Despite resulting revenue loss, city will end deal with CBS Outdoor over maintenance complaints. It will shift oversight to Metro Transit.
Big cities around the country are striking deals with private companies to run their bus shelters, but Minneapolis leaders think the government can do it better.
Minneapolis is shifting management of nearly 180 privately owned bus shelters to Metro Transit, which already owns nearly two-thirds of the shelters in the Twin Cities. In doing so, it will lose a cut of the revenue from ads for such things as iPhones, beer, luxury apartments and more.
The end of the longtime agreement with CBS Outdoor follows complaints about the upkeep from lingering graffiti, loose glass and a “nightmare” shelter with missing panels, rust and faded scribblings.
One resident complained to the city that after a car smashed into a privately owned bus shelter in south Minneapolis, the New York-based company replaced it with a “crummy” one.
“If we want to attract and keep businesses on this section of East 38th, we have to make it look inviting. Please help!” the citizen pleaded.
Council Member Kevin Reich, who chairs the transportation committee, said the Metro Transit shelters are simply run better. His panel approved ending the franchise agreement on Tuesday, a measure that will move to the full City Council for approval.
Unlike the CBS Outdoor shelters, the 700 Metro Transit shelters around the region carry no ads. But Metro Transit could be edging toward allowing ads, a potential money-maker for the agency that already allows its buses, trains and train stations to be plastered in advertising.
Privatizing bus shelters is becoming common elsewhere under “street furniture” contracts, in which a company keeps up transit shelters and other curbside structures, sells advertising space on them, and gives the local government a portion of the revenue.
In Chicago, French company JCDecaux promised to pay the city about $300 million over 20 years for such an arrangement.
Washington, D.C., says it is using a 20-year agreement with Clear Channel to replace and modernize its bus shelters, earmarking revenue from the ads to improve major city roads. Albuquerque, Philadelphia and San Diego have all had private companies install and maintain transit shelters on which they sold ads.
The practice has raised some controversy. In 2012, an audit by the New York City comptroller found that Spanish company Cemusa was not maintaining bus shelters as it agreed to in a $1 billion agreement, with subcontractors falling short. News reports also said Cemusa was not properly shoveling snow at the stops.
In the Twin Cities, companies have approached Metro Transit in recent years about the possibility of selling advertising on its hundreds of bus shelters. Metro Transit spokesman John Siqveland said an evaluation by the agency 10 years ago found that modifying the shelters to accommodate advertising and adding backlighting would cost too much and the payback would take too long. Yet now that it is taking over more shelters, he added, the agency is reconsidering and could expand advertising in the coming years.
Metro Transit is expected to acquire the shelters by March 1, and start replacing broken glass and drafting a plan to replace all shelters more than 20 years old in the next five years. It will allow CBS Outdoor to continue advertising until June 2015. The agency will seek bids this summer for advertising on those shelters next year, along with the advertising currently done inside buses and trains and at train stations that netted Metro Transit $3.7 million last year.
Minneapolis receives about $110,000 a year from its 35-year-old agreement with CBS Outdoor and its predecssor. St. Paul has a similar arrangement with CBS Outdoor. Efforts to expand the franchise to the broader type of street furniture arrangement used by other cities fell short in 2008, when Clear Channel Outdoor won a bid but then withdrew for economic reasons, according to Minneapolis officials. CBS Outdoor stayed on even after its franchise with Minneapolis ended in 2010 and both sides could not reach a new agreement.
The company did not return messages, but a city traffic official said CBS Outdoor questioned maintaining the shelters if the city was pursuing another arrangement.
“There became some — I’ll call it limbo,” said Jon Wertjes, director of traffic and parking services.
There have been several frustrated missives to City Hall. Noting that glass was about to fall out of an enclosure at one Northeast shelter, one customer wrote, “The whole thing is in disrepair, really. Please, please, please fix it as soon as possible ”
Maya Rao • 612-673-4210