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									          Margaret Lloyd, Policy Director, Scenic Texas, Inc.

                 Testimony to the Sunset Commission

    Recommendations to Improve Outdoor Advertising Controls in Texas

TxDOT has a mission and vision statement published on its web site. Included in their
vision is to "to provide comfortable, safe, durable, cost-effective, environmentally
sensitive and aesthetically appealing transportation systems that work together." Scenic
Texas applauds this vision. It is with this vision statement as a backdrop that we provide
our comments and recommendations today.

In summary, we support all the recommendations under Issue 6 of the Sunset
Commission staff's report but believe the recommendations do not go far enough.
We do not believe the recommendations address the much greater problems that we are
seeing from the continued permitting of billboards along our highways, particularly in
rural Texas. They do not address the depth and extent of the lax regulation and
enforcement of outdoor advertising in Texas. And they do not address the huge taxpayer
burden that has been created by the continued construction of billboards along our
highways. Billboards are a quality of life issue for rural Texans, a scenic issue for the
traveling public, and a taxpayer issue for us all.

General Background:
TxDOT administers and regulates the erection and operation of off-premise outdoor
advertising on property adjacent to interstate highways and federal aid primary highways
pursuant to a contract with the FHWA and the Texas Transportation Code Chapter 391
(the Texas Highway Beautification Act), and on property adjacent to rural roads under
Transportation Code Chapter 394 (the Rural Road Act). The Texas Highway
Beautification Act was passed in response to Lady Bird Johnson's 1965 bill that required
every state to either adopt a method to effectively control outdoor advertising or be
penalized 10% of their highway funding. Since 1965, four states (Vermont, Maine,
Alaska & Hawaii) have adopted effective controls by prohibiting all billboards and by
directing the traveling public to businesses by an extensive way-finding and LOGO
signage system. Although Texas has a LOGO and tourist oriented directional signage
system (TOD), Texas has not stopped new billboard construction. Scenic Texas estimates
that Texas has at least 40,000 legal and illegal off-premise advertising billboards.

Specific Background:
Standards for billboard locations under the Texas Highway Beautification Act are
determined in part by TxDOT regulations. Those regulations have been weak but
TxDOT has discretion to tighten them. TxDOT has recently published notice that it will
be tightening these regulations. As such, Scenic Texas' letter to TxDOT (attached to this
memo) outlines specific regulatory recommendations for interstates and the national
highways in Texas. Under the Rural Road Act, however, the regulatory standards are
very weak and have been set by the legislature itself. Only one commercial business, for
example, is required to establish a "commercial activity area" (the area that billboards are
allowed to be erected if outside city's commercial zone) on rural roads. The commercial
activity area test on all roads in rural Texas has resulted in the construction of thousands
of new billboards in areas once considered to be rural Texas. Because there is no local
control over signs in these rural areas (except for Harris & Fort Bend County Toll
Roads), TxDOT is the only regulatory agency permitting and regulating these billboards.
Our recommendations are centered on what we view as the four biggest problems in
outdoor advertising. In addition, there is a letter we delivered to TxDOT that is attached
to our testimony where we outline specific regulatory recommendations. Although I will
not review that letter today, I would ask that it be included as part of today's record.

Problems and Proposed Solutions:
1. Problem: TxDOT and local governmental bodies are paying millions ofdollars in
condemnation costs to buy billboards along highways that must be widened. However
billboards are on the tax rolls at very low values so governmental entities collect very
little in property taxes. Recently the Texas Fifth District Court of Appeals ruled against
the reasonable valuation method that has been used by TxDOT and governmental entities
for decades, and upheld a jury award of nearly $2 million for the condemnation of Qlli:
non-digital billboard along the Dallas Central Expressway. Notwithstanding this
decision, TxDOT adopted rules that allowed digital billboards inside of Texas cities that
approve them (as of June 1,2008). These billboards will add millions more to the
condemnation costs borne by the taxpayers. Enormous condemnation costs for billboards
are already being experienced, and if this recent decision is upheld and followed, the cost
of highway construction in Texas will be further greatly increased.

The following is an illustration ofthis problem.
On the Harris County Appraisal District 2004 tax rolls, 3536 billboards were valued at
$30,066,380 or $8,503 for each billboard. At $2.50 overlapping tax rate, the billboard
companies paid an average of $212 taxes each year for each billboard. That is a total of
about $750,000 in property taxes for 3536 Harris County billboards in 2004.       .

Before this recent court decision, if those same billboards were condemned by TxDOT,
they would have been condemned as a movable piece of property since billboards can be
and are dismantled, relocated and reconstructed at a new location. But that will change if
the fifth district decision is followed in State v. Central Expressway. In that case, the
state expert testified that a billboard had a value of $360,000 but a jury held the Same
billboard was worth $1,850,000 because the judge allowed the jury to include projected
business income as part of the billboard value.

So a quick review will illustrate that a billboard may be carried on the tax rolls at less
than $10,000 in value could be purchased by the state for $360,000 in condemnation
value but under the new business income value, approved in the Central Expressway
case, is worth over $1.8 million dollars. And this is for a NON-DIGITAL billboard.

If State v. Central Expressway is followed and upheld, the taxpayers will be paying 5.14
times more than we now pay. And for the condemnation of digital billboards that
TxDOT is now allowing, that number will be closer to 18 times more in condemnation
costs than we now pay.

Proposed Legislative Solutions:
A. With respect to the huge amounts required to be paid for highway widenings, there is
no clear consensus on how to craft legislation that will pass constitutional scrutiny.
Immediate and significant study by the state, including the Attorney General's legal staff,
TxDOT's legal staff, and local governmental attorneys who handle billboard
condemnation cases, should convene to determine how, whether, and to what extent these
cost can be ameliorated and to provide recommendations for legislative changes.

B. Faced with the present uncertain legal situation and the escalating costs of highway
construction being caused by billboards, it does not make sense to continue granting new
permits that will become the taxpayers' nightmare. Nor does it make sense to permit
existing billboards and new billboards to become vastly more expensive to remove in
condemnation due to their digital character. Accordingly, the legislature should prohibit
digital billboards on federal and Texas highways. Also the legislature should prohibit
new billboards on such highways, or at least give counties the authority to do so.

2.    Problem: Billboard companies pay no sales tax on advertising revenues. Texas
governmental entities are losing millions of dollars each year by exempting billboard
companies from the payment of sales taxes.

The following is an illustration ofthis problem.
In the Houston market, billboard companies publish rates at $5300/month for a
Houston large freeway non-digital billboard (per company web sites).
$5300 X 4000 (number of large freeway Houston billboards estimated by Scenic
Houston) X 8.25% sales tax = $1,749,000 estimated annual losses by not collecting
sales taxes from large freeway Houston billboards.

Proposed Legislative Solution: The legislature should repeal the sales tax exemption on
outdoor advertising income.

In summary, low valuations, high condemnations and no sales taxes combine to
create the peifect storm or the Texas Taxpayer's Bermuda Triangle:
1. We get no sales taxes from a billboard;

2. We collect about $212 a year in property taxes;

3. And we pay millions in condemnation costs.

Finally, if that same $1.8 million billboard is allowed to become digitized, we would

pay about $6.4 million in condemnation.

Question: What other Texas businesses pay no sales tax, next to nothing in
property taxes but get condemned at market rates using future business income as
a gross multiplier?

3. Problem: Rural Texas views are being destroyed. New billboard construction in
rural Texas is at an all-time high. This is due to statutory and regulatory weaknesses. It
is also due to ineffective enforcement of existing rules due to a lack of manpower, lack of
funding, a lack of prioritization by the agency, inconsistent administration among the
agency's field offices, and an influential regulated industry.

Examples ofineffective regulation and enforcement: 1. In the extraterritorial
jurisdiction of Houston, over 60 billboards have been erected by RTM Media with state
permits but no city permits. The state issued the permits notwithstanding the ban on new
billboard construction in Houston's BTJ since 1985. Houston has been litigating
something that we believe could have and should have never been allowed by TxDOT in
the first instance. 2. On State Highway 71 in western Travis County, Burkett Outdoor
has erected two giant billboards that were permitted by TxDOT located on two residential
lots in a residential-only subdivision called Hazy Hills. TxDOT permitted these
billboards although their erection violates the clear language of the deed restrictions that
limit the subdivision lots to residential use and prohibits commercial signs. The Hazy
Hills property owners and Travis County are now faced with the costs of litigation that
could have been prevented if TxDOT had simply honored the deed restrictions. Both of
these problems could have been resolved if TxDOT had simply respected the will of local
citizens, first by the Houston city ordinance and second by publicly filed deed
restrictions. 3. Finally there are hundreds of non-conforming billboards across our state,
from the wetlands of Galveston up to the Panhandle, that have been illegally re-built
under the guise ofregular maintenance. Many of these non-conforming billboards were
supposed to be removed under Lady Bird's Act. And there are thousands of illegal
billboards across our state.

Proposed Regulatory Solutions: See attached letter to TxDOT from Scenic Texas.

Proposed Legislative Solution: As stated before, the legislature has given TxDOT little
to no discretion to act under the Rural Road Act, and county commissioners have no
authority to provide local relief. Thus the most effective method to improve this situation
is to either stop all billboard construction outside ofcities or give local control to
counties by granting counties the authority to stop new billboards on roads outside a
city'sjurisdiction. County authority would finally provide rural Texas citizens a local
forum to present requests that their community roads be protected and, at the same time,
reducing TxDOT's regulatory burden.

4.     Problem: On-premise advertising signs are essentially not controlled in rural
Texas. This has resulted in huge inappropriate electronic signs with flashing and
scrolling bright messages and a TxDOT LOGO program that simply gives businesses one
more place to advertise rather than providing an incentive to have appropriate on premise
signage in rural Texas.

Proposed Solutions: To use the existing LOGO and TOD programs as the signage
program that honors Texas roads as a transportation vision for the future. In addition
to keeping traffic moving, our highways move the traveling public through some of
Texas' most glorious rural scenery. Texas should have a transportation system with
signage that all Texans can be proud of by adopting the following in rural Texas: 1.
implementing on-premise sign design standards along all highways; 2. prohibiting all
changeable electronic variable message signs; and 3. using the LOGO and TOD
signage programs as a fair, uniform, competitive, and effective program that takes
into consideration the surrounding businesses and communities and traveling public
while remaining respectful of the Texas native landscapes.

Expected Results:
If these recommendations were adopted, we believe TxDOT would have an outdoor
advertising program that is much more manageable, there would be clarity of the law,
every Texan would have a local elected forum with the power to stop new billboards, and
rural Texas would once again be honored as a glorious place to drive and live, just as
Lady Bird intended in 1965. Further, direct or indirect state legislation that prohibits new
and digital billboards along highways, or that gives counties the ability to do this, will
save taxpayer dollars for future highway construction.

We urge the Sunset Commission to aggressively pursue the regulatory and legislative
solutions we propose that will preserve and enhance the beauty of our state. We also
urge you to pursue the taxpayer-related issues with the Comptroller's office on the loss of
sales taxes, and with the Attorney General, TxDOT's general counsel, and local
governmental entities on the discrepancies between the billboard valuations used for
taxation purposes and the valuations used for condemnation purposes.

Implementing these recommendations will assist TxDOT in realizing its vision to provide
cost-effective, environmentally sensitive and aesthetically appealing transportation

                                                                                     3015 Richmond Avenue, Suite 220       !
                                                                                               Houston, Texas 77098
                                                                                                   fax 713.629.()485

           June 2, 2008

           John Campbell
           Director ROW Division
           125 East 11th Street
           Austin, TX 78701

           Re: June 2, 2008 response to Requestfor Comments to Outdoor Advertising Rules

           Dear Mr. Campbell:

           Thank you for giving us the opportunity to comment on new rules regulating outdoor
           advertising in Texas. We are much heartened by the increased priority being given by
           TxDOT to the control of outdoor advertising and are sincerely hopeful that this step will
           playa part in meeting TxDOT's express vision to provide "aesthetically appealing
           transportation systems."                                                                                        I
           In this letter we address the ftfth issue identified in the Notice of Opportunity to                            I
           comment, "Restrictions for new billboard construction on both primary and rural roads
           located in rural areas." Our specific recommendations on this issue as well as the other
           four issues are set forth as attachments to this letter.

           The present regulatory provisions have failed to protect Texas rural areas from billboard                       i
           construction, with the result that large, multi-faced, lighted billboards continue to be
           constructed outside ofTexas cities with alanning impact in many rural areas. While
           there is a need for new legislation in this respect, rule revisions can effect improvements
           under Subchapter I (Regulation ofSigns Along Interstates and Primary Highways).
           Unfortunately the key standards applicable under Subchapter K (Control of Signs Along
           Rural Roads) are set forth in the governing statute and control cannot be significantly
           improved by rulemaking. To the extent there can be·some improvements to Subchapter
           K, they are included as part of our general comments (attachment 2 to this letter).
           The impact ofundesirable billboard construction in rural areas can be lessened by the
           adoption in Subchapter I ofstrengthened rules relating to two topics. First, where new                          I
           billboards may be erected, and second, what characteristics those signs may possess.                            t
           First, we propose that the rural areas where new billboards may be located possess four                         I
           (rather than two) commercial activities, that new billboards be erected only on a
           qua1i:fYing business premises, and that there be a minimum of 1600 feet between                                 I
           billboards. These changes will make it less likely that new billboard construction will                         r

An AffiliaTe of Scenic America, Inc.             www.scenictexas.org                              scenic@scenictexas.org
occur in connection with the development oftravel-related roadside services as opposed
to broader commercial activities found in mbanized areas.

Second, we propose that the character of new billboard construction in rum1 areas be less      l
inappropriate to the mral setting. Specifically, we recommend that new billboards should
be smaller and unlighted. Size and height should be limited to 300 square feet and 25
feet high above the gr01.md, and there should be no double-stacking or side-by-side

The attachments to this letter detail these and related proposals. While present legislation
limits the discretion available to TxDOT, we believe that the adoption ofthese proposals
will better accomplish the intent ofthe Highway Beautification Act and Lady Bird
Johnson--to limit billboards to truly commercial zones and protect the rural countryside

Thank you for considering our views. We would be pleased to discuss our ideas with you,
other TxDOT staff and the Commissioners and to give comments to any draft roles as
may be appropriate.


Carroll Shaddock
                                                   ~lMargaret Lloyd

Founding Chainnan                                    Policy Director and Executive V.P.

cc:	        Deirdre Delisi, Chair
            Ted Houghto~ Commissioner
            Fred Underwood, Commissioner
            Ned S. Holmes, Commissioner
            William Meadows, Commissioner
            Honorable John Carona

    1.   Recommendations for improved standards relating to the construction ofnew
         billboards on Interstate and Primary Highways located in rural Texas.

       2.      Other General Recommendations.
                       Scenic Texas Attachment 1: Interstates

tSUbCh. I_

                               and Primary Highways

                   Exclude buildings that include any residences, whether
                      sf, mf, mixed or institutional (assisted living/nursing
                                                                             "------1                           -­             Reasoning·
                                                                                              Honor the sanctity, character and quality of residential living. Current rule
                                                                                              allows billboards near residential living.
                                                                                                                                                 -             ---===-=
 142 (31)(AfIRemoVe "predominately" from the-rule                              ------------icurrent rule allows a business to qualify as part of the UClA if it"is-not-­
                                                                                              "predominately" residential. To honor the quality of residential living and to
                                                                                              remove discretion from enforcement, "predominately" should be deleted.
 142 (31){A) -!Remove 11& which is Within 800 ft., .... right of way, of:lThe businesses that create the UClA should be the only location for the
                                                                           erection of the billboard, not a location down the highway in a non-UClA
 142 (31)(A)          Increase number"of qualifYIng-activities an"d number of             I:unincorporated areas~a gas station, convenience store or fast food ----,
 and (A) (iii)        separate buildings from 2 to 4                                       should not create a UClA because these are travel-related busine,sses.
                                                                                           The UClA should identify a pure and true commercial area, not simply a
                                                                                          !way to permit billboards. This would honor the rural character of Texas.

 152(a) & 158 lin unincorporated TX, lower billboard height to no more                        Having 42+ "foot tall billboards in rural Texas is out of context-with the rural
               than a typical 2 story rural building (approx. 25 ft) and                      character and nature of the state. If a billboard is allowed, it should be to
              'limit face size to 300 sq. ft.                                                 scale with the UClA where It is located.

 152(d}               In unincorporated TX, remove billboards that are side by            lwa
                                                                                    billboard is allowed, it should be to scale with the UClA where it is                        ­
                      side, stacked or V shaped. Only allow 2 single faces,    Itocated to be in context with natural and built environment.
'154--            lin unincorporated TX, remOVe Iighting----                              IThe single largest complaint received by Scenic Texas results from lighting
                                                                                           billboards at night in rural TX. It Interferes with the quiet enjoyment of rural
                                                                                           liVing and blocks out the night sky for those located miles away from the
 153(e)-------trn"unincorporated TX,-increase spacing to no more than ITO reduce the total number of billboards that can be erected in rural Texas~-
                     feet from another billboard                       the spacing requirement must be upwardly adjusted.
1--..­            1---­             --•.,~---------- .._ - - - - - - - - ­                 I                -                                                                        I
                                                                                              W  Because of TxDOT's stated goal of a complete ...write, we have not
                                                                                               attempted to Identify every existing rule that would need to be
                                                                                               changed to conform to our proposals.
••_ _ ~   .-+-&-    ,   ~   ,_ _   _   .._ _   ,_~   ~       .••_ _ •••_ •• ~._._ _ .~_._~.._ . _ . __,.,.• _ _•__
                                                         ~._.,                                                       "-     ~.,_,_,_~_,   "_~4~   """,,,,,,,,,,,,_,,,,,_~   """'   ~4   __ .,   _ _••   _.,_,_~.   .._ _.:.....-           .. __ ..
                                                                                                                                                                                                                                   ~_._~_..-   ~      . _..__._ _ ..   _'_"_"."_·~_4'--'''   _

                                                                                                                            Scenic Texas Attachment 2:

                                                                                                                          General Proposals and Reasoning

                   1. Minimum state standards. Subchapter I, 21.151, remove "or less restrictive" from paragraph (a). TxOOT should always establish the
                   minimmn standard for localities, the intent ofthe HBA so that the federal HBA is the minimum standard, TxDoT is equal to or stricter than the
                   feds, and the localities may establish stricter standards so that local community standards are upheld. This also removes confusion for local
                   2. Local Control. Local Control for both Subchapters I and K: TxDoT permits should not be issued until the application has been signed
                   with approvals by every local governmental entity that controls the proposed site. This should be the burden of the permit applicant. TillOT
                   should be the last stop in the pennitting process.
                   3. No deed restrictloD violatioDS. To assure a billboard is not in violation of a deed restriction, require that both the billboard permit
                   applicant and landowner sign a statement to that effect on the application.

                   4. Reduce taxpayer burden. All planned new highways and highway widenings: To reduce the number of condemnation "plays" by
                   billboard companies and landowners which increases condemnation costs to the taxpayers, prohibit all new pennits on any road
                   scheduled/planned to be built and for any existing road scheduled/planned for widening.
                   5. Permiting and regulatory efficiency and enforcement, genera): We believe it would provide more consistent enforcement if TxDOT
                   had a central outdoor advertising office where there is a chief regulator/enforcement officer with multi-years of experience in the regulation of
                   outdoor advertising. That officer should be the supervisor to the head outdoor advertising officer/employee for every TxDoT district, work
                   closely with an assigned attorney in TxDOr's general counsel's office, and be the liason to the public. Part ofthat officer's duties should be: 1.
                   training of all district and division outdoor advertising permitting and regulatory officers and field personnel; 2. assuring consistency in
                   statutory and regulatory interpretations across all districts; 3. communicating the interpretations, including field examples, to all district
                   outdoor advertising personnel; 4. recieving billboard inquiries and complaints from citizens; 5. providing a current and correct billboard
                   inventory to the public via the website; 6. developing a complaint and response procedure for the public; 7. acting as the appeals officer for
                   specific permit disputes. Inconsistent statutory and regulatory, interpretations among 25 districts has resulted in the permitting of illegal billboarc
                   6. Public Trust. Prohibit any outdoor advertising district or division employee from receiving gifts of any value from the regulated industry
                   including meals, trips, etc. Institute a revolving door policy so that current outdoor advertising employees are prohibited from lobbying the
                   Commissioners or the staff for 2 years after leaving their state employment.
_,   ,_,__..__ ...
              ~ _    ~...__".~.~_   ...._ ..   _._._...o.._....,...'~.   __.. . . . .....'... __.. _''''_' __
                                                                                 ~                              M''~'''''_'~'_'   _ _ '''.'_'''__ M_'_''__' __'_'_''   .o.-~   •   •••   _ . ~ ~ ~   ._. __   ~   .   ......   •   .   ._._ _ •   •   •   ••   •   ._

        7. Efficiency and cost. The program/permit/licensing fees should be sufficient to pay for the program. Make upward adjustments to cover
        the cost of pennitting and enforcement.
        8. Rural Road Aet Permanently eliminate role 421(a)(9). There is no statutory authority for the rule and no discretion given to TxDOT to
        create rules that are less strict than the Rural Road Act provisions.

        9. Electronic On-Premise Signs. Stop new on-premise electronic scrolling, flashing or changeable message LED signs on all roads that lie
        outside a city's BTJ. Control the existing electronic signs by limiting the illumination, the # ofmessages that can be shown (suggest no more
        than one every 5 minutes), method ofchanging message (instantaneous). Require pemrlts for existing electronic on-premise signs. Consider
        adopting this as a matter ofpublic safety and traffic control versus outdoor advertising.

        10. LOGO signs. Only allow businesses to advertise on LOGO signs if they comply with minimum size. height, and # ofon-premise signs to
        be detennined by TxDOT. The LOGO program should not be a vehicle used to simply increase the number and impact ofexisting on-premise
        11. Measurements. Measurements should be from the ground rather than from centerline of main way because it creates giant signs in our
        rural Texas sky. Especially in unincorporated TX, the height should be in context with the natural geography rather than the height of the

        12. Maintenanee VI. rebuilding. Non-conforming sign maintenance should be honored,and written in an enforceable manner. Set the
        standard at "S00A. or more" (from "exceed 60%). Allow poles to be replaced only if needed to maintain the sign and only with like materials.
        To ultimately reduce the number of non-conforming signs, only maintenance should be allowed (as originally intended). Wooden poles are
        being replaced with brand new steel ones so that eventually an old- wooden billboard is transfonned into a new steel structure. For non­
        conforming signs, true maintenance only with big penalties for violations--sign removal and license suspensions.
        13. Annual Inventory reporting. With the annual permit renewal, require evidence ofcontinued compliance with a print & electronic
        photo ofthe sign, date-stamped within 7 days ofthe date the renewal is made. This will add to the inventory that is currently being created by
        TxDOT and will provide evidence of compliance or falsification of documents. NOTE: Also look at increasing penalties for repeat offenders
        and for presenting false docmnentation (like permanent license revocation).
        14. Relocations in rural Texas. For relocations allowed in rural areas, they must be erected at the smaller size and height rules
        (recommended on attachment 1). Recognizing that relocations may occur (from. highway widenings) in unincorporated areas, the rural Texas
        integrity does not need to be compromised to accommodate the relocations.                    .

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