SAN JOSE CAPITAL OF SILICON VALLEY

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1 CED AGENDA: 04/24/17 ITEM: D (2) CITY OF SAN JOSE CAPITAL OF SILICON VALLEY Memorandum TO: COMMUNITY AND ECONOMIC DEVELOPMENT COMMITTEE FROM: Harry Freitas Nanci Klein SUBJECT: SEE BELOW DATE: April 12, 2017 Appro,ed D " e SUBJECT: OFF-PREMISE COMMERCIAL ADVERTISING ON CITY-OWNED AND CITY-CONTROLLED SITES; DOWNTOWN SIGN INTENSIFICATION RECOMMENDATION Accept an informational report on the status of activities to investigate removing existing barriers to off-premise commercial advertising on city-owned and city-controlled sites and direct staff to continue implementing the proposed workplan. OUTCOME Provide the Committee with a status report on staffs efforts to respond to Council-adopted Priority No. 6: "Electronic Billboards Options for public and private property that will allow electronic digital off-site advertising signs or billboard installations." More specifically, this report proposes a workplan approach to removing existing banders to off-premise signage opportunities on city-owned and city-controlled sites to create the opportunity to generate revenue for the City and facilitate dynamic and contemporary signage on sites that are potentially eligible for off-premise advertising under Federal and State law. The intent is to do this in a way that maintains control over land use compatibility, aesthetics, and environmental impacts. BACKGROUND Billboards are large signs that can display commercial off-site/off-premise advertising (i.e., signs for goods or services that are not provided on the site that contains the sign). In 1986, the Council adopted policies and ordinances prohibiting new billboards. Prior to those adopted prohibitions, the City of San Jose had a permitting program in place for allowing off-premise signage in the form of non-electronic static billboards. The City has never allowed electronic programmable off-premise signs.

2 Page 2 The City Council has provided direction to staff to explore off-premise commercial advertising options including on city-owned and city-controlled sites, primarily focused in Downtown and the North San Jose Development Policy areas, while also considering other sites citywide that might be eligible for off-premise advertising under Federal and State regulations. Staff is analyzing options within the context of Federal, State, and City regulations that greatly restrict the locations and maximum size of outdoor advertising signage that contains off-premise commercial messages. This report provides a status update on proposed off-premise signage options including: 1) electronic programmable billboards; and 2) signage on street furniture such as light poles, kiosks, and public restrooms. Existing City Policies and Regulations Existing governmental policies and ordinances, and other considerations for off-premise signage in the City, are summarized as follows: General Plan Policies. The Envision San Jose 2040 General Plan (General Plan) supports consideration of new billboards through a discretionary process where they will not create visual blight and clutter, and encourages relocation of existing billboards from impacted areas to areas where they will have less visually blighting effect. The General Plan specifically prohibits billboards on freeways, rural scenic routes, grand boulevards, and scenic gateways. Sign Code. Title 23 of the San Jose Municipal Code (the Sign Code) currently prohibits new billboards and other off-premise advertising. It provides for consideration of relocation of existing legal non-conforming billboards subject to specific criteria. Criteria for sites to which billboards may be relocated preclude Neighborhood Business Districts, Redevelopment Areas, any area proposed for beautification or utility undergrounding, and priority areas for billboard removal, including the Downtown Core and major thoroughfares leading into the Downtown Core. Under the current Sign Code, relocated billboards cannot be programmable electronic signs. Council Policy 6-4 "Billboards on City-owned Land." This Council Policy (adopted in 1972) prohibits new billboards on City property. It specifies removal of existing billboards from City property within five years. Council Policy 6-16 "Uses of Public Property." This Council Policy (adopted in 1986) specifies the public process allowing any private use of City property that is associated with the public use of that property (Development Permit) and for any private use of City property not associated with the public use of the property (Conditional Use Permit and possibly rezoning).

3 Page 3 City's other Constraints. City Charter provisions governing City-owned property including parkland, private-activity constraints associated with bond funding on some properties, and various contractual obligations may further limit or preclude off-premise displays on specific City-owned sites. State and Federal Regulations. State and Federal regulations govern the placement and type of off-premise commercial advertising along State- and Federally-designated highways including freeways and primary arterials. The regulations, which pertain to sites visible or in proximity to these highways, further limit where billboards and other off-premise commercial advertising can be located in San Jose. As the attached map shows, not just freeways, but also several principal arterial streets in the City are classified as "highways" in Federal and State legislation. MAP-21, the "Moving Ahead for Progress in the 21st Century" Act, which was signed into law by President Obama on July 6, 2012, expanded the National Highway System (NHS) to incorporate principal arterials not previously included. Under MAP-21, Federal transportation funds are focused on national transportation goals through performance-based planning and programming, with a significant amount of highway funding devoted to preserving and improving highways. ANALYSIS Electronic billboards are primarily programmable electronic signs that use digital display screens to produce changeable messages involving still images or images that appear to move on the display screen. Under Section of the Sign Code, a "Programmable Electronic Sign" is defined as a type of animated sign capable of displaying words, symbols, figures, or images that can be electronically or mechanically changed by remote or automatic means. The elements may be internally illuminated or may be illuminated by reflected light. The sign may be part of a permanent sign that is not a programmable electronic sign. The definition includes sign display screens commonly known as liquid crystal display (LCD), plasma and digital displays, and their functional equivalents. This definition applies whether the display is used to produce a series of still images, or images that appear to move on the display screen. Signage Opportunities are Limited on City-owned Properties Staff completed extensive analysis to understand State and Federal constraints on off-premise advertising on State and Federally-designated highways. Although staff identified approximately 1,600 city-owned parcels, substantially fewer of these parcels might be feasible for off-premise signage due to City, State, and Federal regulations as mentioned above. In addition, some city-owned sites might not be desirable for signage due to lack of visibility or other market factors. A large majority of these city-owned properties are small parcels that resulted from right-of-way activity, and they are not on highways or freeways. Because of the smallness of site size, orientation, configuration, minimum required spacing between billboards, and other physical constraints imposed by Federal and State regulations, most of these properties would not accommodate billboards. Potentially, only a handful of parcels might be feasible.

4 Page 4 Other Jurisdictions Staff has reviewed the sign regulations and programs of other cities within California, including San Diego, San Francisco, Los Angeles and Hawthorne, and out-of-state including Chicago, Denver, Kansas City (Missouri), New York, Cleveland, Atlanta, and Miami. The types of off-premise advertising currently allowed in one or more of these cities include electronic billboards, interactive kiosks, and new signage on light-emitting diode (LED) street poles, public restrooms, free-standing way-finding stands, news racks, bike racks and transit shelters on cityowned parcels and along public right-of-way, through site-specific lease agreements. Some of these strategies used in other cities have resulted in increased revenue-generation for these cities to administer programs and implement public benefit improvements and services. Although each advertising opportunity is valued differently by media companies based on its unique market and potential impressions, the Ails and Venues Division of the City of Denver receives approximately $500,000 in annual revenue from all signage on city facilities in the Denver Theater District boundaries. This revenue consists of monies received from five mediumsized (9'-0"x 16'-0") LED signs, three static signs on a City-owned parking garage, and an aggregation of signs on the Colorado Convention Center highlighted by one large-sized (14'-0" x48'-0") LED sign. Similar to approaches used in Chicago, Kansas City, and Denver, staff is considering that a percentage of time on any allowed sign on City-owned or -controlled sites be allocated at no-cost for public messaging or for the use of digital displays to showcase art. The ability to leverage these marketing assets can be used to attract conventions, concerts, and other desirable events to locate in San Jose venues. Based on the Denver model, staff also recommends that a percentage of any revenue that is generated by signs on City-owned property be used to administer the sign program as well as support public benefit improvements and activities. Downtown Sign Intensification Program In Fall 2015, the City participated in the Silicon Valley Chamber of Commerce's Study Mission to Denver. Participants were impressed by the presence of interesting, high-quality and dynamic signage in the Downtown Denver Theater District that enlivened the urban landscape and provided revenue opportunity. In Denver, off-site advertising in the Theater District is a source of funding for cultural promotion and activation, with a revenue share of 15% and time share of 20% to the City. Staff has engaged FinWater Advisors, the consultant in the formation of the 2007 Denver Theater District and currently working on a similar project in downtown Atlanta. FinWater is helping the City develop a comprehensive sign intensification program that would maximize offsite signage opportunities on city-owned and city-controlled sites downtown. Approximately 70 properties have been identified as city-owned and city-controlled properties and mapped with respect to State and Federal constraints within the Downtown Growth Area Boundary. A small portion of these sites may be eligible for off-premise commercial advertising (both electronic and static) if the City policies and regulations described above are modified.

5 Page 5 Potential sites could include city-owned facilities such as parking garages, cultural facilities and empty lots. EVALUATION AND FOLLOW UP Ongoing tasks include determining various governmental parameters to identify areas that might be eligible for new off-premise signage in the City. Staff is focusing on identifying city-owned sites that meet State and Federal regulations and that might have potential for off-premise signage within limitations related to City Charter requirements and contractual obligations. Removing existing barriers to new off-premise commercial advertising on city-owned and citycontrolled sites will require amendments to the General Plan, changes to the Sign Code, changes to City Council Policies, and environmental clearance under the California Environmental Quality Act (CEQA). Staff anticipates completing public engagement through focus groups and public community meetings with stakeholders, including but not limited to residents, businesses, historic preservationists, and environmental groups, by September 2017, and bringing recommendations to the City Council by November Based on further direction from the City Council, staff will draft policy and ordinance changes and complete CEQA review. Depending on the scope of changes, CEQA review might be completed by mid-2018 or earlier. Scheduling public hearings for General Plan amendments will be coordinated within one of the four General Plan Amendment hearing cycles that the City holds each year. Concurrent with the timeline outlined above for citywide ordinance and policy changes, staff proposes to proceed with the Downtown Sign Intensification program as follows: Engage stakeholders in community meetings and focus groups consisting of industry, neighborhood and business leaders Issue a Request For Information to media firms for identified properties and a variety of street furniture on city-owned parcels and city-owned right-of-way Develop program parameters and a revenue structure Issue a Request for Proposals to select media firm(s) and Implement the program on eligible City properties. PUBLIC OUTREACH This memorandum will be posted on the City's website for the, Community and Economic Development Committee meeting.

6 Page 6 COORDINATION This memorandum has been coordinated with the City Attorney's Office. CEOA This memorandum is an information report that is not a project pursuant to the California Environmental Quality Act. /s/ HARRY FREITAS Director of Planning, Building and Code Enforcement /si NANCI KLEIN Assistant Director of Economic Development For general questions, please contact Jenny Nusbaum, Supervising Planner, at (408) For questions about the Downtown Sign Intensification Program, please contact Blage Zelalich, Downtown Manager, at (408) Attachment: Map showing City-owned sites and regulated-highway areas in San Jose