BILL ANALYSIS Ó SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 684 SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: hill VERSION: 4/1/13 Analysis by: Eric Thronson FISCAL: yes Hearing date: April 9, 2013 SUBJECT: Outdoor Advertising Act: former redevelopment agency project areas DESCRIPTION: This bill amends the redevelopment agency exemption to the Outdoor Advertising Act to reflect the elimination of redevelopment agencies. ANALYSIS: Redevelopment Agencies Historically, the Community Redevelopment Law allowed a local government to establish a redevelopment area and capture all of the increase in property taxes generated within the area over a period of decades. These tax revenues were intended to address the blighted nature of a project area, and if used effectively, therefore, should have eventually ended the blight and become unnecessary. Because of this, over time these project areas were given expiration dates, generally up to 40 years following their inception, until which they were able to collect tax revenues and pay off debt. In 2011, the Legislature enacted AB 26X (Blumenfield), Chapter 5 of the First Extraordinary Session. AB 26X eliminated redevelopment agencies and established procedures for winding down the agencies, paying off enforceable obligations, and disposing of agency assets. In addition, AB 26X established successor agencies, typically the city that established the agency, to take control of all redevelopment agency assets, properties, and other items of value. Successor agencies are to dispose of an agency's assets as directed by an oversight board, made up of representatives of local taxing entities, with the proceeds transferred to the county auditor-controller for distribution to taxing agencies within each county. SB 684 (HILL) Page 2 The 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 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. Existing law includes a number of exceptions to the OAA and assigns the California Department of Transportation (Caltrans) the responsibility of reviewing and permitting signs which qualify for these exceptions. Under the OAA, displays advertising those businesses and activities within the boundaries of an individual redevelopment agency project area are considered on-premise displays for an initial period of 10 years or until the project area expires, whichever occurs first. Caltrans may for good cause extend the permits for these signs beyond the initial 10 years, but not beyond the life of the redevelopment project. This bill amends the redevelopment agency exemption to the OAA to reflect the elimination of redevelopment agencies. Specifically, this bill allows an existing advertising display to be considered on-premise if the display: Advertises those businesses and activities developed within the former redevelopment agency project area boundaries, as those boundaries existed on December 29, 2011; Is located within the boundary limits of the project; Was constructed, under construction, or approved for construction by the designated agency of the project on or before January 1, 2012; and Does not cause the reduction in federal aid highway funds. Further, the bill allows existing displays to be considered on-premise displays until January 1, 2023, or the expiration of the redevelopment project area, whichever comes first. Caltrans SB 684 (HILL) Page 3 can extend this exemption for good cause beyond 2023, not to exceed the expiration of the project area, upon application of the successor agency. This bill places the responsibility on the designated successor agency for ensuring these advertising displays are advertising qualifying businesses, are otherwise being operated lawfully, and remain in the public's best interest. Finally, this bill has an urgency statute, meaning that it takes effect immediately following the governor signing it into law. COMMENTS: 1.Purpose . According to the author, this bill addresses an issue inadvertently created when the Legislature eliminated redevelopment agencies. Existing law allows Caltrans to permit advertising displays as on-premises displays within redevelopment project areas for a period of 10 years and includes the possibility of extending those permits. Now that the Legislature eliminated redevelopment agencies, there is no mechanism to extend the permits for these signs. This bill amends current law to allow these signs to continue to function as on-premise displays and remain so as long as was expected before the elimination of redevelopment. 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 SB 684 (HILL) Page 4 allow the committee to consider measures that reflect shifts in statewide policy positions, such as the elimination of redevelopment agencies. 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 do these signs get exemptions to the OAA ? Generally speaking, local governments established redevelopment agency project areas in blighted areas that required some additional investment to address the blight. In theory, the investment should eventually turn the neighborhood around and at some point no longer be necessary. As mentioned earlier, this theory led the Legislature to assign expiration dates to all redevelopment areas, expecting them either to achieve success and no longer be needed or acknowledge the problems are not resolvable through increased investment alone. According to proponents, legislation created the redevelopment exemption to the OAA to allow businesses in these less-desirable places to advertise for two reasons. First, travelers on the landscaped freeway who may have been reluctant to frequent the businesses in the area because of the perceived blight would consider doing so as redevelopment investment helped address the blight issues. Second, this new advertising opportunity could be an additional tool to help a struggling business in the project area become more successful. In either case, the theory behind the expiration of the redevelopment areas seems to hold true with the expiration of the OAA exemption. 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. 4.Permits in a "post-redevelopment" world . As mentioned earlier, Caltrans enforces the OAA, which includes activities such as maintaining a list of landscaped freeways, issuing permits for signs allowed by statute to exist, and fining owners of non-compliant signs. Caltrans has issued 95 permits for advertising displays along landscaped freeways in redevelopment project areas throughout the state. Many of these signs are currently or will soon be in existence longer than 10 years and therefore have permits which need to be extended. With the elimination of redevelopment agencies, SB 684 (HILL) Page 5 however, Caltrans has been unsure how to proceed and has not extended any permits. Neither has Caltrans issued any fines to sign owners with expired permits. Instead, Caltrans has indicated that it is waiting for further direction from the Legislature regarding the state's position on these sign permits. SB 684 (HILL) Page 6 POSITIONS: (Communicated to the committee before noon on Wednesday, April 3, 2013.) SUPPORT: California Sign Association (co-sponsor) League of California Cities (co-sponsor) American Outdoor Advertising, Inc California New Car Dealers Association California State Association of Counties City of Inglewood, Office of the Mayor G.B. Enterprises OPPOSED: None received.