SR 03-05-2019 3C
City Council
Report
City Council Meeting: March 5, 2019
Agenda Item: 3.C
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To: Mayor and City Council
From: David Martin, Director, Transportation Planning
Subject: Professional Services Agreement for the Procurement of Breeze Bike Share
Sponsorship
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute an amended and restated commission-based agreement #2999 in the amount
of $299,462 with The Superlative Group, an Ohio-based company, for the procurement
of sponsorship for the City’s Breeze Bike Share system. This amendment will extend
the term to no later than November 12, 2020, with one additional three -year renewal
option, resulting in an eight-year amended agreement. Payment for this agreement
during any extended term would continue to be commission -based and not exceed 20%
of the revenue generated from the sponsorship.
Summary
The City’s beneficial sponsorship from Hulu, LLC (Hulu) for the Breeze Bike Share
system was the result of a contract with The Superlative Group (Superlative), a firm that
seeks sponsorships on behalf of public and transit agencies. Superlative receives
compensation based on the gross proceeds the City receives from Hulu. Originally, the
term for both the sponsorship and professional services agreements was intended to be
three years each, but Hulu committed to five years of sponsorship due to Superlative’s
successful marketing efforts. The Superlative agreement was not amended to coincide
with the expiration of the Hulu’s sponsorship agreement in November 2020 and the
Superlative agreement has since expired on June 30, 2018. This resulted in the City’s
inability to compensate Superlative for any additional commission fees earned from the
remainder of the Hulu agreement. Staff recommends authorizing an amended and
restated agreement with Superlative to November 12, 2020 in the amount of $299,462.
Staff also recommends authorizing one additional three -year renewal option for the
Superlative agreement to minimize any potential future gaps in sponsorship revenues
for the Breeze Bike Share system. Payment to Superlative during any extended term
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would continue to be commission-based and not exceed 20% of the revenue generated
from the Bike Share sponsorship.
Discussion
On November 11, 2014, Council directed staff to obtain a sponsor for the City’s Breeze
Bike Share system as one of a series of steps to implement and fund the program. In
April 2015, the City entered into a three-year, commission-based agreement with The
Superlative Group, a third-party broker that seeks sponsors on behalf of public and
transit agencies, after a competitive Request for Proposals process. Superlative,
through its marketing efforts, secured a five-year Presenting Sponsorship agreement
with Hulu on behalf of the City. Staff anticipates approximately $3.6 million in total
sponsorship proceeds over the life of the Hulu agreement, and has collected $2.21
million to date. This sponsorship level well-exceeded the parameters set by Council,
which was a minimum of $250,000 per year for three years; and has not been achieved
by other bikeshare systems in the region. The current Hulu sponsorship agreement will
expire on November 12, 2020.
When the City contracted Superlative to procure a sponsor for the Breeze Bike Share
system, the original goal for the sponsorship duration was also three years. Hulu was
able to commit to five years due to Superlative’s successful marketing efforts; however,
the Superlative agreement was not amended to coincide with the expiration of the Hulu
agreement in November 2020. It is industry practice that commissions are collected for
the duration of the sponsorship. The three-year Superlative agreement expired on June
30, 2018, preventing Superlative from collecting the commission fees for securing the
Hulu sponsorship. Staff recommends that the City enter into an amended and restated
agreement with Superlative to November 12, 2020 in the amount of $299,462 to enable
Superlative to collect the commission fees through the life of the Hulu agreement.
Given the success of Superlative’s role as the third-party broker and the resulting Hulu
sponsorship, staff also recommends that the amended and restated Superlative
agreement include one additional three-year renewal option, resulting in a potential total
of eight-years of commission paid to Superlative from the Hulu agreement. This would
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create an overlap period for extension or substitution of the sponsorship and allow the
City to minimize any potential gaps in sponsorship revenues that continue to support the
Breeze Bike Share system and the City’s mobility goals. Superlative’s services and the
role of a sponsorship revenue will continue to be a crucial component of sustaining the
Breeze Bike Share program. The Superlative agreement would continue to be
commission-based; the commission will not exceed 20% of the gross sponsorship
proceeds per year.
Breeze Bike Share since Launch in November 2015
From 2016 to 2018, the Breeze Bike Share program spent an average of $959,000
annually in contractual services for operations. The program revenue comes from a
combination of user fees and sponsorship fees. The program generated between
$465,000 to $947,000 annually in user fees, and between $420,000 to $716,000
annually in sponsorship fees. To date the program has generated for the City a
cumulative net revenue of approximately $139,000 over the life of the program. The
initial system equipment and launch was paid for primarily by federal and state grant
funds.
Breeze continues to serve Santa Monica residents, workers, and visitors. In 2016 the
system serviced over 289,000 trips and increased to 317,000 trips in 2017. Total trips
in 2018 dipped to 212,000, 33% fewer from the previous calendar year, due to the
introduction of additional shared mobility options such as Metro Bike Share and
dockless electric scooters and electric bicycles in late 2017. While Breeze trips may
have decreased, there has been an increase in the total number of trips being taken on
shared mobility devices citywide. As the City continues to grow mobility options, staff
anticipates continued changes in Breeze ridership, but less dramatic than were seen in
the last year due to its cost competitiveness and unique membership options. Staff will
continue to monitor Breeze ridership and business model as part of the evaluation of
shared mobility changes. We will also be working with our regional partners (UCLA,
West Hollywood, Beverly Hills) on changes to the business model that may be
appropriate with recommendations to come back to Council in the future.
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Past Council Actions
Meeting Date Description
10/13/15 (attachment A) Contract with Hulu, LLC, to establish Hulu as the Presenting
Sponsor for the Breeze Bike Share system
11/11/14 (attachment B) Award of Contract for Bikeshare Installation, Launch and
Operations and Related Program Policy Direction
Financial Impacts and Budget Actions
Staff seeks authority to restate and extend the commission-based agreement with The
Superlative Group to November 12, 2020 in the amount of $299,462. The commission
for any extended term will be set at 20% of the revenue generated from the Hulu
sponsorship agreement.
Agreement Modification Request
Agreement
#
Current
Authorized
Amount
FY 2018-19
Request Amount
FY 2018-19 Budget
PCD Department
Account #
Total Revised
Contract Amount
2999 $417,272 $147,518 01700003.537080 $716,734*
* Includes $151,944 commission for FY 2019-20
Future year funding is contingent on Council budget approval.
Prepared By: Caline Evans, Administrative Analyst
Approved
Forwarded to Council
Attachments:
A. October 13, 2015 Staff Report (web link)
B. November 11, 2014 Staff Report (web link)
C. Oaks Initiative Disclosure
D. Written Comments
From:The SEO Doctors
To:Clerk Mailbox
Subject:SM Council 3/5/19 - Item 3C
Date:Tuesday, March 5, 2019 7:46:39 AM
Breeze Bikes
I think the Breeze bikes should eventually merge with the dominant bike platform being used
around the city. It should be uniform.
Korie Schmidt
(310)600-2278
TheSEODoctors@gmail.com
Item 3-C
3/05/2019
1 of 1 Item 3-C
3/05/2019
REFERENCE:
Agreement No. 10813
(CCS)