SR 05-24-2016 3F
City Council
Report
City Council Meeting: May 24, 2016
Agenda Item: 3.F
To: Mayor and City Council
From: Edward King, Director, Big Blue Bus, Planning & Community Engagement
Subject: Agreement to Manage Culver City Bus Advertising Sales Program
Recommended Action
Staff recommends that the City Council authorize the City Manager to enter into a three-
year Memorandum of Understanding (MOU) with the City of Culver City to manage the
bus advertising sales program for Culver CityBus, with two one-year options to renew.
No new costs are associated with this program.
Executive Summary
Staff proposes Big Blue Bus (BBB) continue to serve as exclusive advertising
concessionaire for Culver CityBus, a program which was first authorized by City Council
on June 14, 2011. A Memorandum of Understanding (MOU), No. 9381 CCS, was
established to allow BBB staff to manage the Culver CityBus advertising program. The
original agreement was effective for two years. Subsequently, a First, Second and Third
Modification of the Agreement were established to extend terms of the agreement by
one year, respectively. The City has exercised all renewal options and the MOU expires
on June 30, 2016. Big Blue Bus projects to receive $1.4M over the three-year
agreement. Staff recommends a three-year MOU to begin July 1, 2016, with the City of
Culver City to manage the bus advertising sales program.
Background
Since 2001, BBB has been operating its own advertising sales program, selling
advertising space on buses to a variety of clients which generates a revenue stream
that financially supports transit services. In an effort to increase geographic coverage
advertising space, BBB staff presented a proposal to the City of Culver City to sell
advertising space on Culver CityBus. The City of Culver City agreed and on June 14,
2011, Council authorized Big Blue Bus to become Culver CityBus advertising sales
concessionaire.
Discussion
As required by the MOU, BBB staff coordinates the posting of ads on the Culver
CityBus fleet of approximately 50 buses at its bus yard, managing all aspects of the
advertising program. BBB staff promotes and advertises Culver CityBus ad space along
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with its own, negotiates contracts for ad placement, contracts with and manages the
installation of all ads and handles the accounting and billing. In exchange for these
services BBB receives a 30% commission of gross advertising sales. The actual cost of
posting services is applied to the net advertising sales amount with the remaining
balance identified as the net advertising revenue that is paid to Culver CityBus. Net
advertising sales is defined as the sum of the gross advertising sales amount minus the
30% commission. Big Blue Bus provides Culver CityBus with quarterly reports which
reviews the number of ads sold and gross sales amounts, along with the calculation of
their estimated net revenue.
There are no budgetary expenditure increases associated with managing the Culver
CityBus advertising program. Operation of the program is done by existing Big Blue Bus
Providers, and related costs are deducted from the net sales amount.
Over the last two fiscal years of the current MOU, the Culver City Advertising Program
generated $761,044 in gross revenue, of which $216,468 was retained as
commission.
The advertising program between the City of Santa Monica and the City of Culver City
has proven beneficial to both cities, therefore City staff would like to continue managing
the Culver CityBus program. Staff recommends the establishment of a new MOU that
would extend the program for three years with two one-year extension options.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. Revenue and expenditures are included in the FY 2016-17
Budget Plan for City Council approval.
Prepared By:
Teri Plummer, Administrative Staff Assistant
Approved Forwarded to Council
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Attachments:
A. June 14, 2011 Agreement to manage Culver CityBus Advertising Program
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