BILL ANALYSIS                                                                                                                                                                                                    Ó






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 31
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  padilla
                                                         VERSION: 4/1/13
          Analysis by:  Eric Thronson                    FISCAL:  yes
          Hearing date:  April 9, 2013



          SUBJECT:

          Outdoor Advertising Act:  arena exemption

          DESCRIPTION:

          This bill clarifies aspects of the arena exemption to the  
          Outdoor Advertising Act.

          ANALYSIS:

          The Outdoor Advertising Act (OAA) regulates the size,  
          illumination, orientation, and location of advertising displays  
          adjacent to and within specified distances of interstate or  
          primary highways, and, with some exceptions, specifically  
          prohibits any advertising display from being placed or  
          maintained on property adjacent to a section of landscaped  
          highway.

          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.

          In 2008, the Legislature passed AB 2339 (Solorio), Chapter 493.   
          Known as the arena exemption, AB 2339 expanded the definition of  
          an "on premise" display to include those displays advertising  
          products, goods, or services sold on the premises of an arena  
          that has a capacity of at least 5,000 seats and is located on  
          public land, provided certain conditions were met.  AB 2339  
          specifically prohibited the advertising of products, goods, or  
          services directed at an adult population, including alcohol,  
          tobacco, gambling, or sexually explicit material.

           This bill  clarifies aspects of the OAA arena exemption in the  
          following ways:




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           Allows arenas to display advertising for products, goods, or  
            services sold on premises as well as part of a sponsorship  
            marketing plan if the arena is on public land and has a  
            capacity of 15,000 or more seats.
           Defines the premise of the arena to potentially include a  
            district encompassing the arena but not extending more than  
            1,000 feet beyond the arena.
           Requires the local government to adopt an ordinance  
            authorizing the advertising displays on the premise of the  
            arena with specific regulations including, but not limited to,  
            the number and size of allowable signs, illumination  
            restrictions, and hours of operation.
           Requires the state Transportation Secretary to review and  
            certify, in consultation with the California Department of  
            Transportation (Caltrans), that the proposed displays and sign  
            ordinance meet the minimum statutory requirements.
           Restricts the arena from advertising products, goods, or  
            services related to distilled spirits, tobacco, firearms, or  
            sexually explicit material.
           Allows a qualifying arena to place up to two displays at  
            approaching highway off ramps and treat them as though they  
            are arena displays as long as the displays are authorized by a  
            local ordinance as of January 1, 2019.
           Requires the owner of these displays either to provide or fund  
            the installation of one changeable message sign to accommodate  
            public service messages such as "Amber Alerts" and emergency  
            disaster communications.
          
          COMMENTS:

           1.Purpose  .  According to the author, this bill allows for local  
            control while establishing statewide guidelines for  
            advertising displays at professional sports facilities and  
            arenas.  The author states that the cost of building,  
            operating, and maintaining professional sports facilities is  
            rising, and while public funding was traditionally a large  
            portion of the necessary financing, today funding comes from  
            many different sources such as naming rights, ticket sales,  
            and concessions.  A growing revenue source funding  
            professional sports arenas is advertising, both inside and  
            outside the arena.  The author argues that this bill is  
            important to enable current and future arenas to tap into this  
            increasingly critical financing source to backfill the  
            decrease in public funding available for such purposes.





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           2.Committee policy on exemptions to the OAA  .  Over the years,  
            legislators have introduced numerous bills to exempt stretches  
            of road from the OAA's prohibition against having an  
            advertising display along a landscaped freeway.  Several years  
            ago, the committee determined that continued approval of  
            exemptions for nonconforming and prohibited advertising  
            displays threatened to undermine and render meaningless the  
            provisions and intent of the OAA.  Therefore, in order to  
            defend the integrity of the OAA, the committee has adopted a  
            policy since the 2007-08 legislative session that states that  
            the committee will not consider any measure that would result  
            in the placement of an advertising display in violation of the  
            OAA.  The committee agreed with the 18th century Scottish poet  
            James Thomson, who opined, "But who can paint like Nature?   
            Can imagination boast, amid its gay creation, hues like hers?"

            In the current session, however, the committee has adopted a  
            slightly modified policy on exemptions to the OAA.  In light  
            of recent legislative decisions, it has become clear that  
            simply denying a hearing of bills related to the OAA does not  
            allow the committee to consider measures that reflect shifts  
            in statewide policy positions, such as the financing of  
            professional sports arenas.  For this reason, the committee's  
            policy for the current session retains the prohibition against  
            hearing any measure exempting specific advertising displays  
            from the OAA, but includes the possibility of hearing bills  
            reflecting legislative changes to statewide policy.  This is  
            one such bill.

           3.Why are arenas exempted from the OAA  ?  Major sports arenas are  
            often funded primarily with public dollars, but as the public  
            becomes more reluctant to apply tax dollars to such projects,  
            private investors are increasing their share of arena  
            development and construction costs.  To address this shift,  
            arena promoters have looked for other means by which to  
            finance these costly projects.  Proponents determined that  
            advertising revenue, particularly generated alongside busy  
            interstates in front of massive sports complexes, was a  
            reasonable and potentially lucrative alternative to public  
            financing.  In some ways, policymakers have traded direct  
            public funding for the indirect public cost of allowing these  
            signs to exist, including all the potential downsides such as  
            increased driver distraction and blight.

           4.Why are these clarifications necessary  ?  The current arena  
            exemption contains some ambiguities which, left unaddressed,  




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            appeared headed to litigation.  For example, the current  
            language allows arena displays to advertise products, goods,  
            or services sold on the premises of an arena.  Some have  
            argued that this can include any products or services that are  
            described in a sponsorship marketing plan agreed to on the  
            arena premises.  Caltrans interprets current law as only  
            allowing the advertisement of products or services actually  
            sold on premises, such as those products sold at refreshment  
            bars within the arena.  In this example, it seems responsible  
            to clarify statute and avoid costly legal costs for the state,  
            because if the intent of the exemption is to help arena  
            developers fund arena construction, then existing law should  
            make available to these developers the most effective tools  
            possible.

            In addition, some argue that further clarification regarding  
            the state's role in permitting these signs is necessary.   
            Because the OAA in many ways mirrors federal law, exemptions  
            from the OAA can jeopardize the state's receipt of federal  
            highway funding.  While the regulation of on-premise displays  
            is generally a local matter, some argue that review at the  
            state level is necessary due to the fact that these signs can  
            possibly have statewide implications such as a reduction in  
            federal aid highway funds.  This bill addresses this concern  
            by requiring the Secretary of the Transportation Agency to  
            review the locally-adopted ordinance permitting the signs.

           5.Opposition  .  Opponents of the bill raise several issues.   
            First, opponents argue that this bill creates a conflict for  
            local governments because the billboards must be on public  
            land, so the local government may share in the advertising  
            revenue, and at the same time is required to regulate  
            on-premise signs.  Second, opponents share the concern that  
            these signs could jeopardize federal highway funds.  Third,  
            opponents are concerned that this bill is unnecessarily broad,  
            suggesting that dozens of new billboards would be exempted by  
            this bill.  Finally, the opponents believe this bill puts the  
            Legislature and the governor in a position of picking winners  
            and losers, because it is unfairly exempting some sign owners  
            from state laws and not others.
          
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             April 3,  
          2013.)

               SUPPORT:  AEG




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                         Farmers Insurance Group
                         State Building and Construction Trades Council,  
          AFL-CIO

               OPPOSED:  California State Outdoor Advertising Association