Existing law, the Outdoor Advertising Act, provides for the regulation by the Department of Transportation of advertising displays, as defined, within view of public highways. The act regulates the placement of off-premises advertising displays along highways that generally advertise business conducted or services rendered or goods produced or sold at a location other than the property upon which the display is located. A violation of the act is a crime.

The act also provides that an advertising display advertising businesses and activities developed within the boundary limits of, and as a part of, an individual redevelopment agency project, as those project boundaries existed on December 29, 2011, may remain and be considered an on-premises display, until January 1, 2023, if the advertising display meets specified criteria. The act further authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request from the department an extension for good cause, as specified, beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

This bill would authorize under similar provisions the advertising of businesses or activities operating outside a redevelopment project area but within the boundaries of the City of Inglewood. The bill would impose certain duties on the City of Inglewood regarding advertising displays. By increasing the level of service provided by the city, the bill would impose a state-mandated local program.

The bill would also make findings and declarations as to the need for a special statute relating to the City of Inglewood.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Existing law, the Outdoor Advertising Act, provides for the regulation by the Department of Transportation of advertising displays, as defined, within view of public highways. The act regulates the placement of off-premises advertising displays along highways that generally advertise business conducted or services rendered or goods produced or sold at a location other than the property upon which the display is located. A violation of the act is a crime.

The act also provides that an advertising display advertising businesses and activities developed within the boundary limits of, and as a part of, an individual redevelopment agency project, as those project boundaries existed on December 29, 2011, may remain and be considered an on-premises display, until January 1, 2023, if the advertising display meets specified criteria. The act further authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request from the department an extension for good cause, as specified, beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

This bill would authorize under similar provisions the advertising of businesses or activities operating outside a redevelopment project area but within the boundaries of the City of Inglewood. The bill would impose certain duties on the City of Inglewood regarding advertising displays. By increasing the level of service provided by the city, the bill would impose a state-mandated local program.

The bill would also make findings and declarations as to the need for a special statute relating to the City of Inglewood.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Existing law, the Outdoor Advertising Act, provides for the regulation by the Department of Transportation of advertising displays, as defined, within view of public highways. The act regulates the placement of off-premises advertising displays along highways that generally advertise business conducted or services rendered or goods produced or sold at a location other than the property upon which the display is located. A violation of the act is a crime.

The act also provides that an advertising display advertising businesses and activities developed within the boundary limits of, and as a part of, an individual redevelopment agency project, as those project boundaries existed on December 29, 2011, may remain and be considered an on-premises display, until January 1, 2023, if the advertising display meets specified criteria. The act further authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request from the department an extension for good cause, as specified, beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

This bill would expand these authorize under similar provisions to include the advertising of businesses or activities operating outside the a redevelopment project, project area but within the boundaries of the city, county, or city and county that contained the redevelopment project. By expanding the scope of the Outdoor Advertising Act, a violation of which is a crime, City of Inglewood. The bill would impose certain duties on the City of Inglewood regarding advertising display. By increasing the level of service provided by the city, the bill would impose a state-mandated local program.

Existing law, the Outdoor Advertising Act, provides for the regulation by the Department of Transportation of advertising displays, as defined, within view of public highways. The act regulates the placement of off-premises advertising displays along highways that generally advertise business conducted or services rendered or goods produced or sold at a location other than the property upon which the display is located. A violation of the act is a crime.

The act also provides that an advertising display advertising businesses and activities developed within the boundary limits of, and as a part of, an individual redevelopment agency project, as those project boundaries existed on December 29, 2011, may remain and be considered an on-premises display, until January 1, 2023, if the advertising display meets specified criteria. The act further authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request from the department an extension for good cause, as specified, beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

Existing law, the Outdoor Advertising Act, provides for the regulation by the Department of Transportation of advertising displays, as defined, within view of public highways. The act regulates the placement of off-premises advertising displays along highways that generally advertise business conducted or services rendered or goods produced or sold at a location other than the property upon which the display is located.

The act also provides that an advertising display advertising businesses and activities within the boundary limits of, and as a part of, an individual redevelopment agency project, as those project boundaries existed on December 29, 2011, may remain and be considered an on-premises display, until January 1, 2023, if the advertising display meets specified criteria. The act further authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request from the department an extension for good cause, as specified, beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

This bill would make a nonsubstantive change to these provisions.

Date of Hearing: August 10, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 1199

Author:(Hall) – As Amended Ver:April 26, 2016

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill authorizes two existing advertising displays along Interstate 405 in the City of Inglewood to be considered “on-premise” displays, until January 1, 2023, and therefore exempt from the state Outdoor Advertising Act (OAA). This authorization is valid as long as it does not cause a reduction of federal transportation funds.

FISCAL EFFECT:

Possible loss of up to $350 million in federal transportation funds as a result of a violation of provisions of the federal Highway Beautification Act (HBA) of 1965 (See Comment #5).

COMMENTS:

1. The OAA. The state OAA regulates the placement of advertising displays and signs along interstate or primary highways, landscaped freeways and similar specified highways. The OAA, along with related federal provisions, is intended, among other things, to promote highway beautification and provide a consistent framework for the regulation of advertising displays along freeways and highways. The OAA sets standards for the advertising structures, including their size, identification and location, and requires compliance with permit application procedures and conditions administered by Caltrans.
2. Redevelopment Agencies (RDAs) and the OAA. Until RDAs were dissolved, existing law allowed RDAs to permit advertising signs for 10 years, after which they were regulated by Caltrans and the OAA, unless the RDA and Caltrans agreed to an extension for good cause. Legislation created the RDA exemption to the OAA to allow businesses in these blighted areas to advertise as an additional tool to help struggling businesses in the project area become more successful.

SB 684 (Hill), Chapter 544, Statutes of 2013, sought to address the question about billboards that advertise businesses in RDA project areas in the era of successor agencies. SB 684 permitted existing advertising displays that advertised businesses and activities within the boundary limits of an RDA project to remain considered “on-premise displays” (e.g., not subject to the OAA) until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

1. Federal Highway Beautification Act of 1965: The HBA was created to protect the public investment, promote the safety and recreational value of public travel, and to preserve the natural beauty of highways in the nation. The HBA specifies that states have the responsibility to enforce provisions regarding the placement and maintenance of outdoor advertising signs, displays and devices along the Interstate and National Highway System. The State of California enforces the provisions of federal law through a compact that was developed between the state and the federal government in 1967. Federal law also includes a penalty for states that violate the HBA by reducing all federal highway transportation funds to the state by 10%.
2. Purpose. SB 1199 expands the RDA exemption for two advertising displays located within the boundary limits of the City of Inglewood at two locations on Interstate 405. According to the author, SB 1199 will help ensure that the City of Inglewood is able to fully utilize their outdoor advertising displays to promote businesses located within the area.
3. Staff Comments. This bill, in its current form, poses unnecessary financial risk to the state of California. Expanding the two specified advertising displays in Inglewood may violate the HBA because of their size, content, and location. SB 1199 contains provisions designed to mitigate this risk, but these provisions may be inadequate. The bill currently allows this advertising exemption to remain in place insofar that it does not result in a reduction of federal aid highway funds. However, the federal government may still withhold funds while the legal process of removing the advertisement unfolds.

While it is unlikely that the federal government would withhold $350 million in funding over just two advertising displays, SB 1199 can be further strengthened to prevent such a scenario altogether. For instance, the bill could be amended to make the provisions of this bill contingent upon written confirmation from the Federal Highway Administration that the signs in question do not reduce federal funds.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: June 29, 2016

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Susan Talamantes Eggman, Chair

SBPCA Bill Id:SB 1199

Author:(Hall) – As Amended Ver:April 26, 2016

SENATE VOTE: 27-7

SUBJECT: Advertising displays: City of Inglewood.

SUMMARY: Authorizes two existing advertising displays in the City of Inglewood to be considered “on-premise” displays until January 1, 2023. Specifically, this bill:

1. Requires the signs in question to meet the following conditions to be considered an on-premise display:
2. The advertising display is located within the boundary limits of the City of Inglewood;
3. The advertising display was constructed on or before January 1, 2012;
4. The advertising display is adjacent to Interstate 405 and located at either post mile 22.36L or 22.38L north of Century Boulevard; and,
5. The advertising display does not cause the reduction of federal aid highway funds provided, pursuant to Section 131 of Title 23 of the United States Code.
6. Expands existing exemptions for billboards contained within former redevelopment agencies (RDAs) to include advertising displays located within the boundary limits of the City of Inglewood at two locations on Interstate 405 that were constructed on or before January 1, 2012, so long as the advertising displays do not cause the reduction of federal aid highway funds.
7. Finds and declares that a general statute cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution due to the unique circumstances concerning the location of the advertising displays, or proposed advertising displays, set forth in this act and the need for advertising in that location, it is necessary that an exemption from some of the provisions of the Outdoor Advertising Act be provided for those displays.

EXISTING LAW:

1. Establishes the Outdoor Advertising Act (OAA), which regulates the placement of advertising displays adjacent to and within specified distances of highways that are part of the national system of interstate and defense highways and federal-aid highways.
2. Prohibits any advertising display from being placed or maintained on property adjacent to a section of a freeway that has been landscaped if the advertising display is designed to be viewed primarily by persons traveling on the main-traveled way of the landscaped freeway. The OAA, however, only applies to signs that are located within 660 feet of the right-of-way of federal-aid interstate and primary highways.
3. Provides for limited exemptions and specified exceptions to the prohibition on advertising along system and landscaped freeways, including exemptions for signs advertising the property’s sale or lease, signs designating the premises or its owner, and signs advertising goods or services manufactured or produced on the property itself.
4. Provides that the OAA generally does not apply to “on-premise” advertising displays, which include those advertising the sale of the property upon which it is placed or that advertise the business conducted, services rendered, or goods produced or sold on the property. Local government regulates on-premise displays, except for certain safety requirements.
5. Allows an existing advertising display to be considered on-premise if the display:
   1. Advertises those businesses and activities developed within the former RDA project area boundaries, as those boundaries existed on December 29, 2011;
   2. Is located within the boundary limits of the project;
   3. Was constructed before January 1, 2012; and,
   4. Does not cause the reduction in federal aid highway funds.
6. Authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request, for good cause, from the Department of Transportation (Caltrans) an extension beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

FISCAL EFFECT:

COMMENTS:

1. Background. In 2013, the Legislature passed and the Governor signed SB 684 (Hill), Chapter 544, Statutes of 2013, which sought to address the question about billboards that advertise businesses in RDA project areas in the era of successor agencies. SB 684 permitted existing advertising displays that advertised businesses and activities within the boundary limits of an RDA project to remain and be considered “on-premise displays” (e.g., not subject to the OAA) until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

Generally speaking, local governments established RDA project areas in blighted areas that require additional investment to address the blight. Until RDAs were dissolved, existing law allowed RDAs to permit advertising signs for 10 years, after which they were regulated by Caltrans and the OAA, unless the RDA and Caltrans agreed to an extension for good cause. Legislation created the RDA exemption to the OAA to allow businesses in these less-desirable places to advertise for two reasons. First, travelers, who may have been reluctant to frequent businesses in the area because of the perceived blight, would consider doing so as redevelopment investment helped address the blight issues. Second, the new advertising opportunity could be an additional tool to help struggling businesses in the project area become more successful.

The dissolution of RDAs raised questions about how existing signs would be treated by Caltrans because there is no longer an RDA to negotiate the extension with Caltrans. SB 684 permitted these existing displays to remain in place for a designated period of time and modeled the OAA exception for RDA signs. The thought was that at some point, either the blighted area has improved to the point that the businesses no longer need the unique competitive advantage provided by the sign, or the problems are too large for the signs to resolve. Additionally, in the interim, these signs provided needed funding to cities that were losing large amounts of money from RDAs. At the time, Caltrans estimated that 95 advertising signs were constructed through this authority.

Federal Highway Beautification Act of 1965: The Highway Beautification Act (HBA) was created to protect the public investment, promote the safety and recreational value of public travel, and to preserve the natural beauty of highways in the nation. The HBA specifies that states have the responsibility to enforce provisions regarding the placement and maintenance of outdoor advertising signs, displays and devices along the Interstate and National Highway System. The State of California enforces the provisions of federal law through a compact that was developed between the state and the federal government in 1967. Federal law also includes a penalty for states that violate the HBA by reducing all federal highway transportation funds to the state by 10%.

Outdoor Advertising Act: The state OAA regulates the placement of advertising displays (billboards) and signs along interstate or primary highways, landscaped freeways and similar specified highways. The OAA, along with related federal provisions, is intended, among other things, to promote highway beautification and provide a consistent framework for the regulation of advertising displays along freeways and highways. The OAA sets standards for the advertising structures, including their size, identification and location, and requires compliance with permit application procedures and conditions administered by Caltrans.

The OAA sets minimum spacing requirements between billboards on interstate highways or primary highways, which are freeways and minimum distances from interchanges or an intersection at grade. OAA also sets minimum distances between signs on traditional (primary) highways within and without incorporated areas.

The OAA specifies the original and renewal permit fees for billboards, as well penalties for permit violations. Other provisions provide for substantial monetary penalties for the unlawful trimming, destruction, or removal of trees or shrubs to enhance the visibility of highway-adjacent billboards.

Pending Action on Signs In Question: On November 20, 2015, an administrative law judge (ALJ) found that cause existed for Caltrans to issue Notices of Violation, requiring correction of violations and payment of statutory penalties, pursuant to the OAA and related Caltrans regulations, concerning two “large-scale super graphic wall signs” displayed by Sky Posters in Inglewood, California. One display, measuring 25,000 square feet, depicted displays for movies such as X-Men and Ant Man, while the other, measuring 30,000 square feet, displayed an image of the Nissan Rogue. Both are affixed to the side of a 12-story building adjacent to a section of Interstate 405. By comparison, the OAA restricts permitted advertising to displays of 1,200 square feet in area with a maximum height of 25 feet and a maximum length of 60 feet.

In or about August 2010, Sky Posters applied for and obtained approval from Caltrans for placing RDA displays on the building. In April 2014, however, Caltrans issued two violation notices based on the conclusion that the subject displays were not redevelopment displays advertising businesses in the City’s redevelopment zone and Sky Posters had only received approval for the placement of RDA displays. Additionally, these wall signs were found along a landscaped highway.

After the Notice of Violation was issued, Sky Posters filed a Notice of Defense, which requested an administrative hearing. As noted above, the ALJ found Sky Posters to be in violation of the OAA, and, pursuant to the OAA, ordered Sky Posters to pay $10,300 in penalties and $1,405,641 as disgorgement of the gross revenue that resulted from the displays. The ALJ opinion states that the OAA does not provide for injunctive relief. For this reason, if Caltrans wants to require Sky Posters to remove the wall signs, Caltrans will have to seek such relief from a Superior Court of the State of California. To date, Caltrans has not filed such an injunction with the courts.

1. Bill Summary. This bill expands the RDA exemption for two advertising displays located within the boundary limits of the City of Inglewood at two locations on Interstate 405. The expansion could conflict with regulations that are adopted, pursuant to the HBA, and would place California at risk to lose up to 10% of its federal funds. Presently, California receives $3.5 billion from the federal government, and stands to lose up to $350 million. Current law states that if an advertising display will result in the loss of federal aid highway funds, the display owner or operator shall remove the display and be subject to a civil fine of $10,000 per day. SB 1199 does contain a provision attempting to mitigate the risk of losing federal funds by stipulating the signs may remain in place as long as they do not result in the reduction of federal aid highway funds.

This is an author-sponsored bill.

1. Author’s Statement. According to the author, “In 2011, the Governor signed AB 26X1 which eliminated redevelopment agencies and established successor agencies to take control of all assets and property. These successor agencies, typically the city or county that originally established the agency, are now responsible for administering remaining debt obligations and other assets including advertising displays located in a former redevelopment zone.

“Advertising displays located in former redevelopment agency zones provide a number of benefits to local businesses and local governments. Not only do these displays encourage economic investment in the area, they also provide general fund revenue for the local government successor agency.

“Because redevelopment agencies and their boundaries no longer exist and successor agencies are tasked with managing their assets and property, this bill ensures that the
City of Inglewood is able to fully utilize their outdoor advertising displays to promote business located within the City.”

1. Arguments in Support. The City of Inglewood writes that the bill will not cause any disruption or reduction of federal highway funds to California, nor expand the authority previously granted to cities by SB 684.
2. Arguments in Opposition. None on file.
3. Double-Referral. This bill was heard by the Governmental Organization Committee on June 22, 2016, where it passed with a 19-0 vote.

REGISTERED SUPPORT / OPPOSITION:

Support

Cities of Azusa and Inglewood

Opposition

None on file.

Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958

Date of Hearing: June 22, 2016

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Adam Gray, Chair

SBPCA Bill Id:SB 1199

Author:(Hall) – As Amended Ver:April 26, 2016

SENATE VOTE: 27-7

SUBJECT: Advertising displays: City of Inglewood

SUMMARY: This bill authorizes two existing advertising displays in the City of Inglewood to be considered “on-premise” displays until January 1, 2023. Specifically, this bill:

1. Requires the signs in question to meet the following conditions to be considered an on-premise display:
2. The advertising display is located within the boundary limits of the City of Inglewood.
3. The advertising display was constructed on or before January 1, 2012.
4. The advertising display is adjacent to Interstate 405 and located at either post mile 22.36L or 22.38L north of Century Boulevard.
5. The advertising display does not cause the reduction of federal aid highway funds provided pursuant to Section 131 of Title 23 of the United States Code.
6. Expands existing exemptions for billboards contained within former RDAs to include advertising displays located within the boundary limits of the City of Inglewood at two locations on Interstate 405 that were constructed on or before January 1, 2012, so long as the advertising displays do not cause the reduction of federal aid highway funds.

3) Makes findings and declarations to the need for the special statute for the City of Inglewood.

EXISTING LAW:

1. Establishes the Outdoor Advertising Act (OAA), which regulates the placement of advertising displays adjacent to and within specified distances of highways that are part of the national system of interstate and defense highways and federal-aid highways.
2. Prohibits any advertising display from being placed or maintained on property adjacent to a section of a freeway that has been landscaped if the advertising display is designed to be viewed primarily by persons traveling on the main-traveled way of the landscaped freeway. The OAA, however, only applies to signs that are located within 660 feet of the right-of-way of federal-aid interstate and primary highways.
3. Provides for limited exemptions and specified exceptions to the prohibition on advertising along system and landscaped freeways, including exemptions for signs advertising the property’s sale or lease, signs designating the premises or its owner, and signs advertising goods or services manufactured or produced on the property itself.
4. Provides the OAA generally does not apply to “on-premise” advertising displays, which include those advertising the sale of the property upon which it is placed or that advertise the business conducted, services rendered, or goods produced or sold on the property. Local government regulates on-premise displays, except for certain safety requirements.
5. Allows an existing advertising display to be considered on-premise if the display:
   1. Advertises those businesses and activities developed within the former Redevelopment Agency (RDA) project area boundaries, as those boundaries existed on December 29, 2011;
   2. Is located within the boundary limits of the project;
   3. Was constructed before January 1, 2012; and
   4. Does not cause the reduction in federal aid highway funds.
6. Authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request, for good cause, from the Department of Transportation (Caltrans) an extension beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

FISCAL EFFECT: Unknown

COMMENTS:

Purpose of the bill: According to the author: “In 2011, the Governor signed AB 26X1 which eliminated redevelopment agencies and established successor agencies to take control of all assets and property. These successor agencies, typically the city or county that originally established the agency are now responsible for administering remaining debt obligations and other assets including advertising displays located in a former redevelopment zone.

Advertising displays located in former redevelopment agency zones provide a number of benefits to local businesses and local governments. Not only do these displays encourage economic investment in the area, they also provide general fund revenue for the local government successor agency.

Because redevelopment agencies and their boundaries no longer exist and successor agencies are tasked with managing their assets and property, this bill ensures that the City of Inglewood is able to fully utilize their outdoor advertising displays to promote business located within the City.”

Background: In 2013, the legislature passed and the Governor signed SB 684 (Hill, Chapter 544, Statutes of 2013), which sought to address the question about billboards that advertise businesses in RDA project areas in the era of successor agencies. That bill permitted existing advertising displays that advertised businesses and activities within the boundary limits of a RDA project to remain and be considered “on-premise displays” (e.g., not subject to the OAA) until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

Generally speaking, local governments established RDA project areas in blighted areas that require additional investment to address the blight. Until RDAs were dissolved, existing law allowed RDAs to permit advertising signs for 10 years, after which they were regulated by Caltrans and the OAA, unless the RDA and Caltrans agreed to an extension for good cause. Legislation created the RDA exemption to the OAA to allow businesses in these less-desirable places to advertise for two reasons. First, travelers who may have been reluctant to frequent businesses in the area because of the perceived blight would consider doing so as redevelopment investment helped address the blight issues. Second, the new advertising opportunity could be an additional tool to help struggling businesses in the project area become more successful.

The dissolution of RDAs raised questions about how existing signs would be treated by Caltrans because there is no longer an RDA to negotiate the extension with Caltrans. SB 684 permitted these existing displays to remain in place for a designated period of time and modeled the OAA exception for RDA signs. The thought was that at some point, either the blighted area has improved to the point that the businesses no longer need the unique competitive advantage provided by the sign, or the problems are too large for the signs to resolve. Additionally, in the interim, these signs provided needed funding to cities that were losing large amounts of money from RDAs. At the time, Caltrans estimated that 95 advertising signs were constructed through this authority.

Federal Highway Beautification Act of 1965: The Highway Beautification Act (HBA) was created to protect the public investment, promote the safety and recreational value of public travel, and to preserve the natural beauty of highways in the nation.

The HBA specifies that states have the responsibility to enforce provisions regarding the placement and maintenance of outdoor advertising signs, displays and devices along the Interstate and National Highway System. The state of California enforces the provisions of federal law through a compact that was developed between the state and the federal government in 1967. Federal law also includes a penalty for states that violate the HBA by reducing all federal highway transportation funds to the state by 10%.

This bill expands the RDA exemption for two advertising displays located within the boundary limits of the City of Inglewood at two locations on Interstate 405. The expansion could conflict with regulations that are adopted pursuant to the HBA, and would place California at risk to lose up to 10% of its federal funds. Presently, California receives $3.5 billion from the federal government, and stands to lose up to $350 million. Current law states that if an advertising display will result in the loss of federal aid highway funds, the display owner or operator shall remove the display and be subject to a civil fine of $10,000 per day. SB 1199 does contain a provision attempting to mitigate the risk of losing federal funds by stipulating the signs may remain in place as long as they do not result in the reduction of federal aid highway funds.

Outdoor Advertising Act: The state OAA regulates the placement of advertising displays (billboards) and signs along interstate or primary highways, landscaped freeways and similar specified highways. The OAA, along with related federal provisions, is intended, among other things, to promote highway beautification and provide a consistent framework for the regulation of advertising displays along freeways and highways. The OAA sets standards for the advertising structures, including their size, identification and location, and requires compliance with permit application procedures and conditions administered by Caltrans.

The OAA sets minimum spacing requirements between billboards on interstate highways or primary highways, which are freeways and minimum distances from interchanges or an intersection at grade. The OAA also sets minimum distances between signs on traditional (primary) highways within and without incorporated areas.

The OAA specifies the original and renewal permit fees for billboards, as well penalties for permit violations. Other provisions provide for substantial monetary penalties for the unlawful trimming, destruction, or removal of trees or shrubs to enhance the visibility of highway-adjacent billboards.

Pending Action on Signs In Question: On November 20, 2015, an administrative law judge (ALJ) found that cause existed for Caltrans to issue Notices of Violation, requiring correction of violations and payment of statutory penalties, pursuant to the OAA and related Caltrans regulations, concerning two “large-scale super graphic wall signs” displayed by Sky Posters in Inglewood, California. One display, measuring 25,000 square feet, depicted displays for movies such as X-Men and Ant Man, while the other, measuring 30,000 square feet, displayed an image of the Nissan Rogue. Both are affixed to the side of a 12-story building adjacent to a section of Interstate 405. By comparison, the OAA restricts permitted advertising to displays of 1,200 square feet in area with a maximum height of 25 feet and a maximum length of 60 feet.

In or about August 2010, Sky Posters applied for and obtained approval from Caltrans for placing RDA displays on the building. In April 2014, however, Caltrans issued two violation notices based on the conclusion that the subject displays were not redevelopment displays advertising businesses in the City’s redevelopment zone and Sky Posters had only received approval for the placement of RDA displays. Additionally, these wall signs were found along a landscaped highway.

After the Notice of Violation was issued, Sky Posters filed a Notice of Defense, which requested an administrative hearing. As noted above, the administrative law judge found Sky Posters to be in violation of the OAA, and pursuant to the OAA, ordered Sky Posters to pay $10,300 in penalties and $1,405,641 as disgorgement of the gross revenue that resulted from the displays. The ALJ opinion states that the OAA does not provide for injunctive relief. For this reason, if Caltrans wants to require Sky Posters to remove the wall signs, Caltrans will have to seek such relief from a Superior Court of the State of California. To date, Caltrans has not filed such an injunction with the courts.

Support: The City of Inglewood writes in support: “The City of Inglewood, like many if the other 400-plus cities in the State of California, had been a major beneficiary of local redevelopment efforts by its redevelopment agency…However, in 2011, when Governor Brown signed and AB 26X1 was enacted, and redevelopment agencies were eliminated, the revenues generated by redevelopment efforts were greatly reduced and eliminated in certain areas. This bill will not cause any disruption or reduction of federal highway funds to California, nor expand the authority previously granted to cities by SB 684 (Hill, 2004), the City of Inglewood urges you to vote “AYE” on SB 1199.”

Opposition: The California State Outdoor Advertising Association (CSOAA) writes in opposition: “The regulatory structure that governs our member businesses is complex, and must consider federal, state and local considerations. We are concerned that this proposal creates an unlevel playing field for those outdoor companies that maintained lawfully permitted displays. SB 1199 would benefit those that have not complied with existing law, while punishing other businesses that have abided by the statute. Passing this bill is putting $350 million of federal funds at risk in order to facilitate two wallscapes. This is certainly not wise public policy. At very least, there is no reason to take the risk while legal proceedings have not been finalized. For these reasons, we must oppose SB 1199.”

Double referral: Should SB 1199 pass the Assembly Committee on Governmental Organization on Wednesday, June 22, 2016, this bill will be referred to the Assembly Committee on Local Government for further consideration.

Prior/Related Legislation: SB 684 (Hill, Chapter 544, Statutes of 2013) — permitted existing advertising displays that advertised businesses and activities within the boundary limits of an RDA project to remain and be considered “on-premise displays” until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

SB 31 (Padilla), 2013-2014 Legislative Session. Recasts the arena advertising exception to exempt from the OAA specified advertising displays authorized before January 1, 2019 by local ordinance, at a venue with a capacity of 15,000 seats or more that is capable of providing a permanent venue for professional sports. (Pending on the Assembly Floor)

SB 694 (Correa), 2013-2014 Legislative Session. Exempts from the Outdoor Advertising Act (OAA) advertising displays at current or future high-speed rail stations. (Pending in Assembly Appropriations Committee)

AB 26X (Blumenfield), Chapter 5, Statutes of 2011-12 First Extraordinary Session. Among other provisions, this bill eliminated redevelopment agencies.

AB 2339 (Solorio), Chapter 493, Statutes of 2008. This bill expanded the definition of an "on premise" display to include those displays advertising products, goods, or services sold on the premises of an arena of at least 5,000 seats and is located on public land, provided certain conditions were met.

AB 1499 (Benoit) of 2005-2006 Legislative Session. Creates an exemption to the Act, to permit the City of Riverside to erect an outdoor advertising display along Highway 91 to promote economic activity for the Riverside Plaza. (Vetoed by Governor)

AB 801 (Jones) of 2005-2006 Legislative Session. Creates an exemption from the Outdoor Advertising Act for one sign in the County of Sacramento. (Vetoed by Governor)

AB 2441 (Klehs) of 2005-2006 Legislative Session. Authorizes an advertising display in the redevelopment zone of the City of San Leandro subject to specified conditions. (Vetoed by Governor)

AB 1518 (J. Horton) of 2005-2006 Legislative Session. Exempts, from the prohibition against placing advertising displays adjacent to landscaped freeways, any billboard located on property owned by the Lennox School District, subject to certain conditions. (Died pending Concurrence in Assembly)

AB 762 (Nunez), Chapter 725, Statutes of 2003, creates an exemption to the Act by allowing the National Latino Arts Council to place an advertisement on the roof of a not-for-profit educational academy.

SB 1480 (Speier), Chapter 972, Statutes of 2002, requires the applicant for a state billboard permit to have the written consent of the city or county with land use jurisdiction as well as the owner of the property site for the billboard

SB 190 (Perata) Chapter 54, Statutes of 2001. Exempted a certain development of highway advertising in Oakland from existing laws protecting landscaped highways permitted the City of Artesia to erect an advertising display alongside a landscaped highway. Permitted the City of Artesia to lease one billboard space adjacent to the 91 Freeway on city property.

REGISTERED SUPPORT / OPPOSITION:

Support

City of Azusa

City of Inglewood

Opposition

California State Outdoor Advertising Association

Analysis Prepared by: Kenton Stanhope / G.O. / (916) 319-2531

 THIRD READING  

Bill No: SB 1199

Author:

:

Vote:

SENATE TRANS. & HOUSING COMMITTEE: 8-1, 4/19/16

AYES: Beall, Cannella, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski

NOES: Allen

NO VOTE RECORDED: Bates, Gaines

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT:

SOURCE: Author

DIGEST: This bill authorizes two existing advertising displays in the City of Inglewood to be considered on-premise displays until January 1, 2023.

ANALYSIS:

Existing law:

1. Establishes the Outdoor Advertising Act (OAA), which regulates the placement of advertising displays adjacent to and within specified distances of highways that are part of the national system of interstate and defense highways and federal-aid highways.
2. Prohibits any advertising display from being placed or maintained on property adjacent to a section of a freeway that has been landscaped if the advertising display is designed to be viewed primarily by persons traveling on the main-traveled way of the landscaped freeway. The OAA, however, only applies to signs that are located within 660 feet of the right-of-way of federal-aid interstate and primary highways.
3. Provides for limited exemptions and specified exceptions to the prohibition on advertising along system and landscaped freeways, including exemptions for signs advertising the property’s sale or lease, signs designating the premises or its owner, and signs advertising goods or services manufactured or produced on the property itself.
4. Provides the OAA generally does not apply to “on-premise” advertising displays, which include those advertising the sale of the property upon which it is placed or that advertise the business conducted, services rendered, or goods produced or sold on the property. Local government regulates on-premise displays, except for certain safety requirements.
5. Allows an existing advertising display to be considered on-premise if the display:
   1. Advertises those businesses and activities developed within the former Redevelopment Agency (RDA) project area boundaries, as those boundaries existed on December 29, 2011;
   2. Is located within the boundary limits of the project;
   3. Was constructed before January 1, 2012; and
   4. Does not cause the reduction in federal aid highway funds.
6. Authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request, for good cause, from the Department of Transportation (Caltrans) an extension beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

This bill:

1) Expands existing exemptions for billboards contained within former RDAs to include advertising displays located within the boundary limits of the City of Inglewood at two locations on Interstate 405 that were constructed on or before January 1, 2012, so long as the advertising displays do not cause the reduction of federal aid highway funds.

2) Makes findings and declarations to the need for the special statute for the City of Inglewood.

Comments

1. California’s exemption for RDA displays in a post-RDA world. In 2013, the Legislature passed and the Governor signed SB 684 (Hill, Chapter 544, Statutes of 2013), which sought to address the question about billboards that advertise businesses in RDA project areas in the era of successor agencies. That bill permitted existing advertising displays that advertised businesses and activities within the boundary limits of an RDA project to remain and be considered “on-premise displays” (e.g., not subject to the OAA) until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

Local governments established RDA project areas in blighted areas that require additional investment to address the blight. Until RDAs were dissolved, existing law allowed RDAs to permit advertising signs for 10 years, after which they were regulated by Caltrans and the OAA, unless the RDA and Caltrans agreed to an extension for good cause. Legislation created the RDA exemption to the OAA to allow businesses in these less-desirable places to advertise.

The dissolution of RDAs raised questions about how existing signs would be treated by Caltrans because there is no longer an RDA to negotiate the extension with Caltrans. SB 684 permitted these existing displays to remain in place for a designated period of time and modeled the OAA exception for RDA signs. The thought was that at some point, either the blighted area has improved to the point that the businesses no longer need the unique competitive advantage provided by the sign, or the problems are too large for the signs to resolve.

1. Impacts on the subjects of a recent legal decision. This bill impacts the subjects of a recent decision by an administrative law court concerning violations of the OAA. On November 20, 2015, an administrative law judge (ALJ) found that cause existed for Caltrans to issue Notices of Violation, requiring correction of violations and payment of statutory penalties, pursuant to the OAA and related Caltrans regulations, concerning two “large-scale super graphic wall signs” displayed by Sky Posters in Inglewood, California. One display, measuring 25,000 square feet, depicted displays for movies such as X-Men and Ant Man, while the other, measuring 30,000 square feet, displayed an image of the Nissan Rogue. Both are affixed to the side of a 12-story building adjacent to a section of Interstate 405. By comparison, the OAA restricts permitted advertising to displays of 1,200 square feet in area with a maximum height of 25 feet and a maximum length of 60 feet.

In or about August 2010, Sky Posters applied for and obtained approval from Caltrans for placing RDA displays on the building. In April 2014, however, Caltrans issued two violation notices based on the conclusion that the subject displays were not redevelopment displays advertising businesses in the City’s redevelopment zone and Sky Posters had only received approval for the placement of RDA displays. Additionally, these wall signs were found along a landscaped highway.

After the Notice of Violation was issued, Sky Posters filed a Notice of Defense, which requested an administrative hearing. As noted above, the administrative law judge found Sky Posters to be in violation of the OAA, and pursuant to the OAA, ordered Sky Posters to pay $10,300 in penalties and $1,405,641 as disgorgement of the gross revenue that resulted from the displays. The ALJ opinion states that the OAA does not provide for injunctive relief. For this reason, if Caltrans wants to require Sky Posters to remove the wall signs, Caltrans will have to seek such relief from a Superior Court of the State of California.

If this bill were passed, Sky Posters would likely be permitted to continue displaying the two wall posters at issue.

1. Federal highway funds imperiled. Current law permits existing signs within an RDA project area that advertise for businesses within the RDA to remain in place until 2023. This bill expands that exemption and permit two signs in the City of Inglewood to qualify as on-premise displays and remain until January 1, 2023.

This exception would conflict with regulations that are adopted pursuant to the federal Highway Beautification Act, and could place California at risk to lose up to 10% of its federal funds. Presently, California receives $3.5 billion from the federal government, and stands to lose up to $350 million. This bill states that if an advertising display will result in the loss of federal aid highway funds, the display owner or operator shall remove the display and be subject to a civil fine of $10,000 per day.

Related/Prior Legislation

SB 684 (Hill, Chapter 544, Statutes of 2013) permitted existing advertising displays that advertised businesses and activities within the boundary limits of an RDA project to remain and be considered on-premise displays until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/9/16)

None received

OPPOSITION: (Verified 5/9/16)

California State Outdoor Advertising Association

ARGUMENTS IN SUPPORT: According to the author, “[a]dvertising displays located in former redevelopment agency zones provide a number of benefits to local businesses and local governments. Not only do these displays encourage economic investment in the area, they also provide general fund revenue for the local government successor agency. SB 1199 will allow the City of Inglewood to utilize advertising displays located in the former redevelopment zone to advertise business located within the City’s boundaries. Because redevelopment agencies and their boundaries no longer exist and successor agencies are tasked with managing their assets and property, this bill ensures that the City of Inglewood is able to fully utilize their outdoor advertising displays to promote business located within the City.”

ARGUMENTS IN OPPOSITION: Writing in opposition, the California State Outdoor Advertising Association (CSOAA) states that this bill seeks to legalize two outdoor advertising displays that were recently found to violate state law. According to CSOAA, the sign owner has filed a motion for reconsideration with the Office of Administrative Hearings, and for this reason, believes this bill is premature until there is legal resolution. Additionally, this bill creates an unleveled playing field for those outdoor companies that have maintained lawfully permitted displays. CSOAA argues that there is no reason to put $350 million of federal funds at risk to facilitate two illegal advertising displays.

Prepared by:

5/11/16 15:38:21

**** END ****

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2015 - 2016 Regular

Bill No: SB 1199 Hearing Date: 4/19/2016

SUBJECT: Advertising displays: redevelopment agency project areas

DIGEST: This bill provides that a billboard advertising for businesses and activities within a city, county, or city and county that is contained within an existing redevelopment agency (RDA) project may remain and be considered an on-premises display until January 1, 2023, if the display meets specified criteria.

ANALYSIS:

Existing law:

1. Establishes the Outdoor Advertising Act (OAA), which regulates the placement of advertising displays adjacent to and within specified distances of highways that are part of the national system of interstate and defense highways and federal-aid highways.
2. Prohibits any advertising display from being placed or maintained on property adjacent to a section of a freeway that has been landscaped if the advertising display is designed to be viewed primarily by persons traveling on the main-traveled way of the landscaped freeway. The OAA, however, only applies to signs that are located within 660 feet of the right-of-way of federal-aid interstate and primary highways.
3. Provides for limited exemptions and specified exceptions to the prohibition on advertising along system and landscaped freeways, including exemptions for signs advertising the property’s sale or lease, signs designating the premises or its owner, and signs advertising goods or services manufactured or produced on the property itself.
4. The OAA generally does not apply to “on premise” advertising displays, which include those advertising the sale of the property upon which it is placed or that advertise the business conducted, services rendered, or goods produced or sold on the property. Local government regulates on-premise displays, except for certain safety requirements.
5. Allows an existing advertising display to be considered on-premise if the display:
   1. Advertises those businesses and activities developed within the former
   2. RDA project area boundaries, as those boundaries existed on December 29, 2011;
   3. Is located within the boundary limits of the project;
   4. Was constructed before January 1, 2012; and
   5. Does not cause the reduction in federal aid highway funds.
6. Authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request, for good cause, from Caltrans an extension beyond January 1, 2023, not to exceed the expiration of the redevelopment project area.

This bill expands existing exemptions for billboards contained within former RDAs to include the advertising of businesses or activities operating outside the redevelopment project, but within the boundaries of the city, county, or city and county that contained the redevelopment project.

COMMENTS:

1. Purpose. According to the author, “[i]n 2011, the Governor signed AB 26X1 which eliminated RDAs and established successor agencies to take control of all assets and property. Those successor agencies, typically the city or county that originally established the agency, are now responsible for administering remaining debt obligations and other assets including advertising displays located in a former redevelopment zone. Because RDAs and their boundaries no longer exist and successor agencies are tasked with managing their assets and property, this bill ensures that local governments are able to fully utilize their outdoor advertising display to promote business in their jurisdiction.”
2. California already provides an exception for RDA displays in a post-RDA world. In 2013, the legislature passed and the Governor signed SB 684 (Hill, Chapter 544, Statutes of 2013), which sought to address the question about billboards that advertise businesses in RDA project areas in the era of successor agencies. That bill permitted existing advertising displays that advertised businesses and activities within the boundary limits of a RDA project to remain and be considered “on-premise displays” (e.g., not subject to the OAA) until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

Generally speaking, local governments established RDA project areas in blighted areas that require additional investment to address the blight. Until RDAs were dissolved, existing law allowed RDAs to permit advertising signs for 10 years, after which they were regulated by Caltrans and the OAA, unless the RDA and Caltrans agreed to an extension for good cause. Legislation created the RDA exemption to the OAA to allow businesses in these less-desirable places to advertise for two reasons. First, travelers who may have been reluctant to frequent businesses in the area because of the perceived blight would consider doing so as redevelopment investment helped address the blight issues. Second, the new advertising opportunity could be an additional tool to help struggling businesses in the project area become more successful.

The dissolution of RDAs raised questions about how existing signs would be treated by Caltrans because there is no longer an RDA to negotiate the extension with Caltrans. SB 684 permitted these existing displays to remain in place for a designated period of time and modeled the OAA exception for RDA signs. The thought was that at some point, either the blighted area has improved to the point that the businesses no longer need the unique competitive advantage provided by the sign, or the problems are too large for the signs to resolve. Additionally, in the interim, these signs provided needed funding to cities that were losing large amounts of money from RDAs. At the time, Caltrans estimated that 95 advertising signs were constructed through this authority.

1. Federal highway funds imperiled. As noted above, current law permits existing signs within an RDA project area that advertise for businesses within RDA to remain in place until 2023. This bill would expand that exemption and permit any billboard that was constructed before the end of 2011 to remain, if it is in any local agency that had an RDA and the display is within the boundaries of the local agency that had an RDA, until 2023. The author has not been able to articulate how many additional signs this would permit to remain in place or how many local agencies would be affected, but the Department of Finance’s website indicates that the state dissolved over 400 RDAs in 2011. It is clear that the impacts of this exception could have broad-reaching impacts.

Additionally, the expansion of this exception would conflict with regulations that are adopted pursuant to the federal Highway Beautification Act, and would place California at risk to lose up to 10% of its federal funds. Presently, California receives $3.5 billion from the federal government, and stands to lose up to $350 million. Current law states that if an advertising display will result in the loss of federal aid highway funds, the display owner or operator shall remove the display and be subject to a civil fine of $10,000 per day.

1. Impacts on the subjects of a recent legal decision. This bill impacts the subjects of a recent decision by an administrative law court concerning violations of the OAA. On November 20, 2015, an administrative law judge (ALJ) found that cause existed for Caltrans to issue Notices of Violation, requiring correction of violations and payment of statutory penalties, pursuant to the OAA and related Caltrans regulations, concerning two “large-scale super graphic wall signs” displayed by Sky Posters in Inglewood, California. One display, measuring 25,000 square feet, depicted displays for movies such as X-Men and Ant Man, while the other, measuring 30,000 square feet, displayed an image of the Nissan Rogue. Both are affixed to the side of a 12-story building adjacent to a section of Interstate 405. By comparison, the OAA restricts permitted advertising to displays of 1,200 square feet in area with a maximum height of 25 feet and a maximum length of 60 feet.

In or about August 2010, Sky Posters applied for and obtained approval from Caltrans for placing RDA displays on the building. In April 2014, however, Caltrans issued two violation notices based on the conclusion that the subject displays were not redevelopment displays advertising businesses in the City’s redevelopment zone and Sky Posters had only received approval for the placement of RDA displays. Additionally, these wall signs were found along a landscaped highway.

After the Notice of Violation was issued, Sky Posters filed a Notice of Defense, which requested an administrative hearing. As noted above, the administrative law judge found Sky Posters to be in violation of the OAA, and pursuant to the OAA, ordered Sky Posters to pay $10,300 in penalties and $1,405,641 as disgorgement of the gross revenue that resulted from the displays. The ALJ opinion states that the OAA does not provide for injunctive relief. For this reason, if Caltrans wants to require Sky Posters to remove the wall signs, Caltrans will have to seek such relief from a Superior Court of the State of California.

As of Monday April 11, the two “large-scale super graphic wall signs” were still up. If this bill were passed, Sky Posters would likely be permitted to continue displaying the two wall posters at issue.

Given the broad implications of this bill, the committee may wish to consider whether the legislature should be carving out exceptions to the OAA in fairness to others that operate advertising displays legally.

Related Legislation:

SB 684 (Hill, Chapter 544, Statutes of 2013) — permitted existing advertising displays that advertised businesses and activities within the boundary limits of an RDA project to remain and be considered “on-premise displays” until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing “good cause” beginning on January 1, 2022.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

POSITIONS: (Communicated to the committee before noon on Wednesday,

April 13, 2016.)

SUPPORT:

None received

OPPOSITION:

None received

-- END --