Economics & the Visual Environment: Cost to Taxpayers

Protecting the Rights of Local Governments

"Exclusionary zoning" describes municipal-code laws that prohibit certain types of land uses. In the past, some suburban municipalities used exclusionary zoning to prevent low-income housing from being built in their areas. The Pennsylvania courts established that zoning for discriminatory purposes by "excluding or segregating people on the basis of their means" is unconstitutional. Municipalities have since learned that any exclusionary or very restrictive zoning--even for "good" reasons--must be able to withstand challenges in court.

Some townships--such as Upper Southampton in Bucks County and Robeson in Berks County--have attempted to protect their visual heritage by limiting the amount of new billboard construction. However, the outdoor-advertising industry argues that laws restricting billboard construction create exclusionary zoning (as though excluding billboards were a social injustice) and therefore unconstitutional in Pennsylvania.

With revenues exceeding $5.2 billion per year, the mammoth outdoor-advertising industry can be a seemingly overwhelming opponent. Thirteen members of the Outdoor Advertising Association of America www.oaaa.org have central or branch offices in Pennsylvania; seven of them are multistate or multinational companies, with strong lobbies to protect their self-interests. Viacom Outdoor Group, for example, with more than 100 million display faces worldwide and more than 100,000 billboards in the U.S.A., Canada, and Mexico, obviously has vast monetary resources at its disposal.

 

What's a little municipality to do?

  • Be certain that laws to protect the visual environment are written in terms that are clearly and justifiably for the public good.
  • Devise or participate in a comprehensive plan that addresses scenic and aesthetic issues and roadside blight.
  • Network with other municipalities and with organizations such as SCRUB and the Pennsylvania Resources Council www.prc.org to learn how other "Davids" have faced "Goliath" and won.

Billboards Don't Pay for Themselves

Not only do they detract from a community's unique character, billboards cost taxpayers money! In Fighting Billboard Blight, an action guide published by Scenic America www.scenic.org, we learn the true cost of billboard control. Of 44 states responding to a Scenic America survey, 37 reported that the costs of their billboard-control programs outpaced revenue from permit fees. The combined amount was more than $6 million.

According to Pennsylvania's 1971 Outdoor Advertising Control Act, Section 7, an annual fee must be paid to the state for each billboard within its jurisdiction. The fees range from $10 to $30 per year, according to the size of the sign. Revenue collected from the state does not begin to cover the expenses incurred by the Department of Transportation for monitoring and regulating the outdoor-advertising industry. Although the Outdoor Advertising Control Act has been amended several times since its passage in 1971, permit fees have never been increased.

Can you think of anything else which is the same price today as it was in 1971?

 

Billboards Cost Taxpayers Money--
Even When They Come Down!

  • Highways

When roads are widened or realigned, states must pay the cost for moving or acquiring outdoor-advertising signs. Yet billboards, which continue to derive huge profits from their location along Pennsylvania's highways, pay no road-user taxes, tolls, or fees.

  • Abandoned Buildings

Pennsylvania has numerous older areas in need of revitalization: empty shopping centers; once-thriving inner-ring suburbs; and neighborhoods in small and large cities, where residential, commercial, and industrial zones await reinvestment. Here the walls of abandoned buildings become frames for seemingly "harmless" billboards. In fact, these billboards further depress the neighborhood, and what is more, the cost of removing them later to make improvements could be surprisingly high.

In a recent condemned-property case, heard by the Supreme Court of Virginia (Lamar Corp. v. Commonwealth Transportation Commissioner, September 14, 2001), it was found that "just compensation" means not only paying for the real estate, but also paying fair-market value for billboard structures. Outdoor advertising companies can be expected to demand top dollar. Fair market value is generally estimated at 10 times the annual income of the billboard structure, plus remaining lease costs, plus the cost of removing the structure.

As part of a test survey in two Philadelphia neighborhoods, SCRUB and the Pennsylvania Resources Council www.prc.org found a substantial number of outdoor-advertising signs on abandoned buildings. In Belmont-Mantua--a target area of Philadelphia's Neighborhood Transformation Initiative--the fair-market value of a billboard is estimated at $14,000 per sign for the smallest size and $100,000 for the largest! Once neighborhood revitalization begins, the cost of removing billboards can be enormous.

 

Removing Billboards Boosts Property Values

New billboard construction increases the value of the land on which the billboard is situated, while depressing the value of surrounding property. Thus billboard companies profit at the expense of the surrounding community. Removing billboards has a beneficial effect. As reported by Scenic America www.scenic.org, a study in Pittsburgh, Pa., found that property values rise as much as 255 percent after the removal of nearby billboards.