The Commissioner — Fall 2006

The Billboard Shakedown Scheme

By William Brinton

Over the past few years, there has been a sharp spike in the number of lawsuits filed against municipalities seeking to strike down the entirety of a municipal sign code. These lawsuits are part of a strategy to force the erection of new billboard structures in locations where they are not otherwise allowed. The success of such schemes can undo years of work on the part of citizens, planners, and elected officials who have spent countless hours in formulating land development regulations to make their communities more attractive places to live, work, and visit.

The billboard developers have structured their arguments around multiple First Amendment theories. One federal judge described a series of cases as an attempt by billboard companies to "transform the proverbial First Amendment shield, intended to protect noncommercial speech, into a sword that assures their commercial well-being."¹

Billboard structures, as well as permits to erect them, have become increasingly valuable. Billboard industry experts have recently testified that billboard structures will trade in the marketplace based upon a multiple of monthly gross revenue, often pegged at around 70 times monthly gross revenue. The monthly revenue will depend upon location and traffic counts from adjoining roadways. Assuming that the monthly gross revenue is just $6,000 for a double-sided structure ($3,000 per side), a single billboard structure may be worth $420,000. The cost to erect a modern steel monopole structure may run approximately $80,000 or more depending upon height and components; therefore, a permit to erect such a structure under the foregoing assumptions may be worth $340,000.

Due to the financial rewards, it is easy to understand why such unwanted structures have attracted the attention of those who would use the courts in what amounts to personal enrichment schemes. The goal of these suits appears to be to strike an early settlement to secure permits for a small percentage of the total number of billboard structures applied for. The financial rewards could be in the millions of dollars.

Rather than free speech issues, these lawsuits are really about erecting giant structures that will dominate a landscape for generations. According to a recent government study, modern steel structures can have a normal lifespan up to 70 years.² Billboards can adversely impact community character and roadside beauty in many ways. There is now a push by the billboard industry to secure view zones for billboards along roads and highways that prohibit the use of public land for tree planting. Most courts have been unaware that it is more than just the billboard structure itself that can have an adverse aesthetic impact on an area.

What can planners do to thwart these shakedown schemes?³

• A surprising number of local governments still have not codified their practice of allowing noncommercial copy to be substituted for commercial copy. The adoption of a "substitution clause" can protect a local government against allegations that its sign code unconstitutionally favors commercial copy over noncommercial copy. As a practical matter, the absence of a substitution clause does not mean that noncommercial copy is disfavored and nearly all jurisdictions do not prohibit a change of message from commercial copy to noncommercial copy, but a challenger invariably argues that the absence of a substitution clause is precisely what must be inferred.

Substitution Clause: Notwithstanding anything herein to the contrary, noncommercial copy may be substituted for commercial copy on any lawful sign structure.

• Most sign regulations have not been reviewed or updated in many years. Some jurisdictions have adopted sign regulations from other communities without a critical look at many of the problematic provisions that may be contained therein. The tangled web of published decisions in this area left one federal judge to comment that it is nearly impossible to craft a constitutional ordinance.⁴ Every jurisdiction should periodically seek a legal review of their codified sign regulations. Once every five years is recommended.

• When adopting or readopting sign regulations, a comprehensive preamble may provide important support if and when a court seeks to understand the context of a community's sign regulations.

• A comprehensive description of the purposes, intent, or goals of a sign code is similarly important in the face of a legal challenge. Several published judicial decisions have illustrated good examples of such clauses.⁵ Take a look at your sign regulations to see if the purpose/intent/goals section is comprehensive.

• Billboards are a business unto themselves. Many sophisticated jurisdictions with zoning authority will specifically prohibit outdoor advertising as a permissible use in all zoning districts, or will provide that outdoor advertising is a prohibited use in all zoning districts. Alternatively, if billboards are to be allowed within a zoning district as a permissible use, there should be criteria for operating outdoor advertising by setting forth height, size, setback, spacing, number, and other content-neutral criteria for outdoor advertising as a limitation on its use.

Notes

1. National Advertising Co. v. City of Miami ("National-Miami") 287 F. Supp. 2d 1349, 1356-57 (S.D. Fla. 2003), rev'd on other grounds, 402 F.3d 1329 (11th Cir. 2005), cert. denied, 126 S.Ct. 1318 (2006).

2. See Florida Legislature Office of Program Policy Analysis and Government Accountability, Special Review: "Property Appraisers Use Cost Approach to Value Billboards; Guidelines Need Updating," Report No. 02-69, at 4 (December 2002) (available at www.oppaga.state.fl.us).

3. There is also an important role for local government attorneys. Attorneys representing local governments are urged to immediately contact counsel that specialize in assisting local governments in successfully confronting these schemes. A number of missteps may occur at the early stages of litigation and can be avoided by consulting with experts at the earliest opportunity. This area of the law is far more complex than many practitioners appreciate. It is often instructive to discuss these suits with other communities that have been successful in defeating such schemes.

4. "Many courts, like this one, and many commentators, are concerned that local governments have been placed in a tenuous and near impossible position in drafting a constitutional or content-neutral sign ordinance." Granite State Outdoor Adver., Inc. v. City of Clearwater, Fla. ("Granite State"), 213 F.Supp.2d 1312, 1333 (M.D. Fla. 2002), aff 'd in part and rev'd in part, 351 F.3d 1112 (11th Cir. 2003), cert. denied, 125 S.Ct. 48 (2004).

5. See Don's Porta Signs, Inc. v. City of Clearwater 829 F.2d 1031, 1052 (11th Cir. 1987), cert. denied, 485 U.S. 981 (1988); Granite State, 213 F.Supp.2d 1312 at 1317.