The Santa Monica City Council will consider whether to allow the city's first large-format digital billboards in decades, potentially opening the door to expanded commercial signage and billboards throughout the city.
Two development agreement applications from UNITED XYZ LLC propose installing massive LED displays wrapping around corners of buildings at 301 Arizona Avenue and 1202 Third Street Promenade. Each sign would cover approximately 800 square feet and display full-motion advertising, public art and civic announcements.
The proposals mark a significant departure for Santa Monica, which has prohibited billboards and off-site advertising since 1985. City staff acknowledge the digital displays would be "a first for the City in many decades" and could set precedent for future applications.
"Because of case law that has developed related to regulation of billboards and off-site advertising, approval of these digital displays will likely have broader policy implications with regard to future digital display applications," city staff wrote in a report to the council.
The council will discuss whether to authorize staff to begin negotiations on the development agreements and consider establishing a pilot program limiting large-format digital signage to the Third Street Promenade area.
The applications come as the city seeks to boost economic activity downtown in the face of declining economic fortunes. UNITED XYZ LLC has proposed sharing 20% of advertising revenue with the city, along with minimum annual guarantees starting at $500,000 in the first year and escalating to more than $2.2 million annually by years 50-55. The company would also pay a one-time $500,000 contribution per display upon construction.
The proposed 55-year agreement is part of an industry push for longterm leases to offset the high costs associated with installing the signs and the terms mirror those typically required for affordable housing developments, far exceeding the 20-year term of the city's existing digital advertising contract.
Staff said any new contract needs to evaluate whether new digital billboards could cannibalize revenue from an existing wayfinding kiosk program operated by BIG Outdoor under a franchise agreement adopted in January 2023. That 20-year contract guarantees the city $5 million annually.
"The concept of advertising saturation implies that with increased investment in advertising, there will be a point where each additional dollar spent yields less return than the previous one," said the staff report.
The city plans to hire a consultant to analyze potential impacts on the digital kiosk program should the billboard applications move forward.
Santa Monica's current sign restrictions go back to 1985, which prohibited off-site advertising including billboards. Existing non-conforming signs were given until 2000 to be removed through an amortization period. As that deadline approached, the city created a "Meritorious Sign" program preserving 115 signs with historic, cultural or aesthetic value. Those signs, designated by the City Council in March 2000, remain the only grandfathered off-site advertising in the city.
The sign code has been updated in recent years to accommodate new advertising technology and allow more flexibility for business signage on the Third Street Promenade, but off-site advertising prohibitions remained intact.
City staff acknowledge that digital billboards displaying off-site advertising receive First Amendment protection as commercial speech, subjecting any regulations to intermediate constitutional scrutiny by courts.
Legal challenges would require the city to demonstrate a significant governmental interest in regulation, show the rules directly advance that interest, and prove they are not more extensive than necessary.
Staff recommend limiting any pilot program to the Promenade area to avoid "potential citywide proliferation of digital signs while the City studies the effectiveness of digital billboards."
The proposed digital displays and their locations could raise concerns about driver distraction, particularly where signs would face cross streets like Wilshire Boulevard and Broadway. California Vehicle Code prohibits lighting that impairs driver vision on highways.
City staff are commissioning lighting studies to analyze potential impacts on nearby residential uses, though the Promenade area is predominantly commercial.
Proposed safeguards include restrictions on brightness levels, contrast, glare, flashing effects and scrolling text to minimize both driver distraction and impacts on sensitive land uses.
Beyond revenue sharing, the applications propose allocating display time for community content including civic announcements, emergency notifications, public art and cultural programming. The Santa Monica Arts Commission has expressed interest in showcasing local artists.
The council may also consider requiring operators to offer reduced-rate advertising to local businesses during unsold time slots, supporting the city's Buy Local economic development program.
A community meeting held online April 3 drew 12 attendees who raised questions about pedestrian safety, energy usage, advertising rates and operational standards.
The City Council meeting begins at 5:30 p.m. Tuesday at City Hall, 1685 Main Street.
