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City Council Committee OKs 20-year Billboard Deal

By Ted Cox | December 3, 2012 5:37pm | Updated on December 4, 2012 4:11pm
 Ald. Bob Fioretti questions the 20-year digital billboard deal during Monday's City Council committee meeting.
Ald. Bob Fioretti questions the 20-year digital billboard deal during Monday's City Council committee meeting.
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DNAinfo/Ted Cox

CHICAGO — Members of the City Council budget and zoning committees approved a 20-year, $180 million deal on digital billboards Monday.

Aldermen Bob Fioretti (2nd), Scott Waguespack (32nd) and Ameya Pawar (47th) were the only no votes, with 20 in favor.

The measure now goes before the full City Council for a vote next week.

There was more uncertainty than the voice vote suggested, as skittish aldermen — many of whom felt burned by the extended deal leasing city parking meters — questioned whether the ordinance to place 34 digital billboards on city land along expressways, in effect leasing them to a single business for two decades, was a fair and suitably rewarding contract.

 Ald. Edward Burke talks with Chief Financial Officer Lois Scott during a break in Monday's committee meeting.
Ald. Edward Burke talks with Chief Financial Officer Lois Scott during a break in Monday's committee meeting.
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DNAinfo/Ted Cox

"I've just got a real concern, given where we are and what we've been through," said Ald. Matthew O'Shea (19th). "I want to be sure taxpayers are getting a good return on value on this."

Chief Financial Officer Lois Scott said the deal would guarantee $154.8 million over the next 20 years, in addition to $25 million with the billboards' installation over the first 18 months. She said currently the 1,300 billboards in the city generate $1 million a year in revenue. The city is assured a 50 percent cut on the first $25 million a year; 40 percent on $25 million to $30 million; and 30 percent on gross revenues above $30 million, she said.

Scott estimated the full deal would bring in $250 million to $300 million over 20 years, with "slightly higher" revenues for the firm, Interstate JCDecaux, due to the city's declining rate in more lucrative years.

Yet, for that very reason, some aldermen objected. "Why can't we just do this ourselves?" Pawar suggested, saying the project would be a good fit for Mayor Rahm Emanuel's new Infrastructure Trust.

"We don't have the expertise to do this," Scott responded, adding that the infrastructure trust is not up and running and that Emanuel's budget calls for $25 million in marketing fees. The billboard money will be added to $17 million generated by advertising on bus shelters, also a product of the JCDecaux firm.

Waguespack said it was the wrong approach to set a fee for what they needed and not simply judge the worth of the advertising on its own, adding, "We did set the bar pretty low."

But Scott said according to the Outdoor Advertising Association of America, the average billboard generates just 17 percent of income to the owner, and the city will make almost three times that over the first $25 million.

Fioretti argued it would bring on a "cultural dystopia of advertising" reminiscent of the futuristic movie "Blade Runner." "Somehow, I think we're going down the same slippery slope," he added.

"How is this different from meter leasing?" asked Ald. Ariel Reboyras (30th).

"I think it's quite a bit different," Scott replied, in that it's not leasing an existing source of revenue, but creating an entirely new revenue stream.

"We are creating a new asset, and we are going to lease this," said Ald. Tom Tunney (44th). "It is leasing an asset."

Many aldermen raised objections that the deal was not bid out. Instead it went to a new partnership of Instate Outdoor Advertising and JCDecaux. The latter was one of five finalists, but did not make the cut when the field was narrowed to two in February. JCDecaux formed a partnership with Interstate to seal the deal over the summer.

Scott added that, as it's an entirely new revenue stream, they couldn't well have Interstate JCDecaux design the program, then bid it out.

It will create a network of 34 digital billboards along city expressways on parcels of land too small for other economic use, Scott said. The billboards — 60 "faces" in all on the 34 posts — will run "loops" of static ads, non-moving images, with city public service announcements on neighborhood activities, community groups and arts agencies making up one in every eight 10-second spots.

The billboards also will run emergency information, such as Amber alerts and information carried by the Emergency Alert System, when necessary.

The ordinance will limit the amount of liquor advertising to no more than 20 percent of all ads. Pawar said he would offer an amendment placing similar restrictions on casino ads.

The marathon session was halted toward the end by an abrupt quorum call by Fioretti in an attempt to derail it.

Ald. Carrie Austin (34th), chairman of the budget committee, called Fioretti's parliamentary move "disingenuous" and delayed the joint session with the zoning committee a half-hour to gather a quorum.

"It's not disingenuous," Fioretti insisted. "It will change the landscape of the city."

But, for now, Fioretti couldn't change its passage through committee. The measure goes before the full Council Dec. 12.