BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 31 (Padilla) - Outdoor advertising displays: sports arenas.
Amended: April 1, 2013 Policy Vote: T&H 8-0
Urgency: No Mandate: No
Hearing Date: April 22, 2013
Consultant: Mark McKenzie
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 31 would revise and recast provisions of the
Outdoor Advertising Act that provide an exemption for certain
advertising displays located on the premises of sports arenas.
Fiscal Impact:
Initial Department of Transportation (Caltrans) costs of
approximately $75,000 to conduct any up-front coordination
activities, revise existing regulations regarding outdoor
advertising, and inspect newly erected signs (State Highway
Account).
Ongoing Caltrans staff costs of approximately $35,000
annually to consult with the Secretary of Transportation in
reviewing any proposed displays and ordinances, and to
annually inspect existing signs (State Highway Account).
Minor costs to the Secretary of Transportation to review
proposed displays and local ordinances.
Background: 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. The OAA, with some exceptions,
specifically prohibits the placement of any advertising display
on property adjacent to a section of landscaped highway. State
law generally does not apply to "on premise" advertising
displays, including those that advertise the sale, lease, or
exchange of property upon which it is placed and those that
advertise the business conducted, services rendered, or the
goods produced or sold on the property. Apart from certain
safety requirements in state law, the regulation of "on-premise"
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displays is a local matter.
Existing law, AB 2339 (Solorio), Chap 493/2008, enacted the
"arena exemption" which provides for an exemption from the OAA
for advertising displays located on the premises of a
professional sports arena located on public land with a capacity
of at least 5,000 seats, and the products, goods or services
advertised are or will be offered for sale pursuant to a
specified agreement. The arena exemption prohibits the
advertising of adult products or services, including alcohol,
tobacco, gambling, or sexually explicit material.
Proposed Law: SB 31 would delete the current arena exemption and
recast the provisions in the following ways:
Allow professional sports arenas to display advertising for
products, goods, or services that are either sold on the
premises or part of a sponsorship marketing plan if the arena
is on public land and has a capacity of 15,000 or more seats,
and the advertising display does not cause a reduction in
federal highway funding provided to the state.
Require an advertising display to be either located on the
premises of the arena, or authorized pursuant to a local
ordinance by January 1, 2019 and visible when approaching
interstate or highway offramps nearest to the premises of the
arena.
Define the premises of an arena to include the actual venue or
a project or district encompassing the arena but not extending
more than 1,000 feet beyond the arena.
Require any advertising displays on the premises of an arena
to be authorized by a local ordinance that either authorizes
specific displays or establishes regulations including, but
not limited to, the number and size of allowable signs,
illumination restrictions, and hours of operation.
Require the state Transportation Secretary to review and
certify, in consultation with the Caltrans, that the proposed
displays and sign ordinance meet the minimum statutory
requirements.
Prohibit the advertisement of products, goods, or services
related to distilled spirits, tobacco, firearms, or sexually
explicit material.
Require the owner a displays to either provide or fund the
installation of a changeable message sign to accommodate
public service messages such as "Amber Alerts" and emergency
disaster communications, if the display is a message center
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display.
Staff Comments: The revised arena exemption would currently
apply to 12 sports arena properties statewide. In the near
future, the exemption would also apply to displays located on
the premises of the proposed football stadium at Farmer's Field
in Los Angeles, the new stadium for the San Francisco 49ers in
Santa Clara, and any proposed facilities for the Sacramento
Kings. As the appetite for public financing of sports arenas
has diminished, private capital generated from long-term
sponsorship marketing agreements has become a critical component
of financing the construction and operation of sports arenas and
stadiums.
The Transportation Secretary and Caltrans both note a potential
liability concern related to advertising displays erected
pursuant to the bill. Specifically, some argue that the state
would be exposed to liability if a sign has received tacit
approval from the state pursuant to the review and certification
requirements in the bill, and the Federal Highway Administration
(FHWA) indicates that federal highway funds are at risk as a
result of the erection of an advertising display that does not
comply with a strict interpretation of the federal Highway
Beautification Act. The bill provides that one of the
conditions of the exemption is that a proposed display cannot
result in a reduction in federal funds, and there appears to be
broad agreement that any sign that places those funds at risk
must come down. There is a concern that a sign owner may
attempt to recover lost advertising revenues by filing suit
against the state if an advertising display erected pursuant to
the arena exemption were removed. It appears improbable that
the FHWA would take the extreme step of withholding 10 percent
of federal highway funding from California over the placement of
advertising displays on the premises of sports arenas. Staff
notes that there is no known controversy over the legality of
advertising displays erected pursuant to the existing "arena
exemption." However, in order to address potential liability
concerns, the author has committed to work collaboratively with
the Transportation Secretary to amend the bill to resolve those
concerns. Those discussions are ongoing.
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