SR 12-12-2023 5I
City Council
Report
City Council Meeting: December 12, 2023
Agenda Item: 5.I
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To: Mayor and City Council
From: Anuj Gupta, Director of Transportation, Parking Operations (DOT)
Subject: Award Contract for Managing Advertising Program in City Owned Parking
Structures
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15301 and Section
15311 of the California Environmental Quality Act (CEQA) Guidelines;
2. Award RFP# 375 to BIG Outdoor, for sales, administration, and installation and
maintenance of advertising in City-owned parking structures for the Department
of Transportation; and
3. Authorize the City Manager to negotiate and execute an agreement with BIG
Outdoor for sales, administration, and installation and maintenance of advertising
in City-owned parking structures over a five-year period, with two one-year
renewal options, with guaranteed minimum revenue of $90,000 dollars in year
one, and an increase of 2% per year thereafter.
Summary
The City of Santa Monica owns and operates 12 parking structures consisting of roughly
6,900 parking spaces in and around the downtown area. Approximately 3.9 million
people park in these downtown structures per year, making the interior surfaces of
these structures attractive spaces for advertising. In 2012, Downtown Santa Monica,
Inc. (DTSM) managed an advertising program through Van Wagner Communications,
LLC, but that program expired several years ago. The Santa Monica Department of
Transportation (DOT) Parking Division plans to reinstate an advertising program in
these structures and create a new revenue source for the City. Staff advertised a
Request for Proposals (RFP) for a turnkey advertising program including not only
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posting services but also sales and program coordination provided to generate
advertising revenue. A turnkey parking structure advertising program would be efficient,
cost-effective, and generate significant revenue for the City. After reviewing the
proposal, the evaluation team recommends BIG Outdoor to administer this parking
structure advertising program.
Discussion
For more than 20 years, DOT’s Big Blue Bus (BBB) has overseen a revenue-generating
advertising program selling commercial advertising space on the exterior and interior of
Big Blue Bus fixed route vehicles. BBB is currently using a turnkey advertising program
whereby the vendor Vector Media manages the program and the City takes a
percentage of advertising revenue. This has proven to be a reliable and significant
source of income for the City’s Big Blue Bus Fund. The proposed parking structure
advertising program is being modeled after this program.
The parking structure advertising program would generate a guaranteed minimum
revenue to the City of $90,000 for the first year (with an increase of 2% per year for the
following five years). It is estimated to bring in $450,000 for the first year (with an
increase of 2% per year for the following 5 years). The first-year revenues would be
reduced on a one-time basis by $50,625 to fund the capital costs to install the initial
advertisements, resulting in a net estimated first-year revenue of $241,875 (Attachment
A). Each year’s revenue would go to a newly created general revenue account.
In addition to generating revenue for the City, the advertising program would enhance
the appearance of the parking structures by having several interior advertising spaces
maintained by an outside vendor. This vendor would be responsible for posting
advertisements and maintaining them, including graffiti removal and repairs due to
vandalism. This would assist the Parking Division’s effort to maintain the appearance of
the parking structures and make repairs and enhancements as needed.
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All advertisements displayed in the parking structure will comply with the City’s
advertisement policy (Attachment B). These guidelines restrict advertisements
containing political, adult-related products, sexual subject matter, subject matter
infringing on copyright data, profanity, violence, and other subject matters deemed
inappropriate by the City per the policy.
In July 2023, staff issued a Request for Proposals (RFP) to sell and display advertising
at 57 designated locations in Parking Structures 1, 2, 4, 5, 6, 7, and 8. The RFP
contained two options: Option 1 – Guaranteed Fixed Revenue, and Option 2 – Revenue
Share with Minimum Guarantee. The City received one proposal from BIG Outdoor with
cost proposals for Options 1 and 2 which are as follows:
• Option 1 -Minimum of $200,000 in year 1 (with a 2% increase for the next 5
years).
• Option 2 -Minimum guarantee of $150,000 in year 1 (with a 2% increase for
the next 5 years).
-65% of gross revenue minus initial capital expenses with an
estimated yearly revenue of $487,500 (minus initial capital
expenses) in year 1 (with a 2% increase for the next 5 years).
Parking Structures 7 and 8, adjacent to Santa Monica Place mall, are owned by the City
but operated by Macerich. Macerich and the City have a contract that establishes a
partnership between the City and Macerich wherein Macerich shares in the operating
expenses of these structures and also shares in the revenue for these structures. In the
previous advertising program (administered by DTSM), Macerich received a percentage
of the revenues received for advertisements in structures 7 and 8. Following the receipt
of BIG Outdoor’s proposal, City staff inquired with Macerich regarding their interest in
participating in this advertising program, and Macerich staff indicated that they would
not like to participate initially but would support possible inclusion of structures 7 and 8
at a future date.
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After informing BIG Outdoor of this change (removing structures 7 and 8 and reducing
the number of advertising locations from 57 to 44), Parking staff received an updated
proposal from BIG Outdoor. BIG Outdoor indicated that the change would reduce
projected gross revenues by 40% given that structures 7 and 8 were the largest in their
original proposal, resulting in the following updated figures for Options 1 and 2:
• Option 1 -Minimum of $120,000 in year 1 (with a 2% increase for the next 5
years).
• Option 2 -Minimum guarantee of $90,000 in year 1 (with a 2% increase for
the next 5 years).
-65% of revenue share (minus initial capital costs) with an
estimated yearly revenue of $241,875 ($292,500-$50,625) in year
1, $302,737.50 in year 2, then a 2% increase for each year
afterwards.
• Capital expenses required to complete the initial install of advertisements to be
subtracted from the City’s revenues reducing the City’s first year revenues by an
estimated $50,625.
The contract (per the proposal) gives the City 65% of gross revenue after the initial
capital expenses are deducted. This gives the City the ability to add structures 7 and 8
in the future without needing a contract modification. It also gives the City the option to
add other City-owned parking structures beyond those currently contemplated if the City
and BIG Outdoor agree.
The BIG Outdoor proposal was evaluated by a cross-functional team of DOT staff
based on criteria established in the RFP. Additionally, BIG Outdoor was interviewed by
the evaluation team during the evaluation process, performing well and receiving an
acceptable score.
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Staff recommends that the contract be awarded to BIG Outdoor as the best bidder. Staff
recommends Approach 2 (Including Structures 1, 2, 4, 5, and 6) with all revenues
(including the $90,000 minimum guarantee and estimated $241,875 in year one) to be
deposited to the general fund revenue budget. These revenues would be directed
towards the City’s top priority needs, which include deferred maintenance and
improvements at City-owned parking facilities.
Best and Only
Proposer
BIG Outdoor
Submittals Received Selection Criteria
Bidder BIG
Outdoor Municipal Code SMMC 2.24.190
Evaluation Criteria Price and revenue generated by sales; the
quality of the material or services offered;
the ability, capacity and skill of the bidder to
perform or provide the materials or services;
the capacity of the bidder to perform the
contract or provide the service promptly,
within the time specified, and without delay
or interference; the sufficiency of the
bidder’s financial resources; the character,
and integrity, reputation, judgment, training,
experience and efficiency of the bidder.
Bid Data
Date Posted Posted On Advertise In
(City Charter &
SMMC)
Vendors
Downloaded
Date Publicly
Opened
August 31,
2023
City’s Online
Bidding Site
Santa Monica
Daily Press
19 October 12, 2023
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Additional Vendor Outreach & Justification to Award
Procurement conducted additional outreach to vendors who downloaded the bid to see
why they did not submit a bid but did not receive a response.
Based on the evaluation criteria and criteria in SMMC 2.24.190, staff recommends BIG
Outdoor (the only bidder) as the best bidder for the selling and posting of advertising for
City owned parking structures. The recommendation is based on the firm’s guaranteed
revenue proposal of 65% of gross revenues minus initial capital expenses, their previous
experience working with other agencies creating similar advertisements in public spaces,
positive references from numerous BIG Outdoor clients including Macerich, Asana
Group, and Atlanta Downtown Improvement District, and its relevant staff experience.
Additionally, the Big Outdoor team is technically skilled, which is highlighted by their
proven track record growing advertising revenue in their partnerships with numerous
other agencies. In addition, BIG Outdoor is the City selected vendor moving forward with
the digital out-of-home kiosk program, so they are already a vetted City partner for a
major advertising initiative.
Environmental Review
The advertising program is exempt from CEQA pursuant to Sections 15301 (Class 1
Existing Facilities), and Section 15311 (Accessory Structures) of the CEQA Guidelines.
Section 15301 of CEQA Guidelines provides exemption for the minor alteration of
existing public or private facilities involving negligible or no expansion of use. Section
15311 provides for the construction of minor accessory structures that are accessory to
existing commercial, industrial, or institutional facilities including on-premise signs. The
project will include advertising signage and postings on the interior surfaces of various
locations in existing City owned parking structures. Therefore, the project qualifies for
exemption under Sections 15301 and 15311. In addition, none of the exceptions
specified in Section 15300.2 of CEQA Guidelines would apply that preclude the use of
this CEQA exemption. The project site is not located in a sensitive environment, would
not have a significant effect on the environment, would not damage scenic resources,
would not be located on a hazardous waste site, and would not cause a change to
historic resources. Therefore, this project is categorically exempt from CEQA.
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Financial Impacts and Budget Actions
If approved, a new revenue account will be created to capture all parking advertising
revenue, including the minimum guarantee of $90,000 per year. The revenues will be
deposited in the General Fund in account 01600004.4XXXXX. Budget adjustments
would be incorporated in the year-end budget and/or FY 2024-25 exception-based
budget, as needed.
Prepared By: Zach Pollard, Parking Manager
Approved
Forwarded to Council
Attachments:
A. Attachment B -City Parking Structure Ad Policy -Updated
B. Attachment A - Cost and Pro Forma Data -Updated
C. 23-1012_Oaks_Initiative -Signed
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ATTACHMENT B
CITY OF SANTA MONICA
PARKING DIVISION POLICY FOR ADVERTISEMENTS IN PARKING STRUCTURES
This Parking Division adver#sing policy is intended to maintain governmental neutrality, avoid actual or
perceived discrimina#on in adver#sing, respect First Amendment rights, avert harm or abuse to users of
parking structures and the structures themselves, maximize adver#sing revenues, and preserve
marketability of adver#sing space in Parking Structures.
To achieve these purposes, the City allows all types of parking structure adver#sing, without regard to
content and viewpoint, except adver#sing that contain material falling within one or more of the
following categories:
1. Poli#cal campaign speech. Ads that promote or oppose the elec#on of any candidate or group of
candidates for federal, state, or local government office, or any legisla#on, ini#a#ve,
referendum, or ballot measure.
2. Adult related products and services, such as alcohol, firearms, and tobacco, smoking, smoking
materials, including electronic smoking or “vaping.”
3. Sexual or excretory subject ma;er, and/or Harmful Ma;er as defined by the California Penal
Code Sec#ons 311 or 313.
4. False, misleading, or decep#ve material. Any material that is, or the sponsor reasonably should
have known is, false, fraudulent, misleading, decep#ve, or would cons#tute a tort of defama#on
or invasion of privacy.
5. Material that infringes on any copyright, trade or service mark, #tle, or slogan.
6. Illegal Ac#vity. Material that promotes or encourages unlawful or illegal behavior or ac#vi#es
under local, state, or federal laws.
7. Profanity or violence. Adver#sing that contains any profane language, or portrays images or
descrip#ons of graphic violence, including dead, mu#lated, or disfigured human beings or
animals, or inten#onal inflic#on of pain or violent ac#on towards or upon a person or animal, or
that depicts weapons or devices that appear to be aimed or pointed at the viewer or observer in
a menacing manner.
8. Material harmful or disrup#ve to the opera#on of the parking structures. Material so
objec#onable under contemporary community standards as to be reasonably foreseeable to
result in harm to, disrup#on of, or interference with the parking structure opera#on.
9. Material that conflicts with any applicable federal, state, or local law, statute, or ordinance.
The City’s acceptance of an adver#sement does not cons#tute express or implied endorsement of the
content of the message of the adver#sement, including any person, organiza#on, products, services,
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Packet Pg. 356 Attachment: Attachment B -City Parking Structure Ad Policy -Updated (6043 : Award Contract for Managing Advertising Program in City Owned
informa#on, or viewpoints contained therein, including content that may be found via internet address
or quick response (QR) codes that may appear in posted ads that direct viewers to external sources of
informa#on. All third-party adver#sements appearing on City property must contain the following
disclaimer, appearing in a consistent form and manner:
The views and/or opinions expressed by the adver#ser are not necessarily those of the City of Santa
Monica.
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Packet Pg. 357 Attachment: Attachment B -City Parking Structure Ad Policy -Updated (6043 : Award Contract for Managing Advertising Program in City Owned
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Packet Pg. 358 Attachment: Attachment A - Cost and Pro Forma Data -Updated (6043 : Award Contract for
CONFIDENTIAL INFORMATION
COST PROPOSAL
Plan for ongoing management of advertising sales:
BIG would implement a dedicated sales approach to deliver
maximum value to the Santa Monica Parking Structure Advertising
platform. The wealth of experience BIG Outdoor brings to this
network will ensure high-quality advertisers and content to be
displayed on the network. Using our key agency relationships and
current experience in media sales in Santa Monica, BIG is confident
in the value of this program. It would not only bring value to
advertisers and the City of Santa Monica, but also positively impact
local businesses in the downtown SM area.
BIG OUTDOOR’S FINANCIAL OFFER:
•Approach 1: Guaranteed Fixed Revenue
•Provide cost based on 44 locations and detail how price
changes with the addition of subtraction of locations.
BIG Outdoor to offer the City of Santa Monica a minimum annual
guarantee in the amount of $120,000 in Year 1 of the program
assuming 44 static signage locations. With additional locations
added, BIG Outdoor will provide the city with an updated revenue
projection based on approved set of locations and proportionally
increase guaranteed rent.
•Approach 2: Revenue Share with Minimum Guarantee, whichever
is greater.
•Revenue share to Parking Administration shall be at least
65% of revenue.
BIG Outdoor to offer the City of Santa Monica the greater of 65% of
gross advertising revenue and a minimum annual guarantee (MAG)
rent in the amount of $90,000 in Year 1 of the program. MAG rent to
escalate by 2% every year. During recoupment of BIG Outdoor’s
initial capital investment, the city to receive 20% of gross revenue until
full recoupment.
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Projected Advertising Sales Rate & Revenue Projections:
BIG Outdoor projects gross annual revenue projections in year 1 @ $450,000 w/ 2%
growth each year over the life of the term. Based on these projections and proposal
Approach 2, the city’s share of gross revenue shares in year 1 at 65% share would be
$292,500 (before recoupment of initial capital investment made by BIG Outdoor).
Capital Expenditures to build-out and maintain the static displays
The capital expenditures associated with building out new structural systems for the
larger static displays (i.e. 10 x 22 & 10 x 40) in the parking garages are estimated at a
total of $90,000. We have also allotted additional capital for engineering, permitting
and other requirements we may encounter. Capital Expenses incurred by BIG Outdoor
to be recouped by taking a larger revenue share of 80% until recouped (As detailed in
Approach 2).
For maintenance costs related to the displays, we estimate on average each of the
displays will require approximately $750 per year in general maintenance. BIG Outdoor
to assume all maintenance costs during life of agreement term and will NOT be taken
out of city’s revenue share (Only initial capital expenses to be recouped).
BIG Outdoor acknowledges that the City is a public entity subject to the provisions of the Public Records Act and
respectfully requests that, except as required by law, the City will not disclose the information marked confidential as
trade secrets or proprietary financial information received from BIG Outdoor.
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Packet Pg. 359 Attachment: Attachment A - Cost and Pro Forma Data -Updated (6043 : Award Contract for
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P&L and DCF
Santa Monica Parking Garages - Static Displays (INCLUDING P7 & P8)
Revenue Growth Rate:3.5%BIG 80%BIG 35%
Marginal Expense Growth Rate:3.0%OWNER 20%OWNER 65%Estimated Development Costs 150,000.0
Promotional LED Signage Platform 750,000.0
Minimum Annual Guarantee Rent:150,000.0 Total Development Cost 150,000.0
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 TOTALS
SM Parking Garages - Static Displays
Growth %3.5%3.5%3.5%3.5%3.5%3.5%3.5%3.5%3.5%
Media Revenue 750,000.0 776,250.0 803,418.8 831,538.4 860,642.3 890,764.7 921,941.5 954,209.4 987,606.8 1,022,173.0
Total Gross Revenue 750,000.0$ 776,250.0$ 803,418.8$ 831,538.4$ 860,642.3$ 890,764.7$ 921,941.5$ 954,209.4$ 987,606.8$ 1,022,173.0$ 8,798,544.9$
Net Media Revenue 750,000.0$ 776,250.0$ 803,418.8$ 831,538.4$ 860,642.3$ 890,764.7$ 921,941.5$ 954,209.4$ 987,606.8$ 1,022,173.0$ 8,798,544.9$
Revenue Shares Pre-Recoup
Revenue Share (CITY OF SM)37,500.0$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Revenue Shares Post-Recoup
Revenue Share (CITY OF SM)365,625.0$ 504,562.5$ 522,222.2$ 540,500.0$ 559,417.5$ 578,997.1$ 599,262.0$ 620,236.1$ 641,944.4$ 664,412.5$
Post-Recoup Minimum Annual Guarantee (MAG)150,000.0$ 153,000.0$ 156,060.0$ 159,181.2$ 162,364.8$ 165,612.1$ 168,924.4$ 172,302.9$ 175,748.9$ 179,263.9$ 1,642,458.1$
MAG Escalation %2%2%2%2%2%2%2%2%2%
Total Annual Revenue Shares
CITY OF SANTA MONICA 403,125.0$ 504,562.5$ 522,222.2$ 540,500.0$ 559,417.5$ 578,997.1$ 599,262.0$ 620,236.1$ 641,944.4$ 664,412.5$ 5,634,679.2$
Economic Assumptions Pre-Recoup Share Post-Recoup Share Big Outdoor's Projected Capital Expenditures
PRO FORMA / INCLUDING P7 & P8 5.I.b
Packet Pg. 360 Attachment: Attachment A - Cost and Pro Forma Data -Updated (6043 : Award Contract for
6 COST PROPOSAL
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P&L and DCF
Santa Monica Parking Garages - Static Displays (EXCLUDING P7 & P8)
Revenue Growth Rate:3.5%BIG 80%BIG 35%
Marginal Expense Growth Rate:3.0%OWNER 20%OWNER 65%Estimated Development Costs 90,000.0
Promotional LED Signage Platform 450,000.0
Minimum Annual Guarantee Rent:90,000.0 Total Development Cost 90,000.0
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 TOTALS
SM Parking Garages - Static Displays
Growth %3.5%3.5%3.5%3.5%3.5%3.5%3.5%3.5%3.5%
Media Revenue 450,000.0 465,750.0 482,051.3 498,923.0 516,385.4 534,458.8 553,164.9 572,525.7 592,564.1 613,303.8
Total Gross Revenue 450,000.0$ 465,750.0$ 482,051.3$ 498,923.0$ 516,385.4$ 534,458.8$ 553,164.9$ 572,525.7$ 592,564.1$ 613,303.8$ 5,279,126.9$
Net Media Revenue 450,000.0$ 465,750.0$ 482,051.3$ 498,923.0$ 516,385.4$ 534,458.8$ 553,164.9$ 572,525.7$ 592,564.1$ 613,303.8$ 5,279,126.9$
Revenue Shares Pre-Recoup
Revenue Share (CITY OF SM)22,500.0$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Revenue Shares Post-Recoup
Revenue Share (CITY OF SM)219,375.0$ 302,737.5$ 313,333.3$ 324,300.0$ 335,650.5$ 347,398.2$ 359,557.2$ 372,141.7$ 385,166.6$ 398,647.5$
Post-Recoup Minimum Annual Guarantee (MAG)90,000.0$ 91,800.0$ 93,636.0$ 95,508.7$ 97,418.9$ 99,367.3$ 101,354.6$ 103,381.7$ 105,449.3$ 107,558.3$ 985,474.9$
MAG Escalation %2%2%2%2%2%2%2%2%2%
Total Annual Revenue Shares
CITY OF SANTA MONICA 241,875.0$ 302,737.5$ 313,333.3$ 324,300.0$ 335,650.5$ 347,398.2$ 359,557.2$ 372,141.7$ 385,166.6$ 398,647.5$ 3,380,807.5$
Economic Assumptions Pre-Recoup Share Post-Recoup Share Big Outdoor's Projected Capital Expenditures
PRO FORMA / EXCLUDING P7 & P8 5.I.b
Packet Pg. 361 Attachment: Attachment A - Cost and Pro Forma Data -Updated (6043 : Award Contract for
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Packet Pg. 362 Attachment: 23-1012_Oaks_Initiative -Signed (6043 : Award Contract for Managing Advertising Program in City Owned Parking Structures)