FHWA Outdoor Advertising Control Domestic Scan, Phoenix, Arizona

July 13 & 14, 2005

The Federal Highway Administration's (FHWA's) Office of Real Estate Services (HEPR) held a domestic Scan on the topic of Outdoor Advertising Control (OAC) from July 13-14, 2005, in Phoenix, Arizona. The primary purpose of the Scan was to foster peer-to-peer exchange and to share experiences and best practices in the area of OAC. Another purpose of the Scan was for FHWA to learn what has and has not been working in the states and for the states to communicate with the FHWA those areas in which they need further assistance and guidance. Scan activities included:

• A breakout session on the OAC implications of mega-retail development,

• Presentations on OAC activities within individual states, including a real-time demonstration of Florida's automated Outdoor Advertising Inventory Management System (ODA-IMS),

• A panel discussion on outsourcing and other non-traditional approaches to OAC, and

• Site visits to the Young Electric Sign Company and several sign sites around the Phoenix area.

Scan participants included 24 state DOT officials from 13 states and six FHWA representatives from the HEPR and three divisions (see Appendix A).

Opening Remarks

Following self-introductions by Scan participants, David Nelson, FHWA Assistant Division Administrator for the Arizona Division, provided opening comments on issues related to outdoor advertising (OA) in Arizona. He was followed by Mr. Lonnie Hendrix, State Maintenance Engineer for the Arizona Department of Transportation, who discussed several issues facing Arizona with respect to surface transportation and OA. Next, Susan Lauffer, Director of FHWA's Office of Real Estate Services, welcomed Scan participants and provided brief introductory remarks on the background and purpose of the Scan. Finally, Joe Edwards, Realty Specialist with the Office of Real Estate Services, discussed the Scan agenda and briefed Scan participants for the breakout session to follow.

Breakout Session: The OAC Implications of Mega-Retail Development

Joe Edwards, Realty Specialist with the Office of Real Estate Services, provided an overview of the topic of mega-retail development (MRD). Mr. Edwards began by providing some background on the Highway Beautification Act (HBA). The HBA provides that on-property signs may only advertise activities that are conducted on the property on which they are located. Advertisements for on-premises activities are generally exempt from the HBA's provisions. Mr. Edwards noted that the HBA was intended to provide only broad requirements for determining whether an activity is legitimately on-premises. The term "property" is not specifically defined in the HBA. To date, the FHWA has considered that the terms "property" and "premises" under the HBA mean, at a minimum, land that is under the same ownership and has contiguity. The HBA requires states to provide "effective control" over advertisements on our nation's interstate highways. Under 23 C.F.R. 750.709(d), states are charged with establishing criteria for determining what legitimately constitutes on-premises activity. State and local controls may be more restrictive than the Federal law, but not less restrictive.

For the purposes of this Scan, Mr. Edwards defined "mega-retail developments" as including, but not limited to, developments with multiple uses and/or ownerships and a common scheme of branding or identification of the development itself. Examples of mega-retail developments include big box malls, planned unit developments (PUDs) and multiple lots or ownerships within a single development. He noted that MRDs were not contemplated when existing legislation was enacted and current FHWA guidance was formulated and commented that the proliferation of MRDs has raised concerns with regard to meaningful OAC.

Following Mr. Edwards' introduction, Scan participants broke out into four groups. Each individual Scan participant was asked to take several minutes to complete a Breakout Session Worksheet on MRD activities in his or her own state. These worksheets later served as a guide for breakout group discussions. The Breakout Session Worksheet (see Appendix B) refers to the following three case studies, which were provided to the participants prior to the Scan.

Case 1

A state legislature proposes a law that permits large "comprehensive developments" separated by a major roadway to advertise businesses on both sides of the road (i.e., signs may be off the property where the activity is being conducted, but inside the limits of the "comprehensive development"). For example: Taco Bell on one side and a Payless Shoe Store on the other. Businesses will be allowed to advertise on both sides of the road if the development is located on both sides of the roadway and is under a common ownership, even if the separate parcels are owned by the individual businesses.

The pending legislation proposes to define as a single "property" or "premises" for purposes of sign control laws any comprehensive development that has a common ownership plan, whereby all of the owners have the right to use all common areas such as parking. Such developments would include situations where there are multiple businesses and multiple ownerships. Under the proposal, any signs advertising the activities conducted within that comprehensive development would be on-premises signs and exempt from controls under the HBA.

Case 2

A developer plans a development that will be sited on both sides of an Interstate highway. The developer wants to erect a sign that spans the interstate. The sign would carry the name of the development, and possibly the names or logos for some of the anchor stores. The take-off and touchdown points for the sign are located outside the right-of-way, on property that is part of the "mega development." The bulk of the sign face is located within the right-of-way.

Case 3

A large city has adopted a zoning amendment that permits "Planned Unit Developments " (PUDs). A PUD is a zoning overlay that may be applied to residential, commercial or industrial property for a specific project. PUDs encourage mixed uses, and result in a planned combination of diverse land uses, such as housing, recreation and shopping, in one contained development or subdivision. PUD overlays allow for more flexibility and creativity in the development of a project than would otherwise be available if straight zoning were applied.

Following discussions within the four breakout groups, a representative from each group presented the results and conclusions of that group's discussion to the full Scan audience. Chad LaRue of the Kentucky Department of Transportation served as presenter for Group 1. Ken Towcimak of the Florida Department of Transportation served as presenter for Group 2. Richard Allen of the Connecticut Department of Transportation served as presenter for Group 3. Tom Riley and Timothy Anderson of the Colorado and Texas Departments of Transportation, respectively, served as presenters for Group 4. The following is a summary of the group and individual responses to the Breakout Session Worksheet questions.

How should mega-developments be treated under the Highway Beautification Act?

Most state participants commented that MRD advertising within their states would be treated as on-premises and thus exempt from compliance with the HBA. Several states remarked that the determination of how MRDs should be treated under the HBA should be left to the states. Under such a scenario, the determination of whether a common sign in a MRD advertising individual businesses within the MRD is on-premises would be based on the premises test of the state in which the MRD is located. The consensus in one breakout group was that states had no problem with MRDs so long as effective control over signs exists at the local government level. Most states within that group stated that they would look to the intent of the local government and the bona-fide use of the property within the development; that is, if cross-leases, easements or other types of joint-use agreement existed among the individual landowners within the development, then a common sign advertising multiple businesses within the MRD would be appropriate. That breakout group noted, however, that in such a case, local laws should limit advertising to a single common sign advertising multiple business. In other words, individual businesses occupying the premises of the MRD and advertising on a common sign should lose the right to erect signs on their individual premises. A couple of states indicated that joint use was not sufficient for the purposes of their states' premises tests. Rather, fee simple ownership by a business was required for advertising by that business to be considered on-premises. A considerable amount of discussion centered on the issue of roadways that are internal MRD roadways, indicating that the states have not yet reached a consensus on this issue.

What issues has your state encountered that are similar (or otherwise relate to) those discussed in the case studies? Please describe the problem(s).

Scan participants discussed several situations that they have faced that are similar to those presented in the case studies. Several states noted that MRDs are or should be treated in the same manner as any large shopping center, in which case common signs should generally be treated as on-premises. One issue that many states are confronting is how to deal with OA on property whose ownership is unclear. In the case of shopping centers, some states have a policy of actually checking leases and ownership documents while others do not. Another issue cited as similar to those encountered in the case studies is that of how to regulate OA in areas that are zoned mixed-use. An additional problem mentioned by states is that of signs being placed either on properties that are not contiguous or on strips of land that have no purpose except for the sign. State also cited a problem with signs' being erected in the state Right-of-Way (ROW). Several states commented that a new issue they were facing is OA on convention centers and public arenas, including the sub-issue of naming rights. The states attending the Scan seemed to agree that advertising on such structures should not be considered on-premises and thus exempt from control under the HBA unless the goods or services being advertised are actually being sold on-premises.

How has your state addressed, or how does it propose to address these issues?

Scan participants identified a number of ways in which their states have addressed issues such as those identified in the case studies. First and foremost, states indicated that they deal with these issues by strictly enforcing current federal and state regulations. Strictly enforcing current regulations to one state meant applying its current premises test, which requires unity of title and use and contiguity for a sign to be considered on-premises. Other states commented that they are adjusting and/or fine-tuning their regulations to more effectively protect state interests and that if they were confronted with issues similar to those in the case studies they would address them on a case-by-case basis. Another strategy identified by states for addressing these issues includes educating local public agencies (LPAs) on the OAC process and encouraging them to work more within the laws. One state commented that it was working to develop guidelines for developers that will state explicitly what such developers need to submit to the state in order for a sign to be declared on-premises. Another state noted that it deals with issues related to OA in MRDs by engaging in direct contact with the property owners or developers of the MRD. A few states require documentation and proof of on-premises activity before issuing a permit. At least one state requires a developer to submit copies of leases or other instruments establishing bona-fide joint use. Several states noted that their goal is to encourage sign consolidation in order to reduce the total number of signs installed and cut down on visual clutter for motorists.

What were the challenges?

Scan participants mentioned several challenges related to addressing the issues of MRDs and PUDs. The challenge cited most often was politics and the need to reach common ground with political leadership. One state commented that it was a challenge to convey and articulate OA statutes and regulations to both the parties being regulated and to state and local government actors in charge of enforcement policy. Several states also commented that the OA lobby is very powerful and that the interests of the sign industry are usually contrary to those of the states. In terms of enforcement, states mentioned the difficulties they encounter in trying to determine land ownership. States also encounter difficulties in determining the intent of local governments as to whether such governments consider certain developments to be single or multiple premises for the purposes of OAC. Moreover, even in cases in which sign companies or other advertisers are found to be violating state or federal laws, several states commented on the practical difficulty in taking enforcement action. Some states felt that a lack of guidance and/or legal precedent hindered their enforcement efforts. Many states noted that beyond premises advertising, that is, advertising of businesses other than those located on the premises, presents a challenge. For example, one state observed that Cracker Barrel is the corporate sponsor of the Grand Ole Opry and advertises on its new LED sign, but does not operate on-premises. In general, most states indicated that the issue of how to monitor electronic variable messages signs presents a growing challenge.

What has been the result of your control efforts?

Most states responding to this question commented that their control efforts have been effective. One state indicated that its control measures had resulted in fewer signs. Another noted that it had achieved success through compromising with the OA community. Once again, more than one state noted that politics often impedes effective OAC. One state commented that control has been lax as a result of political pressure. Another stated that LPAs and politics made effective OAC difficult; in particular, this state noted that efforts by the state to promote economic development and demands for advertising signs by the business community hindered its control efforts. Several states commented that their OAC efforts had been upheld in either state or federal courts. In one state, for example, two administrative hearing cases were appealed to that state's appellate court; in both cases, the state's premises test was upheld. Other participants noted that their states' OAC efforts had not been challenged in court. A final result cited by several Scan participants was a better understanding of statutes, regulations and practices by those involved with outdoor advertising, including LPAs and sign companies.

What is working well?

The states responded overwhelmingly that effective OAC is best achieved through the enforcement of existing regulations or "holding the line," as one state put it. One state observed that regulations currently in place have resisted court challenges. A couple of states suggested that an "as needed approach" works well, suggesting that laws should be applied in a more flexible manner. One state commented that educating the public on its rules and regulations as well as on the definition and application of its premises test was working well. This notion was echoed by other states, which suggested that cooperating with developers and helping them to understand state OAC practices served the interests of both states and developers.

What needs to be improved and how?

Reponses to this question ranged from "too much to mention" to "the status quo seems to be working." Not surprisingly, this question elicited a wide variety of suggestions from Scan participants. Several states suggested that a need existed for greater consistency in the application and enforcement of statutes and regulations, particularly as new issues emerge related to the growth of MRDs, PUDs and electronic variable message signs (EVMS). Rather than new laws, the states indicated that more clarity as to existing statutes and regulations, perhaps in the form of guidance from the FHWA, would be useful. Several states commented that communication and coordination with developers and sign companies should be improved. These states noted that certain developers and sign companies do not behave as if the HBA applies to them. In terms of specific improvements that were cited, several states observed that improved surveillance of EVMS is necessary and that regulations need to be updated in order to adequately address current sign technologies. Scan participants from states without permit fees or with fees that do not adequately reflect the costs of running their OAC programs would like their states to increase fees. Finally, several bonus states commented that they would like to be able to opt out of the bonus state program.

Do your proposed solutions require Federal or State legislation or regulatory changes?

The majority of states attending the Scan responded that no federal or state legislative or regulatory changes are required at this time. One state responded that no regulatory changes were necessary unless federal officials decide to regulate on-premises advertising. In general, there was a consensus among the states attending the Scan that more guidance from the FHWA would be desirable. One state mentioned that clarification of current statutes would be helpful. Two states expressed a desire for a reduction in federal regulatory oversight. Both states observed that states should be given greater flexibility in determining how to deal with specific situations such as those discussed during the Scan.

Individual State Presentations on OAC Efforts

The Office of Real Estate Services asked each state attending the Scan to make an informal presentation of approximately 10 minutes discussing OAC efforts within that state. The presentations were meant to provide an opportunity for participants to learn about issues and challenges faced by their peers in other states as well as approaches other states have taken and solutions they have developed for dealing with those challenges. The presentations also provided the participants the opportunity to compare notes on "hot topics" in the field of OAC. The following are summaries of the presentations made by the 13 states attending the Scan.

Arizona

Arizona was represented by Ms. Wendy LeStarge, Manager of Maintenance Permits Services for the Arizona Department of Transportation. OAC is currently located within Arizona DOT's Operations Division. Arizona's OAC program is centralized and employs two staff members. Arizona has 6,805 miles of highway, not including local roads that are part of the national highway system, and 2,215 signs in its inventory, 435 of which are non-conforming. The state imposes an annual sign permit fee of $20. OAC in Arizona has been partially privatized since 1992. The state is currently in the middle of its third 5-year contract with R&M Media Consulting, Inc. Ms. LeStarge distributed copies of Arizona's most current RFP for those states that were interested.

According to Ms. LeStarge, one of the main issues facing Arizona is that its laws are outdated. Few changes have been made either to state OA statutes, originally enacted in 1970 and 1972, or to regulations, originally promulgated in 1977. In addition, OA and the relocation of billboards are highly politicized issues in Arizona. According to Ms. LeStarge, a recent attempt at rulemaking "went down in flames" for this reason. The state's inability to amend old OA regulations has hindered effective control over OA. Permit fees have not been increased since they were first established in 1977. Ms. LeStarge explained that another challenge faced by Arizona is a high amount of turnover of OAC personnel, resulting in a shortage of institutional knowledge. Finally, she noted, efforts to better control electronic signs were dealt a setback in 2004 when a state administrative judge ruled against Arizona's prohibition on electronic variable message signs. One of the strong points of Arizona's OAC program, according to Ms. LeStarge, is its sign database, which provides OAC staff with a good sense of the state's sign inventory. The problem remains, however, that Arizona has limited resources to act on OA violations.

Colorado

Mr. Tom Riley, Roadside Advertising Manager, presented on behalf of the state of Colorado. Colorado is a bonus state. It has about 9,200 miles of highway in its state highway system, 955 miles of which are interstate highways. There are 2,200 permitted signs in the state's sign inventory. OAC is administered through six regional offices. Each regional office has an inspector, however only the inspector in the Denver office works full time on OAC. The state has no application fee for sign permits and sign permit fees are extremely low, e.g., $10 for a small sign. All sign permit fees flow into the state's general fund. Mr. Riley noted that Colorado's OAC program has no in-house legal advisor, however the state attorney general's office is available for consultation on sign issues.

Mr. Riley explained that Colorado has a major problem with illegal signs in the state ROW, especially real estate signs. According to Mr. Riley, the state is empowered to remove litter in the ROW and Colorado courts have construed litter to include signs. Nevertheless, inspectors remain reluctant to remove illegal signs. The state does sometimes confiscate signs in the ROW. In such cases, to obtain the sign back, the sign owner must sign a statement acknowledging that the sign was erected illegally. According to Mr. Riley, if the state removes a sign more than once, the sign is not returned to the owner. In the past, the state has pursued injunctive relief against developers who repeatedly erect signs in the state ROW. Another issue in Colorado has to do with tourist oriented directional (TOD) and specific service (LOGO) signs. The state employs a rotational system for placing advertisements on these signs rather than a first-come, first-served system. This system has caused some friction with businesses. Another challenge is how to deal with agribusinesses, which erect signs to divert people to farms to buy produce. Farmers have complained about attempts by the state to crack down on these signs. A final issue that Colorado is confronting has to do with electronic variable message signs. The state legislature enacted a statute allowing EVMS with four-second messages and one-second intervals between messages. The state DOT is currently conducting a study on the safety effect of such signs.

Connecticut

Connecticut was represented by John Randazzo, Chief of Connecticut's Right-of-Way Division. Mr. Randazzo stated that Connecticut has 400 miles of interstate highway, 1,000 miles of roads in the national highway system, and 400 permitted billboards. OA in Connecticut operates under a permit system. According to Mr. Randazzo, Connecticut courts have held that billboards are personal property. He commented that virtually all (99%) of billboards in Connecticut are on private property.

Mr. Randazzo began his presentation by briefly discussing the purpose of the HBA. He noted that in the past Connecticut received sign permit applications primarily from major sign companies and encountered few problems. He described the permit process in Connecticut, which he said was fairly straightforward. Applicants for a sign permit are required to pay a $100 non-refundable application fee. Applications must be signed not only by the applicant, but also by the landowner and the local zoning authority or building commissioner. Connecticut does not verify leases and applicants are not required to provide copies of leases.

Mr. Randazzo described a recent problem that has emerged in Connecticut with rogue sign companies or "pirates of the interstate." He explained that these companies canvass the landscape for existing billboards and then approach landowners before existing leases expire in an attempt to steal valuable off-premises sign sites. According to Mr. Randazzo, land leases in Connecticut are recorded interests, which gives these rogue companies access to information about when leases are expiring. After identifying a lease that is about to expire, the rogue companies offer signing bonuses to land owners to convince them to switch sign companies. He indicated that the state DOT receives numerous telephone calls from property owners asking for conditional permits or for guarantees that if an existing sign is removed a new one can be erected in its place. Sign companies losing leases, on the other hand, file objections to the cancellation of their permits with the state DOT, placing the state in a difficult position. Mr. Randazzo concluded by noting that the state of Connecticut has extremely limited personnel (one and a half persons) to deal with OAC issues such as this.

Florida

Mr. Ken Towcimak, Florida's Director of Right-of-Way, presented on behalf of that state. Florida has 21,000 signs and 16,000 structures (6,000 of which are non-conforming) in its inventory. Florida DOT's organizational structure is decentralized, operating out of eight district offices, however the state's OAC program is centralized. The state has a very strong inventory management system. Field operations were privatized in 1998. OAC revenues are required to cover the costs of administering the state's OAC program.

According to Mr. Towcimak, while the state DOT has a very large Right-of-Way program ($500 million), it spends a large percentage of its time on billboard issues. One fifth of one percent of highway construction costs in the state must go towards highway beautification. The state engages in both a large amount of sign acquisition and a large amount of litigation. For example, the state has engaged in extensive litigation regarding the issue of storm damage to non-conforming signs. Last year, 300 non-conforming signs were damaged to the point that litigation was required. Eventually a settlement was achieved whereby 103 signs were removed permanently while the remainder of the signs were allowed to be rebuilt. Another challenge Florida is facing is that of the screening of signs by noise walls. The state is awaiting guidance from the FHWA on both the issue of storm damage and that of noise walls. A final issue that the state is grappling with, according to Mr. Towcimak, is what constitutes bona-fide industrial use. In particular, the state has been forced to consider the issue of whether the existence of a utility facility, such as an electrical substation, qualifies an area as industrial for the purpose of OAC. This is becoming an issue in Florida as local governments seek to increase advertising revenues by zoning land as industrial

Illinois

Mr. Dow Grider, OAC Coordinator, made a presentation for the state of Illinois. Mr. Grider stated that Illinois has about 20,000 off-ROW signs, 13,000 of which are permitted. Illinois charges a one-time permit fee per structure based on the size of the structure. The highest fee currently charged is about $200. There is no ongoing permit fee. OAC responsibilities in Illinois are divided among nine district offices. The state's OAC program is short-staffed according to Mr. Grider.

One of the main problems confronting Illinois is that of controlling illegal signs. The state is in the process of updating its sign database. It plans to integrate GIS technology into the database to help the state track signs more effectively. Another issue the state faces is related to EVMS. Illinois currently permits on-premises electronic variable message signs, however it is considering a re-write of its OA rules to address the issue of how to effectively control such signs. Mr. Grider also noted that Illinois is experiencing some problems with comprehensive zoning. Similar to other states, Illinois would like to explore options for opting out of the bonus state program. Finally, Mr. Grider observed that one of the biggest challenges he faces is trying to sell the need for OA enforcement to upper management.

Kentucky

Mr. Chad LaRue, Permits Branch Manager, presented on behalf of the state of Kentucky. Mr. LaRue noted that one of the biggest issues his agency is facing is educating a new state administration on the importance of state and federal OA rules and that fact that these rules are requirements, not simply guidelines. He explained that the state is currently reorganizing and decentralizing OAC. Permit offices in some districts are being eliminated, which will likely have a detrimental effect on the consistency of data and enforcement. Similar to several other states, Kentucky has a sign inventory database, but that database is difficult to use and needs to be updated. Mr. LaRue emphasized that Kentucky has strong laws that should enable it to effectively control OA; however, in actuality, enforcement has not been strong, at least in part due to limited resources. Currently, Kentucky does not charge a permit fee for billboards. While the state is considering imposing such a fee, a debate is taking place within the state administration as to how money generated by such a new fee should be used. Kentucky currently does not allow vegetation cutting to improve sign visibility. Despite this fact, some sign companies have been caught illegally removing vegetation, which, according to Mr. LaRue, has generated "heat" from environmental groups. The state is taking steps to implement a program to collect fees for such cutting. Other issues mentioned by Mr. LaRue that were also mentioned by other states include problems with signs in the state right-of-way, monitoring of electronic signs and issues related to the growth of agritourism. He also commented that Kentucky is interested in exploring means for being released from its bonus agreement. Finally, Mr. LaRue discussed how Kentucky is currently working with the FHWA to conduct a program review of its permitting process.

Mississippi

The presentation for the state of Mississippi was made by John Lee, State Permit Officer. Mr. Lee noted that before working for the state of Mississippi, he was employed in the private sector, which may give him a different perspective from some of his peers in other states. For example, he noted that, while often overlooked, billboards can and do generate economic benefits, especially in rural areas. Further, he discussed the fact that illegal billboard hurt legitimate permitted billboard owners. Mr. Lee noted that OAC in Mississippi is in a state of flux: many legislative and other changes are taking place in the state. For example, in 2003 a new statute was passed restricting the height and size of billboards and eliminating stacked billboards. Further, in 2004, a new OA regulation was promulgated which was four and a half years in the making. Mr. Lee offered to share copies of these regulations with any interested parties. Mississippi also recently made changes to its zoning laws and implemented a new application form for signs, which requires the signature of both landowners and local zoning officials. Finally, the organizational structure of the state's OAC program was recently centralized; previously it was administered out of six district offices. Mr. Lee explained that in Mississippi when an area is zoned commercial/industrial, a business can apply for and receive a sign permit even before commercial/industrial activity is initiated. However, if such activity is not initiated within five years, the sign becomes non-conforming and must be removed. Finally, Mr. Lee discussed the fact that Mississippi's sign inventory database has not been updated in about 12 years. As a result, he noted that at the present time the system cannot realistically be used for inventory control or enforcement. According to Mr. Lee, Mississippi is currently planning to purchase a new sign tracking system which will enable it to more effectively administer its OAC program.

Missouri

Scott Taylor, Outdoor Advertising Manager for the state of Missouri, presented for that state. Missouri is a major billboard state according to Mr. Taylor. There are about 12,000 billboards in the state, about 80% of which are non-conforming due to a recent statutory change requiring businesses to be located on the same premises as signs. OAC is housed in the Missouri Department of Transportation's ROW division. Thirteen OA staff report to Mr. Taylor. The strongest aspect of Missouri's OAC program is the fact that it is centralized according to Mr. Taylor. Sign permit fees, which go into the state's general fund, include a $200 application fee and a $100 biannual renewal fee. Missouri's OAC program is fairly self-supporting. The state employs an in-house inventory management system that is extremely accurate. The system is fully automated. Further, data can be entered into the system straight from the field. The next phase of this system will add GPS data about all signs into the database. Hardware currently is being added inside inspector's cars to make this upgrade possible. Mr. Taylor discussed the fact that transportation enhancement funds were used finance the development of this automated inventory system and noted that the local FHWA office had deemed the database an appropriate expenditure of such funds.

One issue facing Missouri is that of legal sham businesses set up for the sole purpose of obtaining permits. Currently the state has to issue permits to such businesses because they meet the formal legal requirements for receiving a permit. Mr. Taylor also discussed a recent Missouri statute regulating advertising by sexually-oriented businesses, noting that it represents the first time that the state of Missouri had attempted to regulate the content of OA. According to Mr. Taylor, the statue was upheld by the Federal District Court for the Western District of Missouri. He also discussed the issue of agritourism as it relates to OA. Missouri agritourism businesses are demanding OA. According to Mr. Taylor, the state faces a major political battle over this matter. He noted that the FHWA needs to be cognizant of this issue. Mr. Taylor concluded by observing that without the HBA, the OA industry would be out of business because state OAC is necessary for sign businesses to make money. He believes that Missouri has been successful in controlling OA, but commented that in Missouri, at least, "OAC does not mean prohibition."

Oklahoma

Oklahoma was represented by Mr. Kevin Stout, Assistant Chief of that state's Right-of-Way Division. Oklahoma's state highway system consists of 12,000 miles of highway with over 4,000 billboards. OAC within the state is centrally located within the state DOT and employs a staff of three persons. Permitting and regulatory issues are handled through the state DOT's maintenance division. According to Mr. Stout, OA does not receive a lot of attention in Oklahoma.

Every sign in Oklahoma requires a permit. The application fee for an on-premises sign permit costs $100 and is non-refundable. Permits must be renewed every two years at a cost of $20. Fees for signs that are not on-premises are significantly higher. If a permit holder forgets to renew a permit, the sign becomes non-conforming. Applicants must provide proof of land use consent when applying for a sign permit. In addition, all property owners of record must sign the application, which must also be notarized. By signing the application for a permit, applicants acknowledge that they have read all state laws and regulation pertaining to OA. A zoning confirmation firm must also be completed and signed by the local zoning authority as part of the permit application. If the OA is in a PUD, a complete, approved application for the PUD is required in order for a sign permit to be issued.

Oklahoma's state OA statute is a verbatim copy of the HBA. Very few changes have been made to the statute since it was enacted. While Oklahoma's sign inventory is complete, it is maintained on a dated mainframe computer system. The state is in the process of updating this database system. One of the main issues facing Oklahoma is a lack of resources needed to modernize the state's OAC program. Oklahoma also faces a very powerful sign lobby. Sign companies in the state want signs to be treated as personal property. Mr. Stout concluded by discussing Oklahoma's acquisition of billboards for state highway expansion, noting that the state had to apply an income approach to calculate compensation because the property owners and the landowners were the same parties.

South Carolina

Mr. Keith Melvin, Director of Outdoor Advertising, presented on behalf of the state of South Carolina. South Carolina has a centralized OAC program. Permit fees include a $100 non-refundable application fee and renewal fees of $20 or $30 depending on the size of the sign. Seven coordinators and two administrative staff manage the program. The state's sign inventory contains 6,500 permanent signs. South Carolina uses a software program to administer its OAC program. The state's sign permit review process has been completely automated through this system, which has both reduced paperwork and sped up the application, renewal and billing processes. Moreover, the automated system integrates e-commerce: sign companies can renew and pay for permits over the internet. According to Mr. Melvin, the state's automated system has received good feedback from the sign industry.

Mr. Melvin also discussed the state's vegetation cutting program. Sign owners can apply to participate in this program, which allows them to clear vegetation, except hardwoods, within a 300-foot zone of their signs. The state then charges a $200 fee to maintain this vegetation-free zone. This fee is currently being evaluated to determine whether it adequately covers program costs. According to Mr. Melvin, the state's cutting program has been successful in cutting down on illegal cutting by sign companies. Finally, Mr. Melvin mentioned two areas in which South Carolina is currently working with the FHWA. The state is working with the FHWA to update its OA regulations. In addition, it is working to receive permission from the FWHA to implement a pilot project to reduce the number of non-conforming signs.

Tennessee

Rod Boehm, Highway Beautification Administrator for the Tennessee Department of Transportation, presented on behalf of the state of Tennessee. Mr. Boehm commented that in Tennessee OAC has been bounced among several divisions within the state DOT: originally it was housed in the ROW office, in 1981 it was moved to the maintenance division, and now it forms part of the environmental division. OAC in Tennessee has been centralized for 2 years. According to Mr. Boehm, centralizing OAC has worked very well and had led to more uniform enforcement. OAC employs five persons at state DOT headquarters and three to four persons in each of the state's four regions. The application fee for a sign permit is $75. Permit holders must also pay a $30 annual renewal fee. The program generates $400,000 in annual permit fees, which go into the state's general fund.

Mr. Boehm discussed a number of challenges that Tennessee is experiencing with respect to its OAC program. He explained that state regulations currently include a natural disaster rebuild clause. The state is working to remove this clause from the regulations. In addition, Tennessee is experiencing problems with unzoned commercial sham businesses. The state is currently addressing this problem and is making some inroads, according to Mr. Boehm. Similar to Connecticut, Tennessee is experiencing "lease jumping." Current permit procedures require an applicant to include lease information on its permit application. Leaseholders are put on notice when a new sign company applies for a permit for a sign location for which the leaseholder holds a permit. Mr. Boehm noted that a new problem that Tennessee has had to deal with relates to PUDs. He explained that in Tennessee, rather than changing the underlying zoning, PUDs are viewed as an overlay on top of existing zoning. According to Mr. Boehm, the sign industry is challenging this view. Tennessee would be very interested in receiving guidance in this area from the FHWA. As in other states, Tennessee has found it necessary to rewrite its rules to accommodate changing sign technology. Currently the state does not allow electronic signs, however it is in the process of drafting new regulations to allow for changeable message signs. Finally, Tennessee has been grappling with the issue of just compensation for non-conforming signs. At the present, the state only compensates sign owners for moving costs. The sign industry, however, is pushing for compensation for the replacement cost of the signs themselves. The state is investigating how other states are addressing this issue.

Texas

The state of Texas was represented by Carleton Bernhard, Director of Property Management. Mr. Bernhard explained that he is responsible for the administrative side of OAC in Texas, while his colleague Tim Anderson handles the legal aspects of OAC. The state of Texas is divided into 25 divisions, each of which is responsible for its own permitting. Each division consists of about 10 counties. Only licensing in centralized at state DOT headquarters. In Texas, each structure must have a permit, according to Mr. Bernhard. There are about 1,500 licenses and 16,000 active permits in the state. Net permits are growing by about 400-500 per year. In Texas, according to statute, fee revenues must completely cover the OAC program's expenses.

Texas is in the midst of a major initiative to privatize aspects of its OAC program. The state DOT initiated a research project on the feasibility of privatizing its HBA responsibilities. The Center for Transportation Research at the University of Texas in Austin examined privatization efforts in other states, concluded that prospects for privatization were good, and recommended that the state privatize some aspects of its OAC program. The state DOT obtained seed money for a pilot program, which will encompass 5 districts (about 50 counties). It is currently drafting an RFP and hopes to have a contractor in place by September 2005. The contractor's initial responsibility will be to inventory existing permitted signs. The program is being set up so that it can be expanded later both functionally and geographically. The main objective of the program is to improve enforcement. According to Mr. Bernhard, Texas has no plans to privatize enforcement at this time. The question was raised as to the impact this partial privatization might have on staffing. Mr. Bernhard responded that it was still unclear what would happen, but that Texas would not do away with the district offices. Another state asked if Texas would be willing to share its study on the potential benefits of privatization. Mr. Bernhard answered that Texas was willing to provide copies of the study to interested parties.

Wisconsin

The state of Wisconsin was represented by Deborah Brucaya, Outdoor Advertising Program Coordinator. According to Ms. Brucaya, Wisconsin has about 12,000 miles of roads in its state highway system and about 12,000 regulated and 4,000 unregulated signs. Since 1999, Wisconsin does not require permits for on-premises signs. In 2001, a new permit procedure was established whereby landowners are required to sign applications for sign permits. Also in 2001, a new annual renewal fee process was put into place setting renewal fees ranging from $35 to $50. Wisconsin does not permit non-conforming signs.

Ms. Brucaya noted that in Wisconsin as the number of legal sign locations dwindles sign companies have increasingly been looking to other sign categories, such as directional signs, as a means to increase their OA. This presents a challenge for the state DOT because the applications that the sign companies submit do not satisfy the requirements for directional signs. Non-uniform enforcement of statutes and regulations is also a challenge according to Ms. Brucaya. Currently each region is responsible for inventorying the signs within its jurisdiction. A sign database exists, but it needs to be upgraded. The state is looking at various alternatives for improving the effectiveness of its OAC program, including privatizing inventory management and fee collection.

Florida Outdoor Advertising Inventory Management System Demonstration

Following the state presentations, John Garner, Manager of Right-of-Way Production and Operations with the Florida Department of Transportation, conducted a demonstration of Florida's outdoor advertising inventory management system (ODA IMS). In Florida, each structure can have more than one facing, each of which requires a permit. Florida has 12,362 miles of controlled highways and 13,910 permitted structures. The state has issued 21,200 permits to 1,117 different permit holders. An inventory of controlled highways is conducted annually. The number of new applications for permits has been growing rapidly due to the growth and development of permitable areas in Florida.

In 1998, Florida developed a computerized inventory management system to manage its complex OAC process, which includes inventory, billing and notices of non-conforming status and violation. Sign data is captured in the field using laptop computers, transferred to an FTP server, and then uploaded to the state's sign database. The technology employed in the field currently includes a laptop computer, a GPS receiver, a laser rangefinder, which field personnel use to take sign measurements from the side of the road, and a digital camera. According to Mr. Garner, this system is still state of the art, but the technology used in the field has become obsolete. He explained if ODA IMS were implemented today, most of the technology currently used in the field would be integrated into a single unit.

Florida DOT recently upgraded ODA IMS by adding GIS mapping capabilities. It is using Microsoft MapPoint to implement this mapping function. As ODA IMS works now, a field laptop computer calculates the location of the sign and the digital camera is used to take photos of the sign, which are entered into the sign database. The system does not achieve survey-quality accuracy, but is accurate to within about 15 feet. As a result, when annual inventory checks are conducted, field inspectors only investigate sign location discrepancies if it appears that a sign has changed location by more than 15 feet. According to Mr. Garner, the utility of the system's new mapping function is that it has improved the quality of the data. Now sign companies, for example, adjust their inventory to that of Florida DOT. In fact, ODA IMS is popular with the sign industry, which uses it for marketing purposes. Delinquent permit fees have also declined sharply since the system was implemented (although the system is not yet capable of accepting credit card payments for permit fees). Access to the state's inventory data is available to the general public over the internet (http://www2.dot.state.fl.us/rightofway/dbhome.asp).

One question that was raised during the presentation was whether any privacy concerns existed related to the posting of sign information on the internet. Mr. Garner responded that all the information on the ODA IMS is public information and that no billing information is accessible on the website. Another question raised was how much money was required to get this system started. According to Mr. Garner, $350,000 in transportation enhancement funds were used to develop the system. The state spends another $50,000 per years in state funds to maintain it. One Scan participant asked how many staff were required to run the system. Mr. Garner responded that six Florida DOT staff and 10 consultants run the system; this number is down form 38 Florida DOT staff before ODA IMS was implemented. He stated that the contract with the consultants costs the state about $750,000 annually. According to Mr. Garner, the system is funded completely through permit fees. In conclusion, Mr. Garner observed that even more important than the cost savings achieved through the system is the fact that the sign industry has gained confidence in the state's inventory data and as a result is more willing to cooperate with the state DOT.

Site Visits

On the second day of the Scan, the attendees participated in three site visits. The site visits were intended to add both context and perspective to Scan discussions. The first visit was to view a full motion electronic variable message sign located on the Gila River Indian Reservation and advertising the Gila River Casino. Mr. Layne Patton, Realty Officer in FHWA's Arizona Division Office provided commentary during this site visit, discussing both the history of the sign as well as the issue of Native American ownership as it relates to OA.

Scan participants then visited the Young Electric Sign Company (YESCO) in Chandler, Arizona. Yesco is a large manufacturer and lessor of custom signs and display systems. The group's visit was hosted by Mr. David Jones, Vice President of YESCO. Scan participants received a tour of YESCO's sign manufacturing facility, including the design shop, paint shop and neon glass fabrication facility. Mr. Jones' presentation began by highlighting the evolution of sign technology from manually-changed lettering all the way to tri-vision and light emitting diodes (LEDs). He explained the various types of EVMS, from fully static to full animation, and commented on the various regulatory approaches to EVMS, from full prohibition to no restrictions on changeable messages. Finally, he discussed the degree to which police power should be used to regulate OA from the perspective of various organization involved in OA. During his presentation, Mr. Jones referenced the Wachtel and Netherton study commissioned by the FHWA (FHWA/RD-80/051, 1980), which identified various aspects of EVMS that can affect traffic safety and the quality of the roadside visual environment and recommended areas for further study. Following Mr. Jones presentation, Mr. Ron Wardle, also from YESCO, gave a presentation on the LED sign manufacturing process.

The final site visit was to the Chandler Fashion Square Mall to view and discuss issues related to signs in mega-retail developments. Commentary was provided by Ms. Wendy LeStarge, Manager of Maintenance Permits Services for the Arizona Department of Transportation. In particular, Scan participants viewed a sign for a Target store that is separated from the store itself by a roadway. Ms. LeStarge discussed how and why billboards are classified as on-premises and off-premises, focusing on issues such as contiguity of ownership and intervening roadways.

Panel Discussion: Outsourcing and Non-Traditional Approaches to OAC Management

The final activity of the Scan was a panel discussion on outsourcing and other non-traditional approaches to OAC. Four Scan participants from different states sat on the panel. Each panelist was asked to make a brief presentation on new or innovative approaches to OAC administration and enforcement within his or her respective state. Following the presentations, the floor was opened up to discussion by the full group on the topic of creative approaches to OAC and shared experiences.

The first panelist to present was Wendy LeStarge, Manager of Maintenance Permits Services for the Arizona Department of Transportation. Ms. LeStarge was assisted by Mike Heady of R&M Media Consulting, Inc. Ms. LeStarge discussed Arizona's outsourcing of portions of its OAC program. In 1992, Arizona entered into a contract with an outside consultant, R&M Media Consulting, to update its sign inventory and conduct field inspections. The initial contract was financed in part through ISTEA enhancement funds. The contractor's first task was to update the records in the state's sign database. Computer enhancements also were performed to so that photos could be added to the database. Arizona is currently in the middle of its third five-year contract. Ms. LeStarge reported that the program is functioning well. The state is currently working to improve the program by adding GIS data on sign locations. According to Ms. LeStarge, some of the advantages of outsourcing OAC include improved data consistency and better customer service. Disadvantages include the fact that the state has no audit procedure in place to monitor contractors' work and that employing contractors costs a lot of money. In addition, she noted that a possible conflict of interest exists between consultants and the state and that employing consultants to perform certain functions means that data is sometimes in the hands of consultants and not of the state DOT where it belongs.

Mr. Scott Taylor, Outdoor Advertising Manager for the state of Missouri, made a presentation on that state's attempt to regulate advertising by sexually-oriented businesses. In 2004, the Missouri legislature passed a statute (Civil Bill 870 (8/2004)) prohibiting sexually-oriented businesses from using OA within one mile of any state route. The statute is unique because it regulates the content and size of on-premises advertising. For example, on-premises signs advertising sexually-oriented business are restricted to 40 square feet in size and must state explicitly that the business advertised is off limits to minors. Mr. Taylor reported that this statute was challenged and was upheld as constitutional by the U.S. Federal Court for the Western District of Missouri. Some of the issues that Missouri must face with respect to this statute include deciding what constitutes a sexually-oriented business as well as who determines what is a sexually-oriented business.

The state of South Carolina was represented by Mr. Keith Melvin, Director of Outdoor Advertising, who discussed an innovative pilot project in South Carolina to reduce the number of non-conforming signs. South Carolina has proposed a pilot program whereby it would allow a sign company to upgrade one non-conforming sign in exchange for removing two other non-conforming signs. The sign owner would be allowed to choose the sign it upgraded, which would maintain its non-conforming status in the state's sign inventory. The sign company would also select the two non-conforming signs to be removed, however state concurrence would be required. While this pilot project has not yet been formally approved by FHWA, feedback from the agency has thus far been positive according to Mr. Melvin. FHWA asked South Carolina to address the state stakeholders who would be impacted by this pilot project. The states received letters of support for the program from the Sierra Club, the Garden Club and the sign industry. According to Mr. Melvin, this pilot project would benefit both the state and the OA industry. The state would benefit by not having to pay to remove non-conforming signs; the state has estimated that it would cost upwards of $50 million to remove all non-conforming signs in the state. Sign companies would benefit by being able to upgrade some signs, thus lowering their maintenance costs.

Susan Lauffer, Director of FHWA Office of Real Estate Service commented that FHWA is coming out with criteria for proposals for pilot projects, which, once finalized, will be provided to the district offices and then to the states. Ken Towcimak, Director of Right-of-Way for Florida observed that Florida considered a similar plan to that in South Carolina, but was unable to obtain the support of stakeholders. He praised South Carolina's effectiveness in obtaining such support.

The final panel presenter was Mr. Chad LaRue, Permits Branch Manager for the Kentucky Department of Transportation. Mr. LaRue discussed issues related to the fact that Kentucky's OAC program is decentralized. In particular, he noted that while OAC laws in Kentucky are strong, enforcement tends to be weak. Decentralization has hindered enforcement. The state is attempting to remedy this situation by rewriting its policies. In addition, because OAC is decentralized, it tends to form a smaller part of staff members' job responsibilities and is likely to receive less attention. A participant from another state concurred with Mr. LaRue that decentralized organizations are not as effective as centralized organizations at controlling OA, noting that decentralization sometimes fosters nepotism. Before concluding, Mr. LaRue discussed the fact that Kentucky is attempting to amend its OA regulations to authorize the charging of sign permit fees.

Issues and Observations

During this Scan, state Scan participants identified several issues that they are confronting with respect to effective OAC and made a number of other observations regarding state OAC efforts. PUDs and on-premises signs have emerged as a major issue for the states. The majority of states indicated that they treat signs in PUDs as on-premises, however approximately one third of the states attending the Scan (4 of 13) stated that under state law they cannot treat such signs as on-premises. While more important in some states that others, the issue of mega-retail developments also generated a great deal of discussion throughout the Scan. A consensus emerged among the states attending the Scan that local governments should be responsible for determining whether or not a mega-retail development is treated as a single parcel of land for OAC purposes. The states also discussed ways to improve control over signs in mega-retail developments. They largely agreed that whether signs in such developments should be viewed as on-premises or off-premises should be an issue for the states. To improve OAC in MRDs, the states need to educate local governments in how to effectively control outdoor advertising in mega-retail developments and should empower local governments to exercise such control.

Other observations made by states attending the Scan include the fact that OAC is organized differently in different states. In some states, all OAC responsibilities are centralized; in others, regional offices exercise a great deal of independence in administering the OAC programs.

Most states attending the Scan seemed to view centralization as the key to effective control. Several states also noted the state departments responsible for OAC need to communicate better. Scan participants also observed that regulations regarding the maintenance of non-conforming signs vary among the states. Most states agreed that they should be doing more to implement the law as written. One participant commented that he would like to see a more uniform policy on dealing with non-conforming signs from the FHWA. Other states asked for more flexibility for non-conforming signs in the Federal Regulations, noting that 23 C.F.R. 750 should be reviewed for possible revision. At least one state commented that the FHWA should leave the regulation of signs completely to the states

Scan Evaluations

In an effort to improve future scans, Scan participants were asked to complete an evaluation of the OAC domestic Scan. Of the 22 state DOT representatives attending the full Scan, 20 (91%) responded to the Scan Evaluation. Near every respondent stated that the Scan met his or her expectations and that the objectives of the Scan were met. One respondent stated that mega-retail development was not a major issue for states. Two respondents noted that the Scan did not lead to definitive answers. The vast majority of the participants stated that the site visits were both informative and interesting. The vast majority of the participants also stated that the Scan provided them with new ideas for managing their state's OAC program. The participants seemed to value very much the opportunity to engage in group discussions and to gather information about what other states are doing. Virtually all the participants were satisfied with pre-Scan communications and arrangements and with the meeting facilities. One respondent suggested providing each participant with the names and states of other participants in advance of the Scan. Numerous suggestions for future Scan topics were provided, including 1) the future of unzoned commercial and industrial property, 2) right-of-way relocation and surplus property, 3) the regulation of non-conforming signs, 4) local comprehensive zoning, 5) bonus state issues, 6) innovative or pilot projects such as South Carolina's non-conforming sign removal pilot project, and 7) technology and sign inventories.

Conclusion

The challenges confronting the states and the FHWA with respect to OAC are complex. The FHWA believes that state transportation professionals benefit greatly from interaction with their peers from other states as well as with FHWA staff and continues to look for ways to partner with the states in the area of OAC. To provide a forum for such interaction, the FHWA organized this domestic Scan. The Outdoor Advertising Control Domestic Scan allowed state OAC officials to discuss several topics of importance to the outdoor advertising community, including the OAC implications of mega-retail development and non-traditional approaches to OAC. The success of this Scan was due in large part to active participation by all the attendees in the breakout session, state presentations and panel discussion. Scan participants expressed satisfaction with the results of the Scan. One participant stated that there was an "excellent exchange of information between the states," while another stated that he would "go home with many new ideas and new people to contact about other state programs." The innovative ideas that were discussed during this Scan will be carried back to 13 states, enhancing their ability to efficiently and effectively carry out their OAC responsibilities.