Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on Transportation and Traffic

FROM:

General Manager of Engineering Services

SUBJECT:

Street Furniture Management and Transit Bench Agreement

 

RECOMMENDATION

COUNCIL POLICY

The Council policy on fees requires that they be set at market levels if the service provided is of a market nature.

PURPOSE

This report recommends that Engineering Services staff undertake a study to investigate the opportunities and report back on the options to improve the quality and revenue generating potential of public street furniture. Further, so as not to limit the implementation of a potential new street furniture plan, this report recommends that a new Transit Bench Agreement be negotiated with the current provider, Goodwill Advertising Ltd., for a short term, not to extend beyond the expiration date of the Transit Shelter Agreement which is August 31, 2002.

BACKGROUND

As many as nine different types of street furniture (Appendix A) items are currently permitted on City streets. In most cases, each type of street furniture is managed as a separate program, resulting in a variety of standards and designs. Some street furniture, such as transit shelters and transit benches, are provided and maintained in exchange for the rights to sell advertising space on the units, with net revenue to the City. Other elements, such as litter containers, are installed and maintained entirely at the City's cost. Still other elements, such as post boxes, are permitted on City streets free of charge.

The demand for street furniture continues to increase, with items such as public washrooms, specialty transit facilities, additional litter containers, decorative benches, etc. being requested. As the City strives to manage its budget, there is pressure on street furniture programs provided by the City. Alternative ways of supplying and maintaining these items are worth investigating to see if improved service, at reduced City cost, is possible.

One street furniture item, transit benches, is currently provided by Goodwill Advertising Ltd., who have 466 benches installed at bus stops on Vancouver's streets. The current Transit Bench Agreement with Goodwill was entered into on June 30, 1989 following a call for proposals. Proposals at that time were evaluated against a number of criteria, including the financial return to the City. This Agreement expires on December 31, 1998.

DISCUSSION

Companies that provide street furniture and other services in exchange for advertising rights have been increasing. While many companies, such as Goodwill Advertising Ltd., concentrate on one product, other companies have broadened their scope to offer a multi-product line of coordinated street furniture. In many cases, these companies offer increased service or enhanced aesthetics, offset by greater advertising opportunities.

Managing each type of street furniture as a separate program allows many suppliers to bid, which usually results in a more competitive proposal. This, however, has led to a disorganized street appearance with each non-City funded furniture item requiring advertising to survive. On the other hand, grouping a number of street furniture elements together in a contract could result in a more coordinated look and allow some items to be ad-free, funded by more ads at key locations. The cost/benefit to the City for this approach has not been evaluated. A study of the opportunities for revenue generation, improved service, and enhanced aesthetics of street furniture offered by the private sector would allow the City to evaluate the merits of the alternatives for the supply of street furniture.

One obstacle to an immediate change in the street furniture management is the Transit Shelter Agreement, which does not expire until August, 2002. This advertising medium would likely be the main advertising venue for any coordinated program and no new system would be feasible to implement until that Agreement expires. Therefore, it is recommended that the Street Furniture Study be conducted during the remaining term of the contract. After that, if a coordinated approach is warranted, a call for expressions of interest could be made and a process leading to implementation in 2002 could proceed.

In order for the City to realize revenues from the existing transit benches, but not forego the opportunity to coordinate the street furniture, it is recommended that any new agreement for transit benches not extend beyond August 31, 2002, so as to coincide with the expiry date of the Transit Shelter Agreement. This is best achieved by negotiating with the current supplier, Goodwill Advertising Ltd., for a short-term agreement.

A short-term contract is unlikely to attract bids from new suppliers as the capital costs to supply transit benches may not be recovered from revenues generated in the short term. Both Key Bench Advertising, the only other transit bench provider in the Lower Mainland, and Creative Outdoor Advertising, an Ontario-based company seeking to expand into B.C., have confirmed that they would not submit a bid for such a short term.

ALTERNATIVES

Should Council not wish to pursue a review of street furniture in the City, then there are a number of alternatives for dealing with the upcoming expiration of the Transit Bench Agreement.

1. Open Up The Contract For Transit Benches to Competitive Bids

A call for proposals from competent suppliers is a good way of ensuring that the City maximizes its revenues and service to the public. This was the approach taken in 1989 when Goodwill Advertising Ltd. was the successful bidder.

The standard term for a contract offered under a competitive proposal call is for a 10 year period. This time frame enables new companies to bid for the contract with the assurance that they will be able to recoup their capital investment for the initial installation of the transit benches.

As there is only one other transit bench supplier active in the Lower Mainland (ie. Key Advertising Group), a national or international call for proposals would be necessary to ensure receipt of a number of competitive proposals. Very little is known about such companies; however, one company, based in Ontario, has expressed an interest in providingan integrated transit bench and litter container module, with litter pick-up included. It is not known how many other companies would be interested in submitting a proposal.

At this time it would be difficult to evaluate proposals that offer additional amenities or services beyond the basic transit bench. The issues that would need to be explored upon receipt of such a proposal, are similar to those suggested for review in a Street Furniture Study.

2. Negotiate with the Current Supplier for Transit Benches

Negotiation with a single company, rather than a call for proposals, is acceptable in certain situations. There is value in continuing to work with a known and competent company, particularly if terms of the revenue-sharing Agreement are likely to be superior to those which could be expected through a call for proposals, or if the company is agreeable to incorporating additional conditions into the Agreement as desired by the City.

Goodwill Advertising Ltd. has been supplying transit benches to the City of Vancouver since 1947. Staff and the public have been generally satisfied with the product and service provided by Goodwill Advertising Ltd.

The company has expressed strong interest in retaining the exclusive rights to transit bench advertising in the City of Vancouver and would welcome an opportunity to directly negotiate a new ten year contract. They have cautioned that a competitive call for proposals may result in a less attractive bid than could be gained through negotiation.

Goodwill Advertising Ltd. are concerned that the City's desire for a more aesthetically pleasing transit bench design will increase the cost of each unit. These increased costs would be passed on to businesses purchasing advertising, who may no longer be able to afford, what has been, a relatively cheap means of street advertising. Most clients using this form of advertising are local businesses.

FINANCIAL IMPLICATIONS

Revenue generated for the City by the 466 transit benches is about $60,000 per year, which is the highest value transit bench contract in the Lower Mainland. Appendix B, Table 1, compares transit bench revenues in the region.

A similar comparison of transit bench revenues generated in other Canadian cities indicates that Vancouver's revenue rates are good, but that the total revenue is small (Appendix B-Table 2).

There are suggestions that revenues may decrease if higher quality street furniture elements are required, or if ad-free amenities are included. On the other hand, greater revenues may be possible if outdoor advertising street furniture elements in a particular area were bundled into a single contract. The Street Furniture Study will review the financial impacts of the options for the supply and maintenance of these elements.

CONCLUSIONS

Street furniture in Vancouver has evolved to a point where the number of different items and the variety of styles often results in an unkempt appearance. In addition, the ability of the City to expand its programs is limited. A review of how street furniture is provided in the City may lead to increased services, amenities, aesthetics and revenues for the City of Vancouver.

Transit benches are provided and maintained under a revenue sharing agreement that expires December 31, 1998. To maintain maximum flexibility, the term of a new Transit Bench Agreement with Goodwill Advertising Ltd. should not extend beyond the expiration of the Transit Shelter Agreement, August 31, 2002.

* * * * *

APPENDIX A
List of Existing Street Furniture

Item

Advertising

Owner

Transit Shelters

_

Pattison Outdoor Advertising

Transit Shelters

  

Streets Operations

Bus Benches

_

Goodwill Advertising

Benches

  

Streets Operations

Bike Racks

  

Adjacent Property Owner

Bike Racks

  

City

News Boxes

  

Various Publishers

Poster Cylinders

_

Street Lighting and Utilities Branch

Litter Containers

  

Sanitation Branch

Litter Containers

  

Various property owners

Phone Booths

  

B.C. Tel.

Phone Booths

  

Canadian Pay Phones

Notice Kiosks

_

Downtown Vancouver BIA

Post Boxes

  

Canada Post

APPENDIX B

Table 1
Sample of Transit Bench Contracts in the Lower Mainland

City

Number of Benches

City-share of Revenue

per-bench City share of revenue

Supplier

         

Vancouver

466

$60,000

$129/year

Goodwill

Richmond

390
61

$7,800
$1,220

$20/year
$20/year

Goodwill
Key Advertising

Burnaby

380
61

$3,800
$ 610

$10/year
$10/year

Goodwill
Key Advertising

Surrey

190
600

$0
$0

$0
$0

Goodwill
Key Advertising

Coquitlam

80

  

$10/year

Goodwill
Key Advertising

Delta

80
75

$0
$0

$01
$0

Goodwill
Key Advertising

Langley

115

$1,725

$15/year 2

Key Advertising

Table 2
Sample of Transit Bench Contracts in Other Canadian Cities

City

Number of Benches

City-share of Revenue

per-bench City share of revenue

Edmonton

2000

$162,000

$81/year

Winnipeg

1000

$100,000

$100/year

Calgary

1600

$300,000

$188/year

1 - option exists to charge a highway use permit fee of $25/year

2 - charged as highway use permit fees

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