Arizona is going to get into the business of selling advertising for roadside signs.
But not just yet.
Officials from the Arizona Department of Transportation said Wednesday they have signed a new agreement with Logo Signs of America to continue erecting signs near freeway exit ramps with the names and logos of nearby restaurants, gas stations, hotels and attractions. And the deal entitles the company to continue to keep all the money it makes.
But the contract is only for the next 18 months. At that time the program gets turned over to the state.
And ADOT gets to keep the signs and start collecting the rents.
The private company, Arizona Logo Sign Group, has operated the program for more than 20 years. But until two years ago, the law said the state could not make any money off the ability of the firm to erect the signs in the rights of way of state roads.
ADOT spokeswoman Laura Douglas said the push to change the contract now comes as tax collections are down and the state is looking for additional sources of cash to build and maintain state roads as well as keep open the rest areas.
State officials considered whether to keep the contract in place but require the private firm to give the state a share of the proceeds. Ultimately, Douglas said, they concluded it was preferable to have the state run the program itself, absorbing the expense but also getting to keep all the cash.
How much the state could make, she said, is not yet clear. Some early estimates put the net return to ADOT at $2.5 million a year.
"That money will go back into our state highway system to ultimately benefit drivers," she said.
That decision to pursue a state takeover, rather than a revenue-sharing plan, is part of the reason for that 18-month delay in taking the program from the private company.
"They'll be assisting ADOT in management of that program, the responsibilities, the maintenance," Douglas said.
But there's something else at work.
Douglas said the state won't have to buy the signs from the company or have to erect new ones of its own. In exchange, that delay gives the company a chance to keep making money by selling advertising on those signs until the state takeover.
It will be up to ADOT to set the advertising rates for the signs.
Currently, businesses that get their logos on those big signs right on the interstate highways pay $120 per month. For another $18 a month, they get their logos on the signs at the top of the exit ramps.
Non-profit operations, most likely amusements, pay $70 per month for the interstate mainline logo panels and $10 for the ramp signs.
The rates are lower along rural roads, with their lower traffic counts, where businesses and non-profits pay $44 a month.