eliminated candidate as their first choice will have their vote to transfer to their second choice. there, all the votes are recounted. fourth, if any candidate receives more than 50% of the votes, he/she is declared the winner. if no candidate receives more than 50% of the vote, the process of eliminating candidates and transferring votes is repeated until one candidate has a winning majority. now let's look at an example of an election using ranked choice of voting. in this example, we have three candidates. candidate a, b, and c. after all the first choice votes are counted, none of the three candidates has received more than 50%, or a majority of the first choice vote cast. candidate a g-205% ofb the votes% received 40%.

and c received 35% of the boats. because no candidate received a majority, the candidate who received the fewest number of first choice votes, a candidate a, is eliminated from the race. voters to pick a candidate a as their first choice candidate will have their but transferred to their second choice. and the voters to pick and a, 15% chose candidate b as their second choice, and 10% chose c as their second choice. these votes are then applied to b and c, and the votes are recounted. candidate b now has 55% of the votes. candidate c as 45%. candidate b has more than 50% of the votes and is determined as the winner. >> thank you for watching. we hope you have ranked choice learned ranked choice of voting and was elected. you have seen the ballot,

learned how to market, and learned how the voting process works. if you have any further questions about ranked choice voting, please contact us at department of elections, city hall, room 48, 1 dr. carlton be good lit place, sentences go, california, 94102. or 415-554-4375. visit our website, www.sfelections.org.

supervisor campos: welcome to today's meeting. we are joined by supervisor mark farrell and we will be shut joined shortly by david chiu. madam clerk, do you have any announcements? >> please turn your wringers off of your cell phones. you wish to speak, fill out a speaker card. items will appear on the board -- the september 20th agenda, unless otherwise stated. supervisor campos: could you please announced item number one.

>> a performance -- supervisor campos: the question of how much the city should advertise on city property is an issue that has been discussed many times and at different times, voters in san francisco have opined on that issue. the question before us is within the confines of what city policy is currently how are we doing in terms of performing our duties and maximizing revenue for the city? that is the reason we call this hearing and we begin by thanking the budget and legislative analysts for their great work on this. >> the morning -- good morning.

i'm from the budget legislative analyst's office. we would like to give a presentation on the audit of city policies and advertising revenues. the presentation will be given by those who have worked directly on the audit. i would also like to say we started out by actually looking at the city's policies, the voter-approved policies. they do define where advertising can and cannot occur and what the goals of the city are. as far as naming rights on candlestick park were recently revised so that naming rights came back into agreement. but yes, we did work within those parameters.

just for starters, we -- the presentation. the goal was to look at the city's advertising agreement. we looked at the city policies and how they monitor in terms of the contract. this was approved in november of 2010 and we completed the audit and submitted it to the board in april of 2010. we had for findings and 15 recommendations. the recommendations included oversight of city policies, the management of mta advertising revenues, non-transit advertising revenues.

overall, we believe our recommendations would be about 1.3 million, which we will talk about later in this presentation. the city departments we covered and received responses from, the recommendations to the city administrator, rec and parks, mta, all of those have agreed partially with the decisions that impacted them, except for mta. supervisor campos: before you proceed, i think it would be helpful for those in the audience and those who are watching, when you talk about the two instances that voters have recently shared or expressed an opinion, to simply note that.

my understanding is we have one proposition, g, which was approved by voters in the march 2002 which prohibits general advertising signs or billboards on public and privately owned buildings, but does not prohibit the number of general advertisements on city-pound motor vehicles or in the public right of way, including sidewalks or streets. the second proposition was proposition e which was approved in 2009, and that prohibits an increase in the number of general advertising signs on city-owned furniture, including transit shelters, kiosks, benches, and newspaper racks. >> that is correct. when you talk about proposition g, you will see when we go through the audit, there's one billboard that predates that.

so there is one billboard with advertising. but, yes, those are the two major propositions that govern advertising. to put into context, the city received -- this is based on the full year of revenue we had during the audit, about $21 million in advertising revenue, almost two-thirds of that is mta, who has three different agreements from which they receive revenues. one of which is from revenues on transit shelters, one of them is for vehicles, and they receive some revenues through an agreement between bart and advertising provider for the combined muni-bart station. there is an agreement with clear channel for advertising on

airport property. public-works as two different agreements. they provide public toilets in exchange for being to advertise on kiosks and another that is not revenue-generating, but it is maintenance of news racks in exchange for advertising. recreation and park has an advertising agreement, they share an advertising revenues with the forty-niners and candlestick park. real-estate has a billboard talked-about on mission and the convention facilities have some advertising in the center. all three of these have -- themta, recreation and park, at this time, there are no naming rights in the city. with that, i would like to turn this over to emily who will give

the next part of the presentation. >> of good morning, supervisors. -- good morning, supervisors. i would like to give you an overview of the presentation. first, we found city departments lack consistent advertising policies and their agreements with companies. not all departments were maximizing their advertising revenues. while we recognize sfmta has increased revenues through negotiations with new advertising agreements, sfmta does not consistently monitor advertising agreements to maximize revenue. finally, city departments have not consistently monitored and advertising companies were compliant. the first finding is in regards to city policies and uniform

advertising guidelines. there is a lack of advertising guidelines to ensure that departments are complying with the city policy and requiring advertisers to me consistent standards. only sfmta and the airport have advertising standards explicitly spelled out in their agreement. for example, sfmta prohibits advertising is related to political activity, these of firearms and pornography and other prohibitions. because the department of public works, recreation and parks department, convention facilities, and the real estate division lack formal advertising standards in their agreement, they cannot and -- they cannot assure companies understand or comply with city policies as well as general department advertising policies. we found only that airport

requires approval advertisements prior to installation. sfmta requires prior approval of pilot programs and experimental advertising only. in contrast, the department of public works and recreation and parks place their responsibility of approving advertisements with the advertising companies. this is a picture of the only city-owned building with an advertisement. the real estate division assumed an advertising agreement when it 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