Can a Changeable-copy Sign Help a Business?

A car wash in California had a two-color, freestanding, rectangular ground sign. It replaced it with a sign of the same proportion, which constituted a multi-color, dimensional cabinet sign on a pole and a manual, changeable-copy sign below it. The sign cost $15,000.

In the first year after the new sign was installed, gross revenue for the car wash increased by $135,000 — 900% of the cost of the sign. A licensed appraiser said that the overall value of the sign was $340,000. The full story and detailed appraisal formulae were published in the September 1999 issue of Signs of the Times magazine.

How Did One Car Dealer Succeed When Three Others had Failed at the Same Lot?

Melvin Tuchez worked as an employee in the auto-sales business, and then he purchased his own dealership, Aztec Motors, in San Fernando, California. He believed three other auto-sales companies on the same site had failed due to inferior branding and weak management. He immediately began spending $16,000 per month on print and on-air advertising.

A sign company called upon Tuchez, and he purchased two on-premise, electronic pole signs. He reported an immediate increase of 10 walk-in customers per week, which resulted in six additional sales, and paid for the signs in less than a month. He subsequently reduced his advertising budget to $4,000 per month. Additionally, he began using the logo from his signs on sales and promotional materials.

The two signs cost $15,000. With the additional sales, and the reduction in other advertising costs, an appraiser calculated his savings over a three-year period at $400,000. Tuchez subsequently opened three additional Aztec Motors locations.

What Difference Does an Angled Sign Make Versus a Sign that’s Parallel to the Road?

Elsewhere in this series of questions, the difference in conspicuity for parallel and perpendicular signs is calculated, along with the requisite minimum sizes for the letters of each. But what if the local sign code won’t allow a bigger sign, and not enough projection length for a legible perpendicular sign? Would a sign with at least some angle make a difference?

Frenchy’s Bistro was located on Anaheim St., a busy thoroughfare in Long Beach, California. As one of four tenants in a commercial building, it had two signs: a non-illuminated wall sign and a tri-color canopy that projected the maximum 30 inches.

As an alternative, Frenchy’s purchased a “double-faced” electric, cabinet sign, but the sign faces weren’t back to back, but angled out from the wall in a V-shape toward each other.

Before the new sign(s) was(were) installed, Frenchy’s had $279,000 in pre-tax income annually. After the sign was installed, sales increased 16% immediately. Over the next year, they increased an additional 32%. The owners surveyed their guests and determined the sign was directly responsible for 10% of all sales. The net income directly attributable to the sign for a year was $16,182. The following year, it increased to $21,360. This also meant an additional $8,865 in state and federal income tax.

Other calculations for the $5,700 sign included that its cost per thousand exposures (CPM, the standard way to compare different forms of advertising) was 15 cents. The cost per month for the sign was $121.11. At the time (2000), other CPMs were as follows:

  • A 30-second, prime-time TV ad: $18
  • A half-page, black-and-white newspaper ad: $10.80
  • A full-page, four-color magazine ad: $8.70
  • A one-minute, drive-time radio ad: $5.30
  • A 30-day, 30-sheet poster panel: $1.60

The full story appears in the September 2000 issue of Signs of the Times magazine.

What Happened in the Denny’s v. Agoura Hills Pole-sign Case?

In 1985, the city of Agoura Hills, California enacted a sign ordinance that prohibited all pole signs, with the exception of a few that were less than 6 feet tall. It included an amortization period that ended in March 1992, at which time all of the pole signs would have to come down, without any cash compensation.

Agoura Hills is bisected by US Highway 101, which runs significantly high above the city. Thus, the only way highway motorists could know that gas stations and restaurants were located below was due to the high-rise pole signs.

Burger King, for example, conducted a traffic-flow study and discovered that 88% of the motorists who passed its restaurant did so on the highway. Only 12% passed it on the road below. The Burger King was specifically built to serve highway customers. Burger King determined that 60% of its sales were directly attributable to its sign. It calculated that the loss of the pole sign would constitute a $2 million loss in profit over a 15-year period.

As for other end users, the court found that the removal of pole signs would cause 35% loss of gross revenue for both Texaco and McDonald’s. This would mean $336,000 less revenue for Texaco in the first year the pole sign was removed, and $1.1 million loss for McDonald’s in its first year.

In 1983, California attorney Bob Aran authored a statute called Section 5499, which stated, “No city or county shall require the removal of any on-premise advertising display on the basis of its height or size by requiring conformance with any ordinance or regulation introduced or adopted on or after March 12, 1983, if special topographic circumstances would result in a material impairment of visibility of the display or the owner’s or user’s ability to adequately and effectively continue to communicate with the public.”

Although the city contended that it banned all pole signs, the court found that the ordinance “plainly discriminated between tall signs and short signs.” The court also ruled that “special topographic circumstances” referred not only to natural surface contours, but also to “all non-temporary surface conditions of whatever origin.” As for visual impairment, the court said more than natural impairments (hills, trees) had to be considered, such as buildings, utility poles, etc.

The court concluded, “The evidence clearly establishes that these special topographic circumstances would materially impair the visibility of conforming signs for each plaintiff. The plaintiffs are entitled to prevail, first of all, based on the material impairment of raw visibility.” Furthermore, if the ban were enforced, the court said conforming signs would not be visible at all from the area’s freeway, and that conforming signs would not be visible to freeway motorists in time to safely exit at the off ramp.

What has Senator Orrin Hatch Said about Signage?

In 1998, the former Signage Foundation for Communication Excellence presented its National Sign Users’ Conference on Sign Regulation and Marketing, in conjunction with the International Sign Association and its Sign Expo ’98 tradeshow. The keynote speaker at the conference was Senator Orrin Hatch (R-UT). The following are some highlights from his address.

“My topic today is the state of the law, particularly Constitutional law, as it applies to commercial communication. The term. of course, includes signs, billboards and the like, legitimate forms of communication. I believe government regulation has become burdensome, often times unconstitutional.

Advertising has been part of our culture since colonial times. Defense of political and commercial speech was recognized by the common law. It has been recognized since day one in this country. In America, the printed word was given greater protection than it was in mother England. Indeed, respect for the printed word was so great that printers were often considered heroes of the Revolutionary War and the new Republic. Witness Ben Franklin, for example.

At the time, legislatures could only prohibit advertising that was fraudulent or misleading. It was not until 1975, in the Bigelow v. Virginia case, and in 1976, in Virginia Board of Pharmacy v. Virginia Consumer Council Inc., that the Supreme Court held that the First Amendment protected truthful and non-misleading commercial messages. The public has an interest in receiving accurate commercial information, and the government has little or no correlative interest in censoring the content of the message.

The Supreme Court recognized a state may regulate commercial advertising more freely than political speech. It may also impose a content-neutral set of restrictions on the time, place or manner of speech. But it may not completely ban the speech.

The content-neutral restrictions often are used merely as an excuse. Other sign codes delegate almost unfettered discretion to bureaucrats. In challenging these restrictions, apply the commercial-speech test of Central Hudson Gas & Electric Corp. v. Public Service Commission in 1980. Here, the government bears the burden of justifying a restriction on commercial speech. The four-part test requires:

  • Is the speech a lawful activity and not misleading?
  • Is the asserted governmental interest substantial?
  • Does the restriction directly advance that interest?
  • Is the restriction narrowly tailored to advance that interest?

In Forty-Four Liquor Mart Inc. v. Rhode Island, in 1996, the Supreme Court increased the protection by subjecting the restrictions to a more strict review. It struck down a prohibition on advertising the price of alcoholic beverages.

Besides First Amendment implications, regulation of sign advertisements raises Fifth Amendment property-rights concerns. Our founders knew from the beginning of the creation of the Republic the importance of property rights. It’s one reason why we have our tremendous wealth and free-market system. Our founders feared that the government they helped form might use its power to abuse the people it was designed to protect.

John Adams, the second president said, “The moment the idea is admitted into a society, that property is not as sacred as the law of God, and as there is not force of law and public justice to protect it, anarchy and tyranny commenced.”

The Father of the Constitution, James Madison, in his celebrated essay on property, wrote that the very purpose of government is to protect private property. That’s why the last clause of the Fifth Amendment was added to the Bill of Rights. Known as the “Takings Clause,” it states, “Nor shall private property be taken for pubic use without due process of law, nor shall private property be taken for public use without just compensation.”

With the growth of government at all levels — federal, state and local — private property has become increasingly under attack. Too often, localities abuse zoning powers by restricting sign advertising on so-called “aesthetic” grounds. Too often, localities misuse the nuisance doctrine to prohibit otherwise legal advertising.

in the 1992 Lucas v. South Carolina Coastal Council Supreme Court case, it struck down zoning regulations that would have forbid the building of a beachfront home. The court said the locality must factually demonstrate that the use of the private property is engendering some concrete danger. Mere aesthetics may not be enough.

What’s the Economic Difference Between a Perpendicular Doubled-faced and Single-faced Sign?

When a Pier 1 Imports store opened in Germantown, TN (a suburb of Memphis), in 1991, it was granted a permit for a sign that faced west-bound traffic. However, no signage was visible to west-bound traffic. A few months after the store’s opening, sales were 25% below projections, despite typical promotions, advertising and direct mailings.

Pier 1 subsequently surveyed 200 shoppers through a market-research firm about having a second sign. The responses were the following.

Are the signs helpful to you? 66% said “very helpful;” 31.5% said “somewhat helpful,” and 2.5% said “not at all helpful.”

Does the sign increase public safety? 93% said yes; 75 said no.

Does the sign affect aesthetics negatively? 91% said no; 5.5% said yes, and 2.5% had no opinion.

Is the sign more of a public benefit or a public nuisance? 90.5% said benefit; 5.5% said nuisance, and 4.5% had no opinion.

Expert appraisal determined that the gross annual income for the store would be $1.2 million with the second sign, and $1,020,000 without it. Store officials stated that overhead and the cost of merchandise being sold was $1,020,000 so, without the second sign, the store would generate no profit.

As for the community itself, Pier 1 estimated that, without the second sign, it would pay, city, county and state taxes of $76,080. With the second sign and increased sales, it would pay $104,229. Thus the tax-revenue difference for the town would be $28,000.  Presented with this evidence, Germantown officials readily granted a variance for the second sign. The full story about this variance appeared in the April 1992 issue of Signs of the Times magazine.

What Does a Business Owner Think About the Bozeman, MI Sign Code?

Roger Koopman wrote an editorial for the Bozeman Daily Chronicle a quarter century ago. Does it sound like it could be written today? This appeared in the February 1991 issue of Signs of the Times magazine.

One of the more interesting hypocrisies of contemporary liberalism is the ease with which its followers can advocate a soft-on-crime posture when traditional issues of justice are involved (violence, theft, etc.), while, at the same time, they can pass the severest of laws against peaceful citizens who never did violence to anyone. They spew forth every possible excuse on behalf of the thug, the murderer and the rapist, but if you are a small businessman who somehow thought you had the right to do with your own property as you saw fit, they’ll nail you to the wall for failing to get the requisite licenses and permissions from the Central Planning Bureau.

So it is with the bullies at City Hall who call themselves commissioners. By way of a “temporary zoning law,” they created a whole new class of “criminals” from among those who failed to realize that independent entrepreneurial thinking has no place in the Brave New Bozeman of 1990. The scapegoat is the business sign, but the issue is freedom.

Under the new sign law, designed to reduce something they call “visual clutter,” they have totally banned new billboards and portable signs, and have mandated the removal of portable signs within two years. Various other bans and restrictions have been decreed. Violators of the sign law (criminals all) will be fined up to $500 and jailed up to six months for every day of non-compliance. In other words, if a businessman was using an “illegal” sign for a month, these fair-minded, tender-hearted City Commissioners could fine him $15,000 and lock him up for 15 years.

Meanwhile, your tax dollars are being used to pay city employees to patrol our streets in search of these dastardly sign violators. And our commissioners are preparing to spend another $20,000 of our money to hire an out-of-state “expert” to design Bozeman’s “streetscapes” of the future.” (They spent $50,000 last year to have some Denver consultant “plan” our community for us.)

The question must be asked: Just who are our city commissioners representing — the people of Bozeman or a narrow political constituency that noisily espouses their radical agenda?

Because the commission has no intention of surveying our opinions on this or any other issue, I conducted my own survey, using a confidential questionnaire that was given to every client/customer who entered my business in May.

My business displays an 8-ft., four-color, lighted sign that conforms to city regulations. Part of my survey dealt with specific attitudes toward that sign, while the remainder addressed general sign regulation issues. Here are the results from my 189 responses:

  • 99.3% said my sign didn’t bother them at all.
  • 97.2% said the sign was useful in locating my business.
  • 81% thought the size of my sign was fine; 19% thought it should be made “larger and more visible,” and 0% thought it should be smaller.
  • 65.5% “seldom, if ever” think about the visual appearance of business signs.

When asked what they would do about a “highly offensive sign,” 78.6% said they would express their displeasure to the business owner or do business elsewhere. Only 29.8% thought government officials should handle the matter.

These results clearly state that people put their faith in individual responsibility and in the marketplace, but this is a concept our elitist city government can’t even begin to understand.  And so they legislate to the approximately 10% who are bothered by the signs and want to see the government do something. In so doing, they ignore the 90% who just want to be left alone.

All the criticisms I received from my last editorial came from educators. Many of the “sign whiners” have little appreciation of what it takes for a town like Bozeman to build a business, meet a payroll and otherwise scratch out a meager and insecure living.

A free society is not a perfect society, but it is the freedom to choose, and to accept responsibility for our choices, that brings out the best in all of us. It creates a society that is dynamic, ever-changing and rich with diversity. Beware of those who would shatter our community by seeking to politically impose not diversity, but uniformity, not growth, but control, not change but resistance to all things different and new.

A look at the 2016 Bozeman sign code shows a ban on LED, inflatable and rooftop signs. Additionally, “A comprehensive sign plan shall be submitted for all commercial, office, industrial, and civic uses consisting of two or more tenants or occupant spaces on a lot(s) subject to a common development permit or plan.” The application fee is $220. 

What Does Amortization Mean for Signage?

Amortization concerns the compensation for a sign that is no longer in compliance when a sign code changes. The theory is that, if a sign is allowed to exist for a certain period of time, the owner of it will recoup their investment before the sign has to be removed, which is a way of circumventing the “just compensation” portion of the 14th Amendment. The fallacy of this is explained in the following article, written by certified planner Richard Bass, that appears in The Signage Foundation website’s Research Library. http://www.thesignagefoundation.org/Portals/0/SFI%20Amortization%20Explained.pdf

An example of appropriate argument for just compensation occurred in Richfield, Michigan with regard to a Michael’s crafts store. Its rooftop on-premise sign, which functioned like a billboard, had been built in the 1950s by the prior tenant. In 1987, Richfield banned rooftop signs. A 10-year amortization was included in the sign ordinance, and the Michael’s sign was ordered to be removed in 1998.

For “just compensation,” three valuation methods were used: cost of replacement, the income approach and a market comparison. Estimates were that Michael’s would need to spend $825,000 annually to replace the advertising value of its rooftop sign. Factoring in a 10% annual return on investment, this would mean the cost of replacing the sign’s advertising value would be $8.25 million.

As for income, the sign was calculated to account for 20-30% of the store’s sales. Conversely, the loss of the sign would mean a 20-30% decrease in sales. This would account for $200,000 less profit annually. Given the additional loss of investment income, the potential loss was calculated at $2 million.

As for replacement cost, based on a square-foot lease rate for a different use, the loss was calculated to be $56,000 annually. With a 10% investment revenue, this would mean a los of $560,000. Faced with this evidence, the court determined Richfield would have to pay cash compensation. A settlement occurred out of court. A full report on these proceedings appeared in the December 1998 issue of Signs of the Times magazine.

Conversely, others have failed to show an economic loss due to amortization. One instance occurred in Ridgeland, Mississippi in 1999. The city passed a sign ordinance that restricted ground signs to 50 square feet and a height of 12 feet, with exceptions for signs located within 300 feet of the Interstate highway. The ordinance included a five-year amortization period, which meant that legally erected signs, which would now become illegal with the passing of the sign ordinance, could stay up for another five years. But then they would have to be taken down, and that time period would suffice as just compensation.

Five years later, numerous businesses — Shoney’s, Midas Muffler, Red Roof Inns — filed an appeal to keep their signs. They invoked the precedent case of Lamar Adv. of South Georgia v. City of Albany (1990). The appeal process lasted three years, but the sign ordinance was upheld. The appellants erred in not documenting the economic ramifications of their signs being taken down, which is something Lamar had done when it won its appeal. This case is detailed in the June 1999 issue of Signs of the Times magazine.

As of November 2016, exactly half of the U.S. states (and the District of Columbia) recognize amortization as a legitimate form of just compensation, and the other 25 do not.

Where Can I Find a Model Sign Code?

Several model sign codes have been published, and many can be viewed in their entirety. Here are a few of them.

From The Signage Foundation http://www.thesignagefoundation.org/Portals/0/OnPremiseSignRegulations.pdf

From the United States Sign Council http://www.usscfoundation.org/USSCModelOn-PremiseSignCode.pdf

From the International Sign Association https://www.signs.org/Portals/0/PDF/pdf2016/Model_Sign_Code_Legal_Tech_Exploration_On-Premise_Sign_Regs.pdf

Can a $500 Sign Generate $1.9 Million in Additional Revenue for a Health Clinic?

A Sarasota, Florida health-care clinic had a great suburban location, demographically. However, due to its location at the end of a two-story complex surrounded by oak trees, its fascia signage simply wasn’t visible from the interstate (0.2 miles away) or the four-lane frontage road with a median. The owner had a dozen other clinics, so he knew something was wrong with the amount of business the clinic was conducting.

The owner subsequently placed a very simple 10 x 24-inch. sign in plain site, with only the clinic’s name and the words “urgent care.” Within 24 hours, the number of clients nearly doubled. Over the course of a year, this increase would equal nearly $1.8 million in additional revenue. To read the full story, go to http://www.nxtbook.com/nxtbooks/STMG/sott_201411/index.php#/110