BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1199
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          Date of Hearing: June 22, 2016


                   ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
                                  Adam Gray, Chair
          SB  
          1199 (Hall) - As Amended April 26, 2016
          SENATE VOTE:  27-7


          SUBJECT:  Advertising displays:  City of Inglewood


          SUMMARY:  This bill authorizes two existing advertising displays  
          in the City of Inglewood to be considered "on-premise" displays  
          until January 1, 2023. Specifically, this bill:  


             1)   Requires the signs in question to meet the following  
               conditions to be considered an on-premise display:


               a)     The advertising display is located within the  
                 boundary limits of the City of Inglewood.


               b)     The advertising display was constructed on or before  
                 January 1, 2012.


               c)     The advertising display is adjacent to Interstate  
                 405 and located at either post mile 22.36L or 22.38L  
                 north of Century Boulevard.


               d)     The advertising display does not cause the reduction  
                 of federal aid highway funds provided pursuant to Section  
                 131 of Title 23 of the United States Code. 


             1)   Expands existing exemptions for billboards contained  
               within former RDAs to include advertising displays located  
               within the boundary limits of the City of Inglewood at two  








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               locations on Interstate 405 that were constructed on or  
               before January 1, 2012, so long as the advertising displays  
               do not cause the reduction of federal aid highway funds.  


             3)  Makes findings and declarations to the need for the  
               special statute for the City of Inglewood.


          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 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)   Provides 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  








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               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 Redevelopment Agency (RDA)  
                    project area boundaries, as those boundaries existed  
                    on December 29, 2011;


                  b)        Is located within the boundary limits of the  
                    project; 


                  c)        Was constructed before January 1, 2012; and 


                  d)        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 the Department of Transportation (Caltrans) an  
               extension beyond January 1, 2023, not to exceed the  
               expiration of the redevelopment project area.


          FISCAL EFFECT:  Unknown


          COMMENTS: 


           Purpose of the bill  : According to the author: "In 2011, the  
          Governor signed AB 26X1 which eliminated redevelopment agencies  
          and established successor agencies to take control of all assets  
          and property.  These successor agencies, typically the city or  
          county that originally established the agency are now  








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          responsible for administering remaining debt obligations and  
          other assets including advertising displays located in a former  
          redevelopment zone.


          Advertising displays located in former redevelopment agency  
          zones provide a number of benefits to local businesses and local  
          governments.  Not only do these displays encourage economic  
          investment in the area, they also provide general fund revenue  
          for the local government successor agency.  


          Because redevelopment agencies and their boundaries no longer  
          exist and successor agencies are tasked with managing their  
          assets and property, this bill ensures that the City of  
          Inglewood is able to fully utilize their outdoor advertising  
          displays to promote business located within the City."


           Background  : 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  








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          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 signs were constructed  
          through this authority.


           Federal Highway Beautification Act of 1965  :   The Highway  
          Beautification Act (HBA) was created to protect the public  
          investment, promote the safety and recreational value of public  
          travel, and to preserve the natural beauty of highways in the  
          nation.

          The HBA specifies that states have the responsibility to enforce  
          provisions regarding the placement and maintenance of outdoor  
          advertising signs, displays and devices along the Interstate and  
          National Highway System.  The state of California enforces the  
          provisions of federal law through a compact that was developed  
          between the state and the federal government in 1967.  Federal  
          law also includes a penalty for states that violate the HBA by  
          reducing all federal highway transportation funds to the state  
          by 10%.

          This bill expands the RDA exemption for two advertising displays  
          located within the boundary limits of the City of Inglewood at  
          two locations on Interstate 405. The expansion could conflict  
          with regulations that are adopted pursuant to the HBA, 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  








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          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. SB 1199 does contain a provision attempting to mitigate the  
          risk of losing federal funds by stipulating the signs may remain  
          in place as long as they do not result in the reduction of  
          federal aid highway funds.
           
          Outdoor Advertising Act  : The state OAA regulates the placement  
          of advertising displays (billboards) and signs along interstate  
          or primary highways, landscaped freeways and similar specified  
          highways.  The OAA, along with related federal provisions, is  
          intended, among other things, to promote highway beautification  
          and provide a consistent framework for the regulation of  
          advertising displays along freeways and highways.  The OAA sets  
          standards for the advertising structures, including their size,  
          identification and location, and requires compliance with permit  
          application procedures and conditions administered by Caltrans.   


          The OAA sets minimum spacing requirements between billboards on  
          interstate highways or primary highways, which are freeways and  
          minimum distances from interchanges or an          intersection  
          at grade.  The OAA also sets minimum distances between signs on  
          traditional (primary) highways within and without incorporated  
          areas.

          The OAA specifies the original and renewal permit fees for  
          billboards, as well penalties for permit violations.  Other  
          provisions provide for substantial monetary penalties for the  
          unlawful trimming, destruction, or removal of trees or shrubs to  
          enhance the visibility of highway-adjacent billboards.
           
          Pending Action on Signs In Question  : 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  








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          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 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. To date, Caltrans has not filed such an injunction  
          with the courts.

           Support  : The City of Inglewood writes in support: "The City of  
          Inglewood, like many if the other 400-plus cities in the State  
          of California, had been a major beneficiary of local  
          redevelopment efforts by its redevelopment agency?However, in  
          2011, when Governor Brown signed and AB 26X1 was enacted, and  
          redevelopment agencies were eliminated, the revenues generated  
          by redevelopment efforts were greatly reduced and eliminated in  
          certain areas. This bill will not cause any disruption or  
          reduction of federal highway funds to California, nor expand the  
          authority previously granted to cities by SB 684 (Hill, 2004),  
          the City of Inglewood urges you to vote "AYE" on SB 1199."

           Opposition  : The California State Outdoor Advertising Association  
          (CSOAA) writes in opposition:  "The regulatory structure that  
          governs our member businesses is complex, and must consider  
          federal, state and local considerations. We are concerned that  
          this proposal creates an unlevel playing field for those outdoor  








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          companies that maintained lawfully permitted displays. SB 1199  
          would benefit those that have not complied with existing law,  
          while punishing other businesses that have abided by the  
          statute. Passing this bill is putting $350 million of federal  
          funds at risk in order to facilitate two wallscapes.  This is  
          certainly not wise public policy. At very least, there is no  
          reason to take the risk while legal proceedings have not been  
          finalized. For these reasons, we must oppose SB 1199."   

           Double referral  : Should SB 1199 pass the Assembly Committee on  
          Governmental Organization on Wednesday, June 22, 2016, this bill  
          will be referred to the Assembly Committee on Local Government  
          for further consideration.

          Prior/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.

          SB 31 (Padilla), 2013-2014 Legislative Session. Recasts the  
          arena advertising exception to exempt from the OAA specified  
          advertising displays authorized before January 1, 2019 by local  
          ordinance, at a venue with a capacity of 15,000 seats or more  
          that is capable of providing a permanent venue for professional  
          sports. (Pending on the Assembly Floor)

          SB 694 (Correa), 2013-2014 Legislative Session.  Exempts from  
          the Outdoor Advertising Act (OAA) advertising displays at  
          current or future high-speed rail stations. (Pending in Assembly  
          Appropriations Committee)

          AB 26X (Blumenfield), Chapter 5, Statutes of 2011-12 First  
          Extraordinary Session. Among other provisions, this bill  
          eliminated redevelopment agencies. 

          AB 2339 (Solorio), Chapter 493, Statutes of 2008. This bill  
          expanded the definition of an "on premise" display to include  
          those displays advertising products, goods, or services sold on  
          the premises of an arena of at least 5,000 seats and is located  
          on public land, provided certain conditions were met.  








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          AB 1499 (Benoit) of 2005-2006 Legislative Session.  Creates an  
          exemption to the Act, to permit the City of Riverside to erect  
          an outdoor advertising display along Highway 91 to promote  
          economic activity for the Riverside Plaza.  (Vetoed by Governor)

          AB 801 (Jones) of 2005-2006 Legislative Session.  Creates an  
          exemption from the Outdoor Advertising Act for one sign in the  
          County of Sacramento.  (Vetoed by Governor)

          AB 2441 (Klehs) of 2005-2006 Legislative Session.  Authorizes an  
          advertising display in the redevelopment zone of the City of San  
          Leandro subject to specified conditions. (Vetoed by Governor)

          AB 1518 (J. Horton) of 2005-2006 Legislative Session.  Exempts,  
          from the prohibition against placing advertising displays  
          adjacent to landscaped freeways, any billboard located on  
          property owned by the Lennox School District, subject to certain  
          conditions. (Died pending Concurrence in Assembly)

          AB 762 (Nunez), Chapter 725, Statutes of 2003, creates an  
          exemption to the Act by allowing the National Latino Arts  
          Council to place an advertisement on the roof of a  
          not-for-profit educational academy.

          SB 1480 (Speier), Chapter 972, Statutes of 2002, requires the  
          applicant for a state billboard permit to have the written  
          consent of the city or county with land use jurisdiction as well  
          as the owner of the property site for the billboard

          SB 190 (Perata) Chapter 54, Statutes of 2001.  Exempted a  
          certain development of highway advertising in Oakland from  
          existing laws protecting landscaped highways permitted the City  
          of Artesia to erect an advertising display alongside a  
          landscaped highway.  Permitted the City of Artesia to lease one  
          billboard space adjacent to the 91 Freeway on city property.  

          REGISTERED SUPPORT / OPPOSITION:


          Support










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          City of Azusa
          City of Inglewood


          Opposition


          California State Outdoor Advertising Association


          Analysis Prepared by:Kenton Stanhope / G.O. / (916)  
          319-2531