Consider Recommendation of Lease Structure for Dynamic Display Billboard with iDigital Media

The purpose of this case is the review the terms of the proposed lease with iDigital Media and the draft sign Ordinance and ultimately make a recommendation to the City Council on how to proceed with this project.

The request for to explore and ultimately construct a Dynamic Display Bill Board originated in the EDA.  Feedback from proposed developers and end users in regards to visibility from Hwy 10 in the COR prompted the discussion.  On May 11, 2021 The City Council adopted Resolution #21-131 directing staff to begin work on negotiation for a ground lease on 7443 Hwy 10 (Former M & G Trailer RALF Site), or another City preferred location and to work on an ordinance amendment for digital billboards. Staff has been working with iDigital Media, City Attorney Langel, City Attorney Knaak, RALF, and the Planning Commission to put together the framework of a lease and ordinance.

Dynamic Display Billboard Location and Design
Staff has originally identified 7443 Hwy 10 NW as the proposed site for the billboard.  Upon further discussion with the  RALF program it was determined that the City would need to acquire the site before it would be able to enter into a lease with iDigital Media.  The estimated cost for the entire site would approach 1.3M according to discussion with RALF. In addition erecting a sign prior to the new frontage road being built as part of the Hwy 10 project is problematic.  Staff  began searching for a better alternative near this location.  Staff Identified a City owned parcel across the Hwy 10 in front of the old Diamond site and presented it to iDigital for consideration.  In order to make the project work on this site, the power lines will need to be put underground and a vertical billboard would be needed.  Discussions with Connexus Energy have been productive and iDigital Media is comfortable moving forward with this site.  (See Site location Map)

Terms of the Lease
The terms of the lease are generally the terms reviewed by the City Council and EDA last year.  The City attorney has reviewed the draft lease and does not have any objections at this point. Ramsey businesses are given a preferred rate, 8 slots of advertising availability if they are willing to buy, and the city is given access to post Public Service Announcement based on ability and an opportunity to advertise city events in the St Could and northern Minnesota networks. Political advertisements are an item that still needs to be refined.  iDigital has asked the City to consider the ability for political advertisement under the conditions in the language below:

"In light of Lessor’s status as a governmental entity, Lessee agrees political advertisements, meaning advertisements appealing for votes for or against a candidate or issue in any election campaign will be treated with equal opportunity and be unbiased to any one party.  This will include equal inventory offerings and equal rates to all political parties.  Lessee further agrees to prohibit advertisement of adult use businesses or products sold or marketed by adult use businesses as such businesses are defined in Section 117-1 of the City Code, as well as advertisement of tobacco products, including cigarettes, e-cigarettes, chewing tobacco, cigars and vapor products, and any advertisement that promotes the use or consumption of such products"

A recommendation by the EDA in regard to this language and other items in the draft lease would be requested before bringing this to the City Council for consideration of approval. 

Sign Ordinance
A draft ordinance has been put together by city staff and WSB. (See attached) Planning Commission has reviewed the attached ordinance language but the City Attorney has yet to provide comments.  The two main issues that will need to be addressed are the distance between signs and the minimum display duration.  Idigital is asking for 6-7 second display duration for messages and the proposed ordinance has started with 8s minimum display duration intervals.  There is some flexibility here as state statutes allow for 6 second display intervals with a 1-2 second transition, whereas the Federal Highway Administration recommends 8 second displays.  The ordinance in current form follows the recommended 8 second regulation.  This item will need to be worked out between iDigital and the City before entering into a lease. Although Ordinances are not specifically under the EDA purview, it would be acceptable for the EDA to provide comments for consideration by the Planning Commission and City Council.

N/A

iDigital has communicated to City Staff that they are anxious to get to the next level on this project.  Lead times for new digital displays are out longer than usual and it takes awhile to get through the MN processes relating to siting the billboards.  iDigital Media would like to have this project under construction in 2022 if it is feasible.  Idigital Media will be available for questions at the EDA meeting.

Key terms of the proposed lease include:

• Lessor will be paid monthly at a rate of 25 % of the gross monthly billing per month. (Estimated to be about 60K/Year).  Payments to Lessor will commence 60 days after the billboard goes live. Two years after billboard goes live, a minimum payment of $1,500 / month ($18,000/year) shall be made by the Lessee to the Lessor.
   
• Lessee agrees to reserve up to 8 slots of the advertisement inventory for Local Business Enterprises, in the event this inventory is not sold within 120 days, Lessee reserves the right to open that inventory for sale to entities outside of Ramsey city limits.  Lessee will work in good faith with the city of Ramsey to prioritize local businesses that wish to advertise on the billboard. 
   
• Lessee agrees to allow City of Ramsey to use advertising space on the Ramsey billboard for Public Service Announcements (PSA) as inventory is available; Lessee will do its best to accommodate any PSA requests.
                                           
• Lessee agrees to allow the City of Ramsey to advertise up to 1 slot each on its St Cloud Network and Northern MN network at no cost based on open inventory.
   
• Lessee will raise advertising rates annually based upon prime and/or market conditions. Local Business Enterprises or "LBE" will have a special rate, called the “local rate”.  The local rate shall be 33% less than the standard rate card rates as published by iDigital annually.  An LBE shall be defined as a business headquartered or which maintains a Substantial Local Office that performs the significant functions of the business in the City of Ramsey or a business of which at least 51% of the stock, equity, or beneficial interest is owned, held, or controlled and whose day-to-day management is under the control of an individual residing in the City of Ramsey. All businesses in the COR shall also carry an LBE designation.  There is no formal certification process for LBE designation and it is determined and assigned based upon the criteria referenced in this definition.   
   
• Lessee further agrees to give the City of Ramsey open inventory for free on Lessees other networks to advertise events and announcements. 
   
• In light of Lessor’s status as a governmental entity, Lessee agrees political advertisements, meaning advertisements appealing for votes for or against a candidate or issue in any election campaign will be treated with equal opportunity and be unbiased to any one party.  This will include equal inventory offerings and equal rates to all political parties.  Lessee further agrees to prohibit advertisement of adult use businesses or products sold or marketed by adult use businesses as such businesses are defined in Section 117-1 of the City Code, as well as advertisement of tobacco products, including cigarettes, e-cigarettes, chewing tobacco, cigars and vapor products, and any advertisement that promotes the use or consumption of such products 
   
• Lessee agrees to place on the sign pedestal permanent City of Ramsey verbiage and logo visible from both directions on Highway 10. 

In addtion to the key terms above, the following items are in need of EDA recommendation or comment:

1) Ability to sell advertisement for political advertisements
2) Potential spacing between signs or number of signs allowed in Ramsey (Draft Ordinance proposes 2 miles between Off Site Premise Digital Displays signs)
3) Location of City of Ramsey sign
4) Ad display duration interval (6,7 or 8s)

Alternatives for Lease:
1)  EDA recommendation to City Council to approve the Lease Structure for Dynamic Display Billboard with iDigital Media; subject ot City Attorney Review (as presented)
2)  EDA recommendation to City Council to approve the Lease Structure for Dynamic Display Billboard with iDigital Media (with suggested changes); subject ot City Attorney Review
3) Something Else

Alternatives for Ordinance:
1) EDA recommendation to provide comment to the Planning Commission and City Council regarding the Ad display duration interval (6,7, or 8s) and the potential spacing between signs.
2) EDA to provide no comments in relation to the draft Ordinance
3) Something else.
 

Construction, maintenance and operation of the sign will be by the iDigital Media. The City would receive lease revenue based on 25% of gross ad sales. There is no net cost to the City

Based on discussion

Motion to:
1)  EDA recommendation to City Council to approve the Lease Structure for Dynamic Display Billboard with iDigital Media; subject ot City Attorney Review (as presented).
or;
2)  EDA recommendation to City Council to approve the Lease Structure for Dynamic Display Billboard with iDigital Media (with suggested changes); subject ot City Attorney Review.
or;
3) Something Else

and;

Motion to:
1) EDA recommendation to provide comment to the Planning Commission and City Council regarding the Ad display duration interval (6,7, or 8s) and the potential spacing between signs.
or;
2) EDA to provide no comments in relation to the draft Ordinance.
or;
3) Something else.