HomeMy WebLinkAbout05-20-2014 C4 CBS OutdoorCity of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number
FROM: J. Christine Dietrick, City Attorney
Prepared By: Andrea Visveshwara, Assistant City Attorney
SUBJECT: APPROVAL OF SETTLEMENT AGREEMENT WITH CBS OUTDOOR
AND AMENDED AND RESTATED LEASE FOR BILLBOARD AT CALLE
JOAQUIN OPEN SPACE AND DETERMINE THAT THE SETTLEMENT
AGREEMENT IS EXEMPT PURSUANT TO SECTIONS 15301 ET SEQ.,
15321, AND 15061 (B) (3) OF THE CALIFORNIA ENVIRONMENTAL
QUALITY ACT
RECOMMENDATION
Adopt a resolution approving the attached settlement agreement with CBS Outdoor and amended
and restated lease for the billboard located on the Calle Joaquin Open Space.
DISCUSSION
Background
Based on a review of the records in the Finance Department, there are a total of four billboards
located on three different properties owned by the City. The proposed settlement agreement would
require three of the billboards to be removed and the lease for the fourth billboard, the one located
on the Calle Joaquin Agricultural Reserve, would be amended and restated, with an expiration date
of 2024.
1960 Santa Barbara (“SB Billboard”). This is a two paneled billboard. The City purchased the
parcel of property at 1960 Santa Barbara Street from Joseph S. Guidetti in 1999. The Property was
acquired subject to a billboard lease with CBS and with the fixed term of the lease ending in June
2011. After the fixed term expired, the lease converts to a year to year lease unless terminated by
one of the parties. In February 2011, the City delivered notice of its intent to terminate the lease at
the conclusion of the fixed term. The revenue for this billboard was $1,000 per year. CBS refused
to vacate the property, contending that it was not required to do so until the City paid it just
compensation because the termination of the lease was the equivalent of eminent domain. In April
2013, the City filed a complaint in superior court to compel CBS to remove the billboard, and CBS
cross-complained seeking damages related to the removal of the billboard. Currently, the billboard
still remains on the property. This property is managed by the City’s Parking Division.
Johnson Ranch (“JR Billboard”). There are two billboards located on Johnson Ranch, each with
just one panel. The revenue for the two billboards is $3,000 per year. The City acquired the
property subject to the leases that allow the billboards to be on the property. The fixed term of
the lease ended on February 1, 2013, and then converts to a year to year lease unless terminated
by one of the parties. In October 2013, the City delivered notice of its intent to terminate the
lease, which required removal of the billboard by February 1, 2014. Currently, the two
billboards still remain on the property.
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Settlement Agreement and Amended and Restated Lease with CBS Outdoor Page 2
Calle Joaquin (“CJ Billboard”). There is one billboard, with two panels on this property. The
revenue for the billboard is $3,105 per year. Kelly Gearheart originally dedicated the property,
subject to the lease, to the City in 2006 as part of a development project. The term of the lease is
unclear because of typographical errors creating ambiguity on the face of the lease. It is either
on a year to year term, or alternatively, is for a fixed term, that has yet to expire. Currently, the
billboard remains on the property. Absent this settlement agreement, the City likely would need
to litigate with CBS over the term of the existing billboard lease.
Settlement Agreement
The attached settlement agreement reduces the parties’ agreement to writing on how to resolve
their disputes as it relates to the four billboards discussed above. Specifically, CBS will remove
the billboards located at 1960 Santa Barbara and Johnson Ranch within 60 days of the parties’
entering into the settlement agreement. The agreement further calls for both parties to dismiss
the respective complaints against the other party, with each party bearing their own costs and
attorney’s fees and waiving any rights to damages. Finally, the settlement agreement calls for
the term of the billboard on the Calle Joaquin open space to terminate in 2024, with CBS paying
annual rent of $4,500 for the billboard for years 1-5, and with annual rent increasing to $5,400
for years 6-10. The amended and restated Lease is necessary to carry out the terms of the
Settlement Agreement related to the lease for the billboard on the Calle Joaquin Agricultural
Reserve.
CONCURRENCES
The Parking and Natural Resources Divisions and Community Development Department concur
with approval of the settlement agreement and amended and restated lease for the billboard on
the Calle Joaquin Agricultural Reserve.
ENVIRONMENTAL REVIEW
The proposed settlement agreement is exempt pursuant to sections 15301 et seq., 15321, and
15061 (b) (3) of the California Environmental Quality Act. The Class 1 categorical exemption
applies pursuant to 15301 et seq. as it consists of the leasing of an existing billboard at Calle
Joaquin and the removal of billboards at 1960 Santa Barbara and Johnson Ranch. Any new
placement of copy associated with the remaining billboard at Calle Joaquin is exempt pursuant to
section 15301 (g) which categorically exempts the replacement of copy on existing signs.
The removal of the billboards at 1960 Santa Barbara and Johnson Ranch are exempt pursuant to
section 15321 of the California Environmental Quality act as the action is a result of the City’s
action to enforce the terms of the existing lease agreement for which it was the City’s assertion
that the lease term had expired requiring the removal of billboards at these locations. The actual
removal of billboards is exempt pursuant to 15061 (b) (3) as it can be seen with certainty that
there is no possibility of a significant effect on the environment associated with the physical
removal of billboards and that the removal of billboards has the potential to improve the
aesthetics of the areas.
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Settlement Agreement and Amended and Restated Lease with CBS Outdoor Page 3
FISCAL IMPACT
Both the general and parking funds are impacted by the recommendation. With respect to the
Parking Fund, the approval of the settlement agreement allows the Parking Fund to avoid
incurring further litigation costs. To date, the Parking Fund has expended $30,365.40 in
litigation costs. With respect to the general fund, approval of the settlement agreement allows
the General Fund to avoid expending funds to compel CBS Outdoor to remove the Johnson
Ranch billboards. In exchange for removing the three billboards on 1960 Santa Barbara and
Johnson Ranch, the lease for the billboard on the Calle Joaquin open space was amended and
restated to clarify that the term of the lease and to increase the annual rent. Over a ten year
period, under the current lease for the billboard on Calle Joaquin, the City’s revenue would be
$31,050. Under the proposed amended and restated lease, over a ten year period, the proposed
revenue is $49,500. Furthermore, by bringing clarity to the lease for the billboard on Calle
Joaquin, the City is able to mitigate the risk of potential future litigation costs to compel CBS
Outdoor to remove that billboard when the term of the lease ends.
ALTERNATIVES
There are no other alternatives being presented because the settlement agreement and amended
and restated lease reduces the parties’ negotiations to date to writing. If the majority of the
Council desires to change the agreement or the lease, the City Council should direct the City
Attorney to schedule a closed session so she may advise the City Council of how those changes
may impact the pending litigation.
ATTACHMENTS
1. Resolution (with Settlement Agreement and Amended and Restated Lease attached)
2. Notice of Exemption
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R ______
RESOLUTION NO. _____ (2014 Series)
A RESOLUTION OF THE CITY OF SAN LUIS OBISPO APPROVING A
SETTLEMENT AGREEMENT AND AMENDED AND RESTATED LEASE FOR APN
053-152-007 WITH CBS OUTDOOR(“CBS”)
WHEREAS, this Resolution relates to outdoor advertising signs owned and operated by
CBS on three separate properties owned in fee by the City; and
WHEREAS, CBS owns and operates an outdoor advertising sign (“Santa Barbara Sign”)
located at 1960 Santa Barbara Avenue, San Luis Obispo, Assessor Parcel Number 003-651-009
(“Santa Barbara Property”), pursuant to a written lease agreement dated March 1, 1991 between
CBS’s predecessor-in-interest, National Advertising Company, and the City’s predecessor-in-
interest, Joseph Guidetti (the “Santa Barbara Lease”); and
WHEREAS, in or about 1999, the City acquired the Santa Barbara Property for purposes
of constructing a Railroad Transportation Center (“Project”). CBS continued to own and operate
the Santa Barbara Sign pursuant to the Santa Barbara Lease following the City’s acquisition of
the Santa Barbara Property; and
WHEREAS, on or about February 8, 2011, the City sent CBS a notice of termination of
the Santa Barbara Lease effective as of June 21, 2011; and
WHEREAS, on or about April 9, 2013, the City filed a Complaint for Ejectment, Private
Nuisance, Trespass, Public Nuisance, Injunctive and Declaratory Relief (“Complaint”) against
CBS in the Superior Court of the State of California for the County of San Luis Obispo, Case
No. CV 130172 (the “Action”), by which City seeks to compel CBS to remove the Santa Barbara
Sign; and
WHEREAS, on or about June 10, 2013, CBS filed a Cross-Complaint in Inverse
Condemnation (“Cross-Complaint”) against the City in the Action. CBS contends that it is
entitled to just compensation pursuant to Business and Professions Code section 5412 and
California’s Eminent Domain Law, including but not limited to damages for loss of business
goodwill, in the event the Santa Barbara Sign is compelled to be removed or is otherwise
impacted by the Project; and
WHEREAS, CBS also owns and operates two single-faced outdoor advertising signs
(“Johnson Ranch Signs”) on property located approximately 3 miles south of the City on the
west side of Highway 101 (commonly known as the “Johnson Ranch”), pursuant to leases dated
March 16, 1993 between CBS’s predecessor-in-interest, National Advertising Company, and the
City’s predecessor-in-interest, J. Dan O’Donnell (collectively, the “Johnson Ranch Leases”); and
WHEREAS, in or about 2001, the City acquired the Johnson Ranch with a grant of funds
from the Guadalupe Oil Field Settlement Fund, administered by the California Regional Water
Quality Control Board, to restore and preserve wetlands on the property, among other things.
CBS continued to own and operate the Johnson Ranch Signs pursuant to the Johnson Ranch
Leases following the City’s acquisition of the Johnson Ranch; and
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Resolution No. _____ (2014 Series)
Page 2
WHEREAS, On October 17, 2013, the City sent CBS a notice of termination of the
Johnson Ranch Leases effective as of February 1, 2014; and
WHEREAS, CBS also owns and operates an outdoor advertising sign (“Calle Joaquin
Sign”) on property located 1.1 miles south of Madonna Road, on the west side of Highway 101,
near Calle Joaquin (“Calle Joaquin Property”), pursuant to a lease dated May 19, 2000 between
CBS’s predecessor-in-interest, Infinity Outdoor, and the City’s predecessor-in-interest, Howard
McBride (“Calle Joaquin Lease”); and
WHEREAS, the Calle Joaquin Lease provides for a principal term of 10 years,
commencing January 1, 2001, with right to extend the term on a year-to-year basis; and
WHEREAS, the City desires the removal of the Santa Barbara Sign and the Johnson
Ranch Signs. The Parties desire to resolve all claims and issues related to the Action, as well as
the Santa Barbara Lease and Johnson Ranch Leases. The Parties also desire to amend and restate
the Calle Joaquin Lease to provide a fixed term of ten years, with no right to extend after the
expiration. The amended lease shall also require removal of the billboard at the end of the ten-
year period.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. The proposed settlement agreement is exempt pursuant to sections 15301
et seq., 15321, and 15061 (b) (3) of the California Environmental Quality Act. The Class 1
categorical exemption applies pursuant to 15301 et seq. as it consists of the leasing of an existing
billboard at Calle Joaquin and the removal of billboards at 1960 Santa Barbara and Johnson
Ranch. Any new placement of copy associated with the remaining billboard at Calle Joaquin is
exempt pursuant to section 15301 (g).
The removal of the billboards at 1960 Santa Barbara and Johnson Ranch are exempt pursuant to
section 15321 of the California Environmental Quality act as the action is a result of the City’s
action to enforce the terms of the existing lease agreement for which it was the City’s assertion
that the lease term had expired requiring the removal of billboards at these locations. The actual
removal of billboards is exempt pursuant to 15061 (b) (3) as it can be seen with certainty that
there is no possibility of a significant effect on the environment associated with the physical
removal of billboards and that the removal of billboards has the potential to improve the
aesthetics of the areas.
SECTION 2. The Mayor is authorized to execute the attached Settlement Agreement and the
Amended and Restated Lease attached as Exhibit A to the Settlement Agreement.
SECTION 3. The City Attorney is authorized to take all actions necessary to effectuate
and implement the terms and conditions of the Settlement Agreement.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
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Resolution No. _____ (2014 Series)
Page 3
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2014.
____________________________________
Mayor Jan Marx
ATTEST:
____________________________________
Anthony J. Mejia, CMC
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
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Notice of Exemption
To: □ Office of Planning and Research
1400 Tenth Street, Room 121
Sacramento, CA 95814
□ County Clerk
County of San Luis Obispo
1144 Monterey Street, Suite A
San Luis Obispo, CA, 93408
From: City of San Luis Obispo City Attorney Department 919 Palm Street San Luis Obispo, CA, 93401-3249
Project Title: Approval of Settlement Agreement with CBS Outdoor and Amended and Restated Lease for Billboard at Calle Joaquin Open Space
Project Location - Specific: 1960 Santa Barbara, Johnson Ranch, Calle Joaquin in San Luis Obispo
Project Location - City: San Luis Obispo
Project Location - County: San Luis Obispo
Description of Nature, Purpose, and Beneficiaries of Project:
The settlement agreement reduces the parties’ agreement to writing on how to resolve their disputes as it relates to four billboards. CBS will remove the billboards located at 1960 Santa Barbara and Johnson Ranch within 60 days of the parties’ entering into the settlement agreement. The agreement further calls for both parties to dismiss the respective complaints against the other party, with each party bearing their own costs and attorney’s fees and waiving any rights to damages. The settlement agreement also calls
for the term of the billboard on the Calle Joaquin open space to terminate in 2024, with CBS paying annual rent of $4,500 for the billboard for years 1-5, and with annual rent increasing to $5,400 for years 6-10. The amended and restated Lease is necessary to carry out the terms of the Settlement Agreement related to the lease for the billboard on the Calle Joaquin Agricultural Reserve.
Name of Public Agency Approving Project: City of San Luis Obispo
Name of Person or Agency Carrying Out Project: Community Development Department
Exempt Status:
□ Ministerial (Sec. 21080(b)(1); 15268);
□ Declared Emergency (Sec. 21080(b)(3); 15269(a));
□ Emergency Project (Sec. 21080(b)(4); 15269(b)(c));
Categorical Exemption. State type and section number: 15301, 15321, and 15061(b)(3)
□ Statutory Exemptions. State code number:
Reasons why project is exempt:
The proposed settlement agreement is exempt pursuant to sections 15301 et seq., 15321, and 15061 (b)
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(3) of the California Environmental Quality Act. The Class 1 categorical exemption applies pursuant to
15301 et seq. as it consists of the leasing of an existing billboard at Calle Joaquin and the removal of
billboards at 1960 Santa Barbara and Johnson Ranch. Any new placement of copy associated with the
remaining billboard at Calle Joaquin is exempt pursuant to section 15301 (g) which categorically
exempts the replacement of copy on existing signs.
The removal of the billboards at 1960 Santa Barbara and Johnson Ranch are exempt pursuant to section
15321 of the California Environmental Quality act as the action is a result of the City’s action to enforce
the terms of the existing lease agreement for which it was the City’s assertion that the lease term had
expired requiring the removal of billboards at these locations. The actual removal of billboards is
exempt pursuant to 15061 (b) (3) as it can be seen with certainty that there is no possibility of a
significant effect on the environment associated with the physical removal of billboards and that the
removal of billboards has the potential to improve the aesthetics of the areas.
Lead Agency
Contact Person: Derek Johnson Area Code/Telephone/Extension: (805) 781-7187
If filed by applicant:
1. Attach certified document of exemption finding.
2. Has a Notice of Exemption been filed by the public agency approving the project?
□ Yes □ No
Signature: Date:
Title: Community Development Director
□ Signed by Lead Agency □ Date received for filing at OPR:
□ Signed by Applicant
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i
I I
Goodwin, Heather MAY 1 9 2014
i
F Mejia Anthon
1W
Sent:
To:
Subject:
Attachments:
Anthony J. Mejia I City Clerk
g. go Palm `street
Sam i c .jis Obispo, CA 931rtc-1
tel180� ,7#33.7102
J, y
Monday, May 19, 2014 4:25 PM
Goodwin, Heather
FW: Billboards, 5/20/14 City Council Meeting
billboard letter to council.doc; Mission Statement.doc
From: Sherri Danoff [mailto:sherri39Ckharter.net]
Sent: Monday, May 19, 2014 4:24 PM
To: Mejia, Anthony
Subject: FW: Billboards, 5/20/14 City Council Meeting
Anthony Mejia
City of SLO
Dear Anthony,
AGENDA
CORRESPONDENCE
Date�Z2?11AItem -* CAA
Protect Scenic 101/PS101 would appreciate your directing the attached letter and mission statement to the Mayor and
Councilmembers, for C4 on the May 20th agenda.
Thank you,
Sherri Danoff
1
May 18, 2014
Mayor Jan Marx & Councilmembers
City of San Luis Obispo
Email: amegia @slocity.org
SUBJECT: BILLBOARDS- CBS Settlement Agreement
C4, May 20, 2014 Agenda
Dear Mayor Marx and Councilmembers:
Protect Scenic 101 (PS101) is pleased that two billboards along Highway 101 with expired
leases would be removed and no longer detract from the scenic views. Unfortunately, a
billboard visible from near the Los Osos Valley Road exit would remain for ten years as part of
the trade -off. It is hoped that future removal would be assured.
"Continue your lawsuit bullying" is a likely message, however, that the City would send to the
billboard industry by the settlement agreement. Billboard companies could be encouraged to
continue baseless lawsuits to thwart removal of billboards with expired leases within the City,
and possibly within the gateway approaches to the City. Baseless lawsuits are known to have
been deterring jurisdictions from billboard removal.
The Agenda Report does not include the alternative of standing up to the bullying tactics of
the billboard company. Nor is the potential for winning the lawsuits addressed, along with
estimated associated costs. Also not mentioned is whether partnering with other entities
wanting billboards removed, such as Scenic California and SLO County, has been explored.
50 billboards line Highway 101 between Avila and Cuesta Grade. PS101 looks forward to
participating with the City in carrying out its General Plan policy for billboard removal along
scenic roadways, and particularly within the City's highly scenic gateway approaches.
Thank you for considering our comments,
Sherri Danoff, Coordinator
Protect Scenic 101 / PS101
Attached: PS101 Mission Statement
PS101 Coordinator: Sherri Danoff, sherri3ft charter. net; 805.595.2208; PO Box 2382, Avila Beach 93424
PROTECT SCENIC 101 (PS 10 1)
MISSION STATEMENT
Goal: Protect SLO County scenic views along Highway 101.
Objective: Retire billboards within unincorporated SLO County's Highway 101 view
corridor, because:
• Billboards detract from otherwise highly scenic attributes of Highway 101, the
County's major travel corridor, and represent distracting visual blight.
• Tourism is vital to local economies, and scenic drives represent an important part of
the tourist experience.
• Billboards infringe on open space between communities which is highly valued by
residents.
• Services are adequately advertised by electronic technologies and print publications.
• SLO County's major tourism competitor to the south, Santa Barbara, has
demonstrated that billboards can be retired.
Priority: Protect scenic rural views north of San Luis Obispo to Cuesta Grade and
south to Avila Beach.
PSI 01 Coordinator: Sherri Danoff; sherri39 @charter,net; 805.595.2208; PO Box 2382, Avila Beach 93424
Kremke, Kate
From: Mejia, Anthony
Sent: Thursday, May 15, 2014 9:25 AM
To: Kremke, Kate
Subject: FW: Billboards Agenda item C 4
Anthony J. Mejia I City Clerk
C11,\" 01. ,per; I mi c3€ spo
�)90 Palm Street
Sari Luis Obispo, CA 93403
Ce l 1 805 78.1 7102
From: Marx, Jan
Sent: Thursday, May 15, 2014 9:23 AM
To: Mejia, Anthony
Subject: FW: Billboards Agenda item C 4
agenda correspondence
Jan Marx
Mayor
MOF
o
ti SHR LUIS OBISPO
Office of the City Council
990 Palm Street, San Luis Obispo, CA 93401 -3249
E jmarx@slocity.org
T 805.781.7120
locity,orr
5 2014
AGENDA
CORRESPONDENCE
Date — Item# �-
From: D. Dollar [dddollar @gmail.com]
Sent: Wednesday, May 14, 2014 10:00 AM
To: Marx, Jan; Christianson, Carlyn; Carpenter, Dan; Smith, Kathy; Ashbaugh, John
Subject: Billboards Agenda item C 4
Mayor and City Council,
We are very pleased to see that the billboards at Johnson Ranch and Santa Barbara Ave. are coming down. This
is great. The billboard on Santa Barbara in the railroad Historic District is really out of place.
However, it is not great that the billboards at Calle Joaquin will not be coming for another decade. Please move
up the removal deadline for Calle Joaquin billboard to the very near future.
There are other billboards in the City Limits that also need removal. Please work on those too.
Sincerely,
Don and Ellen Dollar