In October 2001, the City and Clear Channel executed an agreement for Clear Channel to construct, operate, and maintain the current bus shelter structures on the public rights-of-ways throughout the City.  The agreement resulted in the installation of 107 bus shelters on City rights-of-way and provided for commercial static advertising on the bus shelters with an escalating revenue share with the City.  Over the last three years, the City has received an annual average revenue share of $644,000 from Clear Channel, comprised of $260,000 in minimum annual guarantee, plus 30% of net revenue share.

To date, the City Commission has approved five amendments to the agreement with Clear Channel.  Most significantly, Amendment No. 5, executed in October 2020, established a termination date of September 30, 2021 and enabled for transfer of ownership of all existing bus shelters in the City (currently 103 as some were removed due to construction) from Clear Channel to the City upon expiration or termination of the agreement.  Additionally, Amendment No. 5 reduced the minimum annual guarantee by 50% (to $130,000) and increased revenue share from 30% to 50% as a result of financial impact to Clear Channel due to the COVID-19 pandemic.

Given that the existing bus shelters were installed in 2001, the City Commission has expressed a desire to update the current design. At its December 9, 2015 meeting, the City Commission referred an item to the Finance and Citywide Projects Committee (the Committee) for a discussion on updating the design of the existing bus shelters with the goal of achieving an iconic design and providing amenities/enhancements that could help promote transit use.

On January 22, 2016, the Committee considered the issue.  The Administration had originally recommended issuing a single solicitation for the design, construction, operation, and maintenance of new bus shelters.  However, because the Committee considered an iconic design to be of primary importance, it recommended issuing an initial solicitation to engage a firm to develop a bus shelter design and subsequently issuing a separate solicitation for the construction, operation, and maintenance of the new bus shelters.

At its March 9, 2016 meeting, the City Commission adopted Resolution No. 2016-29325, accepting the recommendation of the Committee to issue a solicitation for the design of new bus shelters.  The Resolution also authorized the City Manager to extend the existing agreement with Clear Channel on a month-to-month basis until such time as the City executes an agreement with a firm to construct new bus shelters.

On April 13, 2016, the City Commission approved the issuance of Request for Qualifications (RFQ) No. 2016-116-KB for Architectural and Engineering Design Criteria Professional Services for New Bus Shelters.  The RFQ process resulted in the selection of ACAI Associates, Inc., whose team included the premier design firm of Pininfarina.  The resulting design developed by the ACAI/Pininfarina team incorporates features to enhance passengers' transit experience, including the use of technology; innovative, sustainable, and attractive architectural elements; and a modular design that enables for installation of bus shelters at more bus stops, particularly at locations within constrained rights-of-way.  The ACAI/Pininfarina bus shelter design was approved by the City Commission, Design Review Board (DRB), and Historic Preservation Board (HPB).

On August 7, 2019, following City Commission approval of the ACAI/Pininfarina bus shelter design, the City issued Request For Proposal (RFP) No. 2019-306-KB for the construction, operation, and maintenance of the new bus shelter design.  The RFP required proposers to submit proposals based on the approved ACAI/Pininfarina bus shelter design.  The successful proposer would bear all costs associated with construction, operation, and maintenance of the new bus shelters, and provide revenue to the City based on advertising proceeds.  No responses to the RFP were received.  The primary reason some proposers cited for declining to submit a proposal was the high manufacturing/construction cost of the ACAI/Pininfarina design.  Staff held meetings with a number of firms in the bus shelter industry to better understand any design-related concerns, or other impediments, which may have resulted in the City not receiving any responses to the RFP.  The issue of the high cost of the ACAI/Pininfarina design was, once again, the primary concern expressed.  Based on industry feedback, City staff worked with the ACAI/Pininfarina team and amended the bus shelter design value engineering modifications to reduce the cost of manufacturing and construction without impacting the aesthetic design.

Based on industry feedback, the Administration determined that issuing a new solicitation that provided flexibility for prospective bidders to bid on the ACAI/Pininfarina design, or suggest an alternative bus shelter design, would be in the best interest of the City.

On September 16, 2020, the Mayor and City Commission authorized the issuance of Invitation to Negotiate (ITN) 2020-239-KB for Revenue Sharing Agreement for the Design, Construction, Operation, and Maintenance of Bus Shelters and Other Street Furniture with the goal of negotiating an agreement that resulted in new and improved bus shelters and revenue to the City.  On October 21, 2020, the City issued the ITN.  The ITN allowed bidders to bid on the ACAI/Pininfarina design or suggest an alternative bus shelter design, with all costs related to design, construction, and installation of the new bus shelters and other street furniture to be the responsibility of the successful bidder.  The ITN also included stand-alone digital Estimated Time of Arrival (ETA) signs at bus shelter locations and the sale of bus shelter advertising space.

ITN responses were due and received on January 7, 2021.  The City received one proposal from OUTFRONT.  On February 16, 2021, the City Manager appointed an Evaluation Committee via LTC # 071-2021.  The Evaluation Committee convened on February 25, 2021 and scored the OUTFRONT proposal with an average score of 93 points.

Pursuant to Resolution No. 2021-31644, the City entered negotiations with OUTFRONT.  Close to 20 negotiation meetings were held.  The City’s negotiation team was comprised of members of the Transportation and Mobility Department, City Attorney’s Office, and Procurement Department.  As an outcome of these negotiations, a draft agreement (attached) was developed for the design, construction, operation, and maintenance of new bus shelters and street furniture at no cost to the City and with revenue share to the City. 

The City was able to negotiate the following terms:

• Installation of a minimum of 200 and maximum of 250 bus shelters and ETA signs citywide (as compared to OUTFRONT’s original proposal of a maximum of 200 bus shelters and ETA signs), including 40 double-sided digital advertising displays.
• Installation of up to 100 bus benches/leaning rails and 100 bicycle racks citywide.
• Capital Expenditure (CapEx) commitment by OUTFRONT of $25 million over a 20-year term or $27 million over a 25-year term, as compared to originally proposed $25 million over a 25-year term.  
•  Negotiated increase in Minimum Annual Guarantee (MAG) from $96,000/year to $264,000/year plus gross revenue share to the City between $44 million (minimum 20-year term with a minimum of 200 shelters) and $69 million (maximum 25-year term with a maximum of 250 shelters).  Overall negotiated revenue share to the City increased by a minimum of $6 million as compared to OUTFRONT’s original proposal.  

• Both the City and OUTFRONT agree that it is beneficial for both parties to spend the full amount of committed CapEx on the Program.  However, if upon full deployment of the new bus shelters and other street furniture the City has not utilized all of the total committed CapEx, upon the City’s request, the Concessionaire will seek in good faith to spend the unspent portion of such allocation on mutually agreed additional bus shelter structures that may benefit the Program.  If, after such good faith discussions, any remaining portion of the CapEx commitment remains unspent, upon the City’s request, the Concessionaire will increase each subsequent quarterly guarantee payment such that the City benefits by fifty percent (50%) of the amount of the unspent CapEx.  It is important to note that the likelihood of having unspent CapEx on this Program is very low. 
• The Agreement provides for a high level of maintenance of bus shelters.  The City has negotiated that OUTFRONT pressure-wash up to 40 bus stops daily (except on weekends and holidays) to ensure the highest level of cleanliness at the City’s busiest bus stops.
•  The Agreement allows for the installation of additional digital advertising displays (in addition to the 40 proposed by OUTFRONT), subject to City Manager’s approval.  Per OUTFRONT, digital advertising generates 3-4 times more revenue than static advertising.    
•  Allocation of digital and static advertising space for the City's use as follows:

o   11% share-of-voice on OUTFRONT’s digital inventory (i.e. total amount of time that all digital displays are available to the City for advertising at no charge plus any unsold space at no charge, as available).

o   5% initial share-of-voice on OUTFRONT’s static inventory, growing to 11% once the full digital deployment is complete.

o   In the event of a public emergency, the City will have immediate access to 100% of OUTFRFONT’s entire digital inventory to assist with public communications.

The Agreement provides for a phased implementation of bus shelters and street furniture citywide as described below:

Phase 1: During Phase 1, OUTFRONT will assume ownership of 95 existing bus shelters (Clear Channel will remove eight existing bus shelters that are located on inactive transit corridors). OUTFRONT will operate and maintain the 95 existing bus shelters and benches, sell advertisements, and provide 30% revenue share to the City.  Phase 1 will commence on October 1, 2021 and expire upon the commencement of Phase 2 of the Program, for a period not-to-exceed 12 months from October 1, 2021 (Commencement Date).  OUTFRONT will not remit MAG payment to the City for the first quarter of the first contract year to allow for Program “ramp-up”.  

Phase 2: Within six months from the Commencement Date of the Agreement, OUTFRONT will secure approval from the City Manager and any governmental approvals required for the design and installation of the new digital displays at up to 40 existing bus shelters.  Additionally, OUTFRONT will commence installation of new bus benches and ETA signs at various existing bus stop locations.

Within 18 months from the Commencement Date, in close coordination with the City, OUTFRONT will develop the new bus shelter design.  The design will be presented to the City Commission for review and approval.  Once approved by the City Commission, OUTFRONT will seek DRB and HPB approvals and any other governmental approvals required for the design.  

During this phase, OUTFRONT will continue to operate, maintain, and sell advertising on the existing bus shelters and provide 10% gross revenue share to the City.  Phase 2 will terminate when deployment of digital displays at 40 bus shelter locations is completed, however, no later than 24 months from the Commencement Date, whichever occurs first. 

Phase 3: During this phase, OUTFRONT will secure City Manager approval of a full-scale/in-field and operational bus shelter prototype.   Once the prototype is approved, OUTFRONT will commence manufacturing/construction/installation, operation and maintenance of new bus shelters and other street furniture, while prioritizing bus stop locations that currently do not have shelters. OUTFRONT will continue to sell advertisements on the existing and new bus shelters and provide 10% gross revenue share to the City.  Phase 3 commences upon securing all requisite approvals for the design of new bus shelters and terminates when the full deployment of all new bus shelters is complete; however, no-to-exceed 48 months from securing such design approvals.

Phase 4: During this phase, OUTFRONT will continue to operate and maintain new bus shelters and other street furniture, sell advertisements on new bus shelters, and provide 20% gross revenue share to the City.  Phase 4 commences when full deployment of new bus shelters is completed and terminates when the Agreement expires or is otherwise terminated pursuant to the terms of the Agreement. 

According to a 2019 Community Satisfaction Survey conducted by ETC Institute, 74% of respondents are satisfied with the City of Miami Beach Trolley System and 59% are satisfied with the Miami-Dade County bus service.  Furthermore, 24% of survey respondents highlighted bus stop amenities as a factor of dissatisfaction with the trolley service.  This project will improve the safety, convenience, and image of the City’s bus stop amenities and, as a result, increase the residents’ quality-of-life and satisfaction with transportation services offered in the City.

Throughout the term of the Agreement, with the exception of the first quarter of the first contract year, the City will be receiving a Minimum Annual Guarantee of $264,000 plus:

1.     30% gross revenue share for Phase 1

2.     10% gross revenue share for Phases 2 and 3

3.     20% gross revenue share for Phase 4

The total estimated revenue share to the City for a 20-year contract term is estimated between $44 million and $48.2 million based on installation of 200 or 250 bus shelters, respectively.

The total estimated revenue share to the City for a 25-year contract term is estimated between $62.7 million and $69.1 million based on installation of 200 or 250 bus shelters, respectively.

All payments from OUTFRONT to the City will be inclusive of any required Florida State Sales and Use Tax(es), as applicable.  The City will remit directly to the appropriate authority any federal, state and local taxes due and payable on account under this Agreement, as applicable. 

The Agreement with OUTFRONT will result in installation of premium bus stop shelters and amenities (minimum of 200 and maximum of 250 bus shelters and ETA signs), 100 bicycle racks and up to 100 bus benches, citywide.  OUTFRONT has committed $25 million in CapEx for a 20-year term and $27 million for a 25-year term.   The estimated total revenue to the City throughout the contract term depends on the term duration and the total number of bus shelters to be installed, however, it is estimated to be between $44 million (for a 20-year term with 200 shelters citywide) and $69 million (for a 25-year term with 250 shelters citywide).  The total value to the City including CapEx, revenue share, and operating/maintenance expenditures is estimated to be between $82.4 million (for a 20-year term with 200 shelters citywide) and $119.2 million (for a 25-year term with 250 shelters citywide).  All payments made by OUTFRONT to the City will be inclusive of any required Florida State Sales and Use Tax(es), as applicable.

For the reasons stated herein, I recommend that the Mayor and City Commission approve the Resolution approving, in substantial form, the negotiated agreement with OutFront Media, pursuant to Invitation to Negotiate (ITN) No. 2020-239-KB, for revenue sharing agreement for the construction, operation, and maintenance of bus shelters and other street furniture; and further authorizing the City Manager and City Clerk to execute the agreement.