Proposition K - Street Ads

What it does

Proposition K, if approved by voters, would declare it to be the policy of the voters of San Francisco that there should be no increase in the number of advertisements on City-owned buildings and street furniture, including transit shelters, kiosks, benches and newspaper racks. Because it is a policy statement, it would not be legally binding. Four members of the Board of Supervisors placed Prop. K on the ballot.

Why it is on the ballot

The City of San Francisco has contracts with private businesses to install and maintain street furniture such as bus shelters, kiosks, bathrooms and newspaper racks in the public right-of-way. In exchange for providing and maintaining these amenities, the vendors are allowed to place advertising signs on the structures. Depending on the contract, the City may or may not receive cash payments or a share of revenues from the advertising. The primary examples of this practice include:

• Bus Shelters and Kiosks: There are 1,139 bus shelters citywide, about 750 of which have advertising signs. There are also 39 street kiosks with advertising, found primarily on Market Street. The bus shelters and kiosks are part of the same contract. Advertising on these shelters is split between commercial materials and non-commercial materials such as public awareness campaigns and information. The current contract brings in $440,000 annually, shared evenly between the Arts Commission and the San Francisco Metropolitan Transportation Agency. At one time, the MTA provided and managed its own shelters, but it shifted to a private-vendor approach during the 1980s after the shelters fell into disrepair and took substantial public resources to maintain. A new version of this contract is being negotiated this year.
• Kiosks and Pay Toilets: The City, through the Department of Public Works, has a contract with a firm that installs self-cleaning toilets along with advertising kiosks. The City receives a share of advertising revenues averaging between $400,000 and $500,000 per year.
•  Newspaper Racks: A third contract also through the Department of Public Works allows a private firm to replace individual newspaper racks with uniform racks containing multiple publications. This contract is designed to reduce the visual clutter of multiple freestanding racks. The City receives minimal revenues from this service, but recovers the cost of administering permit issuance and inspections. The firm under contract assumes the cost of installing and maintaining the racks. The program of replacing these racks has been underway for two years, but remains incomplete in a large portion of the city, and implementation is planned to continue over the next nine years.

Pros

Those who support this declaration of policy claim:

• The city already has too much advertising in public spaces, which detracts from the beauty that makes San Francisco a distinctive place to live and visit. We should value our streets as the important public spaces they are, instead of handing them over to others to use for profit. If the proliferation of advertising continues, San Francisco will lose its visual distinctiveness. This aggressive commercialization of public space will continue to accelerate unless voters take action.
• This measure is a balanced approach, as it does not call for a ban on all advertising, but rather limits the addition of new advertising.
• Advertising contracts such as the proposed transit-shelter agreement give away an enormously valuable public asset with an insufficient return. While the MTA may be in a difficult financial position, policy-makers should be forced to make the hard choices to cut costs or increase taxes instead of taking the easy way out and turning over control of the city's appearance for a short-term, minimal revenue boost.

Cons

Those who oppose this declaration of policy claim:

• It is irresponsible to prohibit the City's ability to tap advertising as a source of revenue. For better or worse, statewide tax restrictions put in place starting in the late 1970s have crippled California cities' ability to effectively provide basic services, and have forced them to seek new sources of revenue. While some may not like it, revenue sources such as advertising are necessary for San Francisco to provide core services to improve the economy, environment, quality of life, and urban character. Public transit and its proposed transit-shelter contract are chief among these services. With Muni facing growing deficits and insufficient service levels, with no end to this situation in sight, it is shortsighted to turn away from millions of dollars per year and stifle an entrepreneurial effort by City leaders to seek new funding sources.
• Advertising is not appropriate everywhere. But some advertising in public space can benefit an urban landscape, making it visually exciting. Other cities such as New York, London, Paris and Tokyo have many times the amount of advertising that San Francisco has - or that it would have if it built all the potential transit shelters.
• This measure was put on the ballot by four supervisors at the last minute. Despite months of advance notice during the RFP process for the transit-shelter contract, the proponents failed to bring this measure up in a timely fashion that would have provided an opportunity for public hearings and input.
• This measure does not need to be on the ballot. The Board of Supervisors and the MTA Board of Directors will both hear the details of the proposed transit shelter contract and provide an opportunity for public input. Both venues would be more appropriate to discuss concerns with advertising on transit shelters.
• Proponents of the measure suggest the City government itself should get into the business of managing transit shelters, newsracks and other street furniture. But this has proven unsuccessful in the past, and the City divested itself of some of these responsibilities decades ago when it determined in-house management was unsuccessful. One reason that private management has been more successful is that companies in the advertising business are inherently more capable of tapping into national and international ad buys. Additionally, no major transit property in the world provides these services through a governmental entity; they all contract out the services to benefit from the advertising revenues and the improved service level.
• The newspaper-rack replacement program reduces visual clutter, rather than adding to it. Instead of dozens of individual newspaper racks of different colors scattered throughout the city, newspaper racks are organized and centralized in a visually appealing way. This improvement more than offsets the additional advertising, and shows a well-designed street furniture program can improve the appearance of the right-of-way even when it includes new advertising.

SPUR's analysis

Prop. K appears as a response to a pending contract for replacing and building new transit shelters citywide and expanding the kiosks.

After the expiration of the current 20-year transit-shelter contract, the MTA issued a request for proposals for a new contract to build and maintain transit shelters and kiosks. The RFP included a mandatory minimum annual guarantee payment of $193 million over 20 years.

The RFP also called for a substantial increase in the number of transit shelters over the life of the contract - about 380 new shelters, 250 of which would have advertising space for growth in locations such as Treasure Island and the Presidio, and along new service routes. Shelters would include technology to allow visually impaired persons to hear NextMuni information including vehicle arrival times, a beacon for waiting passengers to notify approaching transit vehicles, recycled and sustainable materials, solar power, and the most technologically advanced materials available to deter or withstand graffiti.

Earlier this year, the MTA selected Clear Channel Outdoor as the bidder for the new "Transit Shelter Advertising Agreement" and began negotiating with Clear Channel in July. The MTA began its negotiations with the winning bidder, asking for $381 million in late July. During the negotiations, Prop. K was placed on the ballot in early August, and as a result the winning firm dropped its offer by $100 million, simply because of the risk associated with a voter mandate to not increase advertising. The MTA was eventually able to negotiate back to $306 million, but to do so it had to negotiate away other items in the contract. The $75 million loss, about 25 percent of the minimum total guarantee to the city, was directly the result of Prop. K and translates to nearly $4 million a year to the MTA throughout the life of the contract. Despite Proposition K's impact, this contract negotiated by the MTA offers the highest per-passenger revenue of any transit agency contract in the nation.

The contract would provide alternative shelters if requested. For example, there have been requests from the public to place benches instead of a full shelter at certain stops. Also, many locations do not have adequate space for a full shelter. Additionally, Clear Channel Outdoor would install 3,000 bus poles with solar-powered signs at transit stops where there are no shelters, and would provide up to 1,500 covers for signal-control equipment at the MTA's request.

The contract also would require Clear Channel to inspect each shelter and kiosk at least twice per week, except shelters and kiosks on Market Street, which must be inspected at least three times per week. In the course of each inspection of a shelter or kiosk, Clear Channel would be required to remove all graffiti, stickers, posters, litter, dust, dirt and weeds from each shelter or kiosk, and from a five-foot radius surrounding the structure, except for private property and rail right-of-way. The agreement would require Clear Channel to make daily inspections of all platforms and pick up trash, remove graffiti, clean and wash each boarding platform; to inspect LED signs and lighting fixtures; and to replace defective lights. Within 24 hours of being notified of a problem, Clear Channel would be required to repair, replace or remove any damaged structure that is hazardous (such as a component with broken glass) or any damages to light sources.

Clear Channel would be required to maintain a Web-accessible database to for the public designating (1) the location, design and features of each structure; (2) all inspection, cleaning and maintenance activities required to be performed under the agreement; and (3) any complaints about or reports of required maintenance and repairs, as well as the status of each complaint or report.

The MTA has an annual operating budget of $671 million. As a comparison, the proposed bus-shelter contract revenue is worth more than 2 percent of the existing budget, or $15 million per year. This amount is slightly less than the new funding proposed in Prop. A but provides a much-needed infusion of revenues to address the agency's longstanding structural deficit and its negative impact on Muni services.

There is still the opportunity for the MTA to increase its revenue from the contract with Clear Channel up to the initial figure of $381 million, if there is sufficient usage to support a build-out of the entire transit-shelter system. That will be based on the overall extent of ridership on the system. Passage of Prop. A and the defeat of Prop. H on this fall's ballot are both key to helping arrive at that figure, as our transit system can only become a first-class system if it has more money, improved work rules and better traffic management.

Because Prop. K is a policy statement, it is only advisory and would not compel action by the City. It would not legally affect the City's ability to enter into a contract for bus shelters or to continue the implementation of the newspaper-rack program. However, if policy makers were to choose to comply with intent of the measure, it would likely preclude these programs from continuing as they are contemplated. Because Proposition K does not call for a ban on all advertising, but rather a cap or a prohibition of increased advertising, the City could conceivably issue a new RFP for an improved revenue share on existing transit shelters that already have advertising. The total loss of potential revenue to the City as a result of complying with Prop. K would depend on whether the City would be forced to renegotiate the entire contract or simply enter into a new transit-shelter contract under different provisions.

Some advocates of Prop. K argue that it is an extension of Proposition G, an ordinance to ban additional outdoor billboards. In 2002, SPUR was one of the sponsors of Prop. G and worked closely with San Francisco Beautiful, a key supporting organization. This year, SPUR does not support Prop. K, because we view it as having a tremendously negative financial impact on Muni and because we do not believe that advertising on bus shelters affects public space in the same way that billboards do.

While we have supported efforts to restrict public advertising in the past, this measure is the wrong way to go. Core to our critique is that this measure would imply that the City should walk away from a contract worth more than $300 million a year - money that the City cannot replace. Given SPUR's priority of working to fix Muni, we view this measure as financially irresponsible. The mere presence of this measure on the ballot resulted in a reduction of nearly $100 million in the proposed contract. San Francisco elected officials erred by putting this measure on the ballot. The voters can now right that error by rejecting Prop. K.

SPUR recommends a "No" vote on Proposition K.