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Surf City Sees Cash Flow in a New Credit Card

Huntington Beach stands to gain as much as $1.2 million a year from a proposal to issue a Visa or MasterCard bearing the city logo to residents.

October 28, 2002|David Reyes | Times Staff Writer

The city that pioneered beach marketing in Orange County now plans to issue its own credit card, hoping to cash in on Huntington Beach's Surf City logo.

The proposal is patterned after similar credit cards offered by nonprofit groups and retailers to their members and customers.

"We were talking one day and realized we already were sending out mail to residents about aerobic classes and recreation activities," said Mike Hennessey, a consultant to the city on special projects.

"And, we said, 'Hey, look: We can put an ad in with the mail and tell people that there's a Surf City credit card.' If residents want to sign up, the city will get a portion of the purchases."

City residents would be encouraged to sign up for a credit card with the city logo that would be issued by a major credit-card company such as Visa or MasterCard.

A percentage of credit-card sales -- as designated by credit-card holders -- would go into city programs or the city's general fund.

City newsletters would help market the program, and merchants offering discounts to cardholders would be included in city advertising posters.

For cash-strapped Huntington Beach, it could mean as much as $1.2 milliona year, Hennessey said.

The plan is still taking shape and is expected to go before the City Council for approval in January.

Some privacy advocates have expressed concern about the city using data about consumer spending -- or selling that data.

"I would be very wary of participating in the program if the city is going to get data about purchasing patterns of people who participate in this program," said Beth Givens, director of the San Diego-based Privacy Rights Clearinghouse.

Hennessey said the city will not share cardholder information:

"The city will never give away marketing information and will not hand out any private or confidential information. If we were to do that this idea would be dead in the water."

Merchants like the idea, said Joyce Riddell, president of the Huntington Beach Chamber of Commerce.

"The individuals who buy the card will get benefits from merchants that offer discounts for people who use the card, and a portion of that money will go back to the city for the city to use," Riddell said.

"It's very entrepreneurial."

According to the League of California Cities, no other city in the state has considered such an idea.

Surf City card users would be able to earmark a small amount of money for city programs, including cultural services, parks and recreation and libraries.

Those services suffered a total of $900,000 in budget cuts in this year.

In the early '90s, Huntington Beach became the first Orange County city to use sponsorship and advertising deals with private companies to pay lifeguard and beach expenses.

Chevrolet provides 20 pickups for lifeguards, who also ride Yamaha personal watercraft. Also, the city allows companies such as Simple Green to advertise on lifeguard towers.

"All those raise thousands of dollars a year without costing a cent to taxpayers, and in return the companies can enjoy brand marketing associated with the aura of Surf City," Hennessey said.

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