Wednesday, November 25th, 2009 ::: City Hall: New By-Law

In keeping with the standards of Toronto’s billboard industry, CityBillboardTax.ca is not particularly aesthetically pleasing. On every browser that we used, the lines of text in the first section don’t even wrap around when they get to the edge of the screen. In fact, there is little to distinguish it from a 1992-era web site. Take a look:

Also, yesterday the industry circulated a two pager [PDF] that also re-submits the same lies that Planning and Growth Management Committee unanimously rejected earlier this month when it recommended that City Council adopt a new signs by-law and billboard tax.

Let’s take a look at what OMAC is saying.

The proposed new by-law regulations were developed without proper consultation with the industry and are based on inaccurate information and unproven assumptions that ignore the real situation in Toronto. Worse yet, the new rules have not been field tested to determine their impact on our industry.

In truth, before the new regulations were written, City Staff consulted with OMAC and its members over 22 times. Furthermore, the Lobbyist Registry indicates that industry lobbyists have had nearly 80 closed door meetings with members of Council in the last month alone. In fact there was so much consultation with OMAC that Rosanne Caron, President of OMAC, in this letter [PDF] dated February 13th, 2009, states that the City was “receptive” to the industry’s feedback:

The draft by-law favours City-owned outdoor advertising inventory which is not taxed or restricted. This is unfair to OMAC members. The City of Toronto is the single largest beneficiary of revenue from the outdoor advertising industry. OMAC members contribute $36.8 million in average annual revenue to the City through current lease agreements.

These three sentences contradict themselves. First, OMAC states that its members will be at a disadvantage because City-owned billboard space is not being taxed. However, those billboards are in fact operated by OMAC members (and in the case of the City’s Street Furniture, “owned” by an OMAC member.) OMAC then wants credit for contributing $36.8 Million in rents for the City-owned signs that they operate. In other words, a huge slice of OMAC’s inventory is not being taxed at all. Furthermore, the billboard tax should generate $10.5 Million from private properties. This is less than 30% of the rents OMAC submits to the City for tax-free signs on city property. The tax is a mere drop in the bucked for OMAC members - it’s a less than 30% increase on what they’re already paying the City.

OMAC believes the by-law has been developed in bad faith as a punitive measure against outdoor advertising in Toronto.

The billboard tax is not an act of collective punishment; it’s merely a user fee, a fee on the billboard industry for using the City’s enforcement resources; it’s therefore a tax that pays heed to the free market principles of cost-recovery. On the other hand, if this was a punitive measure, it would be completely justified given the OMAC’s culture of non-compliance with City Council decisions. Time and time again, this web site has shown that OMAC members continued to operate illegal billboards for years after City Council rejected the application for the sign. It is a bit rich for OMAC to now appeal to that same City Council for relief from the mess they created by their own palpable disregard for City Council’s authority.

Sign permits expire after 5 years without clear guidelines for renewal

The proposed signs by-law clearly states that a sign permit may be renewed after 5 years if the sign still conforms to the by-law even if another billboard is permitted within the proposed 100M separation of billboards requirement. The only way a billboard would not be able to be renewed after 5 years is if there is a re-zoning of the property or a nearby property; in which case the billboard company is entitled to extensive due process, including an appeal to the Ontario Municipal Board on each re-zoning.

Billboard industry provides free space to charities valued at $6 million

The free space that the billboard industry provides to charities would not be harmed by the proposed by-laws. Billboard companies from time to time have space on their signs that they cannot sell to paying advertisers. They contribute the “fair market value” of this space to tax deductible charities in exchange for placing the charities’ ads in the space. Billboard companies then deduct the regular price of the space they give to charities on their taxes as a charitable contribution. Since this is space they couldn’t sell in the first place, charity space is a profit generator that allows them to deftly monetize unsold space. It is therefore in no danger of anything besides a CRA audit.

The industry’s submission that the average yearly revenue for a 10′x20′ billboard is $9,950 is laughable. This would suggest that a typical 4-week advertising campaign would cost the advertiser only $765.38. The true cost to rent a standard typical billboard in Toronto for 4-weeks is more like $4000. Many signs rent for significantly more than that. In fact, this not particularly exceptional sign on Adelaide Street West earned Titan Outdoor over $200,000 in 2008 according to documents filed with the Ontario Superior Court.

Furthermore,  if the industry wasn’t making serious profits from billboards, why would they take the risk of spending their capital to build illegal billboards everywhere, even after City Council repeatedly said you can’t have the signs?

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