Playing With Fire? Raising Revenue By Allowing Billboards On Public Property

Simulation of L.A. Convention Center billboards

On January 6, 2009, a three-judge panel of the 9th Circuit Court of Appeals ruled in a nationally-watched case that the city of Los Angeles could legally allow commercial advertising signs in bus shelters and other items of “street furniture” while banning the same kind of signs on private property. But does that ruling mean that the city can raise revenue by allowing billboards and other signs anywhere it wants on public property without putting its off-site sign ban in legal jeopardy?

In the aforementioned case, Metrolights vs. City of Los Angeles, the panel said that the advertising signs in bus shelters and kiosks didn’t undermine the stated goals of the off-site sign ban, namely, promoting aesthetics and traffic safety. The street furniture program allowed the city “to supervise a more concentrated supply of offsite signage, which plausibly contributes to its interest in visual coherence as a part of aesthetic quality,” the unanimous opinion stated.

However, the ruling should also provide a cautionary note to politicians and others now eyeing commercial advertising on public property as a way to raise badly-needed cash for city coffers. That’s because the panel said that while government can legally put limits on commercial speech such as outdoor advertising, exceptions to such limits for the sole purpose of raising revenue would run afoul of the lst amendment guarantee of free speech.

As illustration, the judges used the age-old example of shouting fire in a crowded theater. Banning the act is a legitimate exercise of a government’s power to ensure public safety, the court said, but allowing an exception for anyone who made a $100 tax contribution would render the ban unconstitutional.

The court went on to say, “‘Certainly the government cannot silence one speaker but not another because the latter has paid a tax, even though it could constitutionally silence both.  But that doesn’t mean the City cannot silence speakers in general but permit them to bid for the right to speak on City-owned land, assuming that the speakers on City-owned land do not undermine the goal of the City’s general prohibition.”

As noted earlier, the judges found that advertising signs in bus shelters and kiosks didn’t undermine the city’s stated goals of promoting aesthetics and traffic safety. But what about proposals to raise revenue by allowing billboards on public property, such as the facade of the city convention center, or the widely-reviled scheme to sell advertising in city parks?  Or the recently floated idea of allowing commercial ads on street banners?

A large swath of billboards facing motorists one of the nation’s busiest freeway interchanges would seem to detract from both aesthetics and traffic safety. Likewise, it’s easy to argue that advertising signs in city parks and places designed as escapes from the visual noise of the urban environment clearly degrade the city’s aesthetic qualities.

Freeway-facing billboards at L.A. Live

It has to be pointed out that a different 9th Circuit panel of judges found in a later case that massive signs for beer, soft drinks, cars and other products in the L.A. Live area adjacent to the convention center also didn’t undermine the city’s general ban on off-site advertising. The judges said that because the signage was entitled as part of the redevelopment of a blighted area, it was consistent with the off-site sign ban’s purpose of promoting aesthetics by providing revenue to help support that redevelopment.

The proposed convention center signage is part of the plan by L.A. Live owner AEG to build an NFL football stadium on property now occupied by a wing of the convention center. The revenue from the signage, estimated by AEG to be more than $5 million per year, has been described as a key part of the plan, which includes building a new wing of the convention center to replace the one displaced by the stadium.

Which raises questions: Where is the blight that’s being cured by replacing part of a functioning, relatively modern building with a stadium? What other purpose does that signage serve other than raising revenue to support a development for professional football fans and out-of-town conventioneers?

It’s probably foolhardy to predict how courts will rule in any particular case, given that signage law is complex and sometimes confusing and even contradictory. It would be even more foolhardy to suppose that the city’s court victories over the past two years mean that litigious sign companies and property owners are vanquished, and that the city can now proceed without any fear of getting itself into legal hot water over its signage policies.