City sending wrong sign with new rules for advertising.

With little fanfare or public debate, the Bloomberg administration and New York City Council has launched a campaign that will make it harder for businesses to advertise their products and services on the streets of New York City and its arterial highways.

To enforce new limits on outdoor advertising, the City is making use of a weapon called Local Law 31, enacted in 2005 and put into effect recently. Supporters say the initiative is necessary because of safety concerns and the threat of 'visual clutter.'

"We've had enough illegal black market advertising in our City," Manhattan Borough President Scott Stringer declared, making it sound as if outdoor ads were promoting contraband rather than iPods, upcoming TV series, public service campaigns and banking services.

"There is no oversight, there is no control and no enforcement," Stringer complained, condemning the ads as a form of "corporate graffiti" and placing the blame for the regulatory laxity on the Department of Buildings. As evidence, the borough president relied on a survey conducted by the Municipal Art Society that found several buildings with advertising on their facades to be in violation of the law.

The Society's sweeping support of restrictions on public signage represents a turnaround from the position it took in the mid-1980s when City officials proposed turning Times Square into an elegant boulevard stripped of its marquee lights and gigantic illuminated billboards. At the time, the Society took the lead to preserve the advertising. The City relented when Times Square property owners simultaneously turned off the lights, plunging the Great White Way into darkness. Case closed: the signs stayed put. It was a powerful message that New York City's image was inextricably linked to its billboards. (Nearly one third of all postcards depicting New York City's skyline or neighborhoods feature a billboard.)

Under the new law, which excludes Times Square and a small area on W. 34th Street, many billboards built after 1979--including those on the heavily trafficked Long Island Expressway--are to be drastically altered or torn down. The City is now proposing to dismantle about 50-60% of existing billboards while also maintaining current restrictions for temporary ads on sidewalk sheds. Many billboards that do remain will have to be reduced in size or be required to face in another direction. Those changes are inevitably going to affect who buys space on them and how much revenue they produce.

Representatives of the advertising industry have reacted to the city's crusade with dismay and bewilderment. They point out that no study was ever carried out to assess the law or its economic impact on an industry that puts a billion dollars a year into the local economy. "Banning billboards and scaffolding signage will cause a significant financial loss for many different sectors of the economy--property owners, local businesses, union labor, advertising agencies and advertisers," says Ari Noe, president and CEO of OTR Media Group, a New York-based outdoor advertising company specializing in wallscapes and bulletins.

Union workers who put up the signs will also be hard hit. And so will many mom and pop stores located in buildings under repair with unsightly sidewalk bridges on top of them. Scott Stringer may consider scaffold advertising a "blight," but these stores have few other effective ways of luring customers into their establishments while they're being refurbished.

"The scaffolding has to be there by law," Noe says, "so is it better to have a bare ugly structure there instead of ads?" Property owners feel much the same. "Scaffolding ads look good, they're pleasing to the eye and they distract from the obtrusive sidewalk shed," says Nathan Berman of MetroLoft Management, which owns several upper class high rise buildings in Manhattan. He takes exception to allegations made by Stringer and others that property owners allow scaffolding to remain after they are no longer required in order to collect the extra revenue. "Believe me," he said, "we take them down as soon as we can. The people who live or work in our buildings would never tolerate them a minute longer than necessary."

By contrast, Europeans see scaffolding advertising not as a threat to civic order but rather as an urban asset. Edinburgh, Scotland for example, recently gave the go-ahead for and even encouraged product advertising on scaffolding, joining many other European cities that have already done so. Aside from serving a decorative purpose, the advertising offsets the cost of erecting the scaffolding, often one of the biggest expenses in repairing a building.

In New York City, eradicating outdoor advertising from the skyline seems to be a solution in search of a problem. Simply put, there is no public outcry to take down or alter these signs. So just what is behind New York's newly aggressive move to limit outdoor advertising?

Even while it continued to crack down on billboards and scaffolding ads, the City was getting into the outdoor advertising business itself. Borough President Stringer gave the game away himself when he said, "I'm not opposed to advertising; it's an important business component to the City, but you should not create an illegal market where the City gets no benefit and legitimate businesses are hurt."

He failed to clarify why the outdoor advertising industry shouldn't be considered 'legitimate' nor did he specify what 'legitimate businesses' were being hurt. Remove all the ambiguous verbiage and only four words of his statement really count: "the City gets no benefit."

In light of recent developments, the City's coffers are unlikely to stay empty much longer. In early 2006, New York City awarded one of the most lucrative advertising contracts in the world to an obscure Spanish company called Cemusa to rebuild and maintain an exclusive line of outdoor furniture--over 3300 bus shelters and 330 newsstands as well as 20 public toilets. Mayor Michael Bloomberg defended advertising on the public furniture. "In challenging fiscal times ... a coordinated street furniture program offers the City the unique opportunity to ... create a vibrant and aesthetically pleasing streetscape ..."

The deal, which is expected to generate in excess of $1 billion in ad revenues for the City over 20 years, has become mired in controversy. Cemusa was the only company in competition that wasn't based in New York and it won the contract because of a last-minute change in the bidding rules. Two of the losing bidders--JC Decaux and Clear Channel Outdoor--have filed lawsuits over the bidding process on the grounds that "an inexperienced undercapitalized foreign company" had won the contract only because of favoritism and coaching by city officials.

Charges of favoritism are hardly new. No one questions why Times Square was exempted from the new signage restrictions but what made one corner of West 34th Street so special that it deserved a similar waiver?

The Cemusa deal comes on the heels of an MTA agreement with CBS Outdoor Corporation, a division of CBS Corporation, giving it exclusive rights to place signage on the City's subways and buses as well as in locations outside subway stations. In spite of its suit over the public furniture contract, Decaux hasn't been left out of the cold, either. The Port Authority awarded Decaux a contract that allows the company to post signs on its property without the inconvenience of having to seek permits for them.

For example, Decaux has displayed a large sign on the Lincoln Tunnel, managed by the Port Authority, with a guaranteed captive audience made up of New Jersey-bound commuters.

If New York State, New York City, the MTA and the Port Authority weren't putting up all the signs they like, wherever they like, and without bothering to comply with the regulations they impose on everyone else, then avowed concerns over safety hazards and visual clutter might be more understandable. As it is, outdoor advertising companies suspect, the impassioned denunciations of their industry by public officials may actually be more of a smokescreen.

The true motive, they believe, is who gets to keep future revenues that this "corporate graffiti' is expected to bring in.

Outdoor advertising, as its advocates are fond of saying, makes a statement that New York is open for business, but who gets that business is apparently another matter entirely.

BY ED BURNBAUM, NOVACK BURNBAUM CRYSTAL LLP.