The content compiled herein is intended to raise awareness and provide interested parties with both historic and current information regarding changes in the issuance of Specialty License Plates (SLP) in the state of Texas.
The current changes may or may not prove to have a negative financial impact for existing SLP Sponsors as the principal on which they are based are new and untested in the U.S. marketplace. While both TxDOT and My Plates, Inc (contracted private plate vendor) believe the changes to be conducive to revenue growth, both organizations readily admit that there are many uncertainties and no guarantees that existing SLPs won’t suffer a decline in sales revenue.
Background
Recent History
Current Events
SLP Sponsor Concerns
SLP Sponsor Next Steps
Examples of Possible Protections for Sponsors
Specific HB2894 Language Excerpts
The Vendor – My Plates, Inc. (MPI)
Related Document Links Compiled
Specialty License Plates were originally designed and produced in order to support and generate restricted revenue for non-profits, universities, state agencies and professional sports organizations in Texas. While the Texas Legislature directed the Texas Department of Transportation (TxDOT) to produce, sell and distribute these plates, all initial production set up fees ($15,000 per plate design) and all marketing expenses to produce sales materials and generate public interest in the plates became the sole responsibility of each plate’s sponsoring organization. To date, 112 Texas organizations have chosen to and been approved by the Texas Legislature to sponsor a Specialty Plate. The combined total revenue generated by the sales of the plates from 1994 to 2006 was $84,514,834.
[SLP Revenue].
In 2003 Senator Robert Deuell (R-Greenville) authored a bill allowing TxDOT to outsource the sales and marketing of Specialty License Plates to a private vendor. Though the opportunity was there, TxDOT choose not to move forward with it.
As a result, in 2005, Senator Deuell and Representative Larry Phillips authored HB 2894 requiring TxDOT to outsource Specialty License Plate sales and marketing to a private vendor.
[Texas Legislature Online HB 2894]
[Enrolled Bill Summary]
[HB2894 Enrolled Version]
[HRO Bill Analysis May 2005]
[SLP HB2894 Analysis]
[SLP Bill 2894 Fiscal Note]
In late 2005, TxDOT awarded a private vendor contract to Effective Teleservices.
In January 2006, concerns from the Texas Transportation Commission regarding the plans to increase the cost of existing plates from $30 to $55 annually caused the commission to defer ruling on the fee schedule until existing SLP sponsors were consulted. The subsequent opposition from the sponsors, the public and legislatures prompted Senator Deuell to ask TxDOT to cancel the contract.
[Texas Transportation Commission Meeting Transcript] January 2006
In November 2007, TxDOT awarded another contract to outsource specialty license plate sales and marketing. The winning vendor is My Plates, Inc. (MPI). As part of their contractual agreement with TxDOT, MPI guarantees $40 million net revenue to the state from specialty plate sales over the next five years. The contract may be renewed by TxDOT for two additional five year terms.
[SLP Contract Attachments] January 2007
[TxDOT Specifications] January 2007
[PO Addendum 1] February 2007
[TxDOT Terms and Conditions Revised] May 2007
[MPI Proposal Redacted] May 2007
[HUB Sub-Contracting Plan] May 2007
[MPI Final Offer to Contract with TxDOT] September 2007
[TxDOT PO to MPI] November 2007
On January 18, 2008, TxDOT invited a small group of specialty plate sponsors to a meeting to announce the arrangement with My Plates, Inc. On January 23, 2008, a larger meeting was held and all specialty plate organizations were invited to attend.
NOTABLE SLP CHANGES ANNOUNCED
1) Changes have been made with the intent to streamline the specialty plate process. Customers will no longer receive their specialty plate renewals separate from their vehicle registration renewal. The two have been combined making the process simpler for consumers.
2) Customers now have the ability to complete application forms online. They can even look up specific personalization options online. This is a great improvement and should be well received by consumers.
3) At the January 18th meeting, TxDOT announced it is no longer processing special plate applications. Checks for specialty plates should be made out to the specific County Tax Assessor-Collector office where the vehicle will be registered, not TxDOT. This change means all print materials produced by specialty plate sponsors to market their own designs are now obsolete. Fortunately, TxDOT has agreed to work with SLP Sponsors on processing existing print applications during this time of transition.
4) TxDOT will no longer offer the option of giving a refund for a specialty plate. Once customers submit an application, they cannot get their money back. Future marketing materials may need to include a warning that there are no refunds for specialty plates.
[Revised Sponsor Presentation PowerPoint]
[SPL Sponsor Meetings Q&A]
On February 27, 2008, Texas Bicycle Coalition (sponsor of the Share the Road Specialty License Plate) sent a letter to the Texas Transportation Commission requesting that TxDOT resolve the potential negative impact of the “for-profit” specialty plate marketing agreement on the existing “non-profit” organizations and other agencies that the plates were originally designed to benefit.
On February 28, 2008 the Texas Transportation Commission heard testimony from TxDOT staff, the president of My Plates, Inc. and two current SLP Sponsors regarding the SLP Fee Schedule proposed (see video below). The Commission deferred approval of the fee schedule and asked TxDOT staff to get more input on the contract from more existing SLP Sponsors and report back to them at the upcoming March 27, 2008 meeting. One Commissioner also suggested that TxDOT specify in the My Plates, Inc. contract how existing SLP Sponsors could increase their license plate revenues through auctions and other marketing activities.
Texas Transportation Commission Meeting – February 28, 2008
Agenda Item: 9a3. Administrative Rules – Vehicle Titles & Registration.
Meeting Transcript
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CURRENT EVENTS
Questions, answers and notes below are from stakeholders in the aftermath of the Texas Transportation Commission’s temporary postponement of the privatization of Specialty License Plate marketing.
This section is dynamic and we will add more content as it is received. Send email with suggested content to slp@biketexas.org to request the addition of additional documents, questions or comments.
- [Invitation to Attend March 5, 2008 Meeting] – Sent March 3, 2008
[SLP Meeting Notes] – March 5, 2008- [Texas Commission on the Arts Response to TxDOT Questions] – March 4, 2008
- [Texas Bicycle Coalition Response to TxDOT Questions] – March 5, 2008
- [Texas Parks & Wildlife Department Response to TxDOT Questions] – Forwarded for inclusion to this list March 13, 2008
- [Public Hearing Announcement from TxDOT] – March 24, 2008
- [Texas Bicycle Coalition Suggested MPI Website Edits Sample] – Submitted to TxDOT at the March 27, 2008 Transportation Commission Meeting.
Overall, representatives of existing plate designs who attended the January 18th meeting do not like the new approach to specialty plate sales and marketing. The group raised many concerns to TxDOT.
- No other state in the nation is currently following this model. In Australia, only Queensland, one of the six states and two territories, uses this model. Specialty License Plate sales do not affect or benefit charities in Queensland.
- If existing SLP Sponsors link to the My Plates, Inc. web site to allow customers to order plates online, SLP Sponsors will be sending their customers to a site promoting My Plates’ own designs. My Plates, Inc. must generate revenue to meet their $40 million contractual agreement with TxDOT and to cover their own expenses. They do not benefit from sales of existing charity specialty plates. Some existing SLP Partners fear losing sales as a result.
- Existing SLP Sponsors cannot compete with a multi-million dollar ad campaign. My Plates, Inc. argues that an increased awareness of specialty plate options will result in increased sales for all designs. However, with a $40 million obligation, million-dollar ad campaign, and business overhead expenses to meet, it seems doubtful that My Plates, Inc. will wholeheartedly promote existing SLPs that do not contribute to revenues for My Plates, Inc.
- Based on some SLP Sponsor’s experience in 2005, there is a concern My Plates, Inc. might inadvertently create the false impression that the cost of existing plates has increased as they promote their own more expensive designs.
- Employees at My Plates customer service centers will not provide information to potential customers on the charitable causes supported by existing plate designs.
- New plate designs created by My Plates, Inc. will not benefit a charitable cause. The money will be split between My Plates, Inc. (a for-profit business), TxDOT, the General Revenue Fund and the local county. This fact may be obscured to the public.
- My Plates will have the ability to collect customer information that the existing plate sponsors cannot collect or gain access to.
SLP Sponsors can choose to work together to protect and enhance future sales before the Transportation Commission approves the new fee schedule for My Plates, Inc. SLP Sponsors all have limited resources and would like to find ways to benefit from this new arrangement at TxDOT. The Specialty License Plate Sponsor list serve [ specialtylicenseplatesponsors@biketexas.org ] can be a forum to discuss these issues. What are your ideas to improve Specialty License Plate sales for existing Sponsors?
Some SLP Sponsors believe that it is better safe than sorry. It is easier to work protections into the contract before the TxDOT Commission approves the new fees. There will be much less leverage afterward.
EXAMPLES OF POSSIBLE PROTECTIONS FOR SPONSORS
- Guarantee that existing SLP revenues will rise in proportion to the overall growth of SLPs. This would give My Plates, Inc. an incentive to boost sales of existing plates as well as the new ones they introduce to the marketplace.
- Create an SLP Sponsor Advisory Committee. This could be the committee to appeal to if SLP Sponsors think that a proposed plate competes with an existing one.
- Allow for online sales that do not require SLP Sponsors to send their customers to a competitor. One option is keeping the current TxDOT site active. Another option is to allow existing SLP Sponsors to sell from their websites just like My Plates, Inc. is allowed.
- Insist on a marketing plan that would benefit existing SLP Sponsors.
- TxDOT could request that the State Comptroller research the likely impact of the My Plates, Inc marketing contract on existing SLP Sponsors. TxDOT projected a $216,000 loss to existing SLP Sponsors in 2005. What loss or gain would the State Comptroller project?
SPECIFIC HB 2894 LANGUAGE EXCERPT
HB 2894 “…Prohibits a private vendor from marketing and selling …, specialty license plates,… that compete directly for sales with another specialty license plate… [link to HB 2894]”
THE VENDOR – MY PLATES, INC (MPI)
