Outdoor advertising companies in Los Angeles, already on the defensive due to the aggressive enforcement tactics of City Attorney Carmen Trutanich, could be forced to deal with an adversary next year that could also hit them square in their wallets.
The Los Angeles City Council, as it begins to craft the initiatives that will appear on the March 8 municipal ballot, has been considering a 12-percent tax on billboards that proponents say could raise an estimated $24 million.
There does not appear to be a lot of momentum for a ballot proposal going into the final weeks before Nov. 17, the last day for the council to adopt all resolutions for placing proposed measures on the ballot for the March election. The council’s budget and finance committee rejected the idea of taxing outdoor advertisements on Oct. 18, and Wednesday, Nov. 3 was the last day that the city’s governing body could request Trutanich’s office to craft resolutions for the March ballot.
The proposal is structured along the lines of a similar law that was enacted in Philadelphia five years ago. That law has already survived a legal challenge.
City Councilman Herb Wesson broached the idea of a billboard tax in May when the council was grappling with a $212 million budget shortfall.
“Throughout the budget, there is a need to be more creative in identifying additional revenue sources that will shore up the city’s finances, as well as gain voter approval,” Wesson wrote to Councilman Bernard Parks, the head of the council budget and finance committee.
Groups representing outdoor advertising firms are lining up to condemn the council for even considering a levy during an ongoing recession.
“During the worst economy of our lifetime and as local businesses struggle to keep their customers and pay their employees, the Los Angeles City Council is currently considering a staggering new business tax to be imposed on all businesses that rely on outdoor advertising to help offset the city’s budget shortfalls,” Damian Jones, a spokesman for the Los Angeles Outdoor Advertising Coalition, said in a statement.
Dennis Hathaway, a Venice resident who has been at the forefront of a citizen effort to reduce the number of billboards throughout the city, supports a tax in concept. But the anti-blight advocate is also concerned that some lawmakers might view revenue generated by a billboard tax as a continuous flow of money into the city’s coffers and thus not be inclined to limit them.
“If the council sees this as an opportunity to use these billboards as a cash cow, that could be a disincentive to reducing them, especially the digital billboards,” said Hathaway, the executive director of the Coalition to Ban Billboard Blight.
City Councilman Bill Rosendahl said his district has been bombarded by billboard companies over the last several years and he is upset that while other council districts receive income from outdoor advertising, his has been forced to absorb what many consider blight.
“I have been asking for a record of a revenue stream from these billboard firms, and I have not had a straight answer,” said the councilman, who co-sponsored the proposal and who represents Westchester and Venice, two neighborhoods that have an abundance of billboards. “The one thing that I’m sure about is I don’t want any more billboards in my district.”
Ben Reznik, an attorney with the law firm Jeffers, Mangles, Butler & Mitchell, is not opposed to taxing billboards, even though his firm has outdoor advertisers as clients.
“I think taxing billboards is a good idea,” said Reznik, who specializes in land use and is representing a client who has a lawsuit against the city. “In order to tax them, you would have to legalize them.”
Reznik said having “proper objective criteria with minimal impact to residents” for outdoor signage could benefit the city economically while not adding too much blight to a community’s visual landscape.
“It could also bring an end to years of litigation where rights under the First Amendment are not continuously challenged by those who think that they are not esthetically pleasing,” the attorney added.
An appeals courts dealt billboard firms and their advocates a setback after it ruled in Los Angeles’ favor on May 26, when it reversed a federal judge’s ruling that struck down a ban on new supergraphics, billboards and freeway-facing signs.
The Ninth Circuit Court of Appeals found that the City Council did not violate the First Amendment right to free speech of billboard companies when it allowed exceptions to its citywide ban. The plaintiff in the case was WorldWide Rush, an outdoor advertising company that has several supergraphics throughout the city.
Reznik’s scenario for allowing billboards to be taxed is what Hathaway fears the most – that they will become more prevalent if they can offer a substantial revenue stream.
“Billboards use a lot of public space and they should have to pay for that privilege,” he said. “But there could be unintended consequences if you allow them to proliferate because the city can tax them.”
Los Angeles Area Chamber of Commerce President and CEO Gary Toebben cited similar concerns that outdoor advertising interests previously raised.
“Now is not the time to rush through tax increases on any Los Angeles businesses without studying the potential impacts on our economy,” said Toebben. “This proposal is exactly what the city’s new Office of Economic Analysis is designed to review, and we call on the City Council to complete that analysis before any further action is taken.”
LAX Coastal Area Chamber of Commerce President and CEO Christina Davis said her organization has not taken a position on a billboard tax.
“We understand that there are some property owners who do use them and consider them to be an essential part of their advertising,” Davis explained. “But we also don’t want to have blight and we want to maintain the visual beauty of our community.”
Other cities are moving toward a possible levy on outdoor advertising. West Hollywood voters will have the ability to impose fees on outdoor signage on their city in March after an initiative was approved by their city council Oct. 19. Proponents of the tax say it would bring in $4 million by applying a 7-percent excise tax on outdoor signs.