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Monday, May 29, 2023

Los Angeles May Sign Off on Hefty Billboard Fines

L.A.’s City Hall is planning to raise penalties for billboard violations to as much as $48,000 a day, almost 20 times the current level.

The huge increases are proposed because city officials believe that ad companies shrug off the current fines as part of the cost of doing business.

The higher fines come in a package of proposed revisions to the city’s sign ordinance that City Attorney Mike Feuer unveiled last month. They aim to make it so costly for outdoor ad firms that they will force companies to deal with unpermitted or improperly placed billboards.

One billboard firm, Lamar Advertising Co. of Baton Rouge, La., voiced vigorous opposition to the plan.

“We believe these fines to be onerous and potentially may have constitutional restraints,” said Ray Baker, vice president and general manager for the Los Angeles region.

Clear Channel Outdoor, a unit of San Antonio radio station owner Clear Channel Communications Inc., declined to offer specific comments because the company was still reviewing the proposal.

“Clear Channel historically has supported enforcement as long as there has been a due process for the companies,” spokeswoman Fiona Hutton said.

CBS Outdoor, a division of New York’s CBS Corp., and two other billboard companies declined to comment or did not respond.

Significantly, the proposed revisions would make the companies pay the fines during any appeal process in order to force compliance. In the past, fines have been suspended while a matter is appealed.

The revisions will go to a City Council committee next month and then could go to the full council before the end of the year.

City officials have estimated that between 1,000 and 4,000 signs either lack permits or have other code violations. They claim that the current maximum penalty of $2,500 a day or about $75,000 a month is insufficient to deter sign companies that rake in as much as $100,000 a month from large billboards. What’s more, the companies frequently are able to get the penalties reduced on appeal.

“Because some of these companies make so much money from their billboards, they view the current lesser penalties as a mere slap on the wrist and a necessary and affordable cost of doing business,” Feuer wrote in a report to council members explaining the sign ordinance revisions.

The proposed penalties would increase according to the size of the billboard, on the theory that larger billboards bring in more revenue. Penalties for the smallest signs – under 150 square feet – would start at $2,500 for the first day and increase to $8,000 a day after three days. For the largest billboards, more than 750 square feet, the penalties would start at $12,000 for the first day of a violation, maxing out at $48,000 a day after three days.

The penalties would kick in roughly two weeks after the compliance deadline given in a notice of violation sent to a billboard company.

In his letter, Feuer said this sliding scale of penalties is modeled on a similar ordinance in New York. Sign companies sued, but courts upheld the ordinance.

Outdoor ad companies are expected to push for more lenient penalties for minor or inadvertent violations, such as a billboard being placed a few feet from the permitted location.

Feuer’s proposed revisions would not allow for penalties to be suspended during the appeals process – unless an appeal takes longer than 18 months. That would significantly increase costs for billboard companies.

Digital billboard fight

Meanwhile, billboard companies are gearing up for a new fight next month over the fate of 100 digital billboards throughout the city. These billboards went up after ClearChannel and CBS Outdoor reached an agreement in 2006 with former City Attorney Rocky Delgadillo to take down dozens of other billboards.

Each digital billboard can generate more than $100,000 a month in revenue for sign companies. But they have also drawn criticism for their brightness and distraction for drivers.

L.A.’s Summit Media had sued the city seeking to void the agreement, arguing that it unfairly eliminated competition from Summit and other sign companies. In 2009, Los Angeles County Superior Court Judge Terry Green agreed that the city’s process for allowing digital signs was not valid and ordered them turned off. The digital billboards went dark early this year.

In Green’s courtroom next month, Summit will argue that the digital signs and their underlying structures should be dismantled.

“Our view is that the digital signs were put up as part of an agreement with the city; that agreement has been found invalid and therefore the signs and their structures should come down,” said Phil Recht, attorney for Summit.

Howard Fine
Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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