG buses and to allow latitude for advanced design diesel buses. When the policy was established, there was quantum difference between diesel technology and CNG from an emissions standpoint. If there is a go ahead from the MTC and Council, we will be arranging to tag on to a larger purchaser and the buses can be customized for our particular needs. Mr. La Vack doesn't want to see any policy changes towards assigning the importance of moving towards alternative fuel buses. He noted the staff report is missing pages. He feels there should be a rebuttal position for the Californians Against Hidden Taxes. He is not opposed to staffs recommendation, but he would like to see less emphasis in the staff report relative to downgrading CNG buses. He doesn't want to see the MTC push this issue too far and sour the City on acquisition of CNG buses. Mr. Rice agrees with considering diesel on its own merit as far as being cleaner. He doesn't feel the purchase of up to three buses is going to significantly impact our pollution. Ms. Paulsen concurred with Mr. La Vack concerning the downgrading of CNG buses in the report. We've been trying to get the buses but we haven't been able to and diesel has improved. We need to go forward with this, but use it on its own merit. Mr. Rice noted we have experienced problems with our CNG fleet. Mr. Herron stated SLOCOG is not changing its policy. They continue to encourage and promote alternative fuels. Ms. Paulsen moved to go forward with the purchase of replacement buses fueled by diesel. The motion was seconded by Mr. La Vack and unanimously approved. 3. APPROVE ADVERTISING ON SLO TRANSIT BUSES: Mr. Watson stated when the City was faced the funding issues discussed at the last meeting, staff was charged with several goals. This item deals with a marketing issue for San Luis Obispo Transit. With the fare increase, we will be losing ridership and this is a timely opportunity to use marketing efforts to recapture some of the losses and attract new riders. This item would recommend to the Council a chane in policy to allow advertising on the transit system. There are media in the community who are willing to pay to advertise on SLO Transit. The media would be giving payment in the form of advertising in their media. Staff is proposing to use perforated vinyl see through signs which would be dedicated to the rear two side windows for advertising. The rear windows of four buses was also offered. To the person on the outside, it is an opaque sign. To the people inside the bus, it is a clouded view. It is kind of like looking through a veil. Additionally, this advertising doesn't wipe out the sides of our buses or our logo. Vice Chairwoman Highland asked if there is interior advertising. Mr. Watson stated currently signs inside the buses are transit related and public service announcements. Mr. Watson stated this is a timely issue. The need is here for more marketing and we can also get a three or four return on our investment. Mr. Rice would like to move forward with this item, with the ability to review it in one year. He is concerned about the backs of the buses being too dark and encouraging trouble. He is also concerned about the drivers and the potential necessity for additional interior lighting. Mr. Pisano has had experience with window advertising and feels additional lighting is not necessary. Mr. Roundtree asked if the Police Chief has okayed the use of advertising and if the audience attracted by the advertising are already riding the bus. Mr. Watson stated this has not been run by our Police Department. He is taking his information from periodicals he has read. We operate with the interior lights on all the time. Mr. Watson stated the advertiser will offer us $36,000 worth of$50 30-second ads in one year. Mr. Watson displayed a video of professional commercials to the Committee. Mr. Watson stated if this on-bus advertising were passed by the MTC and the Council, this would free up the dollars that we normally buy airtime with. We could use our marketing budget for the rental of the video taped commercials. Mr. Rice supports this item. Mr. Rice moved to approve the advertising as drafted by staff. The motion was seconded by Mr. La Vack and unanimously approved. Ms. Paulsen suggested recommending interior advertising to the Council. She would like to have control over what is advertised. Mr. Watson stated any advertising will be controlled by the City. Vice Chairwoman Highland asked staff to research interior advertising. 4. APPROVE THE SERVICE REQUEST FOR PROPOSAL: Mr. Watson stated we've had a three-year contract with Mayflower Contract Services and the Council elected to extend it for two additional years. We don't have the latitude to extend the contract further. It is timely to see what service providers are out there who are willing to bid on operating our transit. We are being innovative and flexible in the RFP which will hopefully result in savings. All of the responsible recipients from last time will be invited and we're looking for some new ones. Ms. Paulsen asked if the RFP is available for review. Mr. Watson has the RFP in his office and it is available at any time. Mr. La Vack asked if this type of contract is in existence in other transit systems. Mr. Watson doesn't believe so. We're trying to open the doors to new ideas. Mr. Herron distributed an informational memo to the Committee. Mr. Watson added the City is very motivated to get a cost savings contract because of the funding dilemma. Mr. La Vack feels this make economic sense. He is concerned about the supervision and management of the meshing of the systems and personnel. Mrs. Jones stated the concept of the new contract is to only contract out for the bus driving. Everything else is going to be done in-house. Mr. Watson noted the office staff support would also be by contract. Mr. La Vack and Ms. Paulsen would like to see more information relative to this issue. Mr. La Vack moved to support the concept for the Service RFP. The motion was seconded by Ms. Paulsen and unanimously approved. Mr. Watson informed the Committee he will include in the Council report that the MTC has not seen the final document, but it will be made available. If any members of the Committee has a problem with the document, they can make their feelings known at the Council hearing. �f-/D 5. APPROVE THE GOALS FOR SLO TRANSIT FOR THE UPCOMING BUDGET PERIOD: Mr. Watson stated we don't have the dollars to take on anything new and most of the goals are continuations. Mr. La Vack feels with the fiscal situation being up in the air, a long-term funding source needs to be researched. This should be a high priority goal of the MTC. We should also be looking at local funding options. Ms. Paulsen suggested adding to#7, "Continued search for fiinding sources." Mr. La Vack moved to approve the modified goals for the upcoming budget period. The motion was seconded by Mr. Rice and unanimously approved. INFORMATION ITEMS: 6. UPDATE ON THE MULTI MODAL TRANSFER CENTER PROJECT: Mrs. Jones stated she has been working on the Amtrak location. The appraisal and environmental assessment are complete. There is work being done on a concept design for the site. The Division of Rail would like to add more parking to the site and we are also looking into bicycle and pedestrian facilities to connect with the train station from the Multi-Modal Center. The stakeholders for the Downtown Super Stop had a meeting and have not yet decided on an exact location. Mr. Roundtree asked if there's been discussions with Greyhound regarding the Amtrack site. Mrs. Jones stated this is being looked into by SLOCOG. Mr. Watson stated Greyhound owns their site and it's next to the freeway. They do not seem to be interested. Mr. Watson added hazardous materials were identified on the site. A letter from the County was received allowing the continuation of the project. 7. RECEIVE THE OPERATIONS REPORT: Mr. Watson reviewed the report with the MTC and stated ridership continues to go up. It will be interesting.to watch the non Cal Poly ridership numbers in January when the fares increase. FURTHER COMMITTEE COMMENTS: Mr. Rice noted the ASI at Cal Poly putting together a transportation committee and he will be a member. ADJOURNMENT: There being no further business to come before the Committee, the meeting was adjourned at 11:44 a.m. to the next meeting of the Mass Transportation Committee, time and date to be announced. Respectfully submitted, Leaha K. Magee Shorthand Reporter t' riING AGENDA r- ITEM # RESOLUTION NO. (1997 Series) A RESOLUTION ESTABLISHING A POLICY TO ALLOW ADVERTISING ON SAN LUIS OBISPO CITY TRANSIT BUSES WHEREAS, the City of San Luis Obispo desires to increase its revenues so as to offset operating losses; and WHEREAS, advertising on City buses is one method of increasing revenues. NOW, THEREFORE, BE IT RESOLVED, that the City hereby approves a policy allowing advertising on City buses, but not the City trolley, subject to City approved standards and conditions. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this day of 1997. ATTEST: Bonnie Gawf, City Clerk Mayor Allen K. Settle APPROVED: AN ALTERNATIVE RESOLUTION Jeff Jorgensen, City Attorney PRESENTED BY COUNCIL MEMBER DAVE ROMERO FrA0 ❑ CDD DIR ❑ FIN DIR ❑ GHIEF 0 PW DIR IG ❑ POLICE CHF M ❑ REC DIR LE ❑ UTIL DIR . ❑ PERS DIR