Staff recommends City Council approve the purchase of MET's Advertising Concessionaire's bench inventory to ensure a seamless transition of advertising service during the transition to an in-house operated advertising program at MET. 

MET Transit has historically offered advertising opportunities to the community with its on vehicle advertising as well as on street advertising displayed on bus benches. This opportunity has traditionally been executed via a concession agreement with an outside entity to manage and sell the advertising space; the current concession expires March 31, 2022. Due to increases in Federal funding authorized by the Bipartisan Infrastructure Act recently passed at the Federal level, MET Transit has realized an increased need for additional local match dollars to ensure the agency can adequately provide required local funding to take advantage of the additional Federal funds.  To accomplish this, the Aviation and Transit Department is in the process of internalizing the advertising program within the MET Transit Division to increase the level of revenue generated and available for use as matching grant funds.  The traditional structure for the concession agreement has consisted of a revenue share model with the contracted concessionaire, providing MET with only 40% of the annual revenue generated by the advertising agreements. For the period of FY18 through FY21, the amount received by MET averaged $117,959 annually.  Based upon this figure, overall annual revenue generated by the advertising program averaged $294,897.  By bringing this entire revenue amount in house, MET will increase its ability to generate local revenue for providing not only required Federal match amounts, but also be able to leverage the increased revenue in support of continued operation of MET Transit services. To ensure a smooth transition for current advertising customers and to not interrupt the revenue stream, the Aviation and Transit Department has negotiated a purchase price for all existing, on street and spare bench inventory from the current concessionaire, Blair Unlimited, Inc, at the end of the agreement for a total amount of $240,000.  This negotiated price is reasonably in line with quoted prices received by the Department for the purchase of new benches with replacement advertising.  The advantage of purchasing the existing inventory will allow MET to immediately realize increased direct revenue from the already existing contracts due to the uninterrupted advertising time span.  By purchasing already in place benches, City personnel will not be required to spend time and resources purchasing replacement benches and developing replacement advertising for in place contracts. Further, personnel will not be required to spend time physically moving and replacing the 250+ benches that are already placed throughout the community. Should the City be required to purchase new benches with replacement advertising, the Department estimates it may take six months or more to directly replace all on street bench inventory depending on supply availability.  Further, direct replacement would serve to delay existing advertising agreements, potentially comprising current and future contracts with the existing customer base and result in a reduced revenue stream.  MET received quotes from three other vendors for new benches and all quotes were the same price or higher for new benches.  MET also asked the City Purchasing Agent to review and approve this transaction to ensure it was appropriate prior to Council's approval.  Going forward MET will utilize the Department's new Marketing and Advertising Coordinator to manage the MET's advertising program including the sale of advertising for these bus benches.

City Council may:

• Approve the purchase agreement with Blair Unlimited Inc; or
• Not Approve the purchase and advise staff on how to proceed.

The proposed cost of purchasing all existing bench inventory, including spares has been negotiated at $240,000.  This includes an inventory of 260 currently deployed benches and approximately 58 spare benches and parts including equipment to manufacture additional replacement benches. Based upon average revenue historically generated by the advertising program, MET expects this purchase to pay for itself within one and one half years from just the additional anticipated concession revenues.  Funding is available in MET Transit's capital reserves for this purchase.