Lamar Advantage GP Co. v. City of Cincinnati
| Decision Date | 17 October 2018 |
| Docket Number | Case No. A-18-04105 (consolidated with Case No. A-18-04125) |
| Parties | LAMAR ADVANTAGE GP CO., LLC, dba Lamar Advertising of Cincinnati, OH, Plaintiff, and State of Ohio ex rel. Lamar Advantage GP Co., LLC, Relator, v. CITY OF CINCINNATI, et al., Defendants-Respondents. Norton Outdoor Advertising, Inc., Plaintiff, v. City of Cincinnati, et al., Defendants. |
| Court | Ohio Court of Common Pleas |
Following receipt of testimonial and documentary evidence over the course of several days, this matter is now before the Court on the Motions for Preliminary Injunction filed by Plaintiff LAMAR ADVANTAGE GP CO., LLC, dba LAMAR ADVERTISING OF CINCINNATI, OH, and Plaintiff NORTON OUTDOOR ADVERTISING, INC., wherein both parties seek the issuance of a preliminary injunction so as to restrain Defendants CITY OF CINCINNATI and its officials from implementing or enforcing: (i) Chapter 313 of the Cincinnati Municipal Code as recently enacted through Ordinance No. 167-2018 which imposed an Outdoor Advertising Sign Excise Tax on all outdoor advertising signs, i.e. , a billboard tax, throughout the City of Cincinnati; and (ii) certain provisions of Chapter 895 of the Cincinnati Municipal Code as recently amended through Ordinance No. 163-2018 whereby, inter alia , certain fees associated with permits concerning billboards were increased and the renewal period for such permits was changed from a biennial requirement to an annual requirement.
Because: (i) the newly-enacted billboard tax directly and unequivocally isolates and targets for taxation a small group that owns and controls the means or instruments used exclusively for the exercise of First Amendment rights; and (ii) the tax constitutes a discriminatory tax upon those means or instruments, the billboard tax clearly violates the First Amendment consistent with Grosjean v. American Press Co. , 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed. 660 (1936), Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue , 460 U.S. 575, 103 S.Ct. 1365, 75 L.Ed.2d 295 (1983), and Leathers v. Medlock , 499 U.S. 439, 111 S.Ct. 1438, 113 L.Ed.2d 494 (1991). Furthermore, because the billboard tax is the sine qua non for the entirety of Chapter 313 of the Cincinnati Municipal Code, as well as in light of another provision of Chapter 313 also violating the First Amendment, severing the billboard tax would not be consistent with nor advance the clear intention of the Cincinnati City Council through its adoption of Ordinance No. 167. Accordingly, a preliminary injunction against implementation or enforcement of any provision of Chapter 313 is warranted.
With respect to the recently-amended provisions of Chapter 895 of the Cincinnati Municipal Code, because, following commencement of this action, the Cincinnati City Council passed Ordinance No. 323-2018 whereby it effectively reinstated the status quo ante passage of Ordinance No. 163 as it related to both the fees associated with billboard permits and the renewal period for such permits as contained in Chapter 895 of the Cincinnati Municipal Code, the claim for preliminary injunctive relief with respect to Chapter 895 Ordinance No. 163 has become moot.
On June 27, 2018, the Cincinnati City Council passed, as an emergency measure, Ordinance No. 167-2018. Ordinance No. 167 enacted, inter alia , a new Chapter 313 to the Cincinnati Municipal Code through which the CITY OF CINCINNATI "levied an excise tax on the privilege of installing, placing, and maintaining" outdoor advertising signs, i.e. , billboards, in the City of Cincinnati. Cincinnati Municipal Code § 313-3(a) . The amount of the billboard tax is the greater of: (i) seven percent of the gross receipts generated by or attributable to any billboard located in the City of Cincinnati; or (ii) an annual minimum tax which varies based upon the type of billboard (electronic versus non-electronic) and the location of the billboard (in close proximity to an interstate or primary highway versus all other locations).1 Cincinnati Municipal Code § 313-3(b) .
Generally speaking, the billboard tax is imposed against all signs in the City of Cincinnati greater than 36 square feet in total face area, regardless of whether the sign is advocating a commercial message vel non and whether any commercial message is directed to the premises where the sign is located vel non. See Cincinnati Municipal Code § 313-5(a)(iii); Cincinnati Municipal Code § 313-1-O . The only other exceptions to the imposition of the billboard tax are for: (i) signs "owned, controlled, leased, licensed, or otherwise used by the United States, the State of Ohio, or the city of Cincinnati"; and (ii) signs otherwise declared exempt from regulation pursuant to Cincinnati Municipal Code § 895-2 and Cincinnati Municipal Code § 1427-07.2 Cincinnati Municipal Code § 313-5(a)(i) & 313-5(a)(ii) .
All persons owning or controlling any billboard within the City of Cincinnati are required to register all billboards subject to the billboard tax. Cincinnati Municipal Code § 313-9 .3 And those persons are also mandated to file quarterly and annual tax returns, with the latter requiring disclosure of the gross receipts for each billboard. Cincinnati Municipal Code § 313-11(b) & 313-11(c) . Furthermore, without the issuance of a warrant or the opportunity for pre-compliance review before a neutral decision maker, those subject to the billboard tax (or even suspected of being subject to it) are mandated to afford the city treasurer or his designee "access to all records and evidence at all reasonable times" as well as to provide them "the means, facilities and opportunity to conduct any examination or investigation upon reasonable notice". Cincinnati Municipal Code § 313-11(e)(i) & 313-11(e)(i) .
While the owners of billboards may pass the cost of the billboard tax onto an advertiser who leases a billboard, Cincinnati Municipal Code § 313-7(c)(i) , the owners may not, by express prohibition, "state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by an advertiser, or that it will be added to the rent or other charge." Cincinnati Municipal Code § 313-7(b) . Also, the billboard tax may not "be stated or charged separately from the rent or other consideration paid by an advertiser...or shown separately on any record thereof, or otherwise reflected upon any bill, statement or charge made for the sign's use...." Cincinnati Municipal Code § 313-7(a) .
In passing Ordinance No. 167 as an emergency ordinance, the Cincinnati City Council invoked the talismanic language that it was "necessary for the preservation of the public peace, healthy [sic], safety, and general welfare." Ordinance No. 167-2018, sec. 7 . Specifically, the City Council indicated the immediate implementation of the billboard tax was necessary so that city officials and departments could establish the necessary regulations and procedures, put in place the appropriate staffing, and reach out to owners of billboards so that the City could begin to collect the tax no later than October 15, 2018, when the first quarterly tax returns and associated payments would be due. Ordinance No. 167-2018, sec. 5 & 7 .
On the same day it passed Ordinance No. 167, i.e. , on June 27, 2018, the Cincinnati City Council passed, also as an emergency measure, Ordinance No. 163-2018. Part of the budget proposal originally presented by the Mayor of Cincinnati, Ordinance No. 163 amended, inter alia , certain provisions of Chapter 895 of the Cincinnati Municipal Code so as to significantly increase certain permit fees associated with billboards.
Before constructing any billboard in the City of Cincinnati, a person must obtain an outdoor advertising construction permit in addition to any required building permit or other permit or license. Cincinnati Municipal Code § 895-13 . Pursuant to Ordinance No. 163, the cost for the outdoor advertising construction permit increased from $70 to $280. Ordinance No. 167-2018, sec. 5 . Additionally, the City's director of buildings and inspections "has the duty to inspect the construction of outdoor advertising signs" to ensure "the construction has been completed in accordance with all applicable codes." Cincinnati Municipal Code § 895-13 . Thereupon, the director issues a permit number for the individual billboard which must be displayed, together with the owner's name, on the billboard or accompanying structure so that it is visible from the public right-of-way. Cincinnati Municipal Code § 895-13 .
Ordinance No. 163 also increased the frequency by which owners of billboards must renew an outdoor advertising permit, as well as increasing the fees associated with each renewal application. While owners of billboards previously renewed such permits on a biennial basis, Ordinance No. 163 now mandates annual renewals. And in terms of the fee structure for a renewal permit if the owner of a billboard filed a verified certification that each billboard was being displayed and maintained in accordance with Chapter 895 of the Cincinnati Municipal Code, the fee increased, pursuant to Ordinance No. 163, from $20 to $160 for each billboard face, see Cincinnati Municipal Code § 895-19(a) ; if the owner simply applied to the City's director of building and inspections for the City to conduct inspection of a billboard to ensure compliance with the requirements of Chapter 895, the fee increased, pursuant to Ordinance No. 163, from $40 to $160 for each billboard face, see Cincinnati Municipal Code § 895-19(b) ; but if an owner failed to undertake either of the two foregoing options, then the City still inspected the billboard but, in such a scenario, the fee for the renewal permit increased, pursuant to Ordinance No. 163, from $50 to $400 for each billboard face, see Cincinnati...
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