BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
SB 1470 (Leno)
As Amended April 6, 2010
Hearing Date: April 20, 2010
Fiscal: Yes
Urgency: No
SK:jd
SUBJECT
Outdoor Advertising
DESCRIPTION
Under existing law, the Outdoor Advertising Act (OAA), lawfully
erected signs are defined as advertising displays that were
erected in compliance with state laws and local ordinances in
effect at the time of their erection, or that were subsequently
brought into compliance with state laws and local ordinances.
This bill would revise the definition of "lawfully erected" to
also require that a sign meet its building permit requirements
in order to be considered lawfully erected and to exempt from
that definition signs that were illegally changed with respect
to height, orientation, size, or technology. This bill would
allow an action to be brought against the owner of an unlawful
sign for the disgorgement of revenues and for civil penalties,
as specified.
BACKGROUND
The OAA generally regulates the placement of advertising
displays adjacent to and within 660 feet of interstate or
primary highways. The OAA also regulates the size,
illumination, orientation, and location of displays and requires
cities to pay compensation to the owner of a lawfully erected
display, as defined, if they compel the removal of a billboard.
In Los Angeles, the City Attorney's Office, the sponsor of this
measure, has recently taken both criminal and civil action
against owners of illegal billboards. The Los Angeles Times
(more)
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recently reported on several of these efforts, noting that a
number of sign owners had received cease and desist letters
alleging that signs were installed illegally. In many
jurisdictions, such as the City of Los Angeles and the City of
San Francisco, the citizen complaint process is used for code
enforcement. Yet the number of inspectors is low. For example,
the City of San Francisco has three inspectors and the City of
Los Angeles has six sign inspectors in that city which contains
approximately 10,000 outdoor advertising displays.
Last year, this Committee heard a related bill, SB 690 (Leno,
2009), which dealt more specifically with the existing
rebuttable presumption as to lawfulness and authority to remove
signs without payment of just compensation. As a result of the
sponsor's recent successful enforcement efforts, this bill
instead adopts a different approach to address the proliferation
of illegal outdoor advertising by making more explicit the
actions that may make a sign illegal and focusing on the
penalties that may be assessed against the owner of an unlawful
sign.
CHANGES TO EXISTING LAW
Existing law regulates 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. (Bus. & Prof. Code Sec. 5200 et seq.)
Existing law defines "lawfully erected" as advertising displays
that were erected in compliance with state laws and local
ordinances in effect at the time of their erection, or that were
subsequently brought into compliance with state laws and local
ordinances. Lawfully erected does not include displays whose
"use" was modified after erection in a manner that caused the
display to be illegal. (Bus. & Prof. Code Sec. 5216.1.)
Existing law creates a rebuttable presumption that an
advertising display is lawfully erected if it has been in
existence for a period of five years or longer without the owner
having received written notice during that time period from a
governmental entity stating that the display was not lawfully
erected. (Bus. & Prof. Code Sec. 5216.1.)
Existing law specifies penalties for advertising displays that
are within 660 feet of the highway right-of-way as follows:
1)Upon erection or alteration of a display, an owner must obtain
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a permit. (Bus. & Prof. Code Sec. 5350.) If the display does
not have a valid, unrevoked, and unexpired permit, existing
law imposes the following penalties:
a) $100 if the display is placed in a location that
conforms to the OAA; and
b) $10,000 if the display is placed in a location that does
not conform to the OAA or local ordinances and is not
removed within 30 days of written notice from the entity
with jurisdiction over the property upon which the display
is located, plus $100 for each day the display remains in
place after the written notice is sent. (Bus. & Prof. Code
Sec. 5485(b).)
2)In addition to the above penalties, the gross revenues from
the unauthorized advertising display that are received by, or
owed to, the applicant and a person working in concert with
the applicant shall be disgorged. (Bus. & Prof. Code Sec.
5485(c).)
3)If an action results in the successful enforcement of the OAA,
the court may award the governmental entity its enforcement
costs, including attorney's fees. (Bus. & Prof. Code Sec.
5485(e).)
This bill would revise the definition of "lawfully erected" to
also require that a sign meet its building permit requirements
in order to be considered lawfully erected and would exempt from
that definition signs that were illegally changed with respect
to height, orientation, size, or technology.
This bill would permit the Attorney General, any district
attorney, county counsel, city attorney, or city prosecutor to
bring an action against a sign owner whose sign is unlawfully
erected or illegally altered for the disgorgement of revenues
collected by the sign owner while the sign was out of
compliance. This bill would provide that the sign owner may be
liable for civil penalties up to $2,500 for each violation of
any relevant state law, local ordinance, or local building
permit requirement for each day the sign is in violation.
This bill would specify the distribution of moneys collected
through successful enforcement actions and would provide that
the agency bringing the enforcement action may request the court
to award enforcement costs, including attorney's fees.
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COMMENT
1. Stated need for the bill
The author writes:
The proliferation of illegal outdoor advertising has gone
unchecked for too long. Limited compliance and inspection
resources force municipalities to accept the blight that
illegal signs bring to neighborhoods. Building and safety
codes exist to protect people from unsafe and unfair
construction. Yet existing laws do little to allow cities and
counties to force illegal advertising into compliance. There
is a need to ensure that our laws protecting the visual
landscape can be enforced in a manner that will dissuade sign
companies from failing to comply with permitting requirements
that exist to protect the public. . . .
Because the definition of "lawfully erected" allows signs out
of compliance to be brought back into compliance with their
permit without any penalty, it encourages sign companies to
ignore existing codes to maximize their profits knowing that
the best a government entity can do is force them to bring the
sign into compliance with the code. Making the definition of
"lawfully erected" more precise is a modest but important tool
to aid government efforts by making more explicit the actions
that make a sign illegal. By adding civil penalties and a
cause of action for the disgorgement of gross revenues, this
bill allows the government entity the ability to pursue real
sanctions against the worst violators and deter new violations
in the future.
The sponsor of this bill, the Los Angeles City Attorney, writes
". . . current state law incentivizes sign owners to illegally
alter their displays to maximize profitability, and to
nonetheless retain their status as 'lawfully erected' if brought
back into compliance upon getting caught. These companies are
incentivized to act illegally because there is absolutely no
penalty, at the state level, for their actions. . . . SB 1470
is necessary to close this loophole in existing law. This bill
sends a message that the outdoor advertising industry will not
receive special privileges and exemptions that are not available
to businesses. It will help to protect the visual integrity of
. . . California's cities and counties and it will allow local
law enforcement agencies to more effectively cite and enforce
against illegal signs."
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2. Displays whose height, orientation, size, or technology were
modified
This bill would revise the definition of "lawfully erected" to
exclude displays whose height, orientation, size, or technology
is modified in a manner that causes the display to become
illegal. Regency Outdoor Advertising argues that this bill
violates the Fifth Amendment of the United States Constitution
because it will "provide for summary destruction without
compensation with either notice or opportunity to cure." While
the Fifth Amendment provides that private property shall not be
taken for public use without just compensation, the entire
section amended by this bill details the criteria for when
compensation is, and is not, required. For example, the
existing definition of "lawfully erected" excludes displays
whose use was modified after erection in a manner that causes
them to become illegal. No case has been presented to the
Committee that demonstrates that the existing structure of
compensation for lawfully erected signs (based on federal law)
violates the Fifth Amendment of the Constitution.
The sponsor further contends that adding specific language to
the definition of a "lawfully erected" sign does not violate the
Fifth Amendment, and that the exemption only applies when the
sign owner has engaged in an illegal act. The sponsor further
states that they are not aware of any interpretation of the
Takings Clause of the Fifth Amendment that treats as "property"
the ability to engage in an illegal act while retaining the
protected status that a statute gives to signs that are
"lawfully erected," and that "[a]s early as 1951 the California
Supreme Court aligned itself with 'courts throughout the
country' that 'generally follow a strict policy against the
extension or enlargement' of nonconforming uses. The test . . .
is 'whether the nonconforming use was the same before and after
the passage of a zoning ordinance . . . .' The Fifth Amendment
did not require the State to enact a statutory right of
compensation available in such settings, so the fact that the
bill would clarify the word 'use' in a way that might prevent an
abuse of the compensation statute by lawbreakers hardly
constitutes a 'taking' within the meaning of the Fifth
Amendment." (Citations omitted.)
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3. Displays subsequently brought into compliance: loophole in
existing law
Existing law defines "lawfully erected" as including signs that
are not in compliance when erected but were subsequently brought
into full compliance. That requirement was arguably intended to
encourage owners of those signs to bring those signs into full
compliance. Existing law, however, allows for the situation
where a sign owner could bring a sign into compliance but
unlawfully modify it again, even days later. In that case,
under existing law, that illegally modified sign would be
considered "lawfully erected" because it had been brought into
compliance, even though that compliance had not been maintained.
This bill aims to address that loophole by requiring that
"lawfully erected" includes signs that were subsequently brought
into, and maintained in, full compliance.
4. Penalties
This bill would allow a civil action to be brought against the
owner of an illegal sign for the disgorgement of revenues
collected by the sign owner for that sign while the sign was out
of compliance and for civil penalties up to $2,500 for each day
the sign is in violation. These provisions would apply in two
instances: (1) whenever a sign located anywhere in the state is
not lawfully erected; or (2) whenever a sign located anywhere in
the state that was erected in compliance with state laws, local
ordinances, and local building permit requirements in effect at
the time of its erection is subsequently illegally altered.
The disgorgement provision in the bill is based on an existing
provision of the OAA which generally applies to the placing of
signs within 660 feet of the highway right-of-way. This bill is
structured so that its penalties provisions would apply to signs
located anywhere in the state. In addition, it is important to
note that the civil penalties that may be imposed under the bill
could be "up to" $2,500 per day. As a result, a court would
retain the discretion to determine the appropriate penalty. In
order to better target bad actors and address situations for
first-time, minor violations, however, the author has agreed to
amend the bill to add language permitting the court to consider
specified factors in assessing the amount of the penalty. The
following language would accomplish this:
On page 3, line 21, after the period insert: "In assessing
the amount of the civil penalty, the court shall consider any
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one or more of the relevant circumstances presented by any of
the parties to the case, including, but not limited to, the
following: the nature and seriousness of the misconduct, the
number of violations, the persistence of the misconduct, the
length of time over which the misconduct occurred, the
willfulness of the defendant's misconduct, and the defendant's
assets, liabilities, and net worth."
In addition, the bill's language regarding disgorgement is
intended to allow for the disgorgement of the revenues that are
attributable to the unlawful sign during the time period that
the sign was out of compliance. In order to better effectuate
this goal, the author has agreed to amend the bill as follows:
On page 3, line 11, strike "with respect to the display" and
insert "from the unlawful advertising display that are, during
the time period that the display was illegally erected or
altered,"
On page 3, line 13, strike "while the display was illegally
erected or altered"
5. Bill does not affect rebuttable presumption
Last year, the Committee heard SB 690, which, among other
things, modified the rebuttable presumption under existing law.
That rebuttable presumption provides that an advertising display
is lawfully erected if it has been in existence for a period of
five years or longer without the owner having received written
notice during that time period from a governmental entity
stating that the display was not lawfully erected.
Because of the sponsor's recent successful enforcement efforts,
this bill would revise the definition of lawfully erected to
make more explicit those actions that may make a sign illegal
and focus on the remedies that are available to address illegal
outdoor advertising. It does not make changes to the rebuttable
presumption in existing law.
6. Opposition
CBS Outdoor raises concerns about the bill's revision to the
definition of lawfully erected stating, "Most of the current
display owners obtained ownership of their displays through
acquisition. It is typical for a display to have transferred
ownership several times since its erection, and historic
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documentation of the display is sometimes incomplete due to
multiple acquisitions and/or transfers. Also, many displays
were erected several decades ago, during a time when local
municipalities did not maintain accurate and complete permit
records. . . . It is difficult to see what interest could
possibly justify the stripping of [the right to just
compensation] simply because a decades old building permit has
been inadvertently lost, damaged, and/or destroyed, in most
cases, by someone other than the current display owner."
Staff notes, however, that as explained in Comment 5, existing
law's rebuttable presumption is not affected by this bill. As a
result, a sign is considered lawfully erected if it has been in
existence for a period of five years or longer without the owner
having received written notice during that time period from a
governmental entity stating that the display was not lawfully
erected. Under the presumption, this bill would not affect
signs erected decades ago provided that the owner had not
received notice that the sign was unlawful. The sponsor also
notes that the purpose of adding "local building permit
requirements" to the definition of "lawfully erected" is to
codify what is believed to be existing law-that this definition
"does not preempt the entire building and safety code
enforcement system that exists at the local level." In
addition, it is important to note that the OAA requires, for
signs covered by that act, that a sign may not be erected
without first obtaining a written permit from the California
Department of Transportation. Regulations implementing the act
specify that, in order to obtain the permit, owners shall
demonstrate the consent of the city or county by producing a
copy of the applicable building or sign permit, or other
official act of the city and county used in that jurisdiction to
authorize construction. As a result, it is not out of the norm
to require building permit compliance.
CBS Outdoor also raises concerns about the bill's penalty
provisions, arguing that the bill "fails to take into
consideration that the current display owner may simply have
been a bona fide purchaser of a previously altered display, and
now unjustly faces severe penalties . . . an innocent display
owner may face fines up to $2,500 per day for each day the sign
was in violation. This certainly would be an unfair and
unlawful result." Committee staff notes, however, that the
disgorgement provision in the bill is based on existing law
which relates to signs within 660 feet of a highway
right-of-way. In addition, the amendment suggested in Comment 4
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would allow the court to consider specified factors in assessing
the amount of the penalty in order to better target bad actors
and address situations for first-time, minor violations.
7. Amendment taken in Senate Transportation and Housing Committee
When this bill was heard in the Transportation and Housing
Committee, the author committed to an amendment which, for
procedural timing requirements, needs to be taken in this
Committee. That amendment, which is consistent with the bill as
it is currently in print, makes clear that signs that were
erected in compliance with the law at the time that they were
erected, must also be maintained in compliance. The following
language would accomplish this:
On page 2, line 4, after "erected" insert "and maintained"
Support : None Known
Opposition : CBS Outdoor; Regency Outdoor Advertising
HISTORY
Source : Los Angeles City Attorney's Office
Related Pending Legislation : None Known
Prior Legislation :
SB 690 (Leno, 2009) (See Background.)
SB 563 (Ridley-Thomas, 2007), which would have deleted the
rebuttable presumption, was re-referred to the Senate Rules
Committee.
Prior Vote : Senate Transportation and Housing Committee (Ayes
5, Noes 3)
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