Development

New York City Sign Regulations Upheld

Clear Channel Outdoor, Inc. v. City of New York

NYLJ 4/9/09, p. 31., col. 1

U.S.Dist. Ct., S.D.N.Y.

(Crotty, J.).

In two related cases brought by outdoor advertising companies challenging New York City's regulation of outdoor advertising signs, both the advertising companies and the city sought summary judgment. The court granted the city's summary judgment motion, upholding the city's regulations.

Since 1940, The City of New York has regulated outdoor advertising signs in residential districts and within 200 feet of arterial highways. The city's enforcement of those regulations had been lax, and in 2001, the City Council amended the zoning resolution to reduce the size of accessory signs near highways and to establish size requirements for signs in manufacturing districts. At the same time, the Council provided for enhanced enforcement of its sign regulations. The Council further amended the regulations in 2003 to require outdoor advertising companies to provide the Department of Buildings with an inventory of all signs within 900 feet of an arterial highway. Regulations enacted pursuant to the new provisions exempt non-conforming signs legally in place in 1980, but establish documentation requirements to qualify for non-conforming use status. In this action, two outdoor advertisers challenged different provisions of the new regulatory scheme. Clear Channel, which maintains a large number of signs visible from arterial highways, challenged the regulatory scheme on the ground that numerous exceptions permitted by the city undermine the regulatory scheme so that the regulation does not advance the asserted governmental interest in traffic safety and aesthetics. Metro Fuel, which maintains smaller illuminated signs in commercial and manufacturing districts, contended that the city's restrictions on illumination are so pierced by exceptions that they do not accomplish the city's asserted objectives.

In awarding summary judgment to the city, the court rejected Clear Channel's argument that the prohibition on arterial advertising would not advance the city's asserted interest because sign owners would simply convert commercial advertising signs to non-commercial signs not covered by the ban. The court also indicated that the amended zoning resolution left ample room for outdoor advertising, and that the documentation requirements were narrowly tailored to ensure an accurate accounting of non-conforming signs. The court then rejected Metro Fuel's argument that the city's aesthetic justification for its prohibition on illuminated signs in certain districts was mere pretext, because the city permitted similar signs on street furniture including bus shelters and newsstands ' where the city could collect franchising fees for the signs. The court simply held that the city could apply different rules via zoning from those it applies when regulating street furniture.

COMMENT

A municipality may regulate non-accessory commercial signs if: 1) the regulation directly advances an asserted substantial governmental interest; and 2) the regulation is not more extensive than necessary to serve that interest. In Metromedia, Inc. v. City of San Diego, 453 U.S. 490, the Supreme Court, while invalidating San Diego's regulation of non-commercial advertising signs, indicated that San Diego could ban all non-accessory commercial signs under the asserted reason of traffic safety and aesthetics, even though the ordinance permitted on-site commercial signs. Metromedia, the sign owner, had argued that the regulation's exception permitting on-site commercial signs undermined the interest in traffic safety and aesthetics. The Court's plurality opinion rejected the argument, reasoning that San Diego could still significantly improve traffic safety and aesthetics despite the on-site exception, and that a city may choose to value one kind of commercial speech over another.

However, when the sign owner instead challenges the constitutionality of the city's enforcement of a Metromedia-like sign prohibition, one federal court has held the enforcement unconstitutional when the city permits individually determined exceptions, concluding that the exceptions directly undermine the city's interest in improving traffic safety and aesthetics. In World-Wide Rush v. City of Los Angeles, 563 F. Supp. 2d 1132, the court held that a ban on all non-accessory commercial signs within 2,000 feet of a freeway was unconstitutional “as applied” because the city actually permitted three non-accessory signs within 2,000 feet of freeways (and did not permit plaintiff sign-owner's signs). The court reasoned that if the excepted signs are identical to those prohibited, then such discriminatory enforcement violates the First Amendment because the excepted signs directly undermine the ban's objective of improving traffic safety and aesthetics, even when the exceptions are few in number.

World-Wide Rush relied upon Greater New Orleans Broadcasting Ass'n v. United States, 527 U.S. 173, where the Court held that government policies permitting tribal casinos and state lotteries to advertise directly undermined a ban on private casino advertising, the goal of which was to reduce gambling-related social costs, and thus the ban was unconstitutional. In Clear-Channel v. New York, the court stated that the “all-or-nothing” approach of World-Wide Rush misinterpreted the reasoning of Greater New Orleans, explaining that three exceptions are not enough to undermine the interest in improving traffic safety and aesthetics. Clear-Channel instead interpreted Greater New Orleans as holding that a regulation or ordinance must be “riddled with exceptions” in order to undermine advancing a government interest, but Clear Channel does not indicate how many exceptions would be necessary before the governmental interest is undermined, simply indicating that three is not “nearly enough.”

New York courts have construed the New York Constitution as coterminus with the First Amendment to the extent that there are no additional restrictions on the government's ability to regulate commercial speech. In Town of Carmel v. Suburban Outdoor Advertising Co., Inc., 127 A.D.2d 204, on facts nearly identical to Metromedia, the court upheld the ordinance to the extent it banned non-accessory commercial speech under the asserted reason of traffic safety and aesthetics.

Refusal to Rezone Requires Return of Down Payment

Emanuel Development Corp. v. Spring Road LJR/NIBA Associates, LLC

NYLJ 4/13/09, p. 36., col. 2

AppDiv, Second Dept.

(memorandum opinion)

In purchaser's action for return of a down payment, purchaser appealed from the Supreme Court's denial of its summary judgment motion. The Appellate Division reversed and awarded summary judgment to purchaser, holding that the town's refusal to rezone the property to permit a condominium development entitled purchaser to return of the down payment.

The sale contract between seller and purchaser included a rider making the agreement “subject to and conditioned upon the approval of Seller's application to allow for the construction of residential condominium units.” The rider gave either party the right to terminate if seller failed to obtain zoning approval within nine months. Seller applied for rezoning, and the town board rezoned the property to an R-3M Garden Apartment District, which permitted construction of seven units developed as town houses with ownership by a homeowners' association. The rezoning resolution, however, provided that the project would not be owned as a condominium or co-operative development. Purchaser then sought return of the down payment, and when seller refused, purchaser brought this action and moved for summary judgment. Supreme Court denied the motion, holding that questions of fact remained about whether the contract used the word “condominium” in its generic sense to mean attached housing units. Purchaser appealed.

In reversing, the Appellate Division held that the word “condominium” has a legal meaning defined in the Real Property Law, and that there was, therefore, nothing ambiguous about the sale contract. Because the zoning resolution explicitly precluded condominium ownership, purchaser was entitled to return of the down payment.

New York City Sign Regulations Upheld

Clear Channel Outdoor, Inc. v. City of New York

NYLJ 4/9/09, p. 31., col. 1

U.S.Dist. Ct., S.D.N.Y.

(Crotty, J.).

In two related cases brought by outdoor advertising companies challenging New York City's regulation of outdoor advertising signs, both the advertising companies and the city sought summary judgment. The court granted the city's summary judgment motion, upholding the city's regulations.

Since 1940, The City of New York has regulated outdoor advertising signs in residential districts and within 200 feet of arterial highways. The city's enforcement of those regulations had been lax, and in 2001, the City Council amended the zoning resolution to reduce the size of accessory signs near highways and to establish size requirements for signs in manufacturing districts. At the same time, the Council provided for enhanced enforcement of its sign regulations. The Council further amended the regulations in 2003 to require outdoor advertising companies to provide the Department of Buildings with an inventory of all signs within 900 feet of an arterial highway. Regulations enacted pursuant to the new provisions exempt non-conforming signs legally in place in 1980, but establish documentation requirements to qualify for non-conforming use status. In this action, two outdoor advertisers challenged different provisions of the new regulatory scheme. Clear Channel, which maintains a large number of signs visible from arterial highways, challenged the regulatory scheme on the ground that numerous exceptions permitted by the city undermine the regulatory scheme so that the regulation does not advance the asserted governmental interest in traffic safety and aesthetics. Metro Fuel, which maintains smaller illuminated signs in commercial and manufacturing districts, contended that the city's restrictions on illumination are so pierced by exceptions that they do not accomplish the city's asserted objectives.

In awarding summary judgment to the city, the court rejected Clear Channel's argument that the prohibition on arterial advertising would not advance the city's asserted interest because sign owners would simply convert commercial advertising signs to non-commercial signs not covered by the ban. The court also indicated that the amended zoning resolution left ample room for outdoor advertising, and that the documentation requirements were narrowly tailored to ensure an accurate accounting of non-conforming signs. The court then rejected Metro Fuel's argument that the city's aesthetic justification for its prohibition on illuminated signs in certain districts was mere pretext, because the city permitted similar signs on street furniture including bus shelters and newsstands ' where the city could collect franchising fees for the signs. The court simply held that the city could apply different rules via zoning from those it applies when regulating street furniture.

COMMENT

A municipality may regulate non-accessory commercial signs if: 1) the regulation directly advances an asserted substantial governmental interest; and 2) the regulation is not more extensive than necessary to serve that interest. In Metromedia, Inc. v. City of San Diego, 453 U.S. 490, the Supreme Court, while invalidating San Diego's regulation of non-commercial advertising signs, indicated that San Diego could ban all non-accessory commercial signs under the asserted reason of traffic safety and aesthetics, even though the ordinance permitted on-site commercial signs. Metromedia, the sign owner, had argued that the regulation's exception permitting on-site commercial signs undermined the interest in traffic safety and aesthetics. The Court's plurality opinion rejected the argument, reasoning that San Diego could still significantly improve traffic safety and aesthetics despite the on-site exception, and that a city may choose to value one kind of commercial speech over another.

However, when the sign owner instead challenges the constitutionality of the city's enforcement of a Metromedia-like sign prohibition, one federal court has held the enforcement unconstitutional when the city permits individually determined exceptions, concluding that the exceptions directly undermine the city's interest in improving traffic safety and aesthetics. In World-Wide Rush v. City of Los Angeles, 563 F. Supp. 2d 1132, the court held that a ban on all non-accessory commercial signs within 2,000 feet of a freeway was unconstitutional “as applied” because the city actually permitted three non-accessory signs within 2,000 feet of freeways (and did not permit plaintiff sign-owner's signs). The court reasoned that if the excepted signs are identical to those prohibited, then such discriminatory enforcement violates the First Amendment because the excepted signs directly undermine the ban's objective of improving traffic safety and aesthetics, even when the exceptions are few in number.

World-Wide Rush relied upon Greater New Orleans Broadcasting Ass'n v. United States, 527 U.S. 173, where the Court held that government policies permitting tribal casinos and state lotteries to advertise directly undermined a ban on private casino advertising, the goal of which was to reduce gambling-related social costs, and thus the ban was unconstitutional. In Clear-Channel v. New York, the court stated that the “all-or-nothing” approach of World-Wide Rush misinterpreted the reasoning of Greater New Orleans, explaining that three exceptions are not enough to undermine the interest in improving traffic safety and aesthetics. Clear-Channel instead interpreted Greater New Orleans as holding that a regulation or ordinance must be “riddled with exceptions” in order to undermine advancing a government interest, but Clear Channel does not indicate how many exceptions would be necessary before the governmental interest is undermined, simply indicating that three is not “nearly enough.”

New York courts have construed the New York Constitution as coterminus with the First Amendment to the extent that there are no additional restrictions on the government's ability to regulate commercial speech. In Town of Carmel v. Suburban Outdoor Advertising Co., Inc., 127 A.D.2d 204, on facts nearly identical to Metromedia , the court upheld the ordinance to the extent it banned non-accessory commercial speech under the asserted reason of traffic safety and aesthetics.

Refusal to Rezone Requires Return of Down Payment

Emanuel Development Corp. v. Spring Road LJR/NIBA Associates, LLC

NYLJ 4/13/09, p. 36., col. 2

AppDiv, Second Dept.

(memorandum opinion)

In purchaser's action for return of a down payment, purchaser appealed from the Supreme Court's denial of its summary judgment motion. The Appellate Division reversed and awarded summary judgment to purchaser, holding that the town's refusal to rezone the property to permit a condominium development entitled purchaser to return of the down payment.

The sale contract between seller and purchaser included a rider making the agreement “subject to and conditioned upon the approval of Seller's application to allow for the construction of residential condominium units.” The rider gave either party the right to terminate if seller failed to obtain zoning approval within nine months. Seller applied for rezoning, and the town board rezoned the property to an R-3M Garden Apartment District, which permitted construction of seven units developed as town houses with ownership by a homeowners' association. The rezoning resolution, however, provided that the project would not be owned as a condominium or co-operative development. Purchaser then sought return of the down payment, and when seller refused, purchaser brought this action and moved for summary judgment. Supreme Court denied the motion, holding that questions of fact remained about whether the contract used the word “condominium” in its generic sense to mean attached housing units. Purchaser appealed.

In reversing, the Appellate Division held that the word “condominium” has a legal meaning defined in the Real Property Law, and that there was, therefore, nothing ambiguous about the sale contract. Because the zoning resolution explicitly precluded condominium ownership, purchaser was entitled to return of the down payment.