HomeMy WebLinkAboutMemoCITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
TO:
Pedro G. Hernandez, P.E.
City Manager
FROM: Mar, H.
Chief of
l
ay, P.E.
erations
DATE: February 16, 2007 FILE: B-30153
SUBJECT: Manager's Finding:
Fuel Miami, LLC — Citywide
Contract for Bus Benches, Bus
Shelters and Illuminated Panels
REFERENCES:
ENCLOSURES:
FINDINGS
The Department of Public Works finds and determines that pursuant to City Code Section 18-
85(a), it is neither practicable nor advantageous to the City to require competitive bidding for a
new citywide bus bench/shelter contract. Furthermore it is in the best interest of the City to
waive competitive bids and secure the services of Fuel Miami, LLC to provide bus shelter
design, installation and maintenance in addition to bus bench design, installation and
maintenance for each and every bus stop within the City of Miami. This approach will maximize
the number of shelters on the street within the shortest timeframe possible. This will also
reduce the overall amount of advertising on shelters and benches from 1,100 locations to no
more than 750 locations.
There are approximately one thousand nine hundred (1,900) bus stops within the City of Miami.
Fuel Miami, LLC. has advertising rights to all but two hundred (200) of these bus stops through
April 18, 2017. There are two hundred (200) bus stops within the City that are outside of the
existing Fuel contract (some of which have bus shelters installed under a previous City contract
that are now maintained by Fuel for the City). Fuel has the financial ability to install six
hundred (600) shelters within three (3) years, starting in late Spring 2007. We, therefore,
are proposing to include these two hundred (200) locations into the contract between the City
and Fuel in order to expedite installation of bus shelters at selected locations throughout the
city, through one vendor.
In order to provide bus shelters where they are truly needed as rapidly as possible the
Department of Public Works determined that it is in the best interest of the City to hold a duly
advertised public hearing and to request the City Commission to waive the competitive sealed
bidding requirements pursuant to Section 18-85(a) of the Code of the City of Miami by a 415th
affirmative vote. As provided in accordance with Section 18-85(a) of the Code of the City of
Miami, we recommend that the City Manager affirm and adopt these findings and forward the
matter to the City Commission for its approval by a 415th affirmative vote after a duly advertised
public hearing.
Manager's Finding: Fuel Miami, LLC = Citywide Bus Bench Contract Amendment
February 16, 2007
Page2of6
BACKGROUND
The City of Miami (City) and Sarmiento Advertising Group, LLC entered into an Agreement for
Bus Bench Design, Installation and Maintenance dated April 18, 2002. The City Commission
subsequently approved the sale and transfer of one hundred percent (100%) of Sarmiento's
stock to Fuel Miami, LLC, (Fuel) a Delaware Limited Liability Corporation via Resolution 06-
0665 on November 9, 2006, subject to conditions to be approved by the City Commission.
The Bus Bench Design, Installation and Maintenance contract provides Fuel with contractual
rights, including advertising rights on eighty-nine percent (89%), approximately one thousand
seven hundred (1,700) of the one thousand nine (1,900) hundred bus stops within the City until
the end of their contract term on April 18, 2012. Fuel has an additional exclusive absolute right
to extend for another five (5) year term thereafter until April 18, 2017. While these advertising
rights are not exclusive per the terms of the existing contract, there remain significant concerns
associated with allowing a competing vendor to provide advertisements associated with bus
shelters at the same locations for which Fuel has existing advertising rights as outlined below:
The typical advertising panels for bus shelters are almost identical in size and placement to
those already approved and installed under the existing Fuel bus bench contract.
It is neither practical nor desirable to allow a bus shelter with advertising next to or in close
proximity to an already approved Fuel bus bench with advertising.
- Having a bus shelter adjacent to a bus bench dilutes the city's ability to provide either a bus
bench or bus shelter at every transit stop in the city.
- This alternative very possibly, if not probably, infringes on Fuel's advertising rights and could
lead to litigation against the City for failure to honor Fuel's existing contract terms.
This alternative may also infringe on Fuel's contractual rights to exclusively place bus
benches, thereby allowing a bus shelter but not one with any provision for seating or a
'bench'.
(For future reference, no similar concern exists for advertising associated with news racks,
payphones, or trash receptacles as the typical advertising panels differ significantly regarding
size and placement locations and, therefore, are marketed to differing types of companies and
would not infringe on Fuel's existing advertising rights.)
The remaining two hundred (200) bus stops in the City were the subject of a previous Bus
Shelters Contract that expired on January 26, 2004. Fuel is responsible for maintaining these
bus shelters, on a month to month basis, as a condition of their Assignment and Assumption
Agreement with additional conditions.
The City has a large proportion of transit dependent constituents who rely on mass transit and
who are currently underserved due to a lack of adequate bus shelters to protect them from the
sun, wind and rain. The City is committed to providing transit convenience measures, such as
bus benches and shelters, for the use of our residents and visitors to promote transit usage.
The City has assessed the feasibility and practicality of the following alternatives to provide bus
shelters in the City:
- Alternative 1- Execute a new contract with Fuel to include 600 bus shelters and 600 trash
receptacles in addition to bus benches and illuminated panels (included under their current
Manager's Finding: Fuel Miami, LLC — Citywide Bus Bench Contract Amendment
February 16, 2007
Page 3of6
contract) and to add the two hundred (200) bus stop locations not previously under their
contract;
- Alternative 2- Piggyback on the existing County contract for bus shelters for only the two
hundred (200) bus stop locations not currently under the Fuel contract; or,
- Alternative 3- Issue a competitive bid for bus shelters for only the two hundred (200) bus
stop locations not currently under the Fuel contract.
Due to the concerns described previously regarding allowing a competing vendor to provide bus
shelters with advertising at the same locations for which Fuel has existing contract and
advertising rights, the City did not consider an alternative for either piggybacking or issuing a
competitive bid for all bus stop locations within the City.
Below is a summary of the pros and cons of each alternative:
- Alternative 1- Execute a new contract with Fuel to include 600 bus shelters and 600
trash receptacles in addition to bus benches and to add the two hundred (200) bus
stop locations not previously under their contract
o Since Fuel has advertising rights to the majority of bus stops within the City, this option
allows the City the greatest flexibility to provide bus shelters where they are needed the
most as opposed to where they may generate the most advertising (ad) revenue.
o This alternative can be implemented very quickly as the timeframe for approval of the
new contract is much shorter than the timeframe for a competitive bidding process. In
addition, the proposed bus shelter design (both regular and slim line) meets permitting
criteria and has already received master permit approval from both Public Works and the
Building Department. No product approval or other approval is required from the County.
Therefore, bus shelter manufacture and subsequent installation can begin immediately
following contract execution.
o At no cost to the City, Fuel will furnish and install no fewer than six hundred (600) bus
shelters. The location of 500 of these shelters will be determined by the City. The
location of 100 of these shelters will be at the discretion of Fuel. In addition, at no cost to
the City, existing benches where shelters are proposed will be relocated to other bus
stops within the City as appropriate. This will ensure that every bus stop in the City has
either a bench or a shelter as designated by the City. Finally, any remaining bus
benches that are replaced by shelters and can not be accommodated at a bus stop will
be donated to the City for placement at parks, adult living facilities or other locations as
identified by the City.
o At no cost to the City, Fuel will furnish and install six hundred (600) trash receptacles in
conjunction with the six hundred bus shelters.
o Currently, Fuel has the right to place up to nine hundred (900) ad panels with bus
benches. The expired shelter contract authorized an additional two hundred (200) ad
panels for a citywide total of one thousand one hundred (1,100). The proposed new
contract agreement will modify the total number of ad panels to no more than seven
hundred fifty (750). The City will see a net reduction of three hundred fifty (350) ad
panels in the City. This is desirable as certain neighborhoods have expressed objections
to the ad panels based on historic designations or other issues.
a The City will receive annual revenue for all ad panels above six hundred (600) to the
maximum limit of seven hundred fifty (750) according to the greater of a) $1,350 per
panel plus 2% annual escalation through the contract duration, or b) thirty percent (30%)
of earned monthly gross revenues arising solely from these ad panels. The anticipated
Manager's Finding: Fuel Miami, LL,C'— Citywide Bus Bench Contract Amendment
February 16, 2007
Page4of6
annual revenue once seven hundred fifty (750) ad panels are installed would be no less
than $202,500.
o As a condition of the Assignment and Assumption Agreement, Fuel has retained the
management team previously employed by Sarmiento that has provided exceptional
service to the City since 2002 and is committed to continuing this high level of service.
o Fuel would be responsible for all maintenance associated with every bus bench and
shelter in the City throughout the twenty (20) year duration of their contract.
o Florida statute (F.S. 337.408) does not require a competitive public bid for the installation
of benches or transit shelters together with advertising within the right of way limits of
municipal, county or state roads (excepting limited access highways). Thus, this
Manager's finding is required solely because the City's Code, Section 18-85(a) is more
restrictive than State statute and requires a waiver by a 415th affirmative vote after a duly
advertised public hearing.
o This contract generates revenue for the City once the six hundred (600) ad panel
threshold is exceeded. No general fund contribution is required to provide the 600 bus
shelters or the 600 trash receptacles.
o Should Fuel fail to meet their contract obligations to City under this agreement, they.
could lose all rights to both bus benches and shelters within the City, thereby allowing a
future competitive process if the City deemed it in its best interests.
- Alternative 2- Piggyback on the existing County contract for bus shelters for only the
two hundred (200) bus stop locations not currently under the Fuel contract
o This alternative can be implemented fairly quickly as the timeframe for approval of the
piggyback is much shorter than the timeframe for a competitive bidding process.
o The County shelter design is attractive and has been well received by the public. In
addition, the design meets local design and permitting criteria.
o The provision of bus shelters is limited to only two hundred (200) bus stops as Fuel has
advertising rights to the remaining bus stop sites. Of the 200 authorized locations, only
thirty (30) have been identified as locations where the highest need exists for shelters
based on volume of transit ridership and proximity to significant trip generators, such as
schools, hospitals, senior centers, etc.
o The majority of bus stops that have the greatest need for bus shelters cannot be
addressed until April 2017, at the earliest, due to the Fuel contract advertising rights and
exclusive absolute renewal provisions.
o There will be no net reduction to the number of ad panels allowed within the City. The
number of authorized ad panels will remain at 1,100.
o Per the County contract terms this alternative would provide the City between $263,600
and $336,200 annually. Based on an approximate cost of $20,000 per bus shelter
($15,000 material cost plus $5,000 installation), the City could install at its own expense
approximately 16 shelters per year without advertising (and thereby not infringing on
Fuel's existing advertising rights) at some of the 1,700 locations controlled by Fuel.
Additionally, maintenance of any shelters installed by the City would rest solely with the
City, at an approximate cost of $1000 per year per shelter.
o Any additional shelters desired at the 1,700 locations controlled by Fuel would require a
significant general fund contribution for installation and annual maintenance.
o By allowing more than one vendor to sell advertising in the same market to offset the
City's costs to provide transit convenience measures, the City is in essence competing
against itself for the same ad revenues, thereby diminishing its abilities to provide as
many shelters as possible since the revenues received would be reduced.
Manager's Finding: Fuel Miami, LLC— Citywide Bus Bench Contract Amendment
February 16, 2007
Page5of6
- Alternative 3- Issue a competitive bid for bus shelters for only the two hundred (200)
bus stop locations not currently under the Fuel contract
o This alternative allows all potential vendors to compete to provide bus shelters in the City
even though Florida Statute Section 337.408 does not require a competitive public bid
for the installation of benches or transit shelters together with advertising within the right
of way limits of municipal, county or state roads (excepting limited access highways).
o The provision of bus shelters is limited to only two hundred (200) bus stops as Fuel has
advertising rights to the remaining bus stop sites. Of the 200 locations, only thirty (30)
have been identified as locations where the highest need exists for shelters based on
volume of transit ridership and proximity to significant trip generators, such as schools,
hospitals, senior centers, etc.
o The majority of bus stops that have the greatest need for bus shelters cannot be
addressed until April 2017 at the earliest due to the Fuel contract exclusive rights and
exclusive absolute renewal provisions.
o This alternative has the longest time for procurement, design and implementation. No
shelters will be installed for at least eighteen to twenty-four months after contract
execution. Even then, only 200 shelters may be placed.
o There will be no net reduction to the number of ad panels allowed within the City. The
number of authorized ad panels will remain at 1,100.
o Any additional shelters desired at the 1,700 locations controlled by Fuel would require a
significant general fund contribution for installation and annual maintenance.
o It is estimated that this contract would provide between $263,600 and $336,200 annually
to the City, depending on the final negotiated contract payment terms. Based on an
approximate cost of $20,000 per bus shelter ($15,000 material cost plus . $5,000
installation), the City could install at its own expense approximately sixteen (16)
shelters per year without advertising (and thereby not infringing on Fuel's existing
advertising rights) at some of the 1,700 Locations controlled by Fuel. Maintenance of any
shelters installed by the City would rest solely with the City, at an approximate cost of
$1000 per year per shelter.
o By allowing more than one vendor to sell advertising in the same market to offset the
City's costs to provide transit convenience measures, the City is in essence competing
against itself for the same ad revenues, thereby diminishing its abilities to provide as
many shelters as possible since the revenues received would be reduced.
Your signature below will signify your concurrence with the above recommendation and your
assimilation of these findings as your own justification for the waiver of competitive bids and the
selection of the specified firm.
Approved:
Pedro G. He ►•ez, P.E., City Manager
C: Jorge L. Fernandez, City Attorney
Robin Jones Jackson, Asst. City Attorney
Stephanie Grindell, Public Works Director