Cash-strapped Muni offered shelter-ad windfall

Although the cash-strapped Muni system stands to make more than $300 million in advertising revenue over the next 20 years from a new bus shelter contract, critics say the plan violates the spirit of an anti-billboard measure passed by voters in 2002.

Three different companies — CBS Outdoor, Cemusa and Clear Channel — competed for the contract. The current deal expires in December.

Clear Channel was chosen, according to Muni Executive Director Nathaniel Ford, because the money it guarantees will go to the transit agency and because it offers such benefits as solar-powered lighting, audio technology for the visually impaired and lights at bus stops to signal drivers that a passenger wants to get on board.

Mayor Gavin Newsom called it an “extraordinary contract.”

The current deal, first negotiated 20 years ago with CBS Outdoor, provides The City with an annual payment of $400,000. Under the Clear Channel deal, which will go before the Municipal Transportation Agency board of directors for approval Tuesday, the company agrees to pay Muni a minimum average payment of $15.3 million a year over the life of the contract. The agreement also requires approval from the Port Commission and the Board of Supervisors.

“I know I am setting myself up here, but Muni has to and will improve, and this revenue stream will help us accomplish that,” Newsom said.

Muni faces yearly deficits, with next year’s financial shortfall estimated at about $50 million.

As part of the contract, Clear Channel would eventually replace San Francisco’s 1,100 transit shelters and 39 kiosks and has the option of adding 400 new shelters and 111 kiosks, with Muni’s approval.Critics of the contract say ads on transit shelters and kiosks deluge San Franciscans with advertisements they already said they didn’t want in 2002, when 77 percent of voters passed an anti-billboard measure.

Supervisor Jake McGoldrick has authored a ballot measure for November that would allow San Franciscans to weigh in on whether they want more general advertising on The City’s streets.

The Clear Channel contract is for a 15-year term with one five-year option to extend. If Muni stays with the contract until 2027, it would receive a minimum amount of $306 million over the 20-year period, and a possible total of $381 million.

Anticipated gross revenues for the contract add up to $771 million over the 20-year period, according to the deal documents.

Signage deal

Key provisions of The City's transit shelter agreement with Clear Channel:

» San Francisco will receive annual advertising revenue profits of $15.3 million annually, at minimum, for a 20-year period.

» The City will receive annual payments of $500,000 in administrative fees, $200,000 in marketing fees, and $265,000 for Arts Commission.

» Clear Channel will have the exclusive right to sell print advertising on transit shelters and kiosks.

» Clear Channel will replace San Francisco’s 1,100 existing transit shelters and 39 kiosks, within six years.

» Clear Channel may install an additional 400 shelters and 111 kiosks, with Muni approval.

» Clear Channel is responsible for maintenance of shelters and kiosks, including removing graffiti, stickers and litter.

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