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
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          |Author:   |Hall                                                  |
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          |Version:  |3/29/2016                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Alison Dinmore                                        |
          |:         |                                                      |
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          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  







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            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  








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            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  








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            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  








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            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










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            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          April 13, 2016.)
          
            SUPPORT:  

          None received

          OPPOSITION:

          None received


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