Congratulations to Lana Negrete, Caroline Torosis and Jesse Zwick on their election to City Council, and congratulations to Gleam Davis and Phil Brock on the council’s choosing them to share mayoral duties for the next two years. Congrats too, to Negrete for being chosen as Mayor Pro Tem.

While I am in the congratulations business, let me make up for something I should have noted in my recent post on the election as more evidence of how liberal the Santa Monica electorate still is. Congratulations to outgoing Mayor Sue Himmelrich on passage of her Measure GS, which will increase the transfer tax on sales of properties of $8 million or more to fund schools, homelessness prevention, and affordable housing.

But now to business. Tomorrow night the City Council will consider awarding a 20-year franchise, worth tens of millions, possibly hundreds of millions, of dollars, to a company, BIG Outdoor (BIG), to construct and operate up to 50 kiosks on plazas, sidewalks and other public real estate throughout the city. These kiosks will be interactive, so that passersby can access information about “wayfinding” and local businesses and government services. They can also use the kiosks to call for services (like the police or services for homeless people in distress) or take selfies. They will also be Wi-Fi hotspots. Think of a kiosk as a giant smartphone.

The main purpose of the kiosks, however, will be advertising. As a corollary to that, the main purpose from the City’s point of view is generating revenue. This program got rolling in 2019 when City Council directed staff to investigate raising money through public-private partnerships as an alternative to raising taxes and fees.

Whether in 2019 the City in fact needed the money, since notwithstanding years of fretting about future deficits the City had accumulated a huge reserve, was a good question. But that question became moot when Covid hit. The City fell into a real budget crisis as we learned how much our City’s budget depended on tourism. In June 2020, in the depths of the post-Covid financial debacle, the council authorized a study to evaluate the use of advertising, naming rights, and sponsorships to raise money. This led in December 2021 to the City’s release of a Request for Proposals (RFP) for a kiosk program that would combine “digital wayfinding” with advertising.

Santa Monica has a long history of limiting off-site advertising. Because of laws passed decades ago you don’t see billboards in Santa Monica other than a few old ones. New signs for businesses need to be part of their business’s building. Standalone signs (“pole signs”), other than those deemed “meritorious,” were all supposed to be removed more than 20 years ago. The City sells ads on buses and trash trucks and made a deal with Hulu to pay for the Breeze bike-sharing program, but that’s about it for commercialization of City property.

Santa Monica historically has had among the highest per capita tax receipts in California. Now, like British aristocrats renting out the country manor to America tourists, Santa Monica trying to make a buck wherever it can. It’s going to be in the position of telling property owners that they cannot put third-party advertisements on their properties, but the City can have them on its. Sic transit whatever.

I am not opposed to off-site advertising, but like all economic activity it needs rules and limits. I heartily support Santa Monica’s ban on off-site ads, but I love Times Square and Sunset Boulevard, too. There are times and places for everything including advertisements. A few years ago, I advocated for the City to use “off the rack” bus shelters that would be paid for by advertising, rather than design and build its own “special for Santa Monica” bus shelters. (We know how that turned out.)

Advertising can be art. For sure it communicates. There is a long and glorious history of poster art on city streets. Think of kiosks in Paris, or here’s a photo I took in Rome in 1973.

I am told that the genesis for the current kiosk plan was the need to replace the existing kiosks on the Promenade. Replacing the existing kiosks with interactive kiosks would make sense. As would placing kiosks in similar locations such as near the entrance to the Pier, or where Ocean Park Boulevard intersects the beach. Places where there is a lot of space and a lot of tourists.

But dropping them in on regular sidewalks? I don’t know. Because these kiosks can be big. Here’s a schematic from BIG’s presentation of a large kiosk:

The size of the kiosks should be geared to pedestrians who approach the kiosks, not to the eyeballs in passing cars. And please, no videos. Let’s not take the next step to a “Minority Report” streetscape.

The council hearing tomorrow night is shaping up as a battle between BIG, which had in staff’s view the best proposal in response to the RFP, and the company, IKE Smart City (IKE), that staff rated in second place. IKE has informed the City that it will file a protest if the City awards the franchise to BIG, and in that connection IKE has a few points to make. The main one is that IKE, as opposed to BIG, has experience operating interactive kiosks connected to local networks. BIG is known for operating digital billboards that are not interactive, but it has on its team a company with experience with such software.

I should note that IKE not only has announced that it will protest if the City awards the franchise to BIG, but also has threatened legal action against BIG for infringement of trademarks, patents, and copyrights. I have no opinion about any of that. Nor am I qualified to opine on the tech issues. However one aspect of the BIG proposal that concerns me is that BIG pledges to have local architects design a special kiosk for Santa Monica. I love our local architects, but let’s remember what happened with the bus shelters when the council said Santa Monica had to be special. Santa Monica is not that special. For kiosks, the important design issue is size. Keep them as small as possible.)

Staff rated BIG’s proposal as best because it was way better financially. BIG went beyond the RFP, and offered a signing bonus of $4 million, predicted high future revenues, and guaranteed the City a minimum annual payment of $5 million against 50% of adjusted gross revenues. You can understand why staff focused on the money if you recall that this whole thing started when City Council asked staff to research how to raise funds without raising taxes or fees.

Over the term of the franchise, 20 years at least, BIG’s financial deal is considerably better than IKE’s. But this may turn out to be a problem tomorrow night: the City’s consultants, a company called Superlative, “question[ed] the feasibility” of BIG’s projection. Superlative raised this question in its final report, which was only delivered to the City last Wednesday. Superlative said that the offer was “clearly an outlier when compared to the other bidders’ proposals as well as Superlative’s revenue forecast.” For their part, representatives for BIG say that they can guarantee the big bucks because only they understand how lucrative the advertising market is in Santa Monica, because they operate the only digital billboards in Santa Monica, those in Santa Monica Place.

What bothers me is the process. The City Council is supposed to make this major decision—a 20-year franchise to use city sidewalks to sell ads—but the staff’s reports and presentations have amounted to staff’s promotion of BIG and BIG alone, because staff judged BIG to have best proposal for its financial package. In effect, staff’s recommendation becomes a council decision. At a minimum, the council should see all the information in the bids from both companies, get to ask questions of both companies’ reps, and see their products in operation. In Superlative’s report issued last week, Superlative advises more vetting of the proposals. Consider also, that of the current members of City Council, only Gleam Davis was on the council when this process started.

At the meeting on Jan. 26, 2021, when the council authorized staff to issue the RFP, then Council Member Kevin McKeown asked the maker of the motion, now Mayor Davis, if her motion included the reservations he had expressed that the kiosks not be too heavy on advertising. Davis assured him that it did. But there is no indication, other than language in the RFP saying that the kiosks must have blue lights to show that they are available for emergencies, that the public will know that these kiosks are interactive. Otherwise, it seems they will look like electronic billboards.

The City’s RFP says that the “advertising policy for the kiosks will need to be approved by the City Council before the franchise agreement is awarded.” Yet there is no advertising policy in the draft ordinance awarding the franchise. The RFP has language stating that the City will not allow certain categories of advertisements, but none of that is in the ordinance. Nor do the staff reports include any analysis of the First Amendment issues, even though those issues are flagged in the RFP.

The council should slow this decision down. Let’s get both bidders to answer questions. The council members had better be comfortable with the decision they make, because if things go wrong, they will be blamed for it.

Thanks for reading.