Adopt Resolution #22-128 Approving Lease With iDigital Outdoor, LLC for Dynamic Display Billboard

The purpose of this case is to consider approval of a lease with iDigital Outdoor, LLC to erect a Dynamic Display Billboard on City owned land.

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 has 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 Outdoor, LLC, former City Attorney Langel, City Attorney Knaak, and the Planning Commission to put together a lease and ordinance.

Dynamic Display Billboard Location and Design
Staff had 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 Outdoor, LLC.  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 searched for a better alternative near this location.  Staff identified a City owned parcel south of Hwy 10 in front of the old Diamonds 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 attached lease and recommends approval contingent on adoption of an Ordinance adding digital display billboards. 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 Announcements 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 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"

This language was reviewed by the EDA and staff was directed to add this into the attached lease.  

Sign Ordinance
The sign Ordinance adding digital display billboards and the rules and regulations is being introduced this evening in another case.  Approval of the attached lease is contingent on adoption of the Ordinance.  The terms of the attached lease were discussed by the City Council during a previous work session and the sign spacing and display interval of 7s are incorporated into the Ordinance to be introduced at the City Council Meeting.  

N/A

iDigital has communicated to City Staff that they are anxious to move forward on this project.  Lead times for new digital displays are out longer than usual and it takes awhile to get through the processes relating to siting the billboards.  iDigital Media would like to have this project under construction in 2022 if it is feasible.  

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. 

The Ramsey EDA met on February 10, 2022 and recommended that the above terms be included in the lease.

Alternatives for Lease:
1)  City Council to approve the attached Lease  with iDigital Outdoor, LLC contingent on adoption of sign Ordinance; subject to City Attorney Review (as presented)
2)  City Council to approve the attached Lease  with iDigital Outdoor, LLC contingent on adoption of sign Ordinance; subject to City Attorney Review (with suggested changes)
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. 

The EDA met on February 10, 2022 and made a motion to recommend to City Council to approve the Lease Structure for Dynamic Display Billboard with iDigital Media as presented, subject to City Attorney review.

and; 

The EDA met on February 10, 2022 and made a motion to provide comments to the Planning Commission and City Council an ad display duration interval of seven seconds and the approval of the sign spacing outlined in the draft ordinance.

Both motions were passed unanimously. An excerpt of the Minutes from the February EDA Meeting is attached to the case for reference.
 

Motion to Adopt Resolution #22-128 Approving Lease With iDigital Outdoor, LLC for Dynamic Display Billboard Contingent on Adoption of Ordinance #22-19; subject to City Attorney review.