BILL ANALYSIS Ó 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. SB 694 (CORREA) Page 2 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 SB 694 (CORREA) Page 3 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 SB 694 (CORREA) Page 4 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.) SB 694 (CORREA) Page 5 SUPPORT: The City of Anaheim OPPOSED: None received.