IBO STARTER’S KIT-TEN LEGAL TIPS FROM ROTHFELDER & FALICK
After the IBO Spring Conference in Houston, we at Rothfelder & Falick received countless emails and phone calls from new operators asking about legal problems they need to maneuver as they start in the outdoor advertising business. Those contacts dovetailed perfectly with Becky Smith’s and Chris Cowlbeck’s idea to establish an IBO Starter’s Kit for those new to the business. And, they conveniently follow our presentation at the IBO Conference, Rothfelder & Falick’s Top Ten Tips for Starting, Running, Growing and Selling a Successful OOH Company.pptx. So, we’ve contributed to the IBO Starter’s Kit, by offering our Ten Tips from a legal perspective.
Number 1: Put good people around you. I suppose this tip applies to most businesses, and life in general. In the outdoor advertising business, having competent, experienced, and honest real estate/lease representatives, ad salespersons, and accounting staff is critical. Establishing relationships with associated entities, like advertising agencies, brokers, and trade groups (IBO and OAAA) is also important. And, let’s certainly not forget retaining legal counsel that knows outdoor advertising law. (RothfelderFalick.com).
Number 2:Get your paperwork in order. The outdoor advertising business uses forms, including for leases, ad contracts, easements, and purchase agreements. Our law firm has a variety of these forms that can be tailored to your business, but you can also obtain great lease and easement and other real estate forms from Billboard Insider and its Guide to Leases, Easements, and Real Estate. In fact, this book reviews and explains each of the provisions for a standard lease, and it contains several articles from Rothfelder & Falick and other authors on the legal and practical aspects of the forms. Now, having recognized the convenience, savings, and ease in the use of forms, the new operator should at least consult with legal counsel as he incorporates them into in his business to insure full understanding of their terms.
Number 3: Applying for permits. The outdoor advertising business is heavily regulated, at the local, state, and national levels. And, securing permits for the erection and maintenance of billboards is at the core of such regulations. Thus, the new operator must become familiar with the sign, zoning, and building codes in his jurisdiction. For example, the Houston Sign Code contains a myriad of spacing, location, height, size, lighting, and other regulations that effect if, where, and when billboards and other types of signs can be secured. In addition to knowing the regulations, the new operator also should get to know the regulators, as talking to them about permits, variances, and appeals is usually very helpful. Becoming politically engaged, especially at the local level where your billboards are regulated, doesn’t hurt either.
Number 4: Securing and understanding advertising contracts. Once again, advertising contracts in the billboard business are largely form driven, especially that notorious fine print on the second page. However, the new operator must understand the need and application of each of these seemingly “boiler plate” provisions. For example, terms governing the rate, length, renewal, content control, force majeure, government approval, representative authority, and laundry list of other aspects of the contract should be carefully reviewed and approved to insure they are appropriate for the particular transaction. Our law firm can supply forms for ad contracts, as well as explain how, when, and why they are used.
Number 5: Disputes with landlords. The outdoor advertising business, unfortunately, seems to be susceptible to disputes and litigation, especially with landlords. Often, controversy arises simply because the landowner may be greedy and overreaching, such as when ownership of land hosting a billboard changes hands, and the new owner falsely claims he acquired the billboard as well. Other types of legal problems can be avoided by careful wording of leases with landlords, especially on sensitive clauses like rights of first refusal, automatic renewals, access, and recording. Again, convenience and expense usually call for the use of forms in leases, but legal counsel should be consulted as the new operator initially becomes familiar with using and understanding them.
Number 6: Disputes with government agencies. The other type of dispute inevitably confronting the billboard operator is with government regulators, usually over the denial, appeal, or cancellation of permits. Thus, knowledge of the sign and zoning codes, as well as retention of legal counsel who are competent and experienced to litigate under such codes is critical. Our law firm, for example, knows when to use the “stick,” whether sending a demand letter, filing an administrative appeal, or initiating a lawsuit. But, the “carrot” is often more effective, such as offering the local jurisdiction PSAs or other free advertising, development fees, or other incentives for relaxed zoning or variances to secure a new billboard location.
Number 7: Permit violations and cancellations. The new operator will obviously do his best to follow the rules in securing his permit and operating his sign. However, those rules are complicated, and human beings with different subjective standards are charged with interpreting and enforcing them; so, violations and cancellations happen. Thus, the new operator must become familiar with the deadlines, venues, and other appeal procedures when these unfortunate events occur. At this stage, the government will usually have its attorney in charge, and the loss of the sign or other unacceptable consequences is involved, so the operator should at least consult with his own attorney as well.
Number 8: Eminent domain. The Fifth Amendment gives the government the right to take private property for public use, like compelling the removal of billboards to accommodate highway improvements. The constitutional condition to the use of this power of eminent domain, however, is the government’s obligation to pay just and adequate compensation for the property it takes. And, with billboards naturally situated next to highways, which sooner or later will be expanded, the billboard operator is likely to eventually encounter such a condemnation case. These cases are complicated, and involve appraisers on the value of billboards and the land under them, as well as time sensitive deadlines for settlement offers, billboard removals, appeals, and other issues. Rothfelder & Falick are experts in billboard condemnation cases, but whether you hire us or other law firms, competent legal counsel is critical in handling these cases.
Number 9: Digital-the Holy Grail. The new operator will learn, probably sooner rather than later, that the digital illumination and operation of billboards is fast becoming the preferred business model. Granted, digital is more expensive and complicated than static, but this technology is here now and for the future. Thus, the operator needs to become familiar with the vendors, management companies, and government regulations on digital billboards, and work toward incorporating them into his inventory and expertise.
Number 10: Selling your business. I suppose just as important as getting into the billboard business is knowing when to sell it. And, like when one gets into the business, it’s just as important when selling it to put good people around you, including brokers, and there are several good ones in the industry, like Max Drachman, max@drachmanco.com, Marty Williamson, marty@williamsonassociates.com, Paul Wright, paul@signvalue.com, and Mike Morrill, mike@williamsonassociates.com. Lawyers knowledgeable in such billboard transactions are also necessary, and our law firm has over 40 years of experience in representing both buyers and sellers in these deals.
Please contact any of us at Rothfelder & Falick if you have questions about these Top Ten Legal Tips, or any other aspects of getting started in the billboard industry. We offer discounts to IBO members, and can be reached at Richard Rothfelder, rrothfelder@rothfelderfalick.com, 713-962-6300; Mike Falick, mfalick@rothfelderfalick.com, 713-553-6614; and Chris Rothfelder, crothfelder@rothfelderfalick.com, 713-301-1251. Good luck!
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