Suit filed over billboard fee increase

Advertising companies, which can command more than $3 million a year for messages posted on a single highway billboard, have sued Caltrans for increasing the annual permit fee to $100 per sign from $20 -- another skirmish in the legal battle between authorities and outdoor advertisers.

The suit follows settlements by the Los Angeles City Council with many of the same companies, which had sued over a 2002 law requiring that billboards in the city be inspected and illegal signs be removed. Critics claim that the industry’s aggressive legal actions are allowing roadside signs to proliferate.

Billboard detractor Kevin Fry says that the outdoor companies are suing Caltrans because they don’t want the state to have the revenue to enforce regulations such as those that prevent companies from erecting billboards without permits -- a problem that has plagued San Francisco and Los Angeles.

“There’s absolutely no reason why these enormous companies can’t pay a $100 fee,” said Fry, president of Scenic America, a nonprofit organization in Washington. The outdoor advertising industry brings in $23 billion in revenue worldwide, he said.

The industry is “hugely litigious,” Fry said. “Any time you attempt to regulate them, they sue.”

Caltrans, which regulates 11,050 outdoor ad displays visible from state highways, says it needs the extra money to cover the expenses of administering the program.

The old $20 fee proved to be insufficient to cover the cost of processing applications and regulating the billboards, said Dave White, a spokesman for the state agency.

Six inspectors are responsible for ensuring that billboards statewide adhere to a 90-page code of regulations that include rules against offending public decency. “It’s a pretty lofty task,” White said.

But in their lawsuit filed Thursday in Los Angeles Superior Court, the billboard firms contend that $100 per sign will bring in more money than Caltrans needs to run the program.

“They send out inspectors and see if there are any improper activities,” said Michael Wright, an attorney for the 15 companies and a trade group, including industry heavyweights Clear Channel Outdoor Inc. and CBS Outdoor Inc. “They just have to drive by.”

The lawsuit also alleges that outdoor advertising is protected by the 1st Amendment and the California Constitution, and that the permit fee is a unlawful tax.

The companies successfully battled Caltrans over a proposed increase in 2003 to $92 per sign when a judge found the state failed to comply with proper administrative procedures to change the fee. Wright said Caltrans was trying to cover the cost of its legal fees stemming from that trial with the current price increase.

The $100 fee, which will cover a sign for all of 2007, must be paid by the end of this year, according to the suit.

Billboards are the second-fastest-growing segment of the advertising industry after the Internet, according to the Outdoor Advertising Assn. of American. In October, outdoor advertising increased 13% from the same month a year earlier.

Part of that can be traced to price. Billboard advertising costs companies about $2 per thousand views as opposed to $12 for television ads, said Stephen Freitas, the group’s chief marketing officer. Clear Channel charges $20,000 to $300,000 to advertise on a so-called 30-sheet poster billboard for four weeks, according the company’s website.

Changing habits also play a role in the growth, Freitas said.

“Consumers aren’t spending as much time with in-home media, so companies have rediscovered outdoor advertising,” he said. “It’s a medium you can’t choose to ignore.”

alana.semuels@latimes.com