DATE: June 12, 2018
SUBJECT:
Title
ORDINANCE AMENDING SAN DIEGO UNIFIED PORT DISTRICT CODE, ARTICLE 8, SECTION 8.32 TO CONTINUE PILOT PROGRAM REGULATING BUILDING WRAPS ON QUALIFYING BUILDINGS LOCATED IN A COMMERCIAL DISTRICT WITHIN THE DISTRICT'S JURISDICTION IN THE CITY OF SAN DIEGO FOR AN ADDITIONAL ONE YEAR PERIOD COMMENCING JUNE 17, 2018, AND ENDING JUNE 17, 2019, ADD A SUNSET PROVISION AND CORRECT TYPOGRAPHICAL ERRORS
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EXECUTIVE SUMMARY:
In 1962, the California Legislature adopted the San Diego Unified Port District Act (Port Act), codified as California Harbors and Navigation Code Appendix I, and established the San Diego Unified Port District (District). The Port Act is consistent with the Public Trust Doctrine, which specifies, among other things, that submerged waters, tidelands and submerged lands must be used to promote navigation, fisheries, recreation and commerce for the people of California. Pursuant to Section 30(a)(2) of the Port Act, the Board may manage the business of the District and promote the maritime and commercial interests by proper advertisement of its advantages and by the solicitation of business within or outside the District, within other states or in foreign countries, through employees or agencies that are expedient. On April 14, 2016, the Board of Port Commissioners (Board) adopted Section 8.30 of the San Diego Unified Port District Code (Code), which affirms that the District regulates and issues all permits or entitlements for signage within the jurisdiction of the District, and that this authority preempts all other local and municipal regulations, codes, and permit requirements for signage. At the April 14, 2016 meeting, the Office of the General Counsel informed the Board that specific signage standards were anticipated to be developed in the future, after appropriate environmental review under the California Environmental Quality Act (CEQA) and California Coastal Act (Coastal Act) processing, as well as approval by the Board.
On May 16, 2017, the Board adopted Ordinance 2891 (Attachment A) to add Section 8.32 to the Code (Attachment B). Section 8.32 established a one-year pilot program that was limited to the regulation of building wraps on qualifying buildings (as defined below) located within those areas currently designated as “Commercial Recreation” in Planning District 3 - Centre City Embarcadero, as shown on Attachment C, or as such areas may be depicted in any subsequent Port Master Plan (Commercial District). Section 8.32 took effect on June 16, 2017 and expires on June 16, 2018, unless the Board adopts the proposed ordinance to continue Section 8.32 of the Code. The proposed regulations set forth in Section 8.32 were drafted to be content-neutral and were to be administered through a license agreement, which would only be entered into with the applicant following the District’s discretionary review and approval of a building wrap application pursuant to Board Policy No. 357. Since Section 8.32 took effect, only one application was received from Felcor Asset Company LLC dba Wyndham San Diego Bayside (Wyndham) on July 18, 2017 to install a temporary, vinyl building wrap on Tower 1 and Tower 3 of the Wyndham Bayside Hotel building located on District property at 1355 N. Harbor Drive. However, the Wyndham subsequently withdrew its application for the building wraps, and no other applications have been received by the District for building wraps in the Commercial District.
Despite the limited applications received for building wraps in the Commercial District, tenants have continued to express an interest in building wraps as an additional form of revenue and to promote events occurring within the Qualifying Buildings. The effect of the proposed ordinance is to continue the one year pilot program for an additional year to allow tenants within the Commercial District to continue the practice of placing building wraps on their leaseholds, while implementing certain controls to minimize the impact to the environment, avoid visual blight and maximize revenue to the District. The proposed ordinance would also amend Section 8.32 to (i) include a sunset provision that would allow the Board to continue, modify or terminate Section 8.32 prior to said termination date; and (ii) replace the word “Ordinance” in Section 8.32(b)(9) and Section 8.32(d) with “Section 8.32”. The Board has the discretion to accept, modify or reject staff’s recommendation. If the Board adopts the proposed ordinance, the pilot program will continue until 11:59 p.m. on June 17, 2019, unless the Board adopts a new ordinance to continue, modify or terminate Section 8.32 prior to said termination date.
RECOMMENDATION:
Recommendation
Adopt an Ordinance amending San Diego Unified Port District Code, Article 8, Section 8.32 to continue pilot program regulating Building Wraps on Qualifying Buildings located in a Commercial District within the District’s jurisdiction in the City of San Diego for an additional one year period commencing June 17, 2018 and ending June 17, 2019, add a sunset provision and correct typographical errors.
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FISCAL IMPACT:
This agenda sheet has no immediate fiscal impact, but it is anticipated that the District will receive additional revenue as a result of this pilot program.
Compass Strategic Goals:
This agenda item supports the following Strategic Goal(s).
• A Port that the public understands and trusts.
• A thriving and modern maritime seaport.
• A vibrant waterfront destination where residents and visitors converge.
• A Port with a comprehensive vision for Port land and water uses integrated to regional plans.
• A Port that is a safe place to visit, work and play.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
In 1962, the California Legislature adopted the Port Act and established the District. The Port Act is consistent with the Public Trust Doctrine, which specifies, among other things, that all navigable waters, tidelands and submerged lands must be used to promote navigation, fisheries, commerce and recreation for the people of California.
Under Section 30(a)(2) of the Port Act, the Board may manage the business of the District and promote the maritime and commercial interests by proper advertisement of its advantages and by the solicitation of business within or outside the District, within other states or in foreign countries, through employees or agencies that are expedient. Section 30(b)(2)(a) gives the Board the authority to regulate facilities and property necessary for the promotion of commerce, navigation, fisheries, or recreation in the District.
Pursuant to the authority granted by Section 56 of the Port Act, the District previously adopted Section 8.30 of the Code, which clarifies that the District regulates and issues all permits or entitlements for signage within the jurisdiction of the District, and that this authority preempts all other local and municipal regulations, codes, and permit requirements for signage. “Signage” is defined in Section 8.30 of the Code to mean “all signs, including, without limitation, signs which advertise any business, product, person, activity, event or service whether located on-site or off-site and the portion of the Structure on which a sign is attached.”¹ Building wraps would be included within the definition of “Signage”.
Building wraps have been a feature on buildings that are located within the Commercial District. In the past years, tenants within this Commercial District have approached the District with a growing interest to install building wraps, to request a more streamlined approach to the District’s approval process for building wraps and further guidance on the types of building wraps that may be affixed to their leaseholds. Prior to the codification of Section 8.32, building wraps were only approved by District staff as tenant projects through Board Policy No. 357, Board Policy No. 770, and the District’s current Tenant Signage Guidelines, and treated as an “unauthorized service or use” under District leases for purposes of payment to the District. The standard District lease does not have a percentage rental rate established for advertising, which means that tenants that display building wraps on their buildings pay the District twenty percent (20%) of the gross receipts as an unpermitted use under their lease. Through the codification of Section 8.32 a discretionary process was created for potential erection of temporary Building Wraps on Qualifying Buildings, as those terms are defined in Section 8.32.
Building wraps are aesthetically pleasing, low-impact forms of temporary signage that blend with the structure on which they are affixed without impairing the views from inside the structure on which they are located. Public entities throughout the United States have taken varying approaches to the regulation of building wraps in their jurisdictions, which means no single approach is the best approach. For example, some smaller cities, such as the City of Hawthorne, located in the southwestern portion of Los Angeles County with high visibility to the 105 and 405 freeways, have recognized billboards² as a valuable advertising tool, but acknowledged that certain controls may be “necessary to protect and preserve the beauty, character, and aesthetic value of land to protect the safety, welfare and public health of the citizenry”³. The City of Hawthorne has also engaged in profit sharing agreements with advertisers. Other cities, such as New York and Boston, have designated overlay zones for commercial advertising, but also have multiple agency layers of regulation. Further, many larger cities in California do not allow building wraps.
The buildings proposed to be used for signage are used primarily as part of the District’s commercial enterprise. The District operates pursuant to the Port Act, which among other duties, tasks the District with promoting commerce, navigation, fisheries, and recreation within the District. One way the District performs this duty is through operation of a commercial enterprise, including the leasing of District property to private entities. The District’s leasing operations are a government-run commercial operation intended to further the District’s statutory duties. The signage that will be permitted is incidental to and part of that commercial enterprise. The District’s commercial enterprise is also supported by the proposed requirement for the placement of building wraps promoting the District and District-sponsored events. The promotional building wraps are intended to increase revenues to District tenants and to the District through brand recognition, increased attendance at District tenant events, District-sponsored events and increased patronage of the District and District tenants. Shortly after Section 8.32 became effective, the Wyndham submitted an application for a temporary building wrap on Tower 1 and Tower 3 of the Wyndham San Diego Bayside, but subsequently withdrew the application. The building wraps would have been made of vinyl, would have been approximately 70 feet by 20 feet, and would have been placed on the north-facing walls of each of the towers for thirty days.
While advertising can become a valuable source of revenue to the District, it is important that the Board be cautious in adopting regulations which may run afoul of First Amendment Law protection. The issue of to what extent a local government may regulate speech has been considered by the United States Supreme Court as recently as 2015. In Reed v. Town of Gilbert, Ariz. (2013) 135 S. Ct. 2218, the United States Supreme Court determined that the Town of Gilbert’s sign code was content-based. The Town claimed that the purpose of the sign code regulations was to preserve aesthetics and protect traffic safety. The Court held that the sign code didn’t pass strict scrutiny because, even assuming aesthetics and traffic safety are compelling interests, the Town failed to show that, for example, a directional sign would contribute to clutter any more than a political sign. The Supreme Court found the distinctions between signs impermissible because they were based on the content of individual signs. Under the Reed case, any regulation of sign content protected by the First Amendment is presumptively unconstitutional. Importantly, the Reed case does not prevent a governmental agency from regulating other aspects of signage, such as location, size, materials, and illumination. These types of regulations are often referred to as “time, place, manner” restrictions. (Shuttlesworth v. City of Birmingham (1969) 394 U.S. 147, 150-51.) Thus, an agency may adopt tailored regulations without being forced to open its entire jurisdiction to all types of signage.
Based on the foregoing, the General Counsel’s Office proposes the adoption of an ordinance amending Article 8, Section 8.32 of the Code to continue the one year pilot program for an additional year from June 17, 2018 to June 17, 2019 based on the same terms and conditions, except to (i) replace the word “Ordinance” in Section 8.32(b)(9) and Section 8.32(d) with “Section 8.32”; and (ii) add the following sunset provision as Section 8.32(e) to allow the Board to continue, modify or terminate Section 8.32 before the end of the new one year period:
“(e) Term
This Section 8.32 shall terminate as a matter of law, without any further action, at 11:59 p.m. on June 17, 2019; provided, however, the Board of Port Commissioners may continue, modify or terminate Section 8.32 prior to said termination date.”
The Board has the discretion to accept, modify or reject the recommendation of the General Counsel’s Office.
General Counsel’s Comments:
The General Counsel’s Office has drafted and reviewed the agenda sheet, as well as the ordinance attached hereto, and approves them as to form and legality. Signage regulations fall within the general meaning of “police power” regulations, such as those police powers granted to the District through Sections 4, 30 and 55 of the Port Act. (See Graf v. San Diego Unified Port Dist. (1992) 7 Cal.App.4th 1224, 1231 (citing Sections 4, 30 and 55 of the Port Act as location from which Port’s “police powers” derive.) Since the District has the necessary general police powers to regulate signage, the proposed ordinance is appropriate and necessary to regulate Building Wraps on Qualifying Buildings.
Generally, the First Amendment prohibits government regulation of speech. However, in some instances the government can regulate the content of speech. For example, when advertising is incidental to and part of a government agency’s commercial enterprise (as opposed to being the central focus of the commercial enterprise), the government may regulate the content of proposed advertising. (Lehman v. City of Shaker Heights (1974) 418 U.S. 298, 303.) Although the proposed ordinance does not propose regulation of the content of building wraps, these advertisements are incidental to and part of the District’s general commercial enterprise. The time, place, and manner restrictions, and requirement for building wraps that promote the District and District-sponsored events both ensure that the District’s commercial goals related to the building wrap program are satisfied.
There are also some types of speech which the government may regulate, that are entirely unprotected by the First Amendment. The proposed ordinance regulates these categories of speech by prohibiting them on any building wrap. Below is a brief summary of these types of speech, as well as the case holding that each specific type of speech is not protected:
Incitement, where (1) there is a likelihood of imminent illegal content and (2) the speech is directed to cause the imminent illegal conduct. (Brandenburg v. Ohio (1969) 395 U.S. 444, 447-448.)
Fighting words, where the speech is likely to cause a violent response against the speaker or where the speech is an insult likely to inflict immediate emotional harm. (Chaplinsky v. New Hampshire (1942) 315 U.S. 568, 571-572.)
False statement of fact. (Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323, 339-340.)
Commercial speech that is false, misleading, or promotes illegal activity. (Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y. (1980) 447 U.S. 557, 642-644.)
Obscenity, where the material (1) appeals to the prurient interest (based on a community standard), (2) is patently offensive under the law prohibiting obscenity, and, (3) taken as a whole, lacks serious redeeming artistic, literary, political, or scientific value (based on a national standard). (Miller v. California (1973) 413 U.S. 15, 23-24.)
Child pornography. (New York v. Ferber (1982) 458 U.S. 747, 764-765.)
Defamation, with the analysis depending on whether the plaintiff is a public official or candidate (New York Times Co. v. Sullivan (1964) 376 U.S. 254, 267-268), public figure (Gertz, supra, 418 U.S. at 342-343), or a private figure (Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc. (1985) 472 U.S. 749, 763 (over matters of public concern); Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 747 (California law over matters not of public concern).)
As noted above, some of the types of unprotected speech are subject to tests for identification. These tests ensure that that the government is unable to prohibit speech that is otherwise protected, by simply labeling it as one of the unprotected types.
Environmental Review:
Any signage located within the District must comply with all laws and regulations, including, without limitation, the California Environmental Quality Act (“CEQA”) (California Public Resource Code § 21000, et seq.), the California Coastal Act (Public Resource Code § 30000 et seq.), and the Outdoor Advertising Act (California Business and Professions Code § 5200 et seq.). The District, as lead agency under CEQA, has determined that this Ordinance is not subject to CEQA review under State CEQA Guidelines sections 15061(b)(3) and 15378, and alternatively, that the Ordinance is categorically exempt from environmental review under CEQA pursuant to State CEQA Guidelines sections 15301 (existing facilities), 15302 (replacement or reconstruction), 15303 (new construction of small structures), and 15311 (accessory structures).
Specifically, the District has determined this Ordinance is not a “project” subject to CEQA review under Public Resources Code section 21065 and State CEQA Guidelines section 15378 because it would not result in a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. No specific Building Wraps are proposed as part of the Ordinance. It is a pilot program to streamline and formalize the existing process for tenant Building Wraps, to gain additional information on tenant interest in Building Wraps for potential future advertising regulations, and to increase District revenue. Any future expansion in signage, including Building Wraps, is speculative at this time. While tenants within the Commercial District have expressed an interest in Building Wraps, it is uncertain which tenants would apply for Building Wraps under the Ordinance, or the location, size, and other characteristics of such proposed wrap, which would be subject to discretionary environmental review by District staff upon receipt of an application by a tenant.
This District has further determined this Ordinance is not subject to CEQA review under State CEQA Guidelines section 15061(b)(3) because there is no possibility that it would have a significant effect on the environment. The Building Wraps permitted under this Ordinance would have similar visual impacts to wraps currently used by tenants within the Commercial District, would be limited to no more than 30 consecutive days, and would result in no change in land use. The Commercial District is a highly urbanized and densely developed. The existing character of the Commercial District comprises of larger structures blocking upland views of the Bay, multi-floor buildings, parking garage structures and limited roadways (N. Harbor Drive and secondary roads). The addition of Building Wraps during the pilot program would not change the existing visual nature of the Commercial District.
The District further finds that all components of this Ordinance are categorically exempt under CEQA and satisfy the criteria for one or more exemptions. Specifically, this Ordinance is exempt from CEQA review under Class 1 as it allows for the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures or facilities involving negligible or no expansion of use. (State CEQA Guidelines, § 15301.) The Building Wrap permitted under this Ordinance would result in minor alterations to the exterior of the Qualifying Buildings within the Commercial District and would not expand their current land use.
This Ordinance is also exempt under Class 2 as it allows for the replacement or reconstruction of existing structures and facilities where the new structure will be located on the same site as the structure replaced and will have substantially the same purpose and capacity as the structure replaced. (State CEQA Guidelines, § 15302.) The Building Wrap permitted under this Ordinance may replace existing Building Wrap that is affixed to the same Qualifying Buildings and within the same or similar exterior facing surface area as the new signage.
This Ordinance is also exempt under Class 3 as it allows for the construction and location of limited numbers of new, small facilities or structures (State CEQA Guidelines, § 15303) and Class 11 as it allows for the construction, or replacement of minor structures accessory to (appurtenant to) existing commercial, industrial, or institutional facilities (State CEQA Guidelines, § 15311.) The Building Wrap permitted under this Ordinance would be accessory to the Qualifying Buildings to which the signage is affixed.
The District further finds that none of the exceptions to the categorical exemptions under State CEQA Guidelines section 15300.2 applies because (a) the Building Wraps permitted under this Ordinance would not be located in a particularly sensitive environment but instead would be affixed to existing Qualifying Buildings within an urban area within the Commercial District; (b) the cumulative impact of successive signs of this same type in the same place over time would not be significant because the Building Wrap permitted under this Ordinance is limited in duration and scope, and there are no reasonably foreseeable signs that would result in cumulative impacts; (c) the Building Wrap permitted under this Ordinance would not involve any unusual improvements but rather would involve only signage comparable to existing signage at the various sites throughout the District's jurisdiction; (d) the Building Wrap permitted under this Ordinance would not be located on a site designated pursuant to Government Code section 65962.5 (hazardous waste site); and (e) the Building Wrap signage permitted under this Ordinance would not involve any improvements, modifications, or other changes to an historical resource or damage to scenic resources within a highway officially designated as a state scenic highway. Therefore, none of the circumstances outlined in State CEQA Guidelines section 15300.2 applies, and this Ordinance qualifies for the categorical exemptions outlined above.
The District has considered all comments received at the public meeting on May 16, 2017 prior to adoption of this Ordinance. The determination that the District’s approval of this Ordinance is not subject to CEQA review reflects the District’s independent judgement and analysis. The District authorizes and directs staff to prepare, execute and file with the County Clerk a Notice of Exemption for approval of this Ordinance.
The proposed ordinance does not allow for “development,” as defined in Section 30106 of the California Coastal Act, or “new development,” pursuant to Section 1.a. of the District’s Coastal Development Permit (CDP) Regulations because, the adoption of the Ordinance will not result in, without limitation, a physical change, change in use or increase the intensity of uses. Therefore, issuance of a CDP or exclusion is not required. However, the District’s projects require processing under the District’s CDP Regulations, including any future Building Wraps within the District’s jurisdiction. The Board’s adoption of the ordinance in no way limits the exercise of the District’s discretion under the District’s CDP Regulations, and if applications for Building Wraps are submitted, they will undergo review under the District’s CDP Regulations. That review may result in the issuance of a Coastal Act exclusion or a CDP.
The proposed ordinance is consistent with the Port Act and Public Trust doctrine. The proposed ordinance provides a discretionary process for the potential erection of Building Wraps. Section 87 of the Port Act allows for structures incidental or convenient for the promotion of commercial uses and commerce on District Tidelands. Such Building Wraps will promote the commerce activities and commerce, District sponsored events and the public’s use of the District. Therefore, the proposed ordinance is consistent with the Port Act and Public Trust Doctrine.
Equal Opportunity Program:
Not applicable.
PREPARED BY:
Ellen F. Gross
Assistant General Counsel
Elizabeth C. Alonso
Deputy General Counsel
Attachment(s):
Attachment A: Ordinance 2891
Attachment B: Section 8.32 of the San Diego Unified Port District Code
Attachment C: Map of Commercial District
¹“Structure” is defined in Section 8.30 of the Code as “an edifice or portion thereof or a building or portion thereof of any kind or any construction built up or composed of parts joined together in some definite manner including a wall, fence, pier, post, or shelter on which Signage is attached.”
²Section 17.04 of the City of Hawthorne’s Municipal Code defines “Billboard” broadly to include off-site signs, signboards, or outdoor advertising displays used for advertising and display purposes.
³City of Hawthorne, City Council Agenda Bill, Agenda Item No. 10, Meeting of August 23 & September 13, 2016.