BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1397|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 1397
Author: Huff (R)
Amended: 5/31/16
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 6-2, 4/19/16
AYES: Beall, Cannella, Bates, Gaines, Leyva, Mendoza
NOES: Allen, McGuire
NO VOTE RECORDED: Galgiani, Roth, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: 6-1, 5/27/16
AYES: Lara, Bates, Beall, Hill, Mendoza, Nielsen
NOES: McGuire
SUBJECT: Highway safety and information program
SOURCE: Transportation California
DIGEST: This bill permits the California Department of
Transportation (Caltrans), following the completion of a
demonstration phase and upon receipt of federal approval, to
enter into public-private partnerships to use changeable message
signs (CMS) for commercial advertising purposes when they are
not being used for safety- and transportation-related messages.
ANALYSIS:
Existing law:
1) Requires all states to adopt the federal Manual on Uniform
SB 1397
Page 2
Traffic Control Devices (MUTCD), or to at least substantially
comply with it. The federal MUTCD prescribes standards for
signs, signals, markings, and other devices used to guide
traffic on streets and highways throughout the country.
California has adopted its own MUTCD, which has been approved
by federal officials as being "substantially in compliance"
with the federal MUTCD.
2) Provides that traffic control devices or their supports
shall not bear any advertising message or any other message
that is not related to traffic control.
3) Provides that only those traffic control devices that
conform to the California MUTCD may be placed on a street or
highway.
This bill:
1) Permits Caltrans to enter into an agreement with one entity
or legal entity to use a CMS sign for a single project, which
shall include a demonstration phase. Specifically, the
following terms are defined:
a) "Agreement" means a legally enforceable agreement, as
specified, for the project to install and operate CMS.
b) "Demonstration phase" means the initial phase of the
project whereby the safety, operational, and fiscal
viability of the placement of advertising on CMS in
exchange for revenue to the state and an upgraded CMS are
demonstrated.
c) "Entity" means an individual, partnership, limited
partnership, trust, estate, association, limited liability
company, or other entity.
d) "Project" means to study, plan, design, construct,
reconstruct, develop, finance, maintain, rebuild, improve,
repair, lease, operate, or any combination of these, a
state-of-the-art, full-color network of CMS within the
right-of-way of the state highway system.
2) Requires Caltrans to conduct a best-value competitive
procurement and negotiate an initial agreement to become
effective upon receipt of any necessary federal
authorization.
SB 1397
Page 3
a) A proposal submitted to Caltrans in response to the
best value competitive procurement shall be accompanied by
a certified check in an amount to be determined by
Caltrans and specified in the request for proposals to
cover the reasonable costs of preparation of the best
value procurement materials, the review and evaluation of
the proposal, and the negotiation of an agreement with the
selected entity.
b) The department shall promptly return the certificated
checks accompanying proposals not accepted for
consideration by Caltrans.
c) The agreement shall provide that the entity with whom
the agreement is entered will bear all reasonable costs of
the project, including, but not limited to, costs of
installation, maintenance, and operation of the project,
and that reasonable costs incurred to procure the
agreement and not covered by the certified check shall be
reimbursed to Caltrans.
3) Requires the agreement with Caltrans to do all of the
following:
a) Provide for the construction, upgrade or
reconstruction, and operation of the CMS. Caltrans shall
be responsible for the maintenance of the CMS.
b) Provide that any ownership interest shall completely
revert to Caltrans at the expiration of the agreement.
c) Provide that all Caltrans emergency notifications
shall have priority over other messaging, including
advertising.
d) Provide that Caltrans, in consultation with the
California Highway Patrol, shall retain the ability to
make a determination on the safety of the CMS and may take
actions necessary to protect public safety.
e) Provide that Caltrans shall conduct a demonstration
phase of the project as a condition precedent to the full
implementation of the agreement described in this section.
f) Provide that Caltrans shall retain an independent
consultant to perform an evaluation of the results of the
demonstration phase. Caltrans shall review the results of
the demonstration phase and determine at its discretion
whether the placement of commercial advertising with all
CMS creates an unsafe distraction to motorists, and shall
SB 1397
Page 4
consider any other issues of concern.
g) Provide for the entity contracting with Caltrans to
share revenues generated in connection with the use of the
CMS for commercial advertising in furtherance of the
public interest.
4) Requires the demonstration phase to do all of the following:
a) Involve the construction, upgrade or reconstruction,
and operation of CMS at current and planned locations.
Caltrans shall determine the number of CMS signs needed to
be included in the demonstration, which shall be
sufficiently substantive to evaluate the impacts and the
return on investment of the demonstration.
b) Begin immediately following federal approval and last
until full implementation is authorized, and if full
implementation is not authorized, then for a period of
time sufficient to allow the entity contracting with
Caltrans to recover its capital and related costs for the
project.
5) Requires revenues from CMS to be allocated between the legal
entity with whom the agreement is made and with Caltrans in
accordance with the agreement details. Revenues generated
from advertising on CMS and received by Caltrans shall be
deposited into the State Highway Account in the State
Transportation Fund. Funding shall be subject to
appropriation by the legislature, consistent with the
provisions of any federal authorization.
6) Requires Caltrans to adopt policies and guidelines in
connection with the content and formatting of the
advertising. Advertising on CMS shall be in the form and
under those conditions as may be determined by Caltrans and
as set forth in standards, guidelines, and procedures adopted
by Caltrans.
a) Advertising shall not compromise safety or Caltrans'
safety communications.
b) CMS subject to this bill shall be exempt from Section
5408 of the Business and Professions Code, which permits
CMS to be placed within 660 feet of the right-of-way if
meeting specified requirements, such as size and display
SB 1397
Page 5
limitations.
c) Caltrans shall not enter into an agreement with any
entity that will display or advertise alcohol, tobacco,
firearms, sexually explicit material, political messages
or advertisements, or any illegal activity.
7) Requires CMS to meet the design, construction, and operating
requirements in the Caltrans standards and guidelines.
8) Permits Caltrans to use CMS for emergency messages, as
needed, and requires dedicated time to use the CMS for
traveler information, motorist safety, awareness campaigns,
and any other public service messaging, without providing
compensation to the entity with whom it enters into an
agreement.
9) Requires Caltrans, promptly following its review of the
consultant's evaluation of the demonstration phase of the
project, and before authorizing the full the implementation
of the project, to submit a report to the relevant fiscal and
policy committees of the legislature. The report shall
include the consultant's report and any recommended
department revisions to the project, and shall also include
information, including ,but not limited to, the following:
a) The status of implementation, such as number of signs
placed and locations.
b) The amount of revenue received, cost savings to
Caltrans, and costs incurred by Caltrans.
c) An assessment of the effect that the project has had
on public safety, emergency notification, traveler
information, and motorist safety and awareness campaigns.
d) A description of the types of advertising content
displayed by the CMS.
10)Provides that if Caltrans is advised by the U.S. Department
of Transportation or any of its agencies that a display of
advertising authorized by this article would result in the
reduction of federal and highway funds, advertising shall not
be made.
11)Prohibits advertising on CMS on officially designated scenic
highways.
SB 1397
Page 6
Comments
1) Purpose. According to the author, this bill permits Caltrans
to upgrade existing CMS to provide state-of-the-art
responsive, high-definition information capability for
enhanced statewide emergency and traveler communications, at
no cost to the state, through a public/private partnership.
This would begin as a demonstration project; statewide
application would follow demonstration of the efficacy of the
project. Additionally, revenues generated from this bill
could be used for critically needed and currently unfunded
highway projects and road maintenance and repairs.
2) California and federal MUTCD. Federal law requires all
states to adopt the federal MUTCD, or to be in substantial
compliance with it. California has adopted its own MUTCD,
which has been approved by federal officials as being
"substantially in compliance" with the federal MUTCD.
The federal and California MUTCDs contain provisions that
regulate CMS. Both the federal and the California MUTCDs
limit the use of CMS to traffic operations and regulatory,
warning, and guidance information, and use of CMS for
advertising is expressly prohibited. The federal and
California MUTCDs also specify that a CMS may be used to
display a safety, transportation-related, emergency homeland
security, or AMBER Alert messages and that the display format
shall not be of a type that could be considered similar to
advertising displays.
3) What are the effects of this bill? This bill permits
Caltrans, with federal approval and following the completion
of a pilot, to enter into public-private partnerships to use
CMS for commercial advertising purposes when it is not being
used for safety- and transportation-related messages. The
private partner would pay to upgrade the existing CMS and
Caltrans would be required to maintain the CMS. Before
allowing CMS to be used for advertising statewide, Caltrans
would be required to conduct a pilot project at locations
determined by the department. An independent consultant must
perform an independent evaluation of the pilot, which shall
be evaluated by the department to determine whether the
placement of advertising on the CMS creates an unsafe
distraction to motorists and any other issues of concern.
SB 1397
Page 7
4) Opposition. According to the opposition, the California
State Outdoor Advertising Association (CSOAA), this bill will
be a significant departure from past state and federal policy
that only permits traffic safety messages and AMBER alerts on
CMS and fails to consider local control issues and content
management. Federal law does not permit commercial
advertising signs on the right-of-way and requires states to
adopt the federal MUTCD. A violation of these laws includes
a penalty of up to 10% of the state's federal funding.
Additionally, this bill may create spacing conflicts with
existing inventory along the right-of-way, and is unclear as
to which signs will be eligible for application and approval.
Further, this bill creates ambiguity for outdoor companies
that maintained lawfully permitted displays in communities
that have adopted moratoriums on outdoor advertising.
CSOAA also raises a concern over the state stepping into a
position where it can regulate speech. In particular, CSOAA
points to two cases, one in Georgia and one in Missouri, in
which the Ku Klux Klan (KKK) sued those states over denials
of their applications to their respective Adopt-a-Highway
programs administered by their respective state departments
of transportation. The case in Georgia is pending in front
of the Georgia Supreme Court. In Missouri, however, a U.S.
District Court judge ruled that Missouri's refusal to allow
the KKK to participate in the Adopt-a-Highway program was
unconstitutional, and when the 8th Circuit Court of Appeals
confirmed that finding on appeal in March 2000, the state had
to erect signs announcing the KKK's sponsorship of a portion
of I-55. CSOAA states that its members exercise editorial
control to adjust the content of advertising.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
1)Estimated Caltrans up-front administrative costs in the range
of $100,000 to seek federal waivers and adopt guidelines and
regulations. These costs would be incurred prior to preparing
SB 1397
Page 8
any procurement materials. (State Highway Account)
2)Estimated additional costs of up to $150,000 to prepare
procurement materials, evaluate proposals, and negotiate
agreements. These costs would be reimbursed from certified
funds provided by bidders. (State Highway Account)
3)Unknown ongoing administrative costs to Caltrans, likely
reimbursable from advertising revenues, subject to the terms
of an agreement. Caltrans would incur costs for oversight,
and contracts with both an advertising consultant for business
and marketing advice and an independent consultant to review
safety and operational data. (State Highway Account)
4)Unknown, significant revenue gains during the term of the
agreement, potentially in the tens of millions annually, and
possibly over $100 million annually in out years of a
long-term contract with a maximized build-out of the CMS
system. It could be several years before the state realizes
any revenue gains as vendor costs to construct or upgrade CMS
displays would be recovered from advertising revenues.
Revenues would depend upon parameters of the agreement,
including the number of CMS displays that are part of the
program, the projected revenues anticipated from each display,
the term of the contract, and revenue sharing agreements
specified in the contract. (State Highway Account)
SUPPORT: (Verified5/31/16)
Transportation California (source)
Associated General Contractors
California Construction and Industrial Materials Association
California Nevada Cement Association
California-Nevada Conference of Operating Engineers
California Sign Association
OPPOSITION: (Verified5/31/16)
California State Outdoor Advertising Association
City of Buena Park
SB 1397
Page 9
City of Carson
City of Compton
Prepared by:Alison Dinmore / T. & H. / (916) 651-4121
5/31/16 22:24:19
**** END ****