BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular Bill No: SB 1199 Hearing Date: 4/19/2016 ----------------------------------------------------------------- |Author: |Hall | |----------+------------------------------------------------------| |Version: |3/29/2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Alison Dinmore | |: | | ----------------------------------------------------------------- SUBJECT: Advertising displays: redevelopment agency project areas DIGEST: This bill provides that a billboard advertising for businesses and activities within a city, county, or city and county that is contained within an existing redevelopment agency (RDA) project may remain and be considered an on-premises display until January 1, 2023, if the display meets specified criteria. ANALYSIS: Existing law: 1)Establishes the Outdoor Advertising Act (OAA), which regulates the placement of advertising displays adjacent to and within specified distances of highways that are part of the national system of interstate and defense highways and federal-aid highways. 2)Prohibits any advertising display from being placed or maintained on property adjacent to a section of a freeway that has been landscaped if the advertising display is designed to be viewed primarily by persons traveling on the main-traveled way of the landscaped freeway. The OAA, however, only applies to signs that are located within 660 feet of the right-of-way of federal-aid interstate and primary highways. 3)Provides for limited exemptions and specified exceptions to SB 1199 (Hall) Page 2 of ? the prohibition on advertising along system and landscaped freeways, including exemptions for signs advertising the property's sale or lease, signs designating the premises or its owner, and signs advertising goods or services manufactured or produced on the property itself. 4)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. 5)Allows an existing advertising display to be considered on-premise if the display: a) Advertises those businesses and activities developed within the former b) RDA project area boundaries, as those boundaries existed on December 29, 2011; c) Is located within the boundary limits of the project; d) Was constructed before January 1, 2012; and e) Does not cause the reduction in federal aid highway funds. 6)Authorizes, on and after January 1, 2022, the applicable city, county, or city and county to request, for good cause, from Caltrans an extension beyond January 1, 2023, not to exceed the expiration of the redevelopment project area. This bill expands existing exemptions for billboards contained within former RDAs to include the advertising of businesses or activities operating outside the redevelopment project, but within the boundaries of the city, county, or city and county that contained the redevelopment project. COMMENTS: 1)Purpose. According to the author, "[i]n 2011, the Governor signed AB 26X1 which eliminated RDAs and established successor agencies to take control of all assets and property. Those successor agencies, typically the city or county that originally established the agency, are now responsible for administering remaining debt obligations and other assets including advertising displays located in a former redevelopment zone. Because RDAs and their boundaries no SB 1199 (Hall) Page 3 of ? longer exist and successor agencies are tasked with managing their assets and property, this bill ensures that local governments are able to fully utilize their outdoor advertising display to promote business in their jurisdiction." 2)California already provides an exception for RDA displays in a post-RDA world. In 2013, the legislature passed and the Governor signed SB 684 (Hill, Chapter 544, Statutes of 2013), which sought to address the question about billboards that advertise businesses in RDA project areas in the era of successor agencies. That bill permitted existing advertising displays that advertised businesses and activities within the boundary limits of a RDA project to remain and be considered "on-premise displays" (e.g., not subject to the OAA) until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing "good cause" beginning on January 1, 2022. Generally speaking, local governments established RDA project areas in blighted areas that require additional investment to address the blight. Until RDAs were dissolved, existing law allowed RDAs to permit advertising signs for 10 years, after which they were regulated by Caltrans and the OAA, unless the RDA and Caltrans agreed to an extension for good cause. Legislation created the RDA exemption to the OAA to allow businesses in these less-desirable places to advertise for two reasons. First, travelers who may have been reluctant to frequent businesses in the area because of the perceived blight would consider doing so as redevelopment investment helped address the blight issues. Second, the new advertising opportunity could be an additional tool to help struggling businesses in the project area become more successful. The dissolution of RDAs raised questions about how existing signs would be treated by Caltrans because there is no longer an RDA to negotiate the extension with Caltrans. SB 684 permitted these existing displays to remain in place for a designated period of time and modeled the OAA exception for RDA signs. The thought was that 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. Additionally, in the interim, these signs provided needed funding to cities that were losing large amounts of money from RDAs. At the time, Caltrans estimated that 95 advertising SB 1199 (Hall) Page 4 of ? signs were constructed through this authority. 3)Federal highway funds imperiled. As noted above, current law permits existing signs within an RDA project area that advertise for businesses within RDA to remain in place until 2023. This bill would expand that exemption and permit any billboard that was constructed before the end of 2011 to remain, if it is in any local agency that had an RDA and the display is within the boundaries of the local agency that had an RDA, until 2023. The author has not been able to articulate how many additional signs this would permit to remain in place or how many local agencies would be affected, but the Department of Finance's website indicates that the state dissolved over 400 RDAs in 2011. It is clear that the impacts of this exception could have broad-reaching impacts. Additionally, the expansion of this exception would conflict with regulations that are adopted pursuant to the federal Highway Beautification Act, and would place California at risk to lose up to 10% of its federal funds. Presently, California receives $3.5 billion from the federal government, and stands to lose up to $350 million. Current law states that if an advertising display will result in the loss of federal aid highway funds, the display owner or operator shall remove the display and be subject to a civil fine of $10,000 per day. 4)Impacts on the subjects of a recent legal decision. This bill impacts the subjects of a recent decision by an administrative law court concerning violations of the OAA. On November 20, 2015, an administrative law judge (ALJ) found that cause existed for Caltrans to issue Notices of Violation, requiring correction of violations and payment of statutory penalties, pursuant to the OAA and related Caltrans regulations, concerning two "large-scale super graphic wall signs" displayed by Sky Posters in Inglewood, California. One display, measuring 25,000 square feet, depicted displays for movies such as X-Men and Ant Man, while the other, measuring 30,000 square feet, displayed an image of the Nissan Rogue. Both are affixed to the side of a 12-story building adjacent to a section of Interstate 405. By comparison, the OAA restricts permitted advertising to displays of 1,200 square feet in area with a maximum height of 25 feet and a maximum length of 60 feet. In or about August 2010, Sky Posters applied for and obtained approval from Caltrans for placing RDA displays on the SB 1199 (Hall) Page 5 of ? building. In April 2014, however, Caltrans issued two violation notices based on the conclusion that the subject displays were not redevelopment displays advertising businesses in the City's redevelopment zone and Sky Posters had only received approval for the placement of RDA displays. Additionally, these wall signs were found along a landscaped highway. After the Notice of Violation was issued, Sky Posters filed a Notice of Defense, which requested an administrative hearing. As noted above, the administrative law judge found Sky Posters to be in violation of the OAA, and pursuant to the OAA, ordered Sky Posters to pay $10,300 in penalties and $1,405,641 as disgorgement of the gross revenue that resulted from the displays. The ALJ opinion states that the OAA does not provide for injunctive relief. For this reason, if Caltrans wants to require Sky Posters to remove the wall signs, Caltrans will have to seek such relief from a Superior Court of the State of California. As of Monday April 11, the two "large-scale super graphic wall signs" were still up. If this bill were passed, Sky Posters would likely be permitted to continue displaying the two wall posters at issue. Given the broad implications of this bill, the committee may wish to consider whether the legislature should be carving out exceptions to the OAA in fairness to others that operate advertising displays legally. Related Legislation: SB 684 (Hill, Chapter 544, Statutes of 2013) - permitted existing advertising displays that advertised businesses and activities within the boundary limits of an RDA project to remain and be considered "on-premise displays" until January 1, 2023. The city or county could then apply to Caltrans for an extension, showing "good cause" beginning on January 1, 2022. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes SB 1199 (Hall) Page 6 of ? POSITIONS: (Communicated to the committee before noon on Wednesday, April 13, 2016.) SUPPORT: None received OPPOSITION: None received -- END --