planning ahead

By M. Brett Gladstone

Editor’s Note: This is the first installment of a two-part article on property owners’ rights concerning the general advertising signs (billboards) that media companies construct on property owners’ buildings.

Two SFAA members recently battled a large national media company and appear to have successfully defended small property owners’ rights to control permits taken out on their properties. Clear Channel Outdoors, along with CBS Viacom, has been cornering the market on billboard advertising in the city ever since the San Francisco Board of Supervisors passed a law in 2006 that the San Francisco Planning Department interpreted as restraining an owner’s ability to deal with another media company once the current sign lessee (billboard company) removes its billboard. The question before the San Francisco Board of Appeals was: did the Board of Supervisors intend this consequence?

Background
In 2002 and 2003, two things happened to set the stage for the battle that just occurred. First, at the Board of Appeals, smal l property owner Margie Pocoroba, with the help of this author, succeeded in beating back Clear Channel’s claim that because the city issued Clear Channel a permit to remove the sign on Pocoroba’s building, Pocoroba could not rebuild the sign on her property. Prior to this decision, billboard companies told property owners during negotiations for extensions to leases that if the billboard company removes the sign, then the property owner would not be able to rent to a different sign company.

The second event was that the citizens of San Francisco passed Proposition G, directing the Board of Supervisors to bar additional billboards in San Francisco. The board passed the billboard ordinance ostensibly to codify Proposition G. However, the ordinance went further by stating that a sign that is “voluntarily destroyed or removed by its owner” cannot be rebuilt because new signs are not allowed under the Planning Code. There is no evidence that the voters who passed Proposition G intended this result.

The Lee and Erkelens Cases
These are the facts of the Board of Appeals cases, as I understand them. The Lee family owns 2283-2297 Market St., which has had a billboard on it for 70 years. The Lee family did not wish to rerent their roof advertising space to Clear Channel, because Clear Channel offered less than a third of the rent that competitors were willing to pay for the space. Without telling the Lees, Clear Channel applied for and received a permit to remove the signs on their roof. In its permit application, Clear Channel used language (against the wishes of the Lee family) that would forbid the Lees from ever restoring a sign, by calling the removal a “voluntary” termination of a nonconforming use. Clear Channel then sent its crew to the property and removed the sign, again without informing the family. The Lees appealed to the Board of Appeals, asking that the permit issued to Clear Channel be rescinded.

Linda Erkelens owns 1801 Turk St., which has had a billboard on it for 50 years. Erkelens did not wish to grant a new lease to Clear Channel, so the company decided again that it wished to remove the sign. In this case, however, Clear Channel informed the property owner of the permit before removing the sign. Erkelens filed an appeal of the permit’s issuance with the Board of Appeals—an action that temporarily suspended the permit.

The author represented both property owners in their separate appeals. Our briefing was built on a foundation of state case law and the history of city holdings, and argued that the ordinance is ambiguous and that Clear Channel’s actions are unfair. In both cases, the San Francisco Apartment Association filed a “friend of the court” brief and its staff testified at the hearing in support of the small property owners. SFAA was joined by the Coalition for Better Housing, Building Owners and Managers Association and Small Property Owners of San Francisco. On the other side, the Deputy City Attorney’s Office, which represents the Planning Department, filed a brief in support of the Planning Department’s position that the ordinance did confer power to the billboard tenant (in this case, Clear Channel) and caused an abandonment of the small property owner’s right to an existing billboard on his or her property.

Supporters of the small property owners packed the hearing room; it was so full that the president of the board had to limit public comment to one minute per person to prevent the hearing from lasting all night. Experts in the permitting process testified as to the mayhem that would ensue if tenants were allowed to take out permits on property when the property owner has not approved the permit. Property rights supporters spoke to the inherent unfairness of Clear Channel’s attempt to use the permitting process to abandon property owners’ rights to sign income. Chief Building Inspector Laurence Kornfield pointed out the unusual circumstance of a property owner appealing the issuance of a building permit on his or her property, because under rulings that the San Francisco Department of Building Inspection has long enforced, the property owner owns all permits issued for that property.

Clear Channel argued that their leases gave them the right to take out permits on the properties and that, under the ordinance, it can abandon the right of the property owner to replace billboards that it removes. The Planning Department and City Attorney echoed Clear Channel’s arguments. The Planning Department and City Attorney’s Office have a duty to defend laws passed by the voters and the Board of Supervisors, no matter where their true sentiments lie. They took a good deal of heat from the Board of Appeals, which deems itself a court of equity, not just a court of law.

The board’s commissioners described Clear Channel’s business practices as being “extortion” and “corporatism” in its worst form. Vice President Michael Garcia equated Clear Channel’s practices to those of a dog that “buries its bone, not because he wants it, but because he doesn’t want anybody else to have it.” The commissioners could not see how Clear Channel could credibly argue that it was providing value to its landlord property owners when it was willing to pay only a third (or less) in rent of what its competitors would pay for advertising space. The commissioners found that Planning Code Section 604(h)’s language of “its owner” was ambiguous, and so the board relied on the long-standing practice of finding that the property owner is the permit holder. Commissioners stated that they could not see how the removal of the Lee family’s signs could be viewed as “voluntary” when the Lees did not want the sign removed with the language of the removal permit waiving their future rights, nor could they see how Clear Channel’s proposed removal of Erkelens’s sign should be considered “voluntary” (as Clear Channel stated in its permit application) when any proposed removal stemmed solely from failed lease negotiations. Clear Channel’s reliance on their private lease contract with the property owners was considered irrelevant for purposes of permitting removal and reconstruction of signs. In both cases, the commissioners made clear their intent to allow the small property owners to maintain their right to signage at their property while continuing to select their sign tenant freely among those companies offering to pay fair market value for the right to rent signage space. The commissioners noted the irony of their intended decisions, because of their general dislike for billboards. Commissioner Robert Haaland noted that this case is truly special, because both Examiner columnist Ken Garcia and San Francisco Bay Guardian Editor Tim Redmond shared similar opinions on the case.

In the end, the board voted unanimously to grant the Lee family’s and Erkelens’s appeal of the permit taken out by Clear Channel. Thus, both permits to remove the billboards are null and void. The findings hearing on these matters will be held this month, and the results and any further updates will be discussed in this column in the April issue of SF Apartment Magazine.

---

The opinions expressed in this article are those of the authors and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. M. Brett Gladstone is a partner in the San Francisco real-estate law firm of Gladstone & Associates, and can be reached at 415-434-9500. Copyright © 2008 by SF Apartment Magazine. All rights reserved.