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HomeMy WebLinkAbout1A, Clear Channel Litigation ~ ~HILLS CONFIDENTIAL LITIGATION MEMO DATE: April 17,2008 TO: Mayor and City Council FROM: Jim Willis, Interim City Administrator SUBJECT: Clear Channel Outdoor, Inc. mediation This memo and the attachment from John Baker are confidential and are not to be disclosed publicly. Following consultation with the Mayor, 1 have scheduled an Executive Session with respect to this litigation for 6:00 p.m., next Monday, April 21. It will be the first item on your Work Session agenda. Thursday moming the City and representatives of Clear Channel met in a mediation session at the City offices. Following about three hours of mediation, the mediator, retired Judge Robert Lynn, recommended that the session be adjoumed, and that the full City Council be invited to join in a subsequent session. The purpose of the Executive Session is to receive a report on the mediation session from our attomeys and to discuss options available to the City with respect to the continuation of the mediation process. The attomeys representing the City in this litigation, John Baker and Robin Wolpert of the Greene Espel law finn, provided the mediator with the attached memo dated April 15th outlining the City's summary of the essential facts involved in the litigation. It is being provided to you for infonnationlbackground purposes. Also attached is the legal position of Clear Channel as prepared by their legal team. This is a public document. It will provide you with their perspective on the litigation. Ms. Wolpert will be present at the Executive Session to provide you further background on this matter and respond to your questions. GREENE Esp E L ATTORNEYS 0. COUNSELORS JOHN M. BAKER DIRE(.T DIAL No. (612) 373-8344 JBAKER@GREt:NEESPEL.COM April 15, 2008 CONFIDENTIAL MEDIATION STATEMENT FOR MEDIATOR'S EYES ONLY VIA EMAIL Robert H. Lynn 9103 Loch Lomond Blvd. Brooklyn Park, MN 55443 Re: Clear Channel Outdoor, Inc., a Delaware cOIporation,jlkla Eller Media Company v. City of Arden Hills Our File No. 2043-340 Dear Judge Lynn: On behalf of our client the City of Arden Hills (the "City"), I want to thank you for agreeing to serve as our mediator. As you know, the mediation is scheduled to begin at 9:30 a.m. on April 17,2008, at City Hall. My colleague Robin Wolpert and I will represent the City at the mediation. James Lenhoff, City Planner, and Mark Rossow, from the League of Minnesota Cities, will be present throughout the mediation. Interim City Administrator Jim Willis should also be available as needed. This confidential mediation statement is intended to provide you with a summary of the facts as we know them, our candid assessment of the claims asserted in this lawsuit, and the City's settlement position. As such, we ask that you treat the content of this letter as confidential unless pennission to share specific information is provided at the mediation. Overview The dispute at hand stems from Plaintiff Clear Channel Outdoor, lnc.'s ("Plaintiff') unlawful installation of an LED sign in the City in December 2006. Plaintiff never obtained a sign permit before installing the LED sign, even though the City's Sign Code requires a permit for any alteration of a sign. For five months, Plaintiff ignored the City's requests to submit an after-the-fact sign permit application before finally submitting such an application. The sign permit application was properly denied, along with its appeals from that denial, because Plaintiff had, by its own admission, expanded the billboard by increasing the depth of the sign, in violation of the City's Sign Code, and also had internally illuminated the sign in violation of the City's Sign Code. Plaintiff then ignored directives from the City to cease operations, remove the unlavdul LED sign, and restore the sign to its previous condition. Instead, Plaintiff brought this 200 SOUTH SIXTH SiRE!';:T, SlJlTE J~O. MINNEAPOLIS, MN 55402_141:5 612-373-0830 TEL 612-373-0929 FAX WWW.GREENEESPEL.COM PROFESSIONAL LIMITED LlABIUTY PARTNE;R5HIP Robert H. Lynn April 15,2008 Page 2 lawsuit, claiming, among other things, that state law preempts the City's sign regulations-even though the pre-emption argument is based on a selective reading of state law and has been firmly rejected each time Clear Channel has raised it, including the last time Plaintiff tried to install and operate an LED sign illegally_The City brought a counterclaim, contending that Plaintiff's installation of the LED sign was contrary to numerous provisions of the City Sign Code and that Plaintiff should be ordered to remove the LED sign face and restore the sign to its previous condition with a standard sign face. Both parties have moved for summary judgment. The hearing is scheduled for May 14,2008, with opening briefs due the day before mediation. Undisputed Facts A. Plaintiff Operates Nonconforming Billboards Within the City The City prohibits permanent off-premise signs, including billboards, in all sign districts. City Sign Code, Section 1230.02, subd. 8 (providing that "[t]he following permanent and temporary signs shall be prohibited in all sign districts: · · · subd. 8: Permanent off-premise signs, including biIlboards[.]"). Plaintiff operates two off-premise billboards within Sign District 7, the Gateway Business District of the City. Those billboards are non-conforming signs within the meaning of the City's Sign Code. B. The City Prohibits the Enlargement or Expansion of Nonconforming Signs The City prohibits the enlargement or expansion of nonconforming signs. Section 1280-01 of the Sign Code provides that "[i]t is the intent of this Chapter that non-conforming signs shall not be enlarged or expanded, nor be used as grounds for adding other signs or USes prohibited elsewhere within the same district." Section 1280.01 further provides that "[a]n existing sign devoted to a use not permitted by the Zoning Ordinance in the zoning district in which it is located shall not be enlarged, expanded or moved except in changing the sign to a sign permitted in the sign district in which it is located." C The City Strictly Limits the Conditions In Which the Lawful Expansion of Signs Within the Gateway Business District May Occur Consistent with Minn. Stat. S 462.357, subd. Ie (b), which permits a municipality to allow an expansion of a nonconforming use,l the City has strictly limited the circumstances in which a nonconforming billboard located in the Gateway Business District may lawfully be expanded. First, the City must approve in writing of any expansion, alteration, or modification I Minn. Stat. S 462.357, subd. Ie (b), provides that "[a] municipality may, by ordinance, permit an expansion or impose upon nonconformities reasonable regulations to prevent and abate nuisances and to protect the public health, welfare, or safety." Robert H. Lynn April 15, 2008 Page 3 of a billboard. Second, any such expansion, alteration, or modification must be in connection with a transaction that results in a net reduction of the number or sign face area of billboards. Section 1320.13, subd. 6(G)3 of the Sign Code provides that any billboard located in the GB District may be expanded, altered, relocated, or otherwise modified solely upon written approval of the City, provided the expansion, alteration, relocation or modification is authored [sic] by the City of Arden Hills in connection with a transaction which will result in the net reduction in the number of billboards or in the aggregate sign face area of the billboards, located in the GB District. This provision was adopted in 1998 at the request of Clear Channel's predecessor in interest, as part of an arrangement under which it was permitted to build two new sign structures in exchange for the removal of its other sign structures in the Gateway Business District. D. The City Limits the Illumination of Signs in Sign District 7 The City regnlates the illumination of freestanding signs located in Sign District 7. Section 1240.02, Table I, of the Sign Code permits only extemallighting for such signs, and Section 1210.01, subd. 6, defines external lighting as illumination "by means of external light fixtures directed at the sign." E. The City Prohibits the Alteration of a Sign Without Obtaining a Sign Permit The City does not permit the alteration of a sign without obtaining a sign permit. Section 1220.DI of the Sign Code states that "[eJxcept for those signs listed in Section 1230.01, no permanent or temporary sign shall be erected, altered, reconstructed, maintained, or moved in the City without obtaining a sign permit from the City." F. Plaintiff Replaced the Static Face of One ofIts Billboards With an LED Display On December 7, 2006, Plaintiff began to operate an LED dynamic display on the sign, which it has installed in place of the static face without notice to or permission from the City. Plaintiff never submitted a sign permit application to the City before installing or operating the LED face. Although Plaintiff had obtained an electrical permit from the independent contractor hired by the City to receive and grant electrical permits, it never disclosed in its application that it was installing an LED sign face. The department of the City responsible for issuing sign alteration permits leamed about the sign only after it was installed and operational. Clear Channel repeated its pre-emptive approach in most if not all of the other five cities where it decided to install such devices, triggering responses that included stop-work orders and an electrical shutoff (in Minnetonka), cease-and-desist letters (from Arden Hills and Maplewood), and the adoption of moratoria (in all six cities except Maplewood, plus many others that feared a repeat of Clear Channel's approach). Robert H. Lynn April 15, 2008 Page 4 G. Undisputed Differences Between the Static Sign Face and thc LED Sign Although Plaintiff has represented that the LED sign is no different than the static sign face in terms of length, width, and square footage, Plaintiff admitted to the City that the LED sign is different from the static sign in the following respects: . The depth of the LED display device is 8 to 10 inches, but the static sign face was onJy 2 inches in depth; . The static sign had four extemallight fixtures located outside the sign face directed at the sign face, but the LED sign consists of thousands of LEDs generating light from the surface of the sign itself; . The amperage of the LED sign is four times greater than the amperage of the vinyl sign; and . The weight of the LED sign is 9,000 to 10,000 pounds, but the weight of the static sign was 1,000 to 1,500 pounds, and to support the additional weight of the LED sign, the sign pole was modified and structural supports were added to the sign structure. See Exhibit A (letter from Marvin Liszl to James Lenhoff dated May 18,2007) and Exhibit B (Excerpts of the transcript of Minutes of City Council Meeting, September 10, 2007, at 25-29, 33-36.). H. Thc City Denied Plaintiff's After-the-Fact Sign Permit Application Three days after Clear Channel began to operate the LED device, the City Planner notified Plaintiff in a letter dated December 11, 2006 that its LED sign was unJawful and requested Plaintiff to remove the noncompliant features of the sign within 30 days. Plaintiff refused to do so. In a sign code violation letter dated January 24, 2007, the City Planner again notified Plaintiff that its LED sign was unlawful and that Plaintiff had failed to obtain the required permit. In that letter, the City Planner requested Plaintiff to submit a sign permit application. Three weeks later, in a letter dated February 13,2007, the City Attorney informed Plaintiff that its sign was unJawful for many reasons, including the fact that Plaintiff had failed to seek a sign permit. Plaintiff did not submit a sign permit application until mid-May 2007. The City Planner denied Plaintiff's after-the-fact sign permit application and directed Plaintiff to remove the LED sign and reinstall the previous sign face. On appeal, the Planning Commission and the City Council upheld the decision to deny the sign permit. In a letter to Plaintiff dated September 20,2007, the City Council identified the following reasons for denying the sign permit: Robert H. Lynn April 15, 2008 Page 5 . The replacement of the vinyl sign face with the LED face constitutes an unlawful enlargement and expansion of the use and structure under the City's Sign Code because the installation of the LED face increased the depth, weight, and amperage of the sign, required additional external supports, and expanded the lighting from four external lights to thousands ofLEDs; and . The illumination of the LED sign fmled to satisfy the requirements in Sign District 7 for external lighting established by the City's Sign Code because the LEDs are an integral part of the sign itself. Because Plaintiffs continued operation of the altered sign in the absence of a sign permit is unlawful and violates the City's Sign Code, the City directed Clear Channel to remove the LED sign face and restore the static sign face. This lawsuit followed. Analvsis of the City's Counterclaims and Plaintiffs Le~al Claims The following is a summary of the City's arguments in support of its counterclaim for enforcement of its Sign Code and removal of the digital sign, and against Plaintiff's claims. In short, the City is entitled to prevail for three reasons. First, Clear Channel's installation of a digital sign constitutes an unlawful expansion and enlargement of a nonconforming structure and use. Second, Clear Channel's digital sign violates the illumination standards and restrictions in the distl"ict in which the sign is located. Third, Clear Channel altered its static sign and replaced it with a digital sign without first obtaining a sign permit from the City and continues to operate this sign without the required permit. The City also is entitled to prevail on Clear Channel's claims, not only because the digital sign constitutes an unlawful expansion and enlargement of a nonconforming use and violates the City's illumination standards, but also because state law does not preempt local regulations of signs. A. Clear Channel's Digital Sign Constitutes an Unlawfnl Expansion and Enlargement of a Nonconforming Structure and Use Plaintiff s installation of a digital sign constitutes an unlawful expansion and enlargement of a nonconforming structure and use. The City prohibits the enlargement or expansion of nonconforming signs. City Sign Code, Section 1280.01. The state also prohibits the unauthorized expansion of nonconforming uses and requires any subsequent uses to be conforming. Minn. Stat. !i 462.357, subd. Ie (a) and (b). The nonconforming use statute provides: Any nonconformity, including the lawful use or occupation of land or premises existing at the time of the adoption of an additional control under this chapter, may be continued, including through repair, replacement, restoration, maintenance, or improvement, but not including expansion, unless: Robert H. Lynn April 15, 2008 Page 6 (1) the nonconformity or occupancy is discontinued for a period of more than one year; or (2) any nonconforming use is destroyed by fire or other peril to the extent of greater than 50 percent of its market value, and no building permit has been applied for within 180 days of when the property is damaged. In this case, a municipality may impose reasonable conditions upon a building permit in order to mitigate any newly created impact on adjacent property. Minn. Stat. S 462.357, subd. Ie (a) (emphasis added). Minn. Stat. 9 462.357, subd. Ie (b) specifically requires that "falny subsequent use or occupancy of the land or premises shall be a conformmg use or occupancy." Minn. Stat. S 462.357, subd. Ie (b) (emphasis added). This legislative prohibition on the expansion of nonconforming structures or uses merely restates and preserves the longstanding judicial interpretation of the nonconforming use doctrine. As the Minnesota Supreme Court explained: It is not required, however, that preexisting nonconforming uses be allowed to expand or enlarge. Thc public policy behind that doctrine is to increase the likelihood that such uses will in time be eliminated due to obsolescence, exhaustion, or destruction. This in turn will lead to a uniform use of the land consistent with the overall comprehensive zoning plan. County of Freeborn v. Claussen, 295 Minn. 96, 99, 203 N.W.2d 323,325 (1972). Plaintiff admits that the depth of the digital sign unit "is approximately eight inches greater than the sign face it replaced." An increase in one or more dimensions of a structure or a use constitutes an expansion or enlargement of that structure or use. See County of Lake V. Cour/ney, 451 N.W.2d 338, 341 (Minn. Ct. App. 1990) (holding that roof line that was six feet higher than prior roof violated county's ordinance prohibiting the enlargement, increase, or extension of a nonconformity); County of Freeborn, 295 Minn. at 100,203 N.W.2d at 326 ("An addition to an existing building is clearly an extension or expansion of a prior nonconforming use."); Adams Ou/door Adver/ising, LP. V. Board of Zoning Appeals of City of Virginia Beach, 645 S.E.2d 271, 275 (Va. 2007) (holding that installation of electronic message board enlarged nonconforming billboard in violation of city ordinance); Ciiy of Foley Board of Adjustmen/s and Appeals V. H & S Southern Graphics Sys/ems, Inc., 878 S.E.2d 294, 299 (Ala. 2003) (holding that joining two signs increased the total square footage of the sign face and changed the shape of the sign in violation of municipal zoning ordinance). Plaintiff insists that there was no expansion, contending that the LED sign face is designed to display images that are smaller than the vinyl sign face it replaced and that the overall sign footprint is the same even though the depth of the sign increased. The Virginia Supreme Court recently addressed this very argument and rejected it. In Adams Outdoor Robert H. Lynn April 15, 2008 Page 7 (attached hereto as Exhibit C), the City of Virginia Beach's zoning regulation provided that "no nonconforming sign shall be structurally altered, enlarged, moved or replaced." 645 S.E.2d at 275. Adams Outdoor owned a lawful nonconforming billboard and replaced a static face with an electronic message board. !d. The Virginia Supreme Court upheld the decision of the circuit court that the installation of an electronic message board onto the existing nonconforming billboard enlarged the billboard in violation of the City's zoning ordinance. Id. The Court reasoned that the electronic message board increased the depth and weight of the billboard, even though it did not increase the billboard's height, length, or the square footage of the advertising area. Jd The COUli explicitly rejected the argument offered by the billboard's owner that the billboard was not enlarged because the message board did not increase the square footage of the billboard's advertising area, observing that the square footage of the advertising area was not the controlling factor and that increasing the depth and weight of the billboard enlarged the billboard within the meaning of the zoning ordinance. !d. Here, because Plaintiff admits that the depth of the LED sign face is greater than the depth of the static billboard it replaced, it can only be concluded that Plaintiff unlawfully expanded its nonconforming use. See Adams Outdoor, 645 S.E.2d at 274-75. Contrary to Plaintiff's claims, the fact that the two dimensional footprint of the sign did not change does not somehow negate the fact that the depth of the sign increased. The very notion that the term "expansion" is limited to the height and width of the sign and not its depth is contrary to well- established Minnesota law that an increase in one or more dimensions of a structure or a use constitutes an expansion or enlargement of that structure or use. See County of Lake, 451 N.W.2d at 341; County of Freeborn. 295 Minn. at 100, 203 N.W.2d at 326. Also contrary to Plaintiffs claims, a purported reduction in advertising space is not a reduction in the dimension of the structure itself, and the fact that Plaintiff has chosen not to use the maximum available advertising area of the larger digital sign it constructed does not in any way negate the fact that there was an increase in the depth of the sign. See Adams Outdoor, 645 S.E.2d at 274-75 (holding that the advertising surface area is not the controlling factor when the depth and weight of the sign have been increased). In any event, Plaintiff can provide no authority for the proposition that an increase in one dimension of a structure (the depth) and a reduction in another aspect of a structure (such as the advertising surface area) somehow means that the changes in the structure offset each other and there is not an expansion for purposes of the nonconforming use statute. To the contrary, the fact that the depth of the sign increased is alone sufficient to constitute an unlawful expansion. See id The conclusion that Plaintiff unlawfully expanded its sign is buttressed by the plain language of the City's zoning ordinance and the underlying policy of the ordinance. To hold, as Plaintiff must urge, that an increase in one dimension of a billboard is not an expansion would torture the plain and ordinary meaning of the City's ordinance, which plainly prohibits expansion or enlargement of use nonconformities. It is well-established that zoning ordinances must be considered in light of their underlying policy goals, Frank's Nursery Sales. Inc. v. City of Robert H. Lynn April 15,2008 Page 8 Roseville, 295 N. W.2d 604, 608-09 (Minn. 1980), and the intention of zoning laws regarding nonconforming structures is to increase the likelihood that nonconformities "will in time be eliminated due to obsolescence, exhaustion, Or destruction" and to "lead to a uniform use of the land consistent with the overall comprehensive zoning plan." County of Freeborn, 295 Minn. at 99, 203 N.W.2d at 325. Allowing a nonconforming use or structure to be expanded in this fashion violates this policy because it decreases the likelihood that nonconforming structures will be replaced by conforming structures in the ordinary course of their use. Id, 295 Minn. at 100, 203 N. W .3d at 326 (finding that "construction of a building where none existed before constitutes an expansion" in part because "the building will prolong the continuation of the nonconformiug use and considerably lessen the likelihood that it will be eliminated in the foreseeable future."). Plaintiff has admittedly increased the size of its billboard. It has admittedly done so for the purpose of employing LED technology to "remain competitive" in the outdoor advertising industry. The purpose and spirit of the City's zoning ordinance would be defeated if Plaintiff could extend or prolong indefinitely the life of its nonconforming billboard through an expansion. See County of Lake, 451 N.W.2d at 341 (stating that County's interpretation of its zoning ordinance advanced the underlying purpose of regulating existing nonconformities and that the other party's interpretation wouJd thwart the intended goal of the zoning ordinance and the County's power to eliminate nonconformities). For all these reasons, the City is entitled to the removal of the LED sign face and restoration of the standard sign face. B. Plaintiffs' Switch from External to Non-External lIIuminlltion Violates the City's Sign Code Plaintiff s installation of the LED device rendered the sign unlawful in a new respect. In a district in which the only form of lighting allowed is external illumination, Plaintiff replaced an externally illuminated sign face with one that is not externally illuminated, thus creating a new violation of the City's Sign Code. Section 1240.02, Table 1, of the Sign Code permits only extemal lighting for signs located in Sign District 7, and Section 1210.01, subd. 6, defines extemal lighting as illumination "by means of external light fixtures directed at the sign." The static sign was illuminated by four external light fixtures located outside the sign face directed at the sign face. By contrast, the LED sign relies solely upon thousands of LEDs generating light On the surface of the sign itself. Plaintiff insists that its sign meets the City's lighting standards by first contending that the relevant standard is not whether the lighting on the sign is external, but whether the sign is an <'illuminated sign" within the meaning of Section 1210.01, subd. 18. The definition of an illuminated sign is <'any sign, which has characters, letters, figures, designs or outlines which is illuminated by an artificial light source." Plaintiff claims that its LED sign "has no characters, letters, figures, designs or outlines which are illuminated by an artificial light source." Plaintiff never explains, however, why it is justifiable to ignore the plain wording of the Sign Code that allows only extemal lighting of signs located in District 7, and defines that phrase. (In any event, Robert H. Lynn April 15, 2008 Page 9 the LED sign is also an "illuminated sign" as defIned in the Code, notwithstanding Clear Channel's assertion to the contrary. LEDs are a source of light that is anything but natural, and the display has "characters, letters, figures, designs or outlines" when in operation). Plaintiff also insists that it satisfies the external lighting requirement because the sign is not internally backlit and because the diodes are external to the sign. Exhibit B, Transcript at 14. Just because the LED sign is not internally backlit, however, does not mean that it is externally illuminated as the City Code has defined "external lighting." Plaintiff acknowledges that the LEDs sit on the surface of the sign face itself and that the light diodes are in fact the sign. Exhibit B, Transcript at 32, 36. In these circumstances, the LEDs are not "extemallight fixtures directed at the sign," as the Sign Code requires. Instead, they are light fIxtures located on the sign itself. Accordingly, the LED sign is not illuminated by external lighting and fails to satisfY the City's illumination standards.2 C. The Alteration of tbe Sign Witbont Obtaining a Sign Permit and the Continued Operation oftbe Sign Without a Sign Permit Violates the City's Sign Code The City does not permit the alteration of a sign without obtaining a sign permit. Section 1220.QJ of the Sign Code states that "[e]xcept for those signs listed in Section 1230.01, no permanent or temporary sign shall be erected, altered, reconstructed, maintained, Or moved in the City without obtaining a sign permit from the City." It is undisputed that none of the exceptions provided for in Section 1230.QJ apply to Plaintiff's billboards. It is also undisputed that Plaintiff failed to apply for a sign permit before installing the LED unit, and failed to obtain approval of its after-the-fact sign permit application. Finally, it cannot be denied that Plaintiff altered its sign. Although Plaintiff claims that its alteration was an improvement, not an expansion, that distinction is irrelevant for purposes of Section 1220.01, which requires a sign permit for all 2 Plaintiff also contends that the City does not have a rational basis for its illumination standards. To the contrary, the purpose of the City's regulations of signs in general, and the City's lighting regulations in particular, was to permit effective signage appropriate to the planned character of each sign district, promote an attractive environment, minimize adverse effects on nearby property, and protect the public health, safety and welfare. With respect to the external lighting requirement for District 7, an industrial district, the City examined the character of the neighborhood and the needs of the businesses in the district and concluded that the purpose of the signage in District 7 was not to attract the attention of customers, but to provide directional and locational infonnation. Accordingly, the City concluded that glaring signs and bright signs and signs designed to attract the attention of customers were inappropriate for the industrial character of the district. Because the brightest signs are those that are back lit or internally illuminated, the City prohibited such signs in District 7. Instead, the City required that signs in District 7 be externally lit. Robert H. Lynn April 15, 2008 Page 10 alterations. Plaintiff installed the LED sign face illegally and continues to unlawfully operate its LED sign. The City is entitled to removal of the LED sign. D. Plaintiff's Legal Claims Are Without Merit Because Plaintiff Has No Right to Expand its Nonconforming Billboard and the City's Regulations Are Not Preempted by State Law 1. Plaintiff's Installation of the LED Sign Face Does Not Constitute An Improvement Within the Meaning of Minnesota Statute ~ 462.357, subd. Ie Plaintiff argues that it has the right to ignore the City's laws because the replacement of a static sign face with an LED sign face allegedly constitutes an "improvement" within the meaning of Minn. Stat. ~ 462.357, subd. Ie. However, State law prohibits a unilateral expansion of a nonconforming use even if that expansion is an improvement. In any event, Plaintiff's replacement of the static sign face with a digital display does not constitute an improvement because the conversion to a digital display (1) caused the sign to violate the City's external lighting regulations for signs located in Sign District 7 and (2) caused the sign to be more distracting, causing harm to the public health, safety and welfare. For all these reasons, Plaintiff did not improve the sign within the meaning of Minn. Stat. ~ 462.357, subd. Ie. a. Expansions of Nonconforming Uses are Unlawful, Regardless of Whether they Constitute "Improvements" As explained above, the change in the depth of the sign face as a result of the installation of the LED device constitutes an "expansion" of the use. An improvement that is also an expansion is prohibited by the plain language of the statute. In quoting the relevant statutory provision, Plaintiff's Complaint, qnite literally, reads the "but not expansion" clause right out of the statute, by removing that clause and the comma that precedes it after the word "improvement" and replacing it with a period. Compare subd. Ie with Complaint at ~19. Plaintiff's selective interpretation of the nonconforming use statute is at odds with the plain meaning of the statute and would eviscerate the statute's prohibition on expansion. The statute provides that a nonconformity may be "continued, including through repair, replacement, restoration, maintenance, or improvement, but uot iucluding expausion." Minn. Stat. ~ 462.357, subd. Ie (emphasis added). If, as Plaintiff urges, an improvement were permitted, regardless of whether or not such an improvement was also an expansion, that would not only be contrary to the very words of the statute, which permit "improvement, but not [] expansion," it would also effectively nullifY the statute's prohibition on expansion-an interpretation that is not permissible uuder the rules of statutory interpretation. See American Tower, L.P. V. City of Grant, 636 N.W.2d 309, 313 (Minn. 2001). Plaintiff's interpretation Robert H. Lynn April 15, 20118 Page 11 permitting an improvement even if it is an expansion would effectively insulate from state and local regulation the commencement of a new illegal use so long as that illegal use could be characterized as an "improvement." Such an approach would also be at odds with the policy objective underlying state and local nonconforming use laws, which is to accomplish the termination of nonconforming uses over time. b. The Installation of the LED Sign Face Is Not an Improvement Plaintiff's replacement of the static sign face with a digital display does not constitute an improvement because, as explained above, the conversion to a digital display caused the sign to violate the City's external lighting regulations for signs located in Sign District 7. It must be emphasized that Subd. Ie (a) merely creates a right to continue a use, without also creating a right to change that use in a manner that would create a new violation of local laws. Plaintiff's ability to continue its prior use is not in question-it can continue to operate a static sign. What is at stake is its ability to effectively replace a picture with a computer without first obtaining a sign permit and without regard to whether such a step complies with the City's illumination standards and the City's prohibition on expansion of nonconforming uses. Despite the adoption of subd. I e in 200 I, Minnesota nonconforming use law has continued to protect only lawfUl prior nonconforming uses. See, e.g., County of Morrison V. Wheeler, 722 N.W.2d 329, 333 (Minn. App. 2006), rev. denied (Minn. Dec. 20, 2006). "The general rule that only existing lawful uses are entitled to due process protection as nonconforming uses established is directed primarily to the protection of uses established in compliance with then existing zoning classifications." Id (quoting Hooperv. City of St. Paul, 353 N.W.2d 138, 140 (Minn. 1984)) (emphasis added). The operation of a non-externally illuminated sign was not legal at the time the LED device was installed. Because the display devices are not a "use established in compliance with then- existing zoning classifications," they fall outside of the scope of the doctrine's protection, and thus could never constitute a prior lawful nonconforming use. The replacement of the static sign face with a digital display is not an improvement for the additional reason that the conversion also caused the sign to be more distracting, causing harm to the public health, safety and welfare. The City has the statutory authority and constitutional power to regulate billboards, and the conversion of static billboard into digital billboards, to promote the public health, welfare and safety of its citizens. It may do so regardless of whether the sign is a prior lawful nonconforming uses or structure, pursuant to the second sentence of Minn. Stat. S 462.357, subd. Ie (b), which states that: A municipality may, by ordinance, permit an expansion Or impose upon nonconformities reasonable regulations to prevent and abate nuisances and to protect the public health, welfare, or safety. A conversion of a static sign face to a digital display is a step in the wrong direction, from a safety point of view. As the U.S. Court of Appeals for the First Circuit recently noted: Robert H. Lynn April 15,2008 Page 12 We give some respect to "the accumulated, common-sense judgments of local lawmakers and of the many reviewing courts that billboards are real and substantial hazards to traffic safety." [citation omitted] It is given that a billboard can constitute a traffic hazard. Itfollows that [electronic message centers), which provide more visual stimuli than traditional signs, logically will be more distracting and more hazardous. Naser Jewelers, Inc. v. City of Concord, N.H., --- F. 3d ---, 2008 WL 162521, at 6 (1st Cir. 2008) (emphasis added) (quoting Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 509 (1981)). And, as Judge Diana E. Murphy wrote for the Eighth Circuit in August 2006 regarding an attempt to install equally large billboards that would have completely changed their display every six to ten seconds (though "trivision" technology rather than digital technology), "distracting roadside billboards of the type Advantage sought to erect could also pose real danger to both motorists and nearby pedestrians." Advantage Media LLC v. City of Eden Prairie, 456 F.3d 793, 803 (8th eir. 2006). The City's prohibition on the expansion of nonconforming billboards, the requirement that all signs in District 7 be extemally illuminated, and the requirement that a sign permit be obtained before altering a sign easily fall within the scope of Minn. Stat. S 462.357, subd. Ie (b)'s reservation of municipal authority. See also Advantage Media, LLC v. City of Eden Prairie, 456 F.3d 793, 803 (8th Cir. 2006). Empirical studies demonstrate that electronic billboards are distracting and cause accidents. As a 2001 federal research review noted, "Commercial EBBs are designed to 'catch the eye' of drivers. Their presence may distract drivers from concentrating on the driving task and the visual surrounds." (Office of Safety Research and Dev., Fed. Highway Admin., U.S. Dep'tofTransp., Research Review of Potential Safety Effects of Electronic Billboards on Driver Attention and Distraction, Final Report at 17 (2001) ("2001 Federal Research Review")). Compared to static billboards, the images are extremely clearer, and completely transform themselves every few seconds. Louise Story, "Digital Billboard Up Ahead: New-Wave Sign or Hazard?," N.Y. Times, January 11,2007 ("Billboard companies are adopting digital technology that rotates advertiser images every six or eight seconds - the better to catch the eye. ") (emphasis added). In the words of its own press release that accompanied the roll-out of the network that included the digital display in dispute in this case, Clear Channel stated that "the Twin Cities displays are located on heavily traveled freeways throughout the metropolitan area[.]" (December 28, 2006 press release). (emphasis added). At least two studies, one in Wisconsin and one in Massachusetts, have concluded that the addition of electronic billboards along major metropolitan freeways caused a greater number of auto accidents. (J. Wachtel and R. Netherton, "Safety and Environmental Design Considerations in the Use of Commercial Electronic Variable-Message Signage" (1980); 2001 Federal Research Review at 9-10. The ability of electronic billboard displays to cycle from one brilliant display to another every few seconds increases the quantity of advertising capable of distracting drivers. For Robert H. Lynn April 15, 2008 Page 13 example, a digital display that cycles six different advertisements every six seconds will cause a highway driver traveling at 65 mph to see one full rotation of the ads. During peak traffic hours, when traffic slows, a driver could see three to five loops. ("Pixels and Prints: Outdoor's Future Fusion," September 30, 2003, Electronic Display Central.com). As the responsible federal agency recently concluded, distracting a driver for even a relatively short time (two seconds) can significantly increase the risk of accident. In April 2006, a National Highway Traffic Safety Administration study concluded a study on the impact of driver inattention on near-crash risk and crash risk that "glances [away from the forward roadway] totaling more than 2 seconds for any purpose increase the near-crash/crash risk by at least two times that of normal, baseline driving." ("The hnpact of Driver Inattention on Near-Crash/Crash Risk: An Analysis Using the IOO-Car Naturalistic Driving Study Data" (April 2006) (abstract). For all these reasons, the City may restrict the conversion of static billboards (including prior lawful nonconforming billboards) into electronic billboards to curb the risk of distraction and promote the public health, welfare or safety within the meaning of Minn. Stat. 9 462.357, subd. 1 e (b). 2. The City's Illumination Standards Are Not Preempted by State Law Plaintiff contends that it does not have to satisfY the lighting requirements of the City's Sign Code because the City's regulation is preempted by state law. More specifically, Plaintiff argues that the lighting regulations contained in the state's Outdoor Advertising Act, Minn. Stat. 9 173.16, subd. 3, supersede the City's lighting regulation and that Plaintiff's LED sign complies with the lighting requirements of subdivision 3. Complaint ~ 24-27. "Preemption is defined as 'occupying the field' in Minnesota." In re Appeal of Rocheleau, 686 N.W.2d 882, 890 (Minn. Ct. App. 2004) (quoting Mangold Midwest Co. v. Village of Richfield, 274 Minn. 347, 356, 143 N.W.2d 813, 819 (1966)). "The doctrine of preemption is premised on the right of the state to so extensively and intensively occupy a particular field or subject with state laws that there is no reason for municipal regulation." Nordmarken v. City of Richfield, 641 N.W.2d 343, 347 (Minn. Ct. App. 2002) (citing Mangold, 143 N.W.2d at 819). There are four factors that Minnesota courts consider in determining whether preemption has occurred: (I) the subject matter regnlated; (2) whether the subject matter is so fully covered by state law that it has become solely a matter of state concern; (3) whether any partial legislation on the subject matter evinces an intent to treat the subject matter as being solely a state concem; and (4) whether the nature of the subject matter is such that local regulation will have an adverse effect on the general state population. Robert H. Lynn April 15, 2008 Page 14 Haumant v. Griffin, 699 N.W.2d 774,778 (Minn. Ct. App. 2005) (citing Mangold, 274 Minn. at 358,143 N.W.2d at 820). The subject matter of the regulations - billboards - has long been regulated at the local level and Plaintiffs arguments to the contrary have been rejected by the courts. As the Hennepin County District Court concluded in Clear Channel Outdoor v. City of Minnetonka, when rejecting Clear Channel's pre-emption claim, the authority of Minnesota cities to independently regulate signs is longstanding and well-established. Clear Channel Outdoor v. City of Minnetonka, Hennepin County District Court, Case No. 27-CV-06-23485, Order Denying Plaintiff's Motion for Preliminary Injunction (attached hereto as Exhibit D), at 18 (citing Naegele Outdoor Advertising Co. of Minn. v. Village of Minnetonka, 281 Minn. 492, 162 N.W.2d 206 (1968) (affirming Minnetonka's implied statutory authority to drive new and old billboards out of its residentially-zoned areas - including areas where the federal and state billboard-control statutes declined to reach). Similarly, when Clear Channel's predecessor, Eller Media, asserted that the authority of Minnesota cities to independently regulate signs was preempted, the district court rejected this argument and held that Section 173.10 "specifically pennits municipalities, by ordinance or otherwise, to enact more restrictive provisions concerning advertising devices." Eller Media Co. v. City of St. Paul, Ramsey County District Court, Case No. C7-01-8400, Order granting Defendant's motion for summary judgment and denying Plaintiff's motion for summary judgment (J. Bjorkman) (holding that Section 173.10 "specifically permits municipalities, by ordinance or otherwise, to enact more restrictive provisions conceming advertising devices."). See also City of COllage Grove v. 0/1,395 N.W.2d 111, 113-115 (Minn. Ct App. 1986); Advantage Media LLC, 456 F.3d at 802-03; Arcadia Development Corp. v. City of Bloomington, 267 Minn. 221, 227,125 N.W.2d 846,851 (1964). The subject matter has certainly not "become solely a matter of state concern;" indeed, the state statute not only explicitly reserves the right of local governments to more restrictively regulate advertising, but provides that "pennit systems ofIegitimate local zoning authorities shall take precedence inside a business area." Minn. Stat. !l 173.13, subd. I. In rejecting Clear Channel's pre-emption claim, the Hennepin County District Court also observed that both Minn. Stat. !l173.1 0 and !l173.20 provided that nothing in state law "shall be construed to abrogate, or affect the provisions of any other law, municipal ordinance, regulation, or resolution which is more restrictive than are the provisions. . . [of state statutes]." Clear Channel Outdoor, Order Denying Plaintiff's Motion for Preliminary Injunction, Exhibit D, at J 8. The Court based this holding, in part, on the express provisions in Chapter 173 mentioned above which recognized the power of municipalities to impose regulations more restrictive than state law. Id. at 18-20. In fact, even the MNDOT application form for an "advertising device permit" states that the permit is "Subject to Local Ordinace [sic]." These factors should be fatal to any pre-emption claim. See Roucheleau, 686 N.W.2d at 890. There is no "partial legislation on the subject matter evincing an intent to treat the subject matter as solely a state concem." The Hennepin County District Court explained that "Clear Robert H. Lynn April 15, 2008 Page 15 Channel's statutory analysis for preemption would require that this Court give an unduly narrow reading to Minnesota's statutes which provide that Minnesota localities can impose more restrictive ordinances on advertising and advertising devices than required by state law." Clear Channel Outdoor, Order Denying Plaintiffs Motion for Preliminary Injunction, Exhibit D, at 18. Finally, allowing local governments to regulate changing billboards more restrictively than the state can hardly have "an adverse effect on the general state population." While local authority may result in a patchwork of varying regulations, that does not warrant the pre-emption oflocal authority. See Mangold Midwest Co., 143 N.W.2d at 821. For all these reasons, the Hennepin County District Court was correct in its conclusion that "the record does not demonstrate that the Minnesota legislature intended to occupy the field of outdoor billboard regulation, and preclude municipalities from imposing more restrictive rules." Clear Channel Outdoor, Order Denying Plaintiffs Motion for Preliminary Injunction, Exhibit D, at 19. Accordingly, the City's external lighting regulation applies to Plaintiffs sign. And because Plaintiffs sign violates that lighting regulation, the City's enforcement of its Sign Ordinance was lawful and the City is entitled to the removal of the LED sign. 3. The City is Not Estopped from Enforcing its Sign Ordinance Plaintiff claims that the City is somehow estopped from enforcing its sign ordinance or waived its ability to do so because it approved Plaintiffs electrical permit application and because the City has never enforced sign permit requirements against Clear Channel. Significantly, Plaintiffs electrical permit application contains no information or disclosure by Plaintiff that it was seeking the electrical pennit for the purpose of installing an LED sign face. Even though the City's sign code requires a permit for any sign alteration, Plaintiff failed to submit a sign permit application in advance of the installation of the LED sign face, thereby depriving the City of notice and information that Plaintiff intended to install an LED sign face. Indeed, Plaintiffs strategy was to secretly install LED sign faces on signs located in Arden Hills and other Minnesota communities without regard for whether such signs were permitted by local regulations and without obtaining prior approvals from the municipalities in which such signs were located. The Hennepin County District Court specifically found that there was "substantial evidence to support Minnetonka's claim that Clear Channel avoided disclosing its plans to deploy LED billboards in the City of Minnetonka, and operated 'under the radar' in order to get the billboards up and running, in order to meet its expansion and profit goals for 2006." Clear Channel Outdoor, Order Denying Plaintiffs Motion for Preliminary Injunction, Exhibit D, at 10. Accordingly, the fact that the City granted an electrical permit based on an application that failed to contain information regarding Plaintiffs intentions to install an LED sign face does not mean that it impliedly granted permission to Plaintiff to install an LED sign face or waived its right to enforce its own sign ordinance and require a sign permit for any sign alteration. Nor does the fact that the City did not raise any concerns during Plaintiffs quiet installation of the LED sign '~; Robert H. Lynn April 15,200& Page 16 face mean that the City was impliedly granting permission to Plaintiff to install the LED sign face. To the contrary, as soon as the LED sign became operational and the City realized what Plaintiff had done, it directed Plaintiff to cease and desist operation of the unJawful sign. Not only do the facts belie Plaintiffs estoppel and waiver claims, but the Minnesota courts have repeatedly reaffirmed the principle that "a governmental entity' cannot be estopped from correctly enforcing the ordinance even if the property owner relied to his detriment on prior city action.'" SLS Partnership v. City of Apple Valley, 511 N.W.2d 738, 743 (Minn. 1994) (quoting Nursery Sales, Inc. v. City of RoseviIle, 295 N.W.2d 604, 607 (Minn. 1980)). In SLS Partnership, the Minnesota Supreme Court refused to estop a city from enforcing a setback requirement, even where it tried to do so for the first time after 24 years of issuing annual permits despite ongoing setback violations. See id. at 740. See a/so John Wright & Assocs. v. City of Red Wing, 254 Minn. 1, &,93 N.W.2d 660, 664-65 (1958) (illegal use of a building since its inception does not become legal simply by the passage of time); Prior Lalre Aggregates v. City of Savage, 349 N.W.2d 575, 5&0 (Minn. Ct. App. J9&4) (holding that a municipality could not be estopped from enforcing its zoning ordinances); 8A Eugene McQuillan, THE LAW OF MUNICIPAL CORPORATIONS;) 25.349 (3d ed. 1994) (it is no defense to an injunctive suit that municipal authorities have done nothing about the alleged violation). The Minnesota Supreme Court has done nothing to erode the continued validity of its articulation of the governing standard in SLS Partnership. Accordingly, Plaintiff has no legal basis for claiming that the City's actions with respect to the electrical pennit or inactions with respect to prior sign alterations by Clear Channel somehow permit Plaintiff to illegally operate the LED sign. 4. The City Did Not Fail to Review the Sign Permit Within the Allotted Time Although Plaintiff fails to raise this claim in its Complaint, and never raised it on appeal to the Council, it is anticipated that Plaintiff will contend that its sign permit application must be "deemed approved" because the City allegedly failed to approve or review the sign permit application within 30 days from receipt of the application. Section 1220.03 of the City's Sign Code provides that The City Administrator or their designee shall approve or deny the sign permit application in an expedited manner, no more than thirty (30) days from the receipt of the completed application, including applicable fees. All permits not reviewed within thirty (30) days shall be deemed approved. Applicants shall be notified in writing if the application is denied, including the reasons for denial. Plaintiff's Complaint alleges that Plaintiff "submitted a sign pennit application to the City on May 21,2007" and denied the application on June 18,2007. The copy of the sign permit application in the possession of the City is stamped with the date of May 21, 2007, indicating that the City received the application on May 21, 2007. The copy ofthe sign permit application in the possession of the City attorney is stamped with the date of May 21, 2007. However, the copy of the sign permit application in the possession of Clear Channel and produced for the first Robert H. Lynn April ]5,2008 Page ]7 time last week is stamped with the date May 18, 2007. Based on this recently produced document, Plaintiff may argue that the City's denial of the application in a letter dated June 18, 2007 was untimely under Section ]220.03, and should be deemed approved. There are several reasons why the argument that the City failed to review or approve the sign permit application within 30 days from receipt of the application should be rejected. First, based on the allegations contained in Plaintiff's own Complaint, the sign permit application was reviewed and acted upon within 30 days. Plaintiff's allegations in its Complaint are deemed admissions, binding on Plaintiff. Accordingly, the dates identified in Plaintiff's Complaint-the May 21 submission date and the June 18 denial date-are binding On Plaintiff and based on those dates, the City acted in a timely manner. Second, the dates identified in the Complaint are consistent with the dates stamped on the City's documents, and there is no evidence that the City somehow changed the date stamped on its documents to cover up for untimely action. In fact, the document in the possession of the City attorney and received from the City the week of May 20 contains the same date as that contained in the City's own documents, confirming that the City did not change the date in June after supposedly missing the deadline. Third, Plaintiff never raised the issue of untimely review and action so it has waived this argument, and its own untimely action in raising this issue for the first time now has hindered the ability of the City to investigate and determine the details of what occurred on May 18 and May 21, 2007. Fourth, automatic approval is the sanction for an untimely review, not untimely postmarking. Even if the application was actually received on May 18, it is indisputable that the City reviewed the application within 30 days because it met with Plaintiff and its representatives within the 30 day period, satisfying the requirements of "review." The City's ordinance provides for automatic approval only upon a failure to "review" an application within 30 days, and the Minnesota Supreme Court has recently demonstrated that courts may not attach the penalty of automatic approval to related portions of such a requirement. Hans Hagen Homes Inc. v. City of Minnetrista, 728 N.W.2d 536, 540-42 (Minn. 2007). Accordingly, the penalty for late review- automatic approval-is not triggered and the application cannot be deemed approved under the terms of the Sign Code. For all these reasons, Plaintiffs anticipated argument in favor of automatic approval should be rejected. Prior Settlement Discussions and the City's Settlement Position Shortly after this lawsuit was filed, counsel for the parties discussed the possibility of settlement. Plaintiff was unwilling to consider restoring the static sign face, removal of any of Plaintiff's four sign faces in the City or reducing the size of any of its four sign faces in exchange for permission to digitize a single sign face. Plaintiff was only willing to offer the City the opportunity to use the LED sign for public service announcements, which is of littJe interest to the City. Robert H. Lynn April 15, 2008 Page 18 Last evening, I met with the City Council to obtain direction and authority from my client in advance of mediation. The Council has not given me authority for any specific settlement scenario in advance of a proposal from Plaintiff. However, the City is participating in this mediation in good faith and will consider any settlement proposal arising from the mediation process. If you have any questions in advance of the mediation, I would be glad to attempt to answer them on behalf of the City. My direct dial is (612) 373-8344. We appreciate your willingness to assist us to resolve this matter and look forward to seeing you on Thursday. ~~l/ John M. Baker JMB! Attachments Robert H. Lynn April 15,2008 Page 19 bc: (via emaiI) Mark Rossow (via email) James Lenhoff (via email) Jerry Filla (via emaiI) Jim Willis STATE OF MINNESOTA DISTRICT COURT RAMSEY COUNTY SECOND JUDICIAL DISTRICT Clear Channel Outdoor, Inc., a Delaware corporation, ffkla Eller Media Company, Case Type; Other Civil Case No. 62-CV-07-323I Plaintiff, v. MEMORANDUM IN SUPPORT OF CLEAR CHANNEL'S MOTION FOR SUMMARY JUDGMENT City of Arden Hills, Defendant. INTRODUCTION i i I I ! I ~ ) Clear Channel is the owner of two outdoor advertising signs (billboards) located in Arden Hills near the intersection of federal interstate highways 35W and 694. Each of these signs is double-sided, with one image facing westbound traffic and the other facing eastbound traffic. Because cun'ent Arden Hills ordinances prohibit outdoor advertising signs, both signs are legal non-conforming uses. Late in 2006, in an effort to remain competitive in the rapidly changing advertising market, Clear Channel replaced the westerly face on one of the signs (the "1-694 sign") with a new LED face. This matter is before the Court because of Arden Hills' demand that Clear Channel remove the LED face and revert to the old face, which was designed to display changing vinyl images. Because Clear Channel's conversion to a new technology constituted an improvement, and because improvements are explicitly permitted under Minnesota's nOn- I I I i I ; confonning use statute, the City's position is without legal merit. For this and other reasons set forth below, Clear Channel is entitled to summary judgment declaring that the LED face is lawful and enjoining the City from requiring the LED face to be replaced. STATEMENT OF ISSUES I. Was Clear Channel's sign permit application approved by operation ofIaw? 2. Was Clear Channel's replacement of the sign face with a new LED sign face a pennissible "improvement" within the meaning of Minn. Stat. 9462.357, subd. Ie? 2. Can the City require Clear Channel to remove the LED sign face on the basis of lighting restrictions set forth in the municipal sign ordinance? DOCUMENTS COMPRISING THE RECORD A. Affidavit of Michael C. Soules ("Soules Aff.") and the exhibits attached 'I , thereto: Exhibit A: Transcript of September 1 0, 2007, Arden Hills City Council meeting Exhibit B: Arden Hills Sign Code (adopted June 26,2006) Exhibit C: Transcript of Minnesota House floor session on May 12,2004, and accompanying affidavit of Cynthia R Nelson Exhibit D: Legislative record for SF2274, which amended Minn. Stat. 9 462.357, subd. Ie Exhibit E: Transcript of a hearing of the Minnesota House Local Govermnent and Metropolitan Affairs Committee on February 17,2004, and accompanying affidavit of Lori R Peterson Exhibit F: Defendant City of Arden Hills' Answers to Plaintiff's First Interrogatories, dated April 10, 2007 Exhibit G: State v. Steele, No. A05-2254, 2007 WL 46054 (Minn. App. Jan. 9, 2007) Exhibit H: Memorandum by James Lehnhoff, Arden Hills City Planner, dated September 10, 2007 2 B. Affidavit of Thomas McCarver ("McCarver Aff.") and the exhibits attached thereto: Exhibit A: City of Arden Hills electrical permit, dated October 20, 2006 Exhibit B: City of Arden Hills Order for Payment, dated November 22, 2006 Exhibit C: Letter from James Lehnhoff, Arden Hills City Planner, to Clear Channel Outdoor, dated December 11, 2006 Exhibit D: Letter from James Lehnhoff to Clear Channel Outdoor, dated January 24, 2007 Exhibit E: Clear Channel's sign permit application, dated May 18,2007 i . ! [' Exhibit F: Letter from James Lehnhoff to Tom McCarver, Clear Channel Outdoor, dated June] 8, 2007, along with its corresponding enclosure and envelope Exhibit G: Letter from James Lehnhoff to Tom McCarver, dated August 7, 2007 Exhibit H: Letter from James Lehnhoff to Tom McCarver, dated September 20,2007 Exhibit I: Photograph depicting the 1-694 sign before the installation of the LED sign face Exhibit J: Photograph depicting the 1-694 sign after the installation of the LED sign face 3 STATEMENT OF UNDISPUTED MATERIAL FACTS A. Clear Channel's Ownership And Improvement Of The 1-694 Sign Clear Channel has owned and operated the 1-694 sign since April, 2006, when it purchased the sign from Morris Communications Company, another outdoor advertising company. When Clear Channel purchased the 1-694 sign, both the east and west-facing panels were designed to display changeable vinyl images. From April to December 2006, Clear Channel sold and posted a series of different advertisements on both faces without incident. In mid-2006, Clear Channel decided to replace the westerly sign face with a new LED face. McCarver Aff. 14. Although LED technology has been around for decades, this LED sign face nevertheless represented a significant technological improvement over vinyl advertising images. Whereas vinyl sign images could only be changed through a labor-intensive, on-site process, LED images can be changed instantaneously from a remote location. fd. 15. Ite adoption of LED technology is crucial to Clear Channel's competitiveness in the advertising industry. In this regard, it is important to understand that Clear Channel does not just compete with other outdoor advertising companies, but must also compete with television, radio, and internet-based advertisers, all of whom ean change and adapt advertising messages on a daily, hourly, or even second-by-second basis. McCarver Aff. 116. As long as it was limited to displaying only vinyl images, Clear Channel lacked any way to offer advertisers time-sensitive messages, and thus lacked a competitive edge against other media. LED technology offers a solution because it allows Clear Channel to change messages instantaneously from an off-site computer. By converting a few of its sign faces to LED technology, Clear Channel is able to sell some advertising space in the form of static images which change every eight seconds. This is critical to advertisers whose messages are changing or time-sensitive. 4 B. The Installation ofthe LED Panel Was Straightforward, And Entailed No Significant Alterations Of The Sign Structure. Clear Channel installed the new sign face in early November, 2006. Because the new panel is heavier than the previous sign panel, Clear Channel first made some reinforcements to the sign structure. These reinforcements were made within the confines of the existing sign structure and do not change the outward appearance of the sign. McCarver AfI "7. The new LED face also required electricaJ upgrades: the new sign face requires 300 amps whereas the old sign operated on lower amperage. These electrical upgrades were performed by Sterling Electric Corporation pursuant to a permit issued by the City on October 20, 2006. McCarver Aff., Exs. A, B. Apart fi-om the fact that the LED face uses a different image technology requiring some mechanical reinforcements and an upgraded power source, it is in other respects nearly identicaJ to the panel it replaced: . The LED panel is virtually identical in size to the panel it replaced: the LED panel is haJf an inch shorter, one inch wider, and encompasses 671.I square feet, whereas the panel it replaced was 672 square feet. . The LED panel is designed to display images that are smaller than the panel it replaced: the LED images are 645.5 square feet in size, while the vinyl images displayed on the previous panel were 672 square feet . All structural modifications made to support the weight of the LED panel are confined to the existing sign footprint. . Although the depth of the LED panel is approximately eight inches greater than the depth of the panel it replaced, the panel remains severaJ feet behind the catwalk that runs along the bottom on the sign face, and thus did not incrcase the overaJl sign footprint McCarver Aff ~ I I. Clear Channel commenced operation of the LED display on December 10, 2006, and the sign has been continuously operating ever since. ld '1! 13. 5 C. The City's Actions With Respect To The 1-694 Sign The City, for its part, did not question Clear Channel's replacement of the westerly sign face until after December 10,2006, when Clear Channel first began operating the LED display technology.] By letter dated December 11, 2006, the City ordered that Clear Channel remove the alleged non-compliant features of the new sign face. McCarver Aff., Ex. C. After more than a month of discussions, the City then directed Clear Channel to submit a sign permit application. Id., Ex. D.Discussions continued. As a result of those discussion, and although maintaining that a local sign permit was unnecessary because of its statutory right to make improvements, Clear Channel submitted a pennit application to the City on May 18,2007. Id, Ex. E. James Lehnhoff, the Arden HiIls City Planner, denied the application in a letter postmarked June 19,2007. See McCarver AIT., Ex. F. Mr. Lehnhoff cited as his reasons for denying the pennit that Clear Channel's renovation of the 1-694 sign was impermissible because "(a)ltering or enhancing a nonconforming use is prohibited," that modifications to a billboard are allowed only when done in connection with a transaction that reduces the number of billboards within the City, and that because the LED display was not extemaIly lit it violated the City's lighting regulations for freestanding signs in Sign District 7. I For a short time, from early November to December 10, 2006, Clear Channel placed a vinyl image over the LED sign face, and did not take advantage of the new technology. McCarver Aff. ~ 12. The reason was that new advertising contracts were not in place until December. 6 Clear Channel timely appealed the City Planner's decision to the Arden Hills Planning Commission, which upheld the permit denial. In denying the permit, the Planning Commission adopted the same reasoning given by the City Planner in his June letter to Clear Channel. See McCarver Aff., Ex. G. Clear Channel again timely appealed this decision to the City Council. On September 10, 2007, the City Council considered Clear Channel's appeal. The City Council denied Clear Channel's appeal based on its conclusion that the new LED sign face constituted an impermissible cxpansion. The Council's conclusion was based on five factual fmdings: (1) that the amperage of the sign was increased; (2) that the four extemallights had been increased to thousands of lights; (3) that the width of the sign face increased from two inches to eight inches; (4) that the weight increased from 1000 pounds to 9000 pounds; and (5) that structural supports were added to the sign. The Council cited as a further reason for denial that the LEDs are internal to the sign itself and not an extemal lighting source as defined by the Sign Code. See Transcript of September 10, 2006 Council Mtg. ("Sept. 10 Tr.") at 45-46, attached as Soules Aff., Ex. A. By letter dated September 20,2007, the Arden Hills City Planner informed Clear Channel of the City Council's decision and reiterated these same grounds. McCarver Aft:, Ex. H. By that same letter, the City directed Clear Channel to remove the LED sign and replace it with a panel designed to display vinyl images. ld In order to protect its statutory right to make improvements to its signs, Clear Channel filed this action on September 26, 2007. !i 7 STANDARD OF REVIEW Summary judgment is appropriate when there are no genuine issues of material fact and either party is entitled to judgment as a matter ofIaw. See Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995); Minn. R. Civ. P. 56.03. A municipality's land use decision, like the City's denial of Clear Channel's sign pennit application and its directive that the LED sign face be removed, is reviewed to detennine "whether it was unreasonable, arbitrary, or capricious." Trisko v. City of Waite Park, 566 N.W.2d 349,352 (Minn. App. 1997) (citing Swanson v. City o/Bloomington, 421 N.W.2d 307,313 (Minn. 1988)). Where, as here, the city council has stated its reasons for denying the permit, courts limit their "review to the legal sufficiency and the factual bases for those reasons." Trisko, 566 N.W.2d at 352. A municipality's decision is unreasonable, and should be struck down, "if its reasons are legally insufficient or if the decision is without factual basis." County of Morrison v. Wheeler, 722 N.W.2d 329,334 (Minn. App. 2006) (citation omitted). ARGUMENT Clear Channel is entitled to summary judgment. Clear Channel's sign pennit application should be deemed approved by operation of law because the City failed to provide a written notice of denial postmarked within thirty days. Whether or not a permit was required, Clear Channel was entitled to replace the 1-694 sign face pursuant to Minn. Stat. S 462.357, subd. Ie, which allows landowners to make improvements to non- confonnities. The City cannot impose its lighting restrictions on the 1-694 sign because those restrictions have not been certified by the State, do not apply to billboards, and are arbitrary and therefore unenforceable. 8 I. THE SIGN PERMIT SHOULD BE DEEMED APPROVED BY OPERATION OF LAW. I I , , I i As a threshold matter, Clear Channel is entitled to summary judgment because its sign permit application was approved by operation of law. The Arden Hills Sign Code requires permit applications to be reviewed "in an expedited manner." Sign Code ~ 1220.03 (June 26, 2006) ("Sign Code"), attached as Soules Aff., Ex. B. To ensure the timely processing of , ~ j permit applications, the Sign Code mandates that "[ aJII permits not reviewed within thirty (30) days shall be deemed approved," and requires permit denials be provided through written notice "that is postmarked within thirty (30) days of the accepted application." Id. ~ 1220.03. In this case, Clear Channel submitted its sign permit application to the City on May 18,2007. See McCarver Aff., Ex. E (date stamped application). The City thus had thirty days from May 18 to issue a Wlitten notice of denial. The City Planner's denial letter, however, was not postmarked until June 19, 2007 - thirty-two days after the application was received. Id., Ex. F. Because the City Planner's notice of denial was not postmarked within thirty days, Clear Channel's sign permit application should be deemed approved by operation oflaw. See Moreno v. City of Minneapolis, 676 N.W.2d 1, 6 (Minn. App. 2004) (holding that a municipality's failure to act within an analogous 60-day limit imposed by Minn. Stal. ~ 15.99 results in automatic approval ofthe subject land use application).2 2 By counterclaim, the City now argues, for the first time, that it should prevail because Clear Channel failed to obtain a sign permit. See Counterclaim 'lI'124-37. This argument is witham merit, and does not weigh against summary judgment in Clear Channel's favor. The reasoning underlying this argument is circular: Clear Channel's failure to obtain a sign penni! is the result of the City's own actions. (continued on next page) 9 ll. THE REPLACEMENT OF THE 1-694 SIGN FACE WAS A PERMISSffiLE IMPROVEMENT UNDER STATE LAW. As a lawful non-conforming use, the 1-694 sign is govemed by Minnesota's non- confonnity statute, Minn. Stat. 9462.357, subd. Ie. At one time, the sign's non-conforming status would have limited any work performed on the sign to maintenance and repairs. See Minn. Stat. 9462.357, subd. Ie (2003) (allowing non-confonnities to be continued "through repair or maintenance"). The limited protections afforded non-confonnities were consistent with the state's longstanding policy of restricting non-confonning uses in order "to increase the likelihood that nonconformities 'will in time be eliminated due to obsolescence, exhaustion, or destruction. ,,, County of Lake v. Courtney, 451 N. W.2d 338, 341 n.1 (Minn. App. 1990) (citation omitted). That is no longer the case. In 2004, the Minnesota Legislature amended the non- confonning use statute to specifically allow landowners to make "improvements" to non- (continued from previous page) Just as importantly, in considering the validity of a municipal land use decision, courts focus on the rccord that was before the council at the time of its decision. See, e.g., Metro 500, Inc. v. City of Brooklyn Park, 211 nW.2d 358, 362 (Minn. 1973). Otherwise, a municipality could "arbitrarily deny a pelmit and later, after the denial is challenged, state reasons which are completely unconnected with the actual basis for the denial." Id.; see a/so Concept Properties, LLP v. City ofMinnetrista, 694 N.W.2d 804, 827 (Minn. App. 2005) ("The rationale for mandating VI'ritten findings accompanying a decision to deny a zoning application is to prevent a government's post hoc rationalization of a capricious decision"). In this case, the City Council denied Clear Channel's permit application on the basis of six clearly articulated findings, all documented in the record. See Sept. 10 Tr. at 45-46; McCarver Aff., Ex. H. The City Council did not rely upon nor even mention Section 1220.01 of the Sign Code. The one City official who raised the issue at all - the City Planner - stated that the City Council's decision "should be based on the merits of the sign and the applicable regulations as opposed to whether a sign pennit was needed." Soules Aff., Ex. H, at 4. Because the City did not rely on Section 1220.01 in reaching its decision, that provision has no bearing on this case. 10 confonnities. See Minn. Stat. S 462.357, subd. Ie (2008) (allowing non-confonnities to be continued through "through repair, replacement, restoration, maintenance, or improvement, but not including expansion") (emphasis added). In adopting these changes, the Legislature made a conscious decision to bolster the property rights of non-conformity owners. Indeed, shortly before the Legislature passed the 2004 amendments, an opponent of the bill noted that "[a]llowing the replacement, restoration, or improvements of nonconforming uses will prevent [sic] nonconfonning uses to become perpetual." Transcript of House Floor Session at 16 (May 12,2004) ("May 12 Tr.") (remarks of Rep. Paymar), attached as Soules Aff., Ex. C. Representative Paymar contrasted these amendments with the state's earlier policy, which was "to eventually eliminate non-conforming uses by obsolescence, destruction, and deterioration." He wamed that "[t]he proposed. . . amendment totally undermines this well- settled legal principle and renders it virtually useless as a land-use regulatory concept for municipalities to pursue." ld. The Legislature nevertheless passed the 2004 amendments by an overwhelming margin. See Soules Aff., Ex. D. Clear Channel is entitled to a declaratory judgment that its replacement of the 1-694 sign face with a new LED panel constitutes a permissible "improvement" within the meaning of Minn. Stat. S 462.357, subd. Ie. Although "improvement" is not defined in the statute, the plain meaning of this tenn can be ascel1ained by reference to case law and dictionaries. See Annandale Advocate V. City of Annandale, 435 N.W.2d 24, 28 (Minn. 1989) (relying on definitions from case law and a legal dictionary to detennine the plain meaning of a statutory term). More than thirty years ago, the Minnesota Supreme Court adopted a "common-sense interpretation" of "improvement." See Pacific lndem. Co. v. Thompson-Yaeger, 260 N.W.2d . .. 11 548, 554 (Minn. 1977) (quoting the definition of "improvement" in Webster's Third New Intemational Dictionary). Under this defmition, an improvement is "[ a] permanent addition to or bettennent of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs." Lietz v. Northern States Power Co., 718 N.W.2d 865, 869 (Minn. 2006) (citation omitted). This definition contemplates that an "improvement" to a capital asset -like the 1-694 sign - may increase its weight or physical dimensions. And by distinguishing between improvements and repairs, the definition clarifies that an improvement involves something more than merely maintaining the capital asset in its prior condition. During the committec hearing on the 2004 amendments, the bill's sponsor, Representative Abrams, was queried about the distinction between an "improvement" and an "expansion." He stated that "it's the common meaning of the word" that govems, and he recited "the old adage, don't leave common sense outside the door." See Transcript of House Local Government and Metropolitan Affairs Committee Hearing at 27 (Feb. 17,2004) ("Feb. 12 Tr."), attached as Soules Aff, Ex. E. In promoting this "common sense" understanding of improvement, Representativc Abrams echoed the "common-sense interpretation" of "improvement" endorsed by the Minnesota courts. Pacific Indem., 260 N.W.2d at 554.3 The 3 Because the 2004 amendments were enacted against the backdrop of the judicial definition of "improvement," the Minnesota Legislature presumptively incorporated that definition into the statute. See State v. Fleming, 724 N.W.2d 537, 540 (Minn. App. 2006) ("By choosing not to define 'firearm' for purposes of section 624.713, the legislature presumptively adopted the Minnesota Supreme Court's definition."); Cannon v. Univ. of Chicago, 441 U.S. 677, (continued On next page) 12 replacement of the 1-694 sign face with an LED display falls squarely within the definition of an "improvement." The City stakes out an extreme position, arguing that any "increase in one or more dimensions of a structure or a use constitutes an expansion or enlargement of that structure or use," and thus automatically converts an otherwise permitted improvement to a prohibited expansion. Counterclaim 'lI8. The City relied on five factual findings in support of its conclusion that the replacement of the sign face was an expansion rather than an improvement. Again, these five factual findings were: I) that there was an increase in i; amperage; 2) that the number oflights on the sign increased; 3) that the new LED sign face is approximately six inches deeper than the old face; 4) that the LED face weighs more than the old face; and 5) that structural supports were added to support the new sign face. Sept. 10 Tr. at 45. In reaching these conclusions, the City wholly overlooked the bigger picture. Although the LED sign face employs newer technology, this face is in other respects nearly identical to the one it replaced. Not onJy is the new sign face almost the same size, but it actually displays images that are smaller than its predecessor. McCarver Aff. 'lI11. And both the new LED panel and the structural modifications supporting it are confined to the existing sign footprint. Id Indeed, except for the updated image technology, the outward appearance of both the sign face and (continued from previous page) 696-97 (1979) ("It is always appropriate to assume that our elected representatives, like other citizens, know the law."). 13 its supporting structure remain unchanged. Compare McCarver Aff., Ex.l (vinyl sign face) with id, Ex. J (LED sign face). TelIingly, the findings relied upon by the City relate to matters which are not even within the scope the City's own regulatory scheme: Nothing in the Arden Hills Sign Code purports to limit, or even addresses, the amperage, number of lights, depth, or weight of any sign. Even so, the City concluded that these unregulated changes amounted to an expansion. The City's position, in short, is that the only "improvements" allowed under the non- conformity statute are those that have absolutely no effect on the electrical usage, lighting, dimensions, or weight. But the Minnesota Legislature did not intend such a cramped reading of this statute. At the committee hearings, legislators offered several examples of what might constitute an improvement, such as (l) the replacement of a dirt driveway with a paved driveway, Feb. 17 Tr. at 15; (2) the addition of a security system "with, say, cameras or something," id.; and (3) "[c]hanging the lighting inside a building," id. at 26. Each of these examples would result in an increase the dimensions, weight, electrical usage, or lighting of a non-confonnity. The fact that the legislators found such changes to be pelmissible, and that this legislation was passed by an overwhelming majority, underscores Clear Channel's right to update the technology of the 1-694 sign. As a practical matter, the City's interpretation would preclude any material changes to a non-conforming use. This contrasts with the statutory language, which allows non- confonnities to be continued "through repair, replacement, restoration, maintenance, or improvement." Minn. Stat. S 462.357, subd. Ie (emphasis added). The Legislature's inclusion of all these words necessarily implies that an "improvement" is something more 14 than merely repair, restoration, or maintenance. See Minn. Stat. 9 645.16 (interpretative I I canon that a statute should be construed to give effect to all of its provisions). By necessity, an improvement must involve some physical change to the non-conforming structure. See Lietz, 718 N.W.2d at 869 (defining an improvement as a physical installation that is "distinguished from ordinary repairs"). To construe Section 462.357 as the City proposes - such that modest physical alterations are prohibited - would effectively write the word "improvement" out of the statute. The Court should reject this unreasonable construction of the statute. m. THE LIGHTING PROVISIONS OF THE CITY'S SIGN CODE CANNOT BE ENFORCED AGAINST THE 1-694 SIGN. In denying Clear Channel's sign permit application, the City relied, altematively, on the Sign Code's requirement that freestanding signs in Sign District 7 are limited to extemal lighting. But this requirement is inapplicable. The City lacks the necessary State approval to enforce its municipal lighting restrictions against the 1-694 sign. Even if the City had such approval, the lighting restrictions ofthe Sign Code do not apply to billboards. In any event, the external lighting requirement relied on by the City is arbitrary and unenforceable. A. Lacking State Certification, The City Cannot Impose Its Own Lighting Restrictions On The 1-694 Sign. Because the 1-694 sign is adjacent to an interstate highway, the Minnesota Outdoor Advertising Control Act applies to this sign. The Outdoor Advertising Control Act, Minn. Stat. Ch. 173 ("Outdoor Advertising Act" or "the Act"), whose major provisions were passed in 1965 and 1971, is designed to accomplish the purposes of the Federal Highway Beautification Act and to bring state law into compliance with federal law. Minn. Stat. 9 173.01. Under the Act, outdoor advertising signs located within commercial or industrial 15 areas, such as the 1-694 sign, are subject to state standards regulating their size, lighting, and spacing. Id. S 173.16, subds. 2-4. The Act and its implementing regulations allow municipalities to enact their own size, lighting, and spacing regulations in lieu of these state standards, but only upon receiving certification from the Commissioner of Transportation. See Minn. Stat. S 173.16, subd. 5; Minn. R. 8810.1400. Absent such certification, the City cannot enforce the lighting restrictions of its Sign Code against the 1-694 sign. The need for mtmicipalities to obtain state certification prior to enforcing their own lighting standards was confinned by the Court of Appeals decision in In re Eller Media Company's Applicationsfor Outdoor Advertising Device Permits, 642 N.W.2d 492 (Minn. App. 2002). In that case, the Court of Appeals rejected the argument that a city need not obtain state certification in order to impose its local regulations in commercial and industrial areas: Minn. R. 8810.1400 (1999) requires local zoning authorities to obtain an annual "certification of zoning" for local zoning to apply. The record contains no evidence that the city complied with Minn. Stat. S 173.16, subd. 5(b) by giving the commissioner the required notice or complied with Minn. R. 8810.1400 by requesting orreceiving certification..... Minn. R. 8810.1400 unambiguously requires local zoning authorities to obtain an annual "certification of zoning" for local zoning in Minn. Stat. S 173.16, subd. 5 to apply. Id. at 503-04 (footnote omitted); rev'd on other grounds by In re Denial of Eller Media Company's Applicationsfor Outdoor Advertising Device Permits, 664 N.W.2d 1,7, 10 (Minn. 2003). Lacking state certification, the City cannot impose the lighting restrictions of the Sign Code on the 1-694 sign. 16 B. The External Lighting Restriction Does Not Apply To The 1-694 Sign. Even assuming, for the sake of argument, that the City could impose its own lighting regulations on the 1-694 sign without obtaining state certification, the extemal lighting restriction does not apply. This restriction is set forth in Table 1 of the Arden Hills Sign Code, which is entitled "Sign Standards by Sign District." Soules Aff., Ex. B, at 12-19. Table 1 divides up the City into nine "sign districts," within which the design, size, and lighting restrictions vary substantially. On its face, Table 1 does not apply to billboards. The tenn "billboard" has a specific and separate definition in the Sign Ordinance. Nowhere does that tenn appear in Table 1. No sign mentioned in the Table even approaches the size of a typical billboard. Within Sign District 7, the Table establishes standards for freestanding signs with a maximum area of25 square feet, and a maximum height of8 feet. The 1-694 sign, which already existed when Table I was adopted, covers an area more than 600 square feet and is 45 feet tall. See McCarver Aff. ~ I I & Ex. E. 4 Had the City wished to apply the restrictions of Table 1 to billboards, it would have had to do so explicitly. See Mendota Golf, LLP v. City of Mendola Heights, 708 N.W.2d 162, 172 (Minn. 2006) {"[RJestrictions on land use must be clearly expressed.") (citation and alterations omitted); see also id. ("We must give weight to the interpretation that, while still ., Given that billboards are altogether prohibited under a separate section of the very same code, see Sign Code S ]230.02, subd. 8, it is hardly surprising that Table I's restrictions do not apply to billboards. 17 within the confines of the term, is least restrictive upon the rights of the property owner to use his land as he wishes.") (citation omitted). Thus, even to the extent the Table 1 regulations are merely ambiguous, they should be strictly construed against the City. See, e.g., Frank's Nursery Sales v. City ofRoseviIle, 295 N.W.2d 605, 608 (Minn. 1980) ("[z]oning ordinances should be construed strictly against the city and in favor of the property owner."). In any event, the City's finding that the LED sign is intemaUy lit is factually incorrect. Sept. 10 Tr. at 45-46. The Sign Code defines intemal lighting as "an illuminated sign having the source of illumination located inside a translucent panel which is not directly visible." Sign Code ~ 1210.01, subd. 8. Even if the 1-694 sign fell within the City's definition of an illuminated sign - which it does not5 - the onJy sources of illumination on ~ ! the LED face, the diodes, are not "located inside a translucent paneL" These diodes protrude from the surface ofthe sign and are directly visible. C. The Lighting Restriction Relied Upon By The City Is Arbitrary And Unreasonable, And Therefore Unenforceable. Even assuming the restrictions of Table 1 otherwise apply, the external lighting requirement for District 7 signs would still be unenforceable because it is arbitrary and unreasonable. A zoning classification is valid only "when at least one of the rationale[s] for the decision is reasonably related to the promotion of the public health, safety, or general welfare of the community." Wedemeyer v. City of Minneapolis, 540 N.W.2d 539, 543 5 Under the Sign Code, an "illuminated sign" is defined as "any sign, which has characters, letters, figures, designs or outlines which is illuminated by an artificial light source." Sign Code ~ 1210.01, subd. 18. Images on the LED sign face are created when light emitted from diodes (LEDs) mixes together to create pixels. Each diode extends out a short distance from the plane fonned by the sign face. 18 (Minn. App. 1995). Here, where the extemallighting requirement of District 7 bears no As noted above, the Arden Hills Sign Code divides up the City into nine sign districts, I i I ~ . reasonable relationship to a legitimate government objective, the City should not be permitted to enforce that requirement against the 1-694 sign. <lcross which the lighting standards vary unpredictably. In every commercial and industrial district except one - District 7 - the Sign Code permits both extemal and intemal lighting for freestanding signs. See Sign Code S 1240.01 & Table 1 (allowing internally lit signs in Districts 4, 5, 6, and 8). Internal lighting is even permitted for some residential properties, as well as non-residential properties within residential zoning districts. See id (allowing internal and backlit lighting in District 5, which includes residentially-zoned areas); see also id (allowing intemaUy lit signs in District 2, which consists of "non-residential uses in the R-1 through R-4 zoning districts"). In fact, the lighting restrictions for freestanding signs in District 7 are as restrictive as those in District 3, a sign district composed entirely of residential propelties. The lighting restrictions of Table ] are thus facially arbitrary. The City's stated rationale for requiIing extemal lighting in District 7 is no less unreasonable than the Table itself: With respect to the extemal lighting requirement for District 7, an industrial district, the City examined the character of the neighborhood and the needs of the businesses in the district and concluded that the purpose of the signage allowed in District 7 was not to attract the attention of customers, but to provide directional and locational infonnation. Accordingly, the City concluded that glaring signs and bright signs and signs designed to attract the attention of customers were inappropriate for the industrial character ofthe district. Because the brightest signs tend to be those that are backlit or intemally illuminated, the City prohibited such signs in District 7. Instead, the City required that signs in District 7 be externally lit. . . . 19 City of Arden Hills' Answers to Plaintiffs First Interrogatories, at 6-7, attached as Soules Aff., Ex. F. There are several problems with this rationale: First, signs in other industrial areas- like those within District 6 - enjoy less restrictions, and can be intemally Iit.6 If the extemal lighting requirement were appropriate to maintain the "industrial character" of such areas, then presumably that requirement would apply to all industrial areas within the City. Courts have repeatedly held that "[z]oning ordinances must operate unifonnly," and that "the unequal treatment of similarly situated parties is prohibited." Prior Lake Aggregates, Inc. v. City of Savage, 349 N.W.2d 575, 580 (Minn. App. 1984); see also Northwestern College v. City of Arden Hills, 281 N.W.2d 865, 869 (Minn. 1979) ("A zoning ordinance must operate unifonnly on those similarly situated."). Second, the rationale - that other types of lighting would be "inappropriate for the industrial character of the district" - is an argument based on aesthetics. And although otherwise legitimate regulations may advance aesthetic aims, an ordinance driven purely by aesthetics is not a valid land use regulation. See State v. Steele, No. A05-2254, 2007 WL 46054, at *1 (Minn. App. Jan. 9, 2007) ("Generally, we will not deem an ordinance based solely on aesthetic considerations to have a legitimate government purpose. . . ."), Soules Aff., Ex. G; County of Wright v. Kennedy, 415 N.W.2d 728, 732 (Minn. App. 1987) 6 Sign District 6 includes properties within both the 1-1 (Limited Industrial) and 1-2 (General Industrial) zoning districts. Sign Code S 1240.01. Both intemaI and backlit lighting are pennitted in these industrial areas. See Sign Code tbI. I. 20 ("Historically, courts have been reluctant to allow governing authorities to base zoning ordinances on esthetic considerations."); White Bear Docking & Storage, Inc. v. City of White Bear Lake, 324 N.W.2d 174, 177-78 (Minn. 1982) (holding that aesthetic considerations "will not be the sole justification for approval or denial" of a project in a case involving a special use permit) (intemal quotation marks and citation omitted). Finally, even accepting the City's premise that internally lit signs would be "inappropriate for the industrial character" of District 7, and that this type of aesthetic regulation is pennissible, the Sign Code still lacks any rational basis. Local ordinances must be reasonably related to their stated purpose, Wheeler, 722 N.W.2d at 334, and the extemal lighting requirement is not. For although intemallighting is not permitted forfreestanding signs in District 7, such lighting is permissible for wall signs with this district. Sign Code tbl. 1.7 7 To the extent that the City justifies the external lighting requirement based on its conclusion that "that the purpose ofthe signage allowed in District 7 was not to attract the attention of customers, but to provide directional and locational information," the restriction also raises serious First Amendment concerns, because it amounts to a content-based restriction. See Prolife Minnesota v. Minnesota Pro-Life Comm., 632 N.W.2d 748,753 (Minn. App. 2001) (noting that "[cJontent-based restrictions on speech survive First Amendment strict-scrutiny analysis only if they are necessary to serve a compelling state interest and are narrowly drawn to achieve that end"). Clear Channel did not previously assert a First Amendment claim because it was not aware of this content-based rationale, which the City eXplained for the first time in discovery responses served on April 7, 2008. In the event that the Court disagrees with Clear Channel, and concludes that summary judgment is not appropriate, Clear Channel will likely seek to amend its Complaint in this regard. 21 CONCLUSION For the foregoing reasons, this Court should grant Clear Channel's motion for summary judgment. Dated: April 16, 2008 ~ C'Rev!JC .e~r' Michael A. Ponto, Minn. Bar No. 203944 Michael C. Soules, Minn. Bar No. 0387936 FAEGRE & BENSON LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 (612) 766-7000 i i' .j Attorneys for Plaintiff Clear Channel Outdoor, Inc. ACKNOWLEDGMENT REQUIRED BY MINN. STAT. & 549.21 1. SUBD. 1 The undersigned hereby acknowledges that pursuant to Minn. Stat. ~ 549.211, Subd. 3, sanctions may be imposed if, after notice and a reasonable opportunity to respond, the Court determines that the undersigned has violated the provisions of Minn. Stat. ~ 549.211, Subd. 2. ,^^^r.A~ C-.p~ Michael A. Ponto 22