BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: sb 694
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  correa
                                                         VERSION: 4/22/13
          Analysis by:  Eric Thronson                    FISCAL:  yes
          Hearing date:  April 30, 2013



          SUBJECT:

          Outdoor Advertising Act exemption for high-speed rail stations

          DESCRIPTION:

          This bill exempts from the Outdoor Advertising Act advertising  
          displays at current or future high-speed rail stations.  

          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.

          Existing law created the California High-Speed Rail Authority  
          (HSRA) in 1996 to direct development and implementation of  
          inter-city high-speed rail service that is fully coordinated  
          with other public transportation services.  In 2008, voters  
          approved Proposition 1A (Prop 1A) authorizing $9.95 billion in  
          general obligation bonds for the project.  Prop 1A identified  
          the first phase of the project to be a corridor between the  
          Transbay Terminal in San Francisco and Anaheim and include Los  
          Angeles' Union Station.  Prop 1A further identified a number of  
          future potential destinations after the first phase is  
          completed, such as Sacramento, Oakland, and San Diego.





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          According to HSRA's most recent business plan, completion of the  
          first phase of the high-speed rail project will cost at least  
          $68 billion.  This estimate does not include the build-out of  
          stations, with the expectation that local governments will plan  
          for and fund stations based on local preferences.  To date, HSRA  
          has secured roughly $13.6 billion to develop and construct the  
          project, leaving a roughly $55 billion deficit HSRA still needs  
          to address from sources yet to be identified.

           This bill  exempts from the OAA advertising displays at current  
          or future high-speed rail stations.  In order to qualify for the  
          exemption, this bill includes the following requirements:

           The displays must be located on public property upon which is  
            located a multimodal transit station that currently includes,  
            but is not limited to, passenger rail.
           The station must be publicly owned and operated and support  
            the goals of the region's sustainable communities strategy  
            (SCS).
           The station must either serve as a current or future  
            high-speed rail station along the first phase of the system  
            between San Francisco and Anaheim, or be approved as a station  
            location by HSRA along any of the corridors in the subsequent  
            phases of the high-speed rail system.
                 The displays cannot advertise distilled spirits,  
               tobacco, firearms, or sexually explicit material.
                 The displays cannot cause a reduction in federal aid  
               highway funds.
           The local government must adopt an ordinance regulating the  
            displays including, but not limited to, the number of signs  
            and total signage area, minimum separation between signs,  
            illumination restrictions, and hours of operation.
          
          COMMENTS:

           1.Purpose  .  According to the author, this bill provides an  
            opportunity to utilize a public-private partnership to  
            partially fund the construction, operation, and maintenance of  
            high-speed rail station areas.  The author contends that  
            construction and operation of large transit stations,  
            particularly once the stations begin servicing high-speed  
            trains, will result in significant economic development and  
            job creation.  The ongoing costs to operate such facilities,  
            however, can be considerable.  Advertising revenue, as  
            authorized by this bill, will help local communities defray  
            these costs and reduce the need for taxpayer offsets.  In this  




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            way, the author contends, this bill promotes the development  
            of high-speed rail and creates another tool to fund and  
            deliver this important state priority.

           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 the  
            committee will not consider any measure that would result in  
            the placement of an advertising display in violation of the  
            OAA.  

            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 actively pursuing the  
            financing and development of a statewide high-speed rail  
            system.  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.Dedicate advertising revenue to the stations  .  The author  
            suggests that this bill is one tool to finance some of the  
            construction and operations of high-speed rail stations.   
            While this bill allows signage along landscaped freeways on  
            land shared by future high-speed rail stations, it does not  
            commit the revenues from those signs to the stations or the  
            project.  If the state is providing an exemption for a  
            particular purpose, it is important that a state-level entity  
            is ensuring that the purpose is fulfilled.  The committee may  
            wish to amend the bill to require HSRA to approve an  
            expenditure plan that ensures the revenues from these signs  
            will be dedicated to station construction and operation.

           4.Distance from the station  .  This bill exempts signs from the  




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            OAA as long as they are placed on public land upon which a  
            high-speed rail station also is located.  This description is  
            vague and could lead to abuse of this exemption.  For example,  
            if this language is read to mean the public land hosting the  
            sign only has to be connected via other public lands to  
            another parcel of public land upon which the station sits, it  
            could expand the exemption to essentially any public land  
            adjacent to a freeway, because most roadways are publicly  
            owned and interconnected.  The committee may wish to amend the  
            bill to restrict the distance from the station the sign can be  
            erected in order to avoid abuses of the exemption.

           5.Require HSRA approval  .  This bill allows a station along the  
            first phase high-speed rail corridor, whether a current or  
            future station serving the system, to place advertising  
            displays along landscaped freeways.  HSRA has not identified  
            the location of every station along this corridor, however.   
            This could lead to a potential station location along the  
            corridor to claim this exemption and erect signs in violation  
            of OAA but never serve as a high-speed rail station, therefore  
            providing no benefit to the state priority project.  In order  
            to avoid the potential abuse of this exemption, the committee  
            may wish to amend the bill to require HSRA approval of the  
            station location before a station can erect signs.

           6.Subsequent phases of the high-speed rail system  .  HSRA has  
            acknowledged that completing the first phase of the high-speed  
            rail system will take years.  The latest business plan doesn't  
            foresee first phase completion until 2029.  HSRA's business  
            plan does not even contemplate when the subsequent phases will  
            be built, proposing to finance system expansion with surplus  
            revenues from the base system.  Without a clear timeline or  
            expectation of construction of subsequent phases, it seems  
            premature to grant exemptions to the OAA for potential  
            stations.  If the system is constructed more quickly, this  
            language could be amended in the future to include stations in  
            subsequent phases.  The current language could, however, lead  
            to exemptions for stations that may not be built for decades,  
            if ever.  Given this, the committee may wish to amend the bill  
            to limit the exemption to stations only in the first phase of  
            the high-speed rail project.
          
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             April 24,  
          2013.)





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               SUPPORT:  The City of Anaheim

               OPPOSED:  None received.