After 6 Years, Pittsburgh Has Still Received Nothing From Billboard Tax And Lawsuit Drags On

Feb 12, 2019

Natalia Rudiak still remembers driving down Route 51 on a day in 2012 when she saw a billboard of her face being put up. 

"I looked as I was driving and I almost drove off the road because I couldn't believe it. It was my face on the billboard," she recalled. "And mind you, it was a different time back then. This was during the Great Recession. And the billboards that were going around town were saying, 'Say no to Natalia's new tax,' 'Worst economy in 50 years: Natalia Rudiak says raise taxes.'"

The signs were a response from Lamar Advertising after the city passed a bill to tax 10 percent of billboard sales, rentals and licenses in the city. Lamar owns about 4,000 billboards in the greater Pittsburgh region -- more than any other company. Former City Councilor Rudiak sponsored the bill, along with Councilor Darlene Harris. The city later estimated that it would receive $1.2 million to $2 million from the tax.

Instead, the tax has generated nothing but a drawn-out lawsuit.

The tax passed without the signature of then-Mayor Luke Ravenstahl, and Lamar sued the city in 2013. The suit alleges that the tax violates Lamar's free-speech rights and discriminates against outdoor advertising, and that state law doesn't permit such a tax. At one point a trial was scheduled for November. But nothing has been filed since September.

"In 2017, one of the big battles on city council at the time was raising funds for the Housing Opportunity Trust Fund which would go to subsidize affordable housing units in the city of Pittsburgh," Rudiak said. "And what City Council did, and I voted against, was raise the real estate transfer tax, which is a tax that everyday regular people pay on the transfer of property and sales of homes. And it raises the cost of homes for your average homebuyer. One of my reasons and voting against that was because this legislation for this billboard tax is still in litigation." 

Lamar's attorney, Jonathan Kamin, did not respond to requests for comment. But in 2012, he spoke at a public hearing on the tax. He warned that the tax would result in high costs for local businesses who advertised outdoors -- and that the company would sue.

"I'd ask you to think about whether this is good policy or whether this is right for Pittsburgh," he said. "If you think the answer is yes, I guess we'll see you in court." 

Some of the supporters of the tax are disappointed at the delay since then. Among them is Mike Dawida of Scenic Pittsburgh, which advocates for the region's scenic resources. He points to a vista from the North Side's Rivers Casino to Mt. Washington -- where a large sign advertising Sprint is perched on the hillside -- as the kind of landscape a tax might protect from advertising.

"First, you have an electronic billboard which blights the whole world for a long way, then you have a standard sign, which doesn't have much to do with anything that's beneficial to the community," he said, describing the view from street level. "And then you have the sign on Mt. Washington surrounded by a park. You have three different kinds of signs, all defacing what is one of the great views of America and maybe the world." 

Dawida said he wishes the city would be more aggressive with the company: "The city's got to push them; they're paying nothing right now." 

But Duquesne University law professor Bruce Ledewitz says Lamar does have a strong legal argument. If the company loses the fight, he said, it will have to pay the taxes it would have owed, along with interest. But in the meantime, he said, "Anytime you put off paying taxes that's good as far as the business is concerned."

Still, Ledewitz said it's no surprise the city isn't trying to enforce the tax.  If the city loses its legal fight it would have to give the money back to Lamar. And on a range of issues -- like firearms regulations the city is currently mulling -- he said state law often makes it difficult for local municipalities to advance new ideas on their own. 

"In Pennsylvania, city ordinances are not the way to change policy," Ledewitz said. "The way to change policy is in Harrisburg." 

Philadelphia, by contrast, does have a 7 percent sales tax for billboards. Last year the city received $2.9 million from the tax, out of a total $3.3 billion in revenues. Philadelphia's tax also resulted in a legal fight, but the city reached a settlement that included a steep cut in fees. Partly for that reason, Mary Tracy with Scenic Philadelphia says her organization doesn't consider the settlement a win.

"We did everything we could to try to challenge that settlement agreement," Tracy said. "But we don't have the resources, frankly, to be able to go against not only not only the billboard industry, but our own city."

In Pittsburgh, city officials declined to comment on the billboard tax, saying it doesn't comment on matters in litigation.