Exterior ads could earn $8M

Allowing paid advertising on the sides and backs of city buses is the latest money-raising plan being proposed by Hono­lulu Mayor Kirk Caldwell.

Caldwell, who forwarded Bill 69 to the City Council late Tuesday, said the plan could bring in as much as $8 million annually and that all of the money would go to bus operations.

The idea of raising revenues by allowing advertising on the exterior of TheBus was last brought up in 2003 by former City Councilman Dono­van Dela Cruz. That bill was shelved, however, after stiff opposition from the Outdoor Circle and former Mayor Jeremy Harris.

Current Outdoor Circle Executive Director Marti Townsend met with Caldwell on Tuesday morning and told the mayor that members will again oppose the proposal.

Caldwell said he’s always supported strong anti-billboard laws. He pointed out that he testified before the Council against the 2003 bill when he was a member of the state House of Representatives and that he wrote a law review article on the constitutionality of the state’s strong billboard law.

"But at the same time, I think we need to find a balance here and find a way we can raise revenue but not raise it on the backs of those who ride TheBus and not on the backs of those who choose not to ride TheBus, and so we go to the advertisers."

City Transportation Services Director Michael Formby said the cost of operating TheBus has risen to $230 million today from $135 million in 2003, while the taxpayer-subsidized portion of bus operations has doubled to $150 million from $75 million. By ordinance the amount obtained through fares must be between 27 percent and 33 percent.

The city could choose simply to raise fares, Caldwell said, "but is that transportation equity and justice at a time when people are still hanging on by their fingernails?"

Raising fares, he said, "would be a last resort for me."

Formby said the money will go toward paying for bus operations including "restoring additional routes that the passengers have asked for."

Restoring express Bus Route E, from Wai­anae to Hono­lulu, which would cost about $1.1 million, would be among the first priorities, Formby said. Caldwell noted that his administration has already found $3.5 million to restore seven bus routes eliminated by former Mayor Peter Carlisle as a cost-cutting measure, a move that created a huge public outcry.

Formby said most major bus systems in the United States and most that are the size of Hono­lulu’s make money from allowing advertising on city buses, including Los Angeles; Seattle; Portland, Ore.; San Diego; San Francisco; Phoenix; Oakland, Calif.; and Vancouver, Wash.

"King"-size advertising signs, which are typically 30 inches high by 144 inches wide, cost advertisers between $450 and $900 every four weeks, he said, while "queen"-size signs, 37 inches high by 88 inches wide, cost between $400 and $500 every four weeks. Tail signs, which are 21 inches high by 70 inches wide, cost between $350 and $600, he said.

Potential revenues based on advertising placed on large side signs and tail signs on 500 buses come out to between $7.5 million and $8 million annually, Formby said.

The bill calls for certain types of advertising to be prohibited, such as any featuring political candidates, promoting prejudice, containing obscene or lewd content, promoting illegal or immoral purposes, or displaying prohibited products or services.

Formby said similar rules are used for advertising signs in the interiors of buses, which have been allowed for decades. And like interior signs, the city plans to hire a company through the standard procurement process that would manage the advertisements from negotiating with possible advertisers to actually installing the ads on the buses. The city would then receive a percentage of the sales.

The city makes about $175,000 annually on interior bus advertising, he said. "The market is much bigger for exterior advertising than it is for interior advertising," he said.

Caldwell said all nine Council members were briefed on the bill, and "we didn’t get any push-back" from them although "they may have tweaks."

Council Budget Chairwoman Ann Koba­ya­shi, who has been pushing the administration to come forward with revenue-making ideas, said she is open to the idea of advertising on the exterior of buses, although her initial inclination is to allow it only on the backs of buses.

"We have to look at ways of raising revenues, and we have to do it in the most painless way possible," Koba­ya­shi said. "We have to see how they pre­sent it."

Townsend, of the Outdoor Circle, said her organization’s members have strong philosophical and legal concerns about the proposal and won’t support it because it violates the vehicular advertising law.

State law bars advertising on vehicles if deriving revenue from that advertising is its main goal. The law says it is OK to advertise, for instance, if the main purpose of the vehicle is to transport people or goods.

Townsend said her group does not believe the state law allows an entity to give permission to another party to advertise.

City Corporation Counsel Donna Leong, however, told the Hono­lulu Star-Advertiser that it is, and she pointed to tour-related buses and trolleys that have been placing advertising from other firms on their vehicles.

Townsend said those buses and trolleys are running the advertising illegally. The Outdoor Circle has not challenged the companies on the issue because of cost considerations, she said. From an enforceability standpoint, the state law does not say who is supposed to regulate the law, she said.

City officials also pointed out that Hono­lulu city buses previously had advertising along their sides, although they weren’t sure when, or why, the practice was stopped.

The Outdoor Circle also is skeptical that the city will be able to regulate the types of advertising that would be allowed, Townsend said. She pointed to a 2006 9th U.S. Circuit Court of Appeals opinion that said the city could ban aerial advertising, so long as it applied the ban equally.

Townsend said members are also worried that nothing prohibits the city from "going down the slippery slope" of selling advertising on city benches, bus shelters and other property.

Caldwell said he has no plans to allow advertising for revenue on other city property.

Also introduced Tuesday was Bill 70, which would for the first time assess fees for the processing of environmental assessments and environmental impact statements, as well as permit processing fees. The cost of a processing fee could be applied to a final permit fee, but only if it is not returned to the applicant because it is incomplete. The bill also would allow the city to charge more for other land use permits and approvals.

Both Bills 69 and 70 are expected to get their first readings at the Council’s next scheduled monthly meeting on Dec. 11.

Caldwell said there may be other revenue-raising measures introduced in the coming months. One area being looked at is charging fees to people who use city parks to earn money, such as a tennis instructor who charges for lessons.