BILL ANALYSIS Ó
SB 31
Page 1
SENATE THIRD READING
SB 31 (Padilla)
As Amended June 6, 2013
Majority vote
SENATE VOTE :37-0
GOVERNMENTAL ORGANIZATION 16-0 APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Hall, Nestande, Bigelow, |Ayes:|Gatto, Harkey, Bigelow, |
| |Campos, Chesbro, Cooley, | |Bocanegra, Bradford, Ian |
| |Gray, Hagman, Roger | |Calderon, Campos, |
| |Hernández, Jones, | |Donnelly, Eggman, Gomez, |
| |Jones-Sawyer, Levine, | |Hall, Holden, Linder, |
| |Medina, Perea, V. Manuel | |Pan, Quirk, Wagner, Weber |
| |Pérez, Salas | | |
| | | | |
-----------------------------------------------------------------
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
SB 31
Page 2
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 explicit material.
5)Defines a "sponsorship marketing plan" as an agreement between
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
(Caltrans) 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 of Transportation 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
SB 31
Page 3
notice.
10) Prohibits, among other things, Caltrans 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Initial 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).
2)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).
3)Minor costs to the Secretary of Transportation to review local
ordinances.
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
SB 31
Page 4
professional sports arenas is advertising, both inside and
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
Caltrans to review the locally-adopted ordinance permitting the
signs.
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
SB 31
Page 5
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.
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 this
bill, 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 bill would
violate Federal Regulations adopted under the Highway
Beautification Act, 23 United States Code (U.S.C.) Section 131
("HBA"), which in turn would jeopardize 10% of California's
federal highway funding. This bill permits signs that
advertise, "any products, goods, or services marketed or
promoted on the premises" of a professional sports arenas that
SB 31
Page 6
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, this bill 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.
Analysis Prepared by : Felipe Lopez / G. O. / (916) 319-2531
FN: 0001591