TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager/Chief Executive Officer
SUBJECT: Contract Award: Transit Shelter Advertising
ACTION ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider awarding and authorizing the General Manager to execute a revenue-generating transit shelter advertising contract with Lamar Transit, LLC for a base period of two years with three one-year options to extend with a cumulative Minimum Annual Guarantee of $1,050,000 in revenue for all five years.
Staff Contact:
Ramakrishna Pochiraju, Executive Director of Planning & Engineering
Body
STRATEGIC IMPORTANCE:
Goal - Convenient and Reliable Service
Initiative - Service Quality
This contract's advertising revenue would help offset the costs of owning and maintaining bus shelters following the expiration of previous advertising contracts.
BUDGETARY/FISCAL IMPACT:
The proposed award to Lamar Transit, LLC will result in a revenue-generating contract with a base period of two years with the option to extend the term for three additional one-year options for a maximum term of up to five) years. Revenue generated under contract, which can be used to offset transit shelter operating and maintenance costs, would include:
* The greater of the Minimum Annual Guarantee (MAG) or a Revenue Share.
o The MAG is $1,050,000 over five years, with $150,000 in Year 1 and escalating revenues each subsequent year as shown in Table 1, below.
o The Revenue Share equals 55% revenue share if sales revenue generated is $0 - $500,000 OR a 65% revenue share if sales revenue generated are above $500,000.
* A production credit of $25,000 over five years for the District's promotional or community messaging.
These revenues are based on the District's current inventory of 241 transit shelters that currently include static advertising space. The MAG does not assume additional digital inventory. There is an opportunity to add digital advertising. This con...
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