Land owners fined, lose outdoor ad challenge

Property owners claimed they could not be fined for lessees’ illegal outdoor advertisements. Four separate property owners leased space on their premises to companies that procured, erected, and/or maintained advertisements in the space. The leases were all long-term. The Department of Buildings issued multiple notices of violation to the owners charging them for failing to register as an outdoor advertising company, failing to obtain a permit or a proper permit for outdoor advertising signs, and violating various zoning regulations. Each owner challenged the NOVs at a hearing before an ALJ, arguing that, as property owners, they were not outdoor advertising companies subject to the Code. In each case, the ALJ agreed with the owners and dismissed the charges. DOB appealed all four cases to the Environmental Control Board.

The Board reversed the ALJs’ orders as to the outdoor advertising company determination, imposing civil penalties ranging between $15,000 and $80,000. The Board determined that the owners qualified as outdoor advertising companies engaged in the outdoor advertising business, thus they were subject to the Code’s enhanced penalties for illegal signage. The Code provided that an outdoor advertising company was a person who, as part of his or her regular conduct of business, directly or indirectly made space on signs available to others for advertising. The Board found that by leasing space to advertising companies, the owners directly or indirectly made space on the signs available to others for advertising purposes. The owners failed to rebut this finding with contrary evidence, such as proof that leasing space on their buildings to advertising companies was outside their regular conduct of business. The owners filed article 78 petitions challenging the Board’s determinations, but the lower court denied them all. 

The First Department upheld the Board’s determinations and the enhanced penalties, finding its determinations rational. The court explained that the NOVs were issued under a former version of the cited Code section, which defined an outdoor advertising company as an entity involved in the outdoor advertising business. Such business was further defined as being in “the business of…leasing…or otherwise either directly or indirectly making space on signs situated on buildings and premises…available to others for advertising purposes.” Thus, the owners’ leasing conduct clearly fell within the definition of an outdoor advertising company.

JT Tai & Co., Inc. v. City of New York, 925 N.Y.S.2d 434 (1st Dep’t June 7, 2011) (Attorneys: Mark D. Geraghty, Bradley J. Green, for owners; Michael A. Cardozo, Deborah A. Brenner, for NYC)

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