This proposed law implementing the TCN will be an unmitigated disaster for the City of Los Angeles and its citizens. It will cause a net loss of revenue to the City and result in many new billboards, including digital billboards being constructed across the jurisdiction. While the TCN seeks to limit such billboards to public property owned by the regional transportation authority, it will give billboard companies the opening they need to successfully end the ban on new billboards that has been in place since 2002.

Relevant Facts:

1. The establishment of the TCN will create years of new litigation, costing the City huge amounts of money for attorneys’ fees both for its own lawyers and because it will be required to pay the fees of those successfully challenging the TCN under 42 USC 1988.
2. The liabilities created by the TCN will greatly outweigh any benefit to the City, including any revenue share.
3. Until the City adopted a ban on new billboards in 2002, it spent years fighting litigation brought by billboard companies challenging any effort to regulate signs. The problem was largely related to the First Amendment protection given to billboards and the general prohibition on the City selectively handing out sign rights to some more favored parties.
4. The prior billboard litigation was not only a significant municipal expense, but the City lost many of these cases and was required to accept new billboards. It was actually forced to assign several attorneys full time to just handling billboard litigation.
5. The TCN ordinance will result in years of new litigation and a loss of control over billboards, including digital billboards, as billboard companies demand equal treatment from the courts.
6. Many of the billboards the City proposes to place on publicly owned property currently zoned “PF” will violate federal sign law and never qualify for Caltrans permits.
7. The end result will be a net financial loss to the City and an explosion of new digital signage as the courts will likely find that the City no longer has a valid ban on new billboards, returning the City to the chaotic environment it experienced in the decades before the current ban was put in place in 2002.
   

Primary Legal Issues:

1. Constitutional law places the burden on the proponent of any law restricting First Amendment rights, including the right to construct and operate billboards. (United States v. Playboy Entm’t Group (2000), 529 U.S. 803, 813 120 S.Ct. 1878, 1886.)
2. While cities may completely ban billboards, laws selectively prohibiting them have often been subject to successful legal challenges resulting in the loss of control over new billboard. (City of Ladue v. Gilleo (1994) 512 U.S. 43, 52 [114 S.Ct. 2038, 2044, 129 L.Ed.2d 36].) The Supreme Court in City of Ladue found an otherwise permissible ban on off-site signage to be unconstitutional under the First Amendment solely due to exceptions:Exemptions from an otherwise legitimate regulation of a medium of speech may be noteworthy for a reason quite apart from the risks of viewpoint and content discrimination:They may diminish the credibility of the government’s rationale for restricting speech in the first place. See, e. g., Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 424-426, 123 L. Ed. 2d 99, 113 S. Ct. 1505 (1993). In this case, at the very least, the exemptions from Ladue’s ordinance demonstrate that Ladue has concluded that the interest in allowing certain messages to be conveyed by means of residential signs outweighs the City’s esthetic interest in eliminating outdoor signs. Ladue has not imposed a flat ban on signs because it has determined that at least some of them are too vital to be banned. (Id., 512 U.S. 43 at 52.)The TCN will open a can of worms that will be welcomed by the billboard companies that would like nothing better than to build dozens of new digital signs in every part of the City.
3. The TCN seeks to create a completely unprecedented land designation: “a non- contiguous Supplemental Use District.” While the courts have allowed to City some leeway to make zoning decisions regarding specific property and its suitability for billboards the breadth of the TCN’s exception to the general billboard ban will undoubtably cause billboard companies to claim that the exception has swallowed the rule and that there is no legitimate government interest which can further justify the 2002 ban.
4. Both state and federal law, as well as the prohibition on the uncompensated taking of property will mean that the overall reduction in billboards in other areas of the City and their concentration on government property owned by the regional transportation authority will require not only payment to billboard companies but to the individual property owners who will forever lose their stream of income from renting their land to the billboard companies. This private source of revenue will be extinguished in favor of advertising revenue for the City and the regional transportation authority.The legal requirement for payment to individual property owner, rather than just the billboard companies, is codified in California Business and Professions Code 5412: Displays; removal or limitation of use; compensation; application of section; relocation

   Notwithstanding any other provision of this chapter, no advertising display which was lawfully erected anywhere within this state shall be compelled to be removed, nor shall its customary maintenance or use be limited, whether or not the removal or limitation is pursuant to or because of this chapter or any other law, ordinance, or regulation of any governmental entity, without payment of compensation, as defined in the Eminent Domain Law (Title 7 (commencing with Section 1230.010) of Part 3 of the Code of Civil Procedure), except as provided in Sections 5412.1, 5412.2, and 5412.3. The compensation shall be paid to the owner or owners of the advertising display and the owner or owners of the land upon which the display is located.The provision in the TCN allowing billboards on property which is not commercially zoned will violate state and federal law designed to implement the Federal Highway Beautification Act. In United Outdoor Advertising Co., v. Business, Transportation & Housing Agency (1988) 44 Cal.3d 242 [242 Cal.Rptr. 738, 746 P.2d 877], the California Supreme Court struct down a similar plan to that proposed for the TNC. In that case, the Supreme Court held that a plan by the County of San Bernardino to rezone land for the purpose of allowing billboards was illegal:Nor can the requirements of section 5205 necessarily be met by plaintiff or another outdoor advertiser persuading the county to rezone the parcels commercial. The Act does not simply condition the issuance of a billboard permit on having applicants jump through the additional hoop of obtaining an appropriate zoning change from the county. As we have seen, zoning enacted to permit billboards is not recognized for outdoor advertising control purposes. (23 C.F.R. § 750.708(b).) What the Act contemplates is that plaintiff will locate its displays in an area which, for reasons independent of a desire to permit billboards, has obtained the mandated zoning. (Id., 44 Cal.3d at 251–252.)

5. The TCN will also result in claims of illegal “spot zoning.” Spot zoning is one type of discriminatory zoning ordinance. (Wilkins v. City of San Bernardino (1946) 29 Cal.2d 332, 340–341, 175 P.2d 542.) “Spot zoning occurs where a small parcel is restricted and given lesser rights than the surrounding property, as where a lot in the center of a business or commercial district is limited to uses for residential purposes thereby creating an ‘island’ in the middle of a larger area devoted to other uses.” (Arcadia Development Co. v. City of Morgan Hill (2011) 197 Cal.App.4th 1526, 1536 [129 Cal.Rptr.3d 369, 376].)
6. The City currently only allows parcels over a certain size to apply for a Supplemental Use District which allows the adoption of zoning laws that vary from neighboring properties. Court have generally allowed such zoning where it is justified by unique aspects of the real property at issue. In this case, the City is considering applying different zoning laws not to a single property which varies in objective details from neighboring properties but in a single stroke to dozens of publicly owned properties with varying characteristics. The idea that neighboring property owners will not demand similar rights is highly unlikely.

Conclusion:

In a nutshell, the state and federal constitutions will not allow the City to selectively dole out Free Speech and property rights only to favored applicants. The TCN will open a floodgate which will not only eclipse any new revenue or other public benefit but will also result in chaos and the same loss of control over billboards that Los Angeles suffered for decades before the 2002 ban.