purchased this agreement in 2007 which predates the 2009 city legislation prohibiting advertisements of alcohol on city-owned properties. during the audit, we found the real estate division was not clear on what the city's policies were and assumes that when the outdoor advertisements policy agreement would expire this year that they cannot replace it. but with clarification from the commission, we found they could enter into a new agreement because they are not increasing the number of advertisements on city-owned buildings within the city, just replacing one agreement for another. but, because of the restrictions on alcohol, it is likely the real estate division will not see the same high monthly revenues from the new agreement. one of the war exemplary advertising agreements we found during the audience -- one of

the more exemplary advertising agreements we found was the agreement with clear channel. we found this advertising agreement had a high minimum annual guarantee, which is 70% of gross revenues. it also generated consistently higher revenues annually. we also found that it had inappropriate advertising content review process, which i mentioned earlier. it also had an updated, agency- specific advertising standard consistent with the city policies, such as the prohibition of alcohol and tobacco. finally, we found contrasting staff was well aware of these requirements in the contract terms. in contrast, one of the agreements we found to have an unfavorable advertising terms is the department public-works agreement with jc ducomb, which

installs public toilets on the streets in return for the ability to place public kiosks on the streets. these have some things like the city advertisments but they also have two panels for commercial advertisements. most city advertising agreements require companies to remit to the city of higher of a minimum annual guaranteed or percentage of gross revenues of least 40%. however, the agreement between dpw and the company only requires 7% advertising revenues to be permitted to this city. this next slide is a chart that illustrates the differences in revenue generated by different contracts. in 2009, clear channel generated a net annual revenue of $7.6 million wear asjc d

ececuax -- the airport received $6.7 million whereas the department of public works only received half a million dollars. therefore, -- supervisor campos: that is 7%? >> there's a base pay -- there is a base payment plus 7%. therefore, we recommend the department of public works actually try to negotiate amendments to the existing agreement and include some kind of incentive because they're obviously making money and may now want to remit some much money to the city, but if we increase the number of commercial kiosks' they can install, we could increase revenues to the city. supervisor farrell: you have obviously been working with dpw

on this. what are their thoughts? >> these contracts were negotiated a long time ago in the people who negotiated these contracts, they don't know where they are. they also did not realize what the other city departments were doing, so to them, it would have been helpful to that what was the structure for other departments, so they are trying to negotiate amendments, but they also realize a challenge given this agreement has been in place for a long time. >> how long is -- supervisor farrell: how long is the term of the agreement? >> the agreement is for -- >> the agreement as until 2016.

they were actually opened to the idea to come back with some sort of incentive for some sort of reason for the company to come back and renegotiate terms of the contract. although it's not a given they will be able to do that, they are open to trying. supervisor campos: what are the terms of the agreement? is there a unilateral term? >> i do not think so. supervisor campos: it seems we should be open to renegotiation. we have to renegotiate we have 7% and other agreements that actually guarantee 70%, 40% or 30%, 7% appears out of whack. >> we read the contract pretty thoroughly and i'm not an attorney so i cannot really respond to that, but i don't recall there was a provision that would allow a unilateral termination to renegotiate a

contract, but i could go back and look at that. supervisor farrell: would it be possible to send us the contract as well? supervisor campos: it amazes me how we find $5 million pockets of money in our city government that we are not taking advantage of. >> obviously, it would be nice to renegotiate the higher revenue share consistent with the others, but if the departure of public-works were to renegotiate even just a 25% revenue share, that include additional kiosks, we estimate the city could generate or receive $1.1 million in additional revenue annually. supervisor campos: from my perspective, 25% is a very

conservative number. i would hope the would be higher than that. supervisor farrell: i hope someone is running some financial models here. 25% now as opposed to terminating in 2016, someone needs to run the numbers here because those are big deals. >> we do follow up to our recommendation, so that is something we will continue to follow-up. unfortunately, dpw lost their director, so it will be a new situation for us. >> one of the more controversial agreements san francisco has been is the naming rights agreement at candlestick park. city and county of san francisco and the san francisco forty- niners entered into an agreement for naming rights of the stadium in 1996. from 1996 until 1992, the city receives $4.9 million in

revenue. the existing naming rights agreement began -- from 1996 until 2002. the current agreement will expire in may of 2013. this gives the 49ers' the exclusive right to enter into negotiations for naming rights of the stadium but there have to remit 60% of the revenue to the city. from 2004-2007, the park was named monster park and the city received $3 million. but despite renewed authority it to enter into naming rights agreements after a voter- approved ballot initiative, the san francisco 49ers have not exercised his authority. therefore, the city is forgoing a potential 50% net naming rights revenue, which based on past experience, average about $1 million a year. now like to turn it over to my colleague, sarah duffy.

supervisor farrell: can i ask a quick question on the forty- niners? what is the solution here? >> we spoke with recreation and park department and they threw their hands up a little bit. the only solution is to put pressure on the forty-niners through the commission itself, perhaps. but there is not any way they can compel the 49ers into a naming rights agreement. supervisor farrell: so this was a bad deal entered into a while ago? >> we had some concerns at that time, yes. supervisor farrell: do you know they have not made any efforts? >> the recreation and parks department did not know the official reason why they did not

make an effort, but there is speculation that trying to find a naming rights agreement is not one of their priorities at this time. supervisor farrell: again, the question is do you know they have not made any efforts or they'd have not succeeded? >> we do not know if they have made any efforts or not. one other thing -- when we talk about the policies, we did make a recommendation and the city administrator agreed to begin to coordinate and centralize to some sort of uniform standards to advertising which is currently lacking. >> good morning, supervisors. my name is sarah duffy. and going to go over the findings related to the mta

advertising contracts. mta has three advertising agreements. the first is the transit shelter agreement between clear channel and outdoor, the second is for vehicles and parking garages and the third is a memorandum of understanding betweenmta and bart -- between mta and bart. this shows the revenues associated with those three agreements generated during a 10-year time frame through 2010. you can see over the past four years, the revenues have increased by $7.4 million. the increases are largely related to mta's success in negotiating a financial terms for contracts, which in part

resulted from good economic climate in place when the contracts were negotiated. the transit advertising generates a majority of revenues for advertising on city property. as a result of the audit, we found mta has demonstrated a lack of success in monitoring some of these advertising terms. for example, advertising for five of the city parking garages under mta management, titan has not sold any advertisements in these parking garages since the beginning of the agreement in 2009. titan has reported little interest in purchasing advertising space is in parking garages given the poor economic climate. but we noted the airport, their

agreement resulted in advertisements located in elevators and passageways in the airport. these parking garages titan has the possibility of selling advertisements and are all located in downtown san francisco. in mission and other very high traffic locations. supervisor campos: was there any analysis over what is happening with privately-and parking garages and the kind of advertising had that -- kind of advertising that happens in those places and whether or not they are able to secure advertising? >> we started looking at that and we did not have much -- we looked more at the publicly owned parking grudges in other cities. >> we tried to benchmark with other cities. all lot of this is proprietary information and we had a hard time obtaining it. we did call different advertisers in different areas

in terms of their procedures, such as chicago, which has a large number of publicly-owned parking garage is. we did some spot checking, but i would not call a meeting any sort of audit standards. >> based on making calls to advertising agencies that advertise in parking garages, we advertise conservatively mta could receive revenues of approximately $250,000 in advertising in these parking garages. also, mta receives monthly sales reports from tighten but does not have information on actual compared to advertising. unsold advertising space not only result in lost revenue potential, but also in graffiti that tends to be up in spots

like transit vehicles where there is no advertising. supervisor campos: i know the finding is sfmta is not maximizing revenue in terms of these dollars. can you just summarize why that is the case? what is that finding based on? >> our finding is based on the fact that there are not any ads that have been sold in parking garages and another term of the agreement is that titan has the possibility to sell digital display and in the advertisement and we did not see any of that. more oversight on the part of mta in terms of overseeing the ads with the two different contracts.

in response to those recommendations, mta said it tightened is working to maximize sales and in the challenging economic times, it's difficult to sell the maximum amount of advertising. >we also looked at compliance. most of the city's advertising agreements that have the infrastructure in good repair. present terms of mta and dpw, advertising companies have not complied with removing graffiti and vandalism in a timely manner. neither mta d norpw monitored the compliance with removing graffiti and vandalism. we found graffiti on transit

shelters and commercial kiosks and found torn and missing advertisements and we found at least to public toilets on market streets that have been out of order for over two weeks. that would be part of the dpw agreement on maintaining public toilets. we also discovered news racks, which are part of the dpw contracts did not only hold the newspapers but were being used as storage for trash and other things. our office had five recommendations intended to improve compliance with inventory maintenance and other requirements under the existing agreements with the exception of mta. all of the the parents agreed with our recommendations to provide an example of mta's responses -- recommendation 4.3 in our report is that mta should initiate quarterly site visits

to inspect advertisements and associated infrastructure. mta says staff reviews these items as part of the regular duties, but the visits are not documented and the advertising space remains an issue. our office maintains all seven recommendations made to mta as part of the ottoman terms of compliance and revenue generation remain feasible -- as part of the terms of compliance and revenue generation remain feasible. we like to thank the department for their support. supervisor farrell: backing up one slide, the green newspaper racks, -- those are dpw's? who is in charge of all the

standalone racks? >> dpw has a contract with a clear channel to install those racks with the newspapers. they are in charge of maintaining them weekly. obviously they have not been doing that very well. we asked them for their records how they are sure they are maintaining them weekly and clear channel does submit some form of records involved, but we found racks -- supervisor farrell: you are talking about the new, green ones. i'm less concerned about those. they are a vast improvement even if they are somewhat dilapidated according to report compared to some of the stand- alone. the ones that are filled with graffiti and our big eyesores, i

wonder who's in charge of monitoring and taking care of it? >> we look at the agreement they had to maintain the news racks, but we don't know about the others. supervisor campos: any other comments before we hear from mta on this issue? i get a couple follow-ups, just a couple of points on the budget analyst. one of the things that jumps out is the question of who in this city overseas, generally speaking, issues involving advertising? is there someone who is monitoring overall compliance with policies and procedures in the maximizing of revenue for the city? >> no. planning department is responsible for monitoring signs in the city.

our finding was nobody is responsible. we recommended the city administrator become responsible, not so much for compliance, but setting the standards and making sure all the departments know what the standards and policies are. then each department becomes responsible for complying with city standards. supervisor campos: i think that would be very helpful. it concerns me that there is no uniformity of standards citywide. it concerns me, for instance, that it seems for of the six departments implicated here do not, for instance, have standards that prohibit advertisements for political purposes, guns, and as problematic. i don't know the best way to make that happen. if a letter from the committee to the city administrator would

make sense, but i do think is important to have a point person city-wide who is at least monitoring these issues. >> the city administrator did agree to be that point person, so would be good to appoint them. >> with respect to the dpw 7% issue, i think it makes sense for us to comeback and hear directly from dpw in the near future about what efforts have been taken to address that issue. you are talking about millions of dollars, a significant amount of money. one of the things that was interesting to me was that departments do not always require approval of the ads that go up. from my understanding, the airport is the only one that does that? >> that is correct. supervisor campos: in terms of

the best practice, do you have any idea if that makes sense? i would think before and that goes up that there should be someone who at least looks at it and decides whether or not it is consistent with the policies of this city. >> i don't believe we have best practice information on that particular piece. again, that would probably be part of the standards the city administrator would set, whether doing, setting standards doing post checks and giving approval before would be best. >> i know it -- supervisor campos: i know that's sfmta require some approval of ads, but not necessarily everyone. trying to understand what the best practice should be is important. why don't we hear from the

sfmta? we have the cfo with us. thank you for being here. we know we heard from the budget and legislative analyst of the six departments mentioned in the report. the mta is the only one disagrees with some of the findings. >> thank you for letting us comment on this review. first, let me say there are a lot of areas where you could find fault with the mta, but we don't think this is one of the areas -- our revenues have gone up 5000%. we have over 10,000 to 15,000 had spaces. some of the -- dead is site

visits are not feasible given our resource constraints, so we have not agreed with some of the commons because we do not believe the best practice for an advertising type like we do, with some ads and faces, we have embedded all the requirements in to the contract so that by making sure the contract is complying with our advertising policy, which we believe is very strong, and all the other restrictions, we have significant liquidated damages should and our contract has been requested by multiple systems as the best practices, so we feel very confident our contracts -- i would say internationally as well, in terms of the areas of maximizing revenues, you know

advertising is one of the areas we are absolutely focused on because if we don't maximize advertising revenues, that means community services and we actively monitor the advertising. unfortunately, the advertising market is not as strong as you would like to be, what we had in 2011 exceeded revenues by over 15 million and both of our contractors are succeeding and every dollar above, we get 65%, so we have a strong revenue contract. i would say as an overarching comment, unless you want me to go through point by point, we feel strongly about our advertising effort. supervisor campos: i appreciate the perspective and i think a lot of effort has been made, but

i think the effort raised in the report, it makes one wonder whether you are in fact maximizing revenues. let me give you an example. one of the things the report says is that the mta does not have information on available advertising locations compared to actual advertising locations. they're saying you do not have the information of what you could potentially use as advertising in terms of locations. you only have information on the actual. can you respond to that? >> we know exactly the number of ads bases and sites available on our buses and transit shelters. we know the entire universe of sites that are available and we've asked contractors to provide us with what they actually advertise on so we know the difference of what they're not advertising on. second, our mag is so high that even the advertisements on those

bases -- we would not hit mag, so those are the two points i would make. >> -- supervisor campos: wouldn't you want to know what the contractor believes are actual advertisments sites so you would have a way of comparing of what they think is a potential advertising site relative to what you think -- >> de give us every month information by type of ad, the location of the ad, the location, so let's say clear channel -- we have 1100 shelters with free ad sites on each shelter. we know there are 3300 possible ads basis. we know clear channel will be selling 10,000 spaces to yahoo! at these locations. we have these that are free and

so we know for the next three months in advance who is selling, the buyer, the site, what is empty and what ever is anti automatically becomes public-service ads. we monitor that because -- automatic wet -- what ever is empty, automatically becomes public service ads. i'm not sure we communicated that effectively to the budget analyst, but we feel comfortable we know how many ads are sold and where they are and who is buying them. supervisor campos: it seems like there is a disconnect in terms of the information was provided because that's different than what the report says. something else the report says is you have not audited the contracts. have you audited the contracts? >> when they did this review, they did this for fiscal year 2009 and 2010. both contracts had just officially been initiated. we are in the process of we are in the process of auditing the second year now.