Voters in West Hollywood will decide whether to tax new and existing billboards in the city on the March 2011 ballot.

Supergraphics are currently only allowed on the Sunset Strip. The ballot measure would allow them to be placed along other city streets. (photo by Rafael Guerrero)

The West Hollywood City Council blocked an earlier attempt to place the “Tax Billboard Act” initiative on the ballot last month but proponents of the measure had filed a lawsuit to force the city to allow voters to decide the issue and the Superior Court ruled on Dec. 8 to allow the initiative to move forward.

The initiative would impose a seven percent tax on advertising revenue on any billboard, video sign and supergraphic in West Hollywood.

The initiative would also amend West Hollywood’s zoning code to allow supergraphics, also known as “tall walls”, to be placed on Santa Monica and Beverly Boulevards. The city currently only allows tall walls on the Sunset Strip.

West Hollywood City Attorney Michael Jenkins argued the initiative violates the single-subject rule, claiming the elimination of permits for billboards and the adoption of new taxes on the billboards are two separate issues. He also argued the initiative violated the city’s General Plan, which does not allow public advertisements anywhere other than the Sunset Strip.

“The judge basically said that the city may be right,” Jenkins said. “But its argument is not crystal clear enough to keep the measure off the ballot.”

The judge’s decision also indicated that the initiative should be allowed to go through the political process before the court considers its legality.

Mike McNeilly, president of SkyTag, a billboard advertising company that began the tax initiative, said the initiative is a win-win situation for the city and its residents.

“The billboard industry is making more money now than it has ever made,” McNeilly said. “It’s only fair the people of West Hollywood get some money from these billboards.”

McNeilly filed the lawsuit against West Hollywood after he collected 2,744 valid signatures for the initiative and submitted them to the West Hollywood City Clerk’s Office in September. Councilman Jeffrey Prang was one of three council members who voted to block the measure.

“It is being promoted as a measure to tax billboards,” Prang said. “But it is being mainly supported by a large billboard company (SkyTag).”

Prang said the city has tried before to apply taxes to billboards, but decided against it when Jenkins advised the council it would be unconstitutional. McNeilly claims the tax would not be unconstitutional, citing the 2005 Philadelphia Billboard Tax Ordinance at allowing the City of Philadelphia to tax billboard companies. The companies sued the city on First Amendment grounds, but lost.

“It’s a red herring,” said McNeilly of the First Amendment argument.

Jenkins acknowledged the Philadelphia case, but said it was not a good precedent to use in this situation.

“It was an out-of-state decision and has no weight in this matter,” Jenkins said.

Prang believes McNeilly knows the tax portion of the initiative would be ruled unconstitiutional, which would remove the billboard tax but keep the new zoning codes and the elimination of the permit process.

“There will be no oversight,” Prang said. “The companies will not need permission to put up the ads and the city council will have no power.”

McNeilly insists his efforts are genuine and his company would feel no ill effects from the new taxes. He claims the new taxes will help the city support more social programs.

“It’s the advertisers who will have to pay the tax not the billboard companies,” McNeilly said. “The billboard industry is making more money now than it has ever made. There is enough food on the table for everybody.”

McNeilly states billboard companies, including his own, have seen revenues increase by more than 50 percent. He claims a billboard tax will not put a dent in those numbers.

“People who say a tax is bad for business are lying,” McNeilly said. “I know because I am in the business.”

Some residential groups have joined the opposition against the billboard initiative. Elyse Eisenberg, board member of the West Hollywood Neighborhood Association, is tired of seeing advertising everywhere she looks. Eisenberg lives near the Sunset Strip and actually likes the billboards there, but she thinks the Strip is the best place for them, and opening the entire neighborhood to billboard companies would be overkill.

“The initiative is trying to commercialize the entire neighborhood,” Eisenberg said. “Why should we be subjected to marketing every moment of our lives? It’s just a constant visual assault.”

The WHNA represents the five blocks north of Sunset Boulevard in West Hollywood. Eisenberg said they are just holding true to their mission statement to maintain the residents’ quality of life.

McNeilly insists there will be no new supergraphics if the initiative goes through. The minimum space requirement for a tall wall is 5,000 square feet and McNeilly said only one building at 8899 Beverly Blvd. would qualify.

But Prang fears the removal of the permit process would encourage property owners to knock down current structures and rebuild to maximum density to qualify for tall wall signs.

McNeilly also claimed the revenue from the new taxes on every billboard in the city would total $4 million annually.

“It could make $1 million for the city every 90 days,” McNeilly said. “That’s $13,000 per citizen in West Hollywood.”

Prang said the city had done its own review and came up with a much smaller amount.

The revenue and how it would be used were key selling points in the petition to put the initiative on the ballot, according to Prang.

“They approached me at a supermarket with the petition,” Prang said. “I did not identify myself so I could hear their pitch. They told me it would raise a lot of money and it would go to help AIDS services, social services and the elderly.”

In reality, any money made from taxes would go into the city’s General Fund and the city council would decide where to distribute the money.

Despite the objections, McNeilly is confident there is enough public support to push the initiative through.

But if the initiative does pass in March, the initiative would still have to be evaluated in court. The measure could be thrown out entirely if a judge agrees with the city’s argument. Another scenario could eliminate the tax portion of the intiative, but allow billboard companies to place ads throughout the city. Prang is confident in the city’s position.

“Even if the initiative is voted through,” Prang said. “I still think it will get thrown out in court.