BILL ANALYSIS Ó
SB 31
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Date of Hearing: June 12, 2013
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Isadore Hall, Chair
SB 31 (Padilla) - As Amended: June 6, 2013
SENATE VOTE : 37-0
SUBJECT : Outdoor advertising displays: arenas
SUMMARY : Clarifies aspects of the arena exemption to the
Outdoor Advertising Act (OAA). Specifically, this bill :
1)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.
2)Requires the local government to adopt an ordinance
authorizing the advertising displays on the premise of the
arena with specific regulations including:
a) Number of signs and total signage area allowed.
b) Maximum individual signage area.
c) Minimum sign separation.
d) Illumination restrictions and regulations, including
signage refresh rate, scrolling, and brightness.
e) Illuminated sign hours of operation.
3)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.
4)Authorizes advertising displays to advertise any products,
goods, or services sold within that area on a regular basis,
or marketed or promoted in that area pursuant to a sponsorship
marketing plan, except distilled spirits, tobacco, firearms,
or sexually explicitly material.
5)Defines a "sponsorship marketing plan" as an agreement between
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the property owner, facility owner, facility operator, or
occupant of the premises of an arena and a sponsor pursuant to
which the sponsor is allowed to include its logo, slogan, or
advertising displays and that meets both of the following
conditions:
a) The sponsorship marketing plan is for a period of not
less than one year
b) The sponsorship marketing plan grants the sponsor the
opportunity to display its logo, slogan, or advertising in
the interior of structures on the premises of an arena, or
conduct promotions, public relations, or marketing
activities on the premises of an arena.
6)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.
7)Requires the California Department of Transportation to review
and certify that the proposed displays and sign ordinance meet
the minimum statutory requirements.
8)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.
9)Specifies that if an advertising display is subject to a
notice from the United States Secretary that the operation of
that display will result in the reduction of federal funds, as
provided, authorization of the display would cease 60 days
after the owner of the display receives the notice.
10) Prohibits, among other things, the Department of
Transportation from assuming any liability in connection with
cessation of operation or removal of an advertising display.
11) Specifies that an advertising display that was lawfully
erected on or before December 31, 2013, in conformity with the
law relating to the exemption for advertising displays on
arenas, to remain authorized.
EXISTING LAW
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1)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.
2)Provides, through the OAA, for the regulation by the
Department of Transportation of advertising displays, as
defined, within view of public highways.
3)The OAA exempts from its provisions certain advertising
displays that advertise the business conducted, services
rendered, or goods produced or sold on the property upon which
the display is placed, as specified.
4)The OAA exempts from its provisions specified advertising
displays at an arena located on public land with a capacity of
5,000 seats or more that provides a permanent venue for
professional sports, and that advertise products, goods, or
services that are or will be sold on the premises of the arena
on a regular basis pursuant to a specified agreement.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of the bill : According to the author, this bill would
provide local control and would establish statewide guidelines
for on-premise advertising displays at professional sports
facilities. The author further states that professional sports
teams and facilities are important components of California's
economy at the local level and statewide. From San Francisco to
San Diego, there are 18 professional sports teams that play in
over 15 different professional sports facilities. Additional
professional sports facilities are planned.
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
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outside the arena.
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.
Background : The current arena exemption contains some
ambiguities which, if left unaddressed, 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 California Department of Transportation to review the
locally-adopted ordinance permitting the signs.
Outdoor Advertising Act : 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 includes those advertising the sale of the
property upon which it is placed or that advertise the business
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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 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.
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%.
Arguments in Support : Supporters argue that this measure will
provide much needed clarity and flexibility in connection with
the construction and operation of stadiums and arenas throughout
California which serves as a major catalyst for economic
activity.
AEG argues that signage opportunities in and around stadiums,
arenas and sports and entertainment districts are an important
component of the integrated marketing packages that are offered
to corporate sponsors. Most specifically, freeway visible
signage has become a standard part of the business plan for any
new stadium or arena project. The OAA imposes significant
constraints on signage displays that are typically part of the
bundle of rights offered to sports facility sponsors.
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In response to the legal uncertainty posed by these
restrictions, the state adopted an "arena exception" to help
create flexibility for arenas to advertise more broadly under
the OAA. It has become clear, however, that this legislation,
although well intended, is not sufficiently clear and does not
allow the breadth of advertising that in practice is necessary
given the realities of building, operating and updating these
facilities around the state. Without the relief offered by SB
31, the current provisions of the OAA are likely to stifle
future construction and renovation projects and to hamper the
continued success of facilities already in operation.
The Greater Los Angeles African American Chamber of Commerce
further argues that to fund the construction and marketing of
new sports venues and districts, many sports franchises and
sports arena and stadium developers are turning to sponsors and
"sponsorship marketing agreements." Long-term agreements with
commercial sponsors are a critical component of project funding
to build and operate arenas and stadiums. Advertising near
arenas and stadiums, including at the highways exits fans use to
get to the arenas and stadiums, is a major component of these
agreements.
Some arenas and stadiums are also developed as part of
integrated sports and entertainment districts, which support the
financial viability of a project. These sports arenas, stadiums
and sports and entertainment districts provide much needed tax
revenue and economic activity to cities and counties throughout
California.
Arguments in Opposition : The California State Outdoor
Advertising Association (CSOAA) argues that this measure would
create a special exemption from the OAA for signs displayed at
large professional sports arenas located in public land. Such
an exception would not just violate the First Amendment and the
Equal Protection Clause of the Fourteenth Amendment. For
example, under SB 31, signs at large professional sports arenas
would be exempt from the OAA, but identical signs at college
sports arenas or professional sports arenas built on private
property would not. The committee would like to point out that
the recent amendments taken would also apply the exemption to
professional sports arenas built on private property.
The CSOAA further argues that SB 31 would also violate Federal
Regulations adopted under the Highway Beautification Act, 23
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U.S.C. Section 131 ("HBA"), which in turn would jeopardize ten
percent of California's federal highway funding. SB 31 permits
signs that advertise, "any products, goods, or services marketed
or promoted on the premises" of a professional sports arenas
that seats 15,000 or more spectators. Any company whose "logo,
slogan, or advertising" is displayed at the arena thus is
allowed to engage in what would otherwise be offsite
advertising. More specifically, SB 31 would permit signs that
advertise the products of a sportswear company, car manufacturer
or an airline whose logo is displayed inside the arena. The
bill therefore would permit signs advertising such sponsors as
Adidas, Mercedes, or Virgin Atlantic. Such signs are clearly
offsite signs.
Previous Legislation : 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.
REGISTERED SUPPORT / OPPOSITION :
Support
AEG
Anaheim Ducks
Asian Business Association
Greater Los Angeles African American Chamber of Commerce
Honda Center
HP Pavilion
Latino Business Chamber of Greater Los Angeles
Major League Soccer
National Association of Women Business Owners
National Hockey League
State Building and Construction Trades Council, AFL-CIO
Opposition
California State Outdoor Advertising Association
Analysis Prepared by : Felipe Lopez / G. O. / (916) 319-2531
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