In an effort to obtain a potential windfall for the city’s coffers during trying economic times, Los Angeles Councilman Bill Rosendahl submitted a motion April 13 asking the city’s legal staff, as well as the city Department of Building and Safety, to explore how to secure a possible revenue stream from outside signs that have made the transition to digital advertising.
“There has been a recent trend around the city to convert many existing billboards to digital, which has significantly increased the revenue generated by these signs,” the motion stated. “With the city facing a $350 million budget deficit in the upcoming fiscal year and nearly every revenue category projected to remain flat or further decline, the city needs to find creative ways to tap into a portion of the revenue derived from digital billboards.”
The councilman said seeking a clarification on how and if the city could obtain some of the revenue stream of the outdoor advertising companies was essentially the same as the city receiving payment from advertising companies that have contracts with Los Angeles to display posters in street furniture on bus benches and shelters.
“This is a motion that I feel very strongly about,” Rosendahl told The Argonaut after his motion passed. “I believe that we should be getting a revenue stream from these billboards, which many of my constituents view as visual blight.”
Rosendahl, who along with his colleague in Council District 5, Paul Koretz, has been one of the most outspoken proponents of asking city officials to pursue a strategy where any billboard firm that has converted their outdoor signs to digital from the traditional, or static signs, should pay the city a certain percentage of its profits.
Dennis Hathaway, the executive director of the Coalition to Ban Billboard Blight, applauded Rosendahl for taking the action.
“I commend the councilman for drawing attention to this fact that they are making millions of dollars,” Hathaway said.
But he also worries that if a new source of revenue becomes available to the City Council, many of its members may find it difficult to turn off a tap of flowing dollars.
“If the city does get in a position to receive a revenue stream from these billboard companies, what would prevent city officials from eventually seeking more and allowing more billboards at some point?” Hathaway asked. “Our contention is that these (digital) billboards should be shut down and they should go back to being conventional outdoor signs.”
Two years ago, the council passed a moratorium on new billboards as part of a new sign ordinance, which a number of sign companies immediately challenged in court. U.S. District Court Judge Audrey Collins upheld the prohibition outlined in the sign ordinance on Sept. 28 last year.
On Nov. 5, the outdoor advertising firms were dealt another setback when a Los Angeles Superior Court judge struck down a 2006 settlement between the city and other outdoor advertising firms in a legal action initiated by Santa Monica-based Summit Media, which was not part of the original sign agreement.
Last year the council considered placing an initiative on the March 2011 ballot that would have put a 12 percent tax on billboards that proponents say could have raised an estimated $24 million.
City Councilman Herb Wesson broached the idea of a billboard tax in May when the council was grappling with a $212 million budget shortfall for the 2010-11 fiscal year.
“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 immediately lined 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 after Wesson’s proposal was made public.
The council chose not to pursue a tax on billboards in November when it voted to put 10 other measures on the March ballot. West Hollywood city voters rejected a similar measure in March that would have imposed a 7 percent tax on outdoor advertising.
Venice resident David Ewing accompanied Rosendahl, Hathaway and several other Venice and Mar Vista volunteers on a walk throughout Council District 11 to create a written record for city officials of all of the billboards in the district and request that officials at the Department of Building and Safety find their owners and determine which were legal.
“I think that (Rosendahl) is trying to make the best of a bad situation,” Ewing said.
The councilman cast his decision to pursue a new source of revenue as a matter of fairness. “These billboard companies are making a fortune,” Rosendahl asserted.
City Attorney Carmen Trutanich made enforcing the new billboard laws a priority when he took office almost two years ago. Trutanich has filed charges and levied fines against a number of billboard and supergraphics companies and has arrested some property owners who display the signs. Santa Monica resident Siamak Rahimi was arrested Sept. 30 for allegedly erecting an outdoor advertisement on two sides of a building that he owns in Westchester at 9800 S. Sepulveda Blvd., near Los Angeles International Airport.
Trutanich has promised that he would be much more aggressive against illegal supergraphics and outdoor signs than his predecessor, Rocky Delgadillo, whom many anti-blight activists believe was too lenient on sign companies.
“I’m going to do the right thing by the people of Los Angeles,” the city attorney told The Argonaut the day before he took office. “We’re going to stop the proliferation of billboards, and the owners of these outdoor signs will have to follow strict guidelines from now on.”
Rosendahl’s motion states that it is essential that the city find out the amount of money that is generated by all digital signs, as they are an “untapped revenue stream” that has not been accessed.
The city attorney’s office had previously been asked to evaluate the legalities with taxing billboard firms.
“In connection with the proposed billboard taxing measure that was ultimately not placed on our March 2011 ballot, the city attorney’s office advised the City Council regarding the legal issues and options arising out of billboard revenues,” Frank Mateljan, a spokesman in Trutanich’s office, replied to inquires about how the city attorney is handling the councilman’s motion.
“We will continue to advise the council as future questions arise.”
Anthony Alden, an attorney who has represented Summit Media has declined to comment for this story, and Anthony Alwin, a spokesman for Clear Channel Communications, did not return calls or email requests for comment.
Rosendahl said he expects that outdoor advertising firms will oppose his plan.
“It’s going to be an uphill fight,” he admitted. “But I believe very strongly that it’s a battle worth fighting.”