PURPOSE

The purpose of this report is to provide Council with an analysis of two (2) ordinance options to consider which would allow real estate �Open House� signs within the public right-of-way.  One ordinance allows these signs by requiring a permit, permit fees, and insurance, while the other ordinance allows the signs by right, and does not require a permit, fees, or insurance. At the conclusion of this report staff will be making a recommendation regarding the staff preferred option.

BACKGROUND

In the past, the Burbank Association of Realtors has made requests to amend the Burbank Municipal Code to allow real estate �Open House� signs to be posted within the public right-of-way.  The most recent request was placed on the Council agenda for discussion at the November 4, 2003 Council meeting.  At the conclusion of the Council discussion staff was directed to return at a later date with an ordinance allowing the placement of real estate �Open House� signs within the public right-of-way.  Staff was also directed to include standards and restrictions regarding, among other things, location and timing for the placement and removal of signs.   

ANALYSIS

When the Council reviewed this matter in November staff had two concerns. Those concerns have since been addressed in both of the draft ordinances.  One concern was First Amendment considerations whereby there must be a compelling reason which serves a significant government interest to allow an exception to the general prohibition on signs within the public right-of-way.  The language of the draft ordinance defines the compelling reason for this exception is to enhance City revenues from property tax reassessments of residential properties when those properties sell.  Some of these increased revenues will be a direct result of real estate �Open House� signs being placed within the public right-of-way.

Today�s real estate market in Southern California is very solid and fast paced.  Residential property values are at an all-time high.  Properties for sale can be expeditiously and economically promoted through �Open House� signage posted within the public right-of-way.  Consequently, because there is a quicker property tax return on the increased higher property tax assessment, which is due to the sale of the property, there is a compelling reason serving a significant government interest for allowing such signage to be posted within the public right-of-way.

Staff�s other concern was the matter of �equal protection�.  That concern has been addressed through the ordinances by allowing �Open House� signs, not just for the sale of residential property, but also includes �Open House� signs for lease, or rent.  In addition, the sale, lease, or rent of a residential property is not limited to those properties represented by professional realtors, but also includes properties for sale, lease, or rent by the owners, landlords, or the agents of properties. 

COUNCIL REQUESTED SIGN  REGULATIONS

At the November 4, 2003 meeting, Council requested staff to return with an ordinance allowing the placement of �Open House� signs within the public right-of-way.  Council directed these signs to be regulated through the following requirements, standards, and provisions:

1. Establishing limits on the days, times, duration periods, and the number of signs which could be posted per property.

2. Establishing the size, shape, quality, and, location of signs.

3. Allowing the owners, or the agents of properties for sale, rent, or lease which are not represented by professional realtors, to also have the ability to place signs within the public right-of-way.

4. Allowing only �Open House� signs which promote a residential property located in Burbank to be posted within the public right-of-way.

5. Requiring a permit with fees sufficient to recover the costs of administration and enforcement of the ordinance.

6. Requiring insurance and indemnification protections sufficient to guard the City from liability.

7. Allowing staff the ability to easily and summarily abate, remove, and/or impound illegal signs.  This is accomplished by amending  BMC Sec. 20-207.5 to change the dollar amount value for signs that can be summarily removed from $10 each, to $50 each.

8. Establish violation penalties to enforce location, placement, size, quantity, and, other requisite parameters for controlling these signs.

9. Draft the ordinance to �sunset� one year after the effective date of the ordinance, and for staff to return to Council with an evaluation and recommendations concerning the future of the ordinance.

Based on Council�s direction at the November 4, 2003 Council meeting, staff has been working with the Burbank Association of Realtors to formulate an ordinance which would address all the sign standards, restrictions and requirements requested by Council.  In this pursuit, staff has drafted two (2) ordinance options for Council�s consideration.

The differences in the two options are the requirements for a permit, permit fees, and insurance (see Exhibit A).  Both options contain the same sign standards, restrictions, requirements, and a form of indemnification.  However, Option #1 requires insurance and a permit system with fees to recover the costs of the administration and enforcement of the permit system.  Option #2 does not require insurance, or a permit system with fee requirements.   

ORDINANCE OPTIONS

Option # 1 (Requiring Insurance and a Permit With Fees)

The first option is an ordinance requiring a permit with fees and comprehensive public liability insurance in a combined single limit amount of at least $1,000,000 for each permit.  The fees charged for the issuance of the permit are to cover the cost of administration and enforcement of the permit system.  The fee staff is recommending is an annual, and pro-ratable, permit fee of $10 per fiscal year, per sign.  Attached is Exhibit B, which details how staff calculated the fee structure which recovers, as with other similar permit fees, 90% of the allowable and associated costs for the administration and enforcement of the permit system. 

Of the two options, staff believes that Option #1 would be the most costly in both time and money to administer and enforce.  This is because maintaining a permit system requires substantial time expenditures for tracking and administering insurances and maintaining a hard-copy and on-line file for each account.

Option #1 has all the requirements, standards, and regulations on the signs that Council requested.  Those requirements, standards, and regulations are:

1. Size  (face of sign may be no greater than 24� X 24�)

2. Height (total height, including frame, not to exceed three {3} feet)

3. Local address (only a Burbank residence may be advertised on the Open House sign)

4. Limit (no more than four {4} signs per property advertised may be posted on public property)

5. Sign Types (stake-type or A-frame signs may be used and no attachments such as balloons, pennants, or flags may be added to the sign.  Further, all signs must be made of quality materials and maintained in good condition at all times)

6. Location (Open House signs may not be posted on):

• Trees, traffic signs or utility poles, or obstruct any official public sign

• Signs may not obstruct the safe and convenient use by the public of any street, sidewalk, or curbside parkway areas

• Signs may not be placed in any roadway area or center median area

• Placement of signs may not in any manner violate the American with Disabilities Act (curb cuts blocking disabled access)

• Signs may not be within 18� from the face of the curb

• Signs may not be on streets undergoing construction, nor on streets with special events

• Signs may not be within five (5) feet of the beginning of the curb return of any two intersections (a diagram is included in the ordinance text to facilitate understanding the distance requirements)

• Signs may not be within five (5) feet of any: driveway; traffic signal; traffic sign; designated bus stop; bus bench or any other bench on the sidewalk

7. Time (Signs may only be displayed during an open house on Saturdays, Sundays, and federal and state holidays {8 am to dusk or 6 pm}, and Thursdays, {8 am to 2 pm})

8. Permit (A permit shall be obtained from the Public Works Department which includes: fees paid; insurance; indemnification; and, decals applied onto the �Open House� sign)

9. Identification Required (Each sign shall have affixed to it, in an area not to exceed 2� X 3�, the name, address, and telephone number of the person responsible for placing or maintaining the sign within the public right-of-way)

Option # 2 (No Insurance or Permit and Fee Required) 

Option #2 has all the restrictions and standards of Option #1, except for the requirements of securing a permit, paying fees, or requiring insurance.  Most cities which allow real estate �Open House� signs to be within their public rights-of-ways use this option (see City Survey attached as Exhibit C).  These cities allow the signs by right, however with restrictions and standards to control the signs.  The restrictions and standards these cities use are the same type of restrictions and standards that staff has drafted into both ordinance options.

An example of a successful �Open House� sign ordinance which does not require a permit, fees, or insurance, is the City of Glendale�s ordinance.  Glendale, has allowed �Open House� signs within the public right-of-way for years without issuing permits and without requiring insurance.   As such, Glendale reports that they have very few problems with their ordinance.  However, they do recommend a strong educational element in conjunction with implementation of such an ordinance.  Glendale claims that much of the success with their �Open House� sign program is due to a strong educational component keynoted through corroborative and on-going informational programming between city personnel and the Glendale Association of Realtors.

INSURANCE AND INDEMNIFICATION

Insurance: Insurance acquisition and tracking, from an administrative perspective, can be problematic.  It is certain that the members of the Burbank Association of Realtors will be the primary persons who desire to place �Open House� signs within the public right-of-way.  It is anticipated that the next major group of persons wanting to place signs within the public right-of-way will be professional out-of-town realtors who are non-members of the Burbank Association of Realtors.  The final group of persons wanting to place �Open House� signs within the public right-of-way will be the owners and/or agents of properties for sale, lease, or rent.

Staff has been assured by the Burbank Association of Realtors that acquisition and verification of comprehensive public liability insurance in a combined single limit amount of a least $1,000,000 for each permit can be acquired by both in-town and out-of-town professional real estate brokers. However, there is uncertainty concerning non-professionals, which are the individual property owners or their agents, having the ability to secure such insurance easily.   

Because of the uncertainty for individual property owners, or their agents, to be able to secure proper insurance, Option #1 provides for these persons to be exempted from the insurance requirement if they place no more than one (1) �Open House� sign within the public right-of-way.  The logic for this exception is that the City�s liability exposure is smaller with one (1) sign posted, as opposed to the professional realtors having the ability to post a maximum of (4) signs per property being sold.

Indemnification:  Both ordinance options require indemnification from the individual who places the �Open House� sign in the public right-of-way.  There are two different types of indemnification for the two different ordinance options.  While differences between the two types of indemnification exist, neither the permit type of indemnification, nor the non-permit type of indemnification, is perfect. 

Option #1, which has a permit and insurance requirement contains a written indemnification as a part of the permit process.  This written indemnification allows the City to clearly identify the party providing the indemnification.  However, the permit process will not provide the City with the knowledge of each sign�s exact location, therefore, this system will not be perfect.

The other type of indemnification, which is part of Option #2, is an equitable indemnification.  An equitable indemnification is an indemnification, given lack of any writing, whereby the indemnity is only found in the law.  A court will impose the indemnity on any individual who places signs in the public right-of-way pursuant to this law. 

If the City ever needed to enforce the indemnification provision, the written indemnity, which is required as an element of a permit, is stronger since the actual party is identified to the City on the permit application.  However, the equitable indemnity will allow the City to proceed in court, but issues surrounding the identification of the actual party responsible for damages, might arise.  This difference though, may be small if everyone who places signs in the public right-of-way complies with the code provision which requires the placement of a responsible party identity card on the sign itself.  This card will immediately provide the City with information as to who is the responsible person for the placement of the sign.

 PROJECTED COSTS OF ENFORCEMENT

The cost of enforcement of a new permit system to control the placement of real estate �Open House� signs within the public right-of-way can be measured in two ways.  One measurement is the direct dollar cost, which is the amount of staff time it will cost, in dollars, to conduct a code enforcement program for administering a permit system.  The other measurement of costs is the trade-off of staff duties, which is staff time redirected toward new enforcement duties not currently conducted.  This of course, will require taking time away from current enforcement priorities.

Dollar Costs

The current estimated License and Code Services Division costs associated with annual enforcement efforts to abate illegal real estate signage placed within the public right-of-way, is approximately $5,500.  Attached is Exhibit B, which is a projected cost estimate of what the License and Code Services� and Public Works Departments� combined annual costs may be if there was a permit system with an insurance requirement allowing these signs.  Those projected costs are estimated to be $13,629.

The Burbank Association of Realtors and staff believe that initially there may be requests for up to 1,200 �Open House� sign permits annually for Association members and non-members.  Based on the estimate of costs associated with the administration and enforcement of a permit system, and the estimated number of permits to be requested, staff is recommending that should Council select Option #1, then the permit fee be $10 per sign, per year.  Although the figures actually calculate closer to a $12 per sign fee, in accordance with other permit fee structures adopted in the Burbank Fee Resolution, staff is recommending only a 90% cost recovery, which is the $10 per sign fee.  If the permit fee is adopted, then the Burbank Fee Resolution will be amended accordingly.

Staff does not recommend other associated fees such as application fees.  However, a sign permit replacement fee should be charged if a sign becomes lost, stolen, or damaged.  In these circumstances, the replacement sign permit fee would still be $10 per sign, per year.  Overall, at the $10 rate, this permit fee is reasonable contrasted to the cost of similar permits which allow objects within the public right-of-way.  For example, currently an Encroachment Permit issued by the Public Works Department to allow objects within the public right-of-way costs a minimum of $250 per permit, per year.

Trade-Off of Duties Costs

Staff believes that the time taken away from other duties to conduct an �Open House� real estate sign permit program is an important consideration when deciding which option to select.  The trade-off costs of current duties that will not be conducted in exchange for the time spent to administer and enforce a real estate �Open House� sign permit program, is unknown.  Yet it is certain that as code enforcement responsibilities are added without additional staff to conduct those responsibilities, time will be taken away from duties and priorities currently conducted.

If Council adopts Option #1 (permit system with insurance), the staff time trade-off costs are greater than if Council adopts Option #2 (signs allowed by right, and no permit system and insurance).  Option #1 will require a portion of both clerical and field enforcement staff to be administering, tracking, and enforcing an additional perpetual permit system.  This means that License and Code Services staff will not be able to devote as much time to other duties which are currently conducted in the Code Enforcement, Business Tax, and Regulatory Business License programs.  In addition,  Public Works administrative or clerical staff, will also have to reprioritize duties.

EDUCATION PROGRAM

Regardless of which option Council chooses, or what combination of standards and regulations become a part of an adopted ordinance, the key to achieving successful implementation of any ordinance, is education.  Staff and the Burbank Association of Realtors believe that the success or failure of the ordinance may hinge on how well the real estate community, the general public, and staff are educated on the particulars of the ordinance.

The representatives of the Burbank Association of Realtors who have been working in conjunction with staff, agree that a strong educational effort will be necessary.  In this direction, the Burbank Association of Realtors state they will be using the following as methods of educating the real estate community and the public about the ordinance:

• Articles will be published in the Burbank Association of Realtors� newsletter concerning the ordinance

• Training session modules will be implemented as a part of the new realtor orientation class

• On-going discussions will take place at the Association�s regular Thursday membership meetings

• Articles will be published in trade newsletters to surrounding realtor associations such as the:  Southland Association of Realtors (San Fernando Valley and Santa Clarita Valley); Greater Los Angeles Beverly Hills Association of Realtors; Glendale Association of Realtors; Pasadena Foothill Association of Realtors (San Gabriel Valley); and, the Apartment Owners Association.

Staff will be participating in this educational effort by:

• Press releases concerning the ordinance

• Provide License and Code Services web page updates concerning the ordinance

• Publish and distribute a brochure concerning the ordinance and how it will be enforced

• Make presentations to the Burbank Association of Realtors� general membership at their Thursday meetings

• Consider producing a informative video for Channel 6 Public Access and possibly provide this video for the Burbank Association to use as a part of their education programming

CONCLUSION

The Analysis segment of this report offers two (2) options.  Both options provide the restrictions which Council requested and the Burbank Association of Realtors agreed to.  As discussed in this report, the differences between the ordinance options are:

1. The requirement for a permit system with applicable fees for cost recovery

2. The requirement for a liability insurance provision

3. There are two different forms of indemnification (a strong written indemnification for Option #1 vs. a weaker equitable indemnification for Option #2).

These three (3) differences are all positive elements contained in Option #1.  Therefore, staff believes Option #1 is the stronger of the two options since it provides cost recovery, insurance, a better tracking system of the signs, and a written indemnification.  Because Option #1 is the stronger of the two options, and it does more to protect the public�s interest, staff is making Option #1 as the recommended choice for Council. 

RECOMMENDATION

Staff recommends that Council adopt AN ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE BURBANK MUNICIPAL CODE TO AUTHORIZE TEMPORARY �OPEN HOUSE� SIGNS TO BE PLACED IN THE PUBLIC RIGHT-OF-WAY BY PERMIT.

EXHIBITS

A       Matrix of Differences Between Option #1 and Option #2

B        Calculations of Permit Fee Structure

C       Survey of Other Cities

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