Op-ed: San Jose reveals revenue estimates for digital billboards — and it’s not much

Back in 2018 the ban on new billboards was unceremoniously repealed by the San Jose City Council at the urging of billboard industry lobbyists. Since then, our group has been asking questions but getting few direct answers.

For example, one of the claims made by proponents is that billboards that go up on public property will generate revenue for the city. This seems like a reasonable justification on the surface. But how much money will the city make annually when all proposed digital billboards will be up and running?

For several years, city staff have refused to answer this question with reasons varying from “that information is confidential” to “discussions are ongoing” to “contracts are still being finalized.” We had to dig into the city’s bidding documents to find that there was a requirement that 30-35% of annual gross revenue would go to the city, but no mention of dollar amounts.

Instead of being transparent, city staff would respond that it’s not only about revenue, but reiterate the unproven claim that digitals would bring “urban vibrancy” to downtown. They often cite a trip to Denver in 2015 as an example of how digital billboards were implemented there, though a local Denver paper published a commentary asking whether they were worth it.

Last month we finally received a verbal answer to the revenue question, sort of. At a recent District 3 community leadership meeting, Nanci Klein, director of San Jose’s Office of Economic Development & Cultural Affairs, admitted the annual figure was about $2 million. She further explained that estimate was “pre-pandemic” and that she did not yet know the actual dollar amount.

That suggests the final number will be even lower, given visitors downtown have not returned to pre-pandemic levels, reflected in lower rates charged to billboard advertisers, and that the number of prospective sites for new digitals has been reduced. Originally 22 signs at 17 sites were identified back in 2018. As of last year, that has dropped to approximately 13 signs at nine sites according to city staff.

The revenue estimation may be closer to $1 million annually, according to a billboard lobbyist at the Feb. 26 Community and Economic Development Committee meeting.

Whether it’s $1 million or $2 million, it is only a fraction of the city’s annual operating budget. Sadly, we estimate that at least $2 million (or more) has already been spent in overhead by city staff working on billboard-related projects over the last five years. Unfortunately staff cannot confirm this estimate because, unlike the private sector, the city doesn’t keep track of which projects its own employees work on.

Ms. Klein further mentioned the new billboard contracts may be as long as 20 years, so we’ll be stuck with these digital monstrosities long after the current city council and staff have left their posts, with no way to undo the damage. This is an insult to the city’s hard-working taxpayers who deserve better than this sorry display of government’s inability to competently negotiate contracts.

But the inescapable question is: how can the powers that be award contracts to vendors before nailing down a concrete revenue number guaranteed to go to the city coffers? The revenue is the most important aspect of a deal. Our group has repeatedly insisted these digital billboards are a bad deal without merit and deserving of immediate termination.

Is the tradeoff worth it? Despite the city facing a deficit in the current budget planning, we don’t believe it’s worth trading a small amount of revenue vs. compromising the character, architectural integrity and positive street environment of downtown. The city’s own survey on the issue found that residents overwhelmingly oppose new billboards.

Even worse, venue sponsors, fearing to be perceived by the public as associated with random consumer products and services on billboards, may cease providing financial sponsorship of our civic anchors including the Tech Museum, Center for Performing Arts and the Convention Center — all of which are proposed billboard sites.

Despite ongoing public opposition, the office of economic development remains intent on making sure San Jose becomes a haven for new digital billboards. The city’s plan is to wrap all proposed billboards on public property into a package for final approval by the city council before the end of this year.

The city council set this juggernaut in motion back in 2018. Only the city council has the authority to stop the city manager’s office, the office of economic development and the planning department from forcing digital billboards on the people of San Jose.

To that end, we suggest immediately canceling the digital billboard scheme and allow city staff and resources to refocus on other more important matters that directly impact our community. It’s time for city agency fiefdoms to understand they work for the public and not the billboard lobby.

Jason Hemp, Les Levitt and John Miller are co-founders of No Digital Billboards in San Jose.