gc
07 October 2003, 12:38 AM
What's in a name?
For cities, millions
Sponsorships, land leases among creative ideas to boost budget
10:21 PM CDT on Monday, October 6, 2003
By LAURIE FOX / The Dallas Morning News
http://www.dallasnews.com/latestnews/stories/100703dnmetrevenue.6dbe7.html
The natural gas wells north and west of Fort Worth spell potential income to Mayor Mike Moncrief.
Until recently, most of the companies doing the pumping sought out private landowners to purchase rights.
Then they discovered that Fort Worth and neighboring Denton owned some prime land of their own.
Suddenly, undeveloped city-owned property became an unforeseen – and much needed – revenue stream for the cash-strapped cities.
"These property and mineral rights are a tremendous opportunity, a godsend," Mr. Moncrief said. "We were able to go through a difficult budget process this year without massive layoffs or cuts in service.
"But we have a tremendous demand for things in this city and not enough money to do all of them. As we deal with a difficult fiscal environment, we have to take advantage of every opportunity we have."
Many cities throughout the area and the nation are coming to a strikingly similar conclusion: Carrying government solely on the backs of the taxpayers is not viable anymore.
So they're seeking ways to fund services and creative opportunities in the corporate arena that weren't tapped in the past.
Selling naming rights to everything from stadiums and parks to nature preserves is becoming a common option for cities – and some states – large and small.
Increasingly, private companies are paying big bucks to become a city's official soft drink/cellphone/beach vehicle/highway sponsor.
In turn, cities are effectively selling their names to the highest bidders to stem financial woes without raising taxes.
The deals range from multimillion-dollar contracts – such as a recent $166 million deal between New York City and Snapple – to make one drink a city's "official beverage" to more modest agreements that place corporate logos on tennis courts and bus stops.
"These cities have a lot of undiscovered, dormant marketing assets, and they don't know how to develop a strategy to use them," said Chris Lund, vice president of the Superlative Group in Cleveland, a municipal marketing and consulting firm that is bidding on the city of Dallas' business. "Cities need to pretend that they're advertising agencies, and they need to take a good look at their product."
Dallas eyes the pie
Dallas officials recently decided to take a hard look at other cities' efforts to raise money through sponsorships, licensing, merchandising and marketing to see whether they could get a piece of the pie.
Dallas officials are so confident that corporate America will come calling that they've predicted a $2 million influx from sponsorships and naming rights within the next fiscal year.
Dallas plans to hire an outside firm to inventory structures, parks and equipment that could provide moneymaking opportunities and to help craft a sponsorship policy.
"In tough times, sometimes adversity breeds creativity," said Mary Suhm, Dallas' first assistant city manager. "It's a matter of opening your mind to the opportunities."
With sales tax revenue continuing to fall – $35 million to $40 million over the last few years – Ms. Suhm said Dallas must think in new ways.
In Fort Worth, officials estimate that future deals to lease land and mineral rights could bring the city $282,000 a year per high-producing well. The city plans to use a land agent and an oil and gas attorney to help develop a policy, and would set aside $15,000 for a Gas Well Lease Development program.
Denton city attorneys came up with a plan and have natural gas wells pumping on 500 acres at the city-owned Denton Municipal Airport.
Bernard Weinstein, director of the Center for Economic Development and Research at the University of North Texas in Denton, said that while Fort Worth and Denton's land leases have "serious revenue potential," he doubts that other area cities would reap substantial financial benefits from municipal marketing.
"No politician wants higher taxes in poor economic times," he said. "But there's no free lunch out there. I think we're really talking about nickels and dimes."
Some U.S. cities, however, have found ways to make money from private business in less visible ways.
The city of San Diego is widely credited with having one of the most successful municipal marketing campaigns in the country.
The city has taken in more than $5 million in the last three years through contracts with Verizon for wireless services, Chevrolet for beach patrol cars and Pepsi as the exclusive vendor for 475 soft drink machines on city property. The income might seem small compared with the city's $740 million annual operating budget – until city leaders point out that the program costs $145,000 a year to operate.
Gary Ruskin, executive director of Commercial Alert, a national nonprofit group that opposes commercialization in government, said he's troubled by wide-ranging attempts to "sell a city's soul."
"Some things are just too important to be for sale," he said. "The revenue gained by these deals is less than the long-term losses. Cities depend on their civic pride to raise money. And if people think that their town is a huckster, they aren't as willing to donate.
"This is just damaging to the identity of a city."
Mr. Ruskin added that cities such as Boston, San Francisco and Los Angeles have rejected sponsorships for subway stations, a football stadium and other public facilities.
Doing more with less
Michael Reinemer, a spokesman for the National League of Cities in Washington, D.C., said the group does see cities trying to do more with less money. But while some cities are curious about such corporate partnerships, they're not a widespread phenomenon.
"These partnerships should only reflect what makes a city comfortable," he said. "And when you're facing closing libraries and after-school programs and laying off police officers, some of these agreements can save some of those cuts. Cities and towns have been working with the private sector for years."
In Plano, city officials have taken a modest approach to raising cash.
They simply looked around town and began the online sale of fire hydrants, stoplights and water main covers and umbrellas and folding chairs with the city logo.
In the month that the store has been operating, it's raised $5,000.
"I've seen a lot of ideas come and go," said John McGrane, Plano's finance director, who said the city might also begin selling city vehicles and confiscated bicycles through an online auction. "People are just getting more creative."
E-mail lfox@dallasnews.com
For cities, millions
Sponsorships, land leases among creative ideas to boost budget
10:21 PM CDT on Monday, October 6, 2003
By LAURIE FOX / The Dallas Morning News
http://www.dallasnews.com/latestnews/stories/100703dnmetrevenue.6dbe7.html
The natural gas wells north and west of Fort Worth spell potential income to Mayor Mike Moncrief.
Until recently, most of the companies doing the pumping sought out private landowners to purchase rights.
Then they discovered that Fort Worth and neighboring Denton owned some prime land of their own.
Suddenly, undeveloped city-owned property became an unforeseen – and much needed – revenue stream for the cash-strapped cities.
"These property and mineral rights are a tremendous opportunity, a godsend," Mr. Moncrief said. "We were able to go through a difficult budget process this year without massive layoffs or cuts in service.
"But we have a tremendous demand for things in this city and not enough money to do all of them. As we deal with a difficult fiscal environment, we have to take advantage of every opportunity we have."
Many cities throughout the area and the nation are coming to a strikingly similar conclusion: Carrying government solely on the backs of the taxpayers is not viable anymore.
So they're seeking ways to fund services and creative opportunities in the corporate arena that weren't tapped in the past.
Selling naming rights to everything from stadiums and parks to nature preserves is becoming a common option for cities – and some states – large and small.
Increasingly, private companies are paying big bucks to become a city's official soft drink/cellphone/beach vehicle/highway sponsor.
In turn, cities are effectively selling their names to the highest bidders to stem financial woes without raising taxes.
The deals range from multimillion-dollar contracts – such as a recent $166 million deal between New York City and Snapple – to make one drink a city's "official beverage" to more modest agreements that place corporate logos on tennis courts and bus stops.
"These cities have a lot of undiscovered, dormant marketing assets, and they don't know how to develop a strategy to use them," said Chris Lund, vice president of the Superlative Group in Cleveland, a municipal marketing and consulting firm that is bidding on the city of Dallas' business. "Cities need to pretend that they're advertising agencies, and they need to take a good look at their product."
Dallas eyes the pie
Dallas officials recently decided to take a hard look at other cities' efforts to raise money through sponsorships, licensing, merchandising and marketing to see whether they could get a piece of the pie.
Dallas officials are so confident that corporate America will come calling that they've predicted a $2 million influx from sponsorships and naming rights within the next fiscal year.
Dallas plans to hire an outside firm to inventory structures, parks and equipment that could provide moneymaking opportunities and to help craft a sponsorship policy.
"In tough times, sometimes adversity breeds creativity," said Mary Suhm, Dallas' first assistant city manager. "It's a matter of opening your mind to the opportunities."
With sales tax revenue continuing to fall – $35 million to $40 million over the last few years – Ms. Suhm said Dallas must think in new ways.
In Fort Worth, officials estimate that future deals to lease land and mineral rights could bring the city $282,000 a year per high-producing well. The city plans to use a land agent and an oil and gas attorney to help develop a policy, and would set aside $15,000 for a Gas Well Lease Development program.
Denton city attorneys came up with a plan and have natural gas wells pumping on 500 acres at the city-owned Denton Municipal Airport.
Bernard Weinstein, director of the Center for Economic Development and Research at the University of North Texas in Denton, said that while Fort Worth and Denton's land leases have "serious revenue potential," he doubts that other area cities would reap substantial financial benefits from municipal marketing.
"No politician wants higher taxes in poor economic times," he said. "But there's no free lunch out there. I think we're really talking about nickels and dimes."
Some U.S. cities, however, have found ways to make money from private business in less visible ways.
The city of San Diego is widely credited with having one of the most successful municipal marketing campaigns in the country.
The city has taken in more than $5 million in the last three years through contracts with Verizon for wireless services, Chevrolet for beach patrol cars and Pepsi as the exclusive vendor for 475 soft drink machines on city property. The income might seem small compared with the city's $740 million annual operating budget – until city leaders point out that the program costs $145,000 a year to operate.
Gary Ruskin, executive director of Commercial Alert, a national nonprofit group that opposes commercialization in government, said he's troubled by wide-ranging attempts to "sell a city's soul."
"Some things are just too important to be for sale," he said. "The revenue gained by these deals is less than the long-term losses. Cities depend on their civic pride to raise money. And if people think that their town is a huckster, they aren't as willing to donate.
"This is just damaging to the identity of a city."
Mr. Ruskin added that cities such as Boston, San Francisco and Los Angeles have rejected sponsorships for subway stations, a football stadium and other public facilities.
Doing more with less
Michael Reinemer, a spokesman for the National League of Cities in Washington, D.C., said the group does see cities trying to do more with less money. But while some cities are curious about such corporate partnerships, they're not a widespread phenomenon.
"These partnerships should only reflect what makes a city comfortable," he said. "And when you're facing closing libraries and after-school programs and laying off police officers, some of these agreements can save some of those cuts. Cities and towns have been working with the private sector for years."
In Plano, city officials have taken a modest approach to raising cash.
They simply looked around town and began the online sale of fire hydrants, stoplights and water main covers and umbrellas and folding chairs with the city logo.
In the month that the store has been operating, it's raised $5,000.
"I've seen a lot of ideas come and go," said John McGrane, Plano's finance director, who said the city might also begin selling city vehicles and confiscated bicycles through an online auction. "People are just getting more creative."
E-mail lfox@dallasnews.com