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Billboards: the next big thing?

Kearny sees the potential of new revenue through billboards.

 

By Ron Leir

Observer Correspondent

KEARNY –

No, no one has struck oil, but fiscally-strapped Kearny is looking to tap some of its otherwise moribund meadows parcels into revenue-gushers through the promotion of outdoor advertising.

On Oct. 9 the town’s governing body voted to contract with Allvision LLC of New York for the development of three town-owned lots – two along the Belleville Turnpike and one off Harrison Avenue – for the placement of up to four billboards – (there’s room for two on one of the lots) – that would be visible to drivers off the N.J. Turnpike’s 15W inter-change.

Mayor Alberto Santos said the agreement marks a “first” for the town for this type of deal which, he added, could “potentially” produce “hundreds of thousands of dollars a year” in new revenue.

And the town could basically sit back and “merely collect the check” while the contractor does all the work, the mayor said. Allvision would solicit vendors who want to advertise, erect the billboards and maintain them – for a specified fee – while the town draws much of the profit, he said.

If there’s a downside, it’s that the town doesn’t expect to begin seeing any of the cash until 2014.

The town came up with Allvision after it issued a Request For Proposals (RFP) to provide outdoor advertising services and the New York firm was the lone responder, according to Town Attorney Greg Castano Sr.

On its website, Allvision says it was formed in 2002 and “provides asset management, development and consulting services to government agencies, municipalities and private property owners interested in monetizing their real estate portfolios via deployment of outdoor advertising.”

With offices in the U.S. and Canada, Allvision says it “has increased client revenue by over $400 million to date.” It says that outdoor advertising is a $6.1 billion industry in the U.S. and, of that total, $1.7 billion is “attributed to assets that are located on public property, such as billboards, transit facilities, bus shelters and street furniture.”

Among its clients listed are the New Jersey Turnpike Authority, New Jersey Transit, Southeastern Pennsylvania Transportation Authority (SEPTA), Los Angeles Metro and the Canadian National Railway.

Under its four-year contract, Allvision is granted the right to “market the billboard opportunity to potential licensees for (Block 285, Lots 2, 11 and 17), to negotiate the terms of license agreements to be entered into by the Town with such operators … (and) to coordinate and oversee the installation of the billboards ….”

For each of the three lots, Allvision and Kearny will share in “license payments” to be paid by the advertisers and here’s how those payments are to be divided:

The licensee (meaning, the advertiser) shall pay a one-time up front lump sum payment at the outset of the license agreement for the first of the three lots to be developed. The first $45,000 of that payment goes to Allvision to cover undertaking of surveys, engineering and construction costs and any other non-legal expenses. If those costs are less than $45,000, then Allvision will pay Kearny 65 percent of the balance remaining.

The advertiser shall pay annual “base license payments,” with 75 percent going to Kearny and 25 percent to Allvision.

Based on a review by Allvision, the advertiser may be required to pay an additional fee based on a percentage of their advertising revenue, with Kearny getting 75 percent of that fee and Allvision, 25 percent.

The advertiser shall pay an additional up front lump sum payment if Kearny exercises its option to extend the term of the license: 75 percent to Kearny and 25 percent to Allvision.

As part of its obligations, Allvision will be required to apply to the state Dept. of Transportation (DOT) for outdoor advertising permits for each billboard. This cost will be part of the up front deduction of $45,000.

The advertiser is responsible for acquiring any government approvals required for such items as “building, electric and other permits” associated with construction of the billboards.

All license agreements are subject to approval of the mayor and Town Council.

Kearny proposes to ban any billboard advertising “for any product or service that is prohibited by law” or “that contravenes or conflicts with the Town’s policies.” Also forbidden is advertising “for any tobacco or sexually-related products or services” as well as “political advertising unless it is first approved by the Mayor and Council.”

It’s up to Allvision to enforce the advertising bans by giving the licensee 48 hours notice to remove the offending advertising “after written demand from the Town.” If that action fails, then it falls to Kearny to remedy the situation.

Kearny officials figure it will take two years for Allvision to market the town-owned properties, secure license agreements with prospective advertisers, secure all necessary approvals and get the billboards up.

Santos said the town wasn’t yet in a position to project more firm revenue estimates.

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