Transit Advertising Sales Agreements (2004)

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80 APPENDIX E Sample Advertising Acceptance Policies

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93 SANTA CRUZ METROPOLITAN TRANSIT DISTRICT STAFF REPORT DATE: September 13, 2002 TO: Board of Directors FROM: Margaret Gallagher, District Counsel SUBJECT: CONSIDERATION OF APPROVAL OF SANTA CRUZ METRO ADVERTISING POLICY AND REGULATIONS I. RECOMMENDED ACTION Approve the attached Santa Cruz Metro Advertising Policy and Regulations Approve the attached Santa Cruz Metro Advertising Policy and Regulations. II. SUMMARY OF ISSUES • Santa Cruz Metro contracts with Obie Media to facilitate the placement of advertisements on the exterior sides of the buses. • During the 5-years of the Obie Media contract, Santa Cruz Metro will have realized approximately $712,000 in revenue from the advertisements according to the Finance Manager. • The Obie Media contract is set to expire on December 1, 2002. • Santa Cruz Metro issued a Request for Proposals for a contractor to place advertisements in and upon the buses for the next 3-5 years. • It is appropriate for the Board of Directors to consider standards for advertising in and upon the buses. III. DISCUSSION Santa Cruz Metro has contracted with Obie Media, an advertising company, for the placement of advertisement on the exterior of the buses for the last 4 and a-half- years. The contract is set to expire by its terms on December 1, 2002. The Obie Media contract will have generated approximately $712,000 during the term of the contract with approximately $180,000 being earned in the last year of the contract, according to the Finance Manager. Mark Dorfman, the Assistant General Manager, is issuing a Request for Proposals for the placement of advertisements in and upon the buses for the next 3-5 years. The Obie Media contract contains certain restrictions on bus advertisements that the contractor is required to adhere to or risk a contract violation. The contract prohibited the following types of advertisements: 1. alcohol; 2. tobacco; 3. false, misleading or deceptive; 4. defamatory; 5. likely to hold up to scorn or ridicule any person or group; 6. obscene or pornographic; 7. advocacy of imminent lawlessness or violence.

94 During the last year questions have arisen regarding whether or not Santa Cruz Metro can restrict advertisements on the buses. Additionally, the Board of Directors was interested in finding out whether or not bus shelters could be reserved for public service announcements. Although the Obie Media contract allows restrictions in bus advertisement based on content, any such restrictions are subject to the First Amendment to the United States Constitution’s protection of freedom of speech. The right of free speech is not absolute and certain forms of speech are entirely outside the scope of constitutional protection. Witkin, Summary of California Law (1988) 9th Ed. Vol. 7 §289. Most of the advertisement restrictions in the Obie Media contract fall into the area of “unprotected speech.” Unprotected speech may be prohibited without raising any First Amendment issues whatsoever. Types of unprotected speech include: defamation, fraudulent misrepresentation, obscenity, and advocacy of imminent lawless acts. Restrictions on unprotected speech do not raise First Amendment concerns. First Amendment issues do arise when governmental entities restrict protected forms of speech. However, protected speech is not equally permissible in all places and at all times. Nothing in the Constitution requires the government freely to grant access to all who wish to exercise their right to free speech on every type of government property without regard to the nature of the property or to the disruption that might be caused by the speaker’s activities. Recognizing the government, no less than a private owner of property has power to preserve the property under its control for the use to which it is lawfully dedicated, the United States Supreme Court has adopted a forum analysis as a means of determining when the government’s interest in limiting the use of its property to its intended purpose outweighs the interest of those wishing to use the property for other purposes. Accordingly, the extent to which the government can control access depends on the nature of the relevant forum (Cornelius v. NAACP Legal Defense and Education Fund 473 U.S. 788. (1992)). If a governmental entity has created a public forum for ideas, restrictions on the content of protected speech are strictly scrutinized and generally impermissible (Police Dept. of City of Chicago v. Mosley 408 U.S. 92 (1972)). On the other hand, if a governmental entity has not created a public forum, then it may restrict the subject matter of speech so long as the restriction is not arbitrary, capricious or invidious. Restrictions based on the speaker’s viewpoint are always impermissible (Lehman v. Shaker Heights, 418 U.S. 298 (1974)). Where transit districts have permitted political ads or other forms of non-commercial speech, in or upon buses, courts have held that the transit districts have opened First Amendment forums for the expression of ideas. In this type of forum, the transit district may impose content-based restrictions if necessary to serve a compelling state interest and if narrowly drawn to achieve that end (Wirta v. Alameda-Contra Costa Transit Dist. (1967) 68 C. 2d 51, 55; Gay Activists v. Washington Metropolitan Area Transit Authority No. 78-2217 (DDC, 1979)). Or, the government may impose content neutral time, place and manner restrictions narrowly tailored to serve a significant government interest, which leaves open ample alternative channels of communication (United Postal Service v. Council of Greenburgh Civic Association, 453 U.S. 114, 101 S.Ct. 2676, 69 L.Ed. 2d 517(1981)). Where transit districts have permitted only commercial advertising, the Sup reme Court has held that the transit districts have not opened up the advertising space as a forum for ideas Lehman at 778; Packer Corp. v. Utah, 285 U.S. 105 (1932). In those cases the Court has noted that the transit districts were engaged in commerce, the purpose of which was to provide rapid, convenient, pleasant and inexpensive service. “… When the transit agencies have limited the forum for the specific purpose of generating revenues, a transit system has discretion to develop and make reasonable choices concerning the type of advertising that may be displayed in its vehicles. (Lehman at 777). In order to be able to restrict advertisement in this type of forum, the transit district merely has to show that their restriction is reasonable; it need not be the most reasonable or the only reasonable limitation. In addition where the government is acting as a proprietor, its action will not be subjected to the heightened review to which its actions as a lawmaker may be subject. (International Society for Krishna Consciousness (ISKON), Inc. v. Lee 505 U.S. 672, 112 S. Ct. 2701, 120 L.Ed. 2d 541 (1992)). Currently, because Santa Cruz Metro allows political, religious and other issue-orientated advertisements, in and upon its buses, a court would most likely determine that Santa Cruz Metro had created a designated public forum. Therefore, in order to restrict any advertisement based on content, Santa Cruz Metro would have to show a compelling state interest. Because Santa Cruz Metro has never articulated any reasons for the limitations set forth in the Obie Media contract, it is unlikely that a compelling state interest could be articulated for the exclusions noted above, unless the speech was unprotected and, it is doubtful that a court would accept a rationale proposed after litigation was initiated. It is appropriate for the Board of Directors to consider establishing the purpose of its bus advertising program because First Amendment rights can be affected through restricting bus advertisements.

95 If Santa Cruz Metro wishes to maintain a designated public forum allowing all-comers to advertise, maintaining a place for public discourse and have the ability only to restrict unprotected speech, it can do so by continuing its current practices. Of course, should a tobacco or alcohol advertisement be proffered, the advertisement would have to be posted, unless Santa Cruz Metro can articulate a compelling state interest for such restrictions. If Santa Cruz Metro wants to promote its commercial enterprise to the maximum extent possible, it can adopt the attached advertising policy. By adopting this policy, Santa Cruz Metro would be establishing a non-public forum for the purpose of promoting its commercial enterprise. In this way Santa Cruz Metro is able to make reasonable limitations to promote the purpose of the forum, that is, the commercial enterprise not in conflict with its bus service. With regard to whether Santa Cruz Metro can restrict advertisements on its bus shelters to public service announcements, the same forum analysis set forth above is required. Because the placement of the public service announcements is unrelated to any intended purpose of the shelter, other than to open public property for a discourse on a variety of topics, including health related issues such as AIDS and abortion, if a political or religious advertisement was proffered, it would most probably have to be accepted. The intention of a government entity to open its property for discourse results in the designation of that property as a public forum. Additionally, it could be argued that the bus shelters because of their location on public streets, if opened for advertisements, should be considered a traditional “public forum.” Therefore, to be able to only allow public service announcements, Santa Cruz Metro would have to have a compelling state interest. It is doubtful that such could be articulated as required to avoid a First Amendment violation, if a proffered advertisement was declined. IV. FINANCIAL CONSIDERATIONS Bids for the Advertisement contract are scheduled to be opened on October 1, 2002. V. ATTACHMENTS Attachment A: Proposed Santa Cruz Metropolitan Transit District’s Advertising Policy and Regulations

96 SANTA CRUZ METROPOLITAN TRANSIT DISTRICT 8/3/98 Regulation Number: Computer Title: Advertising Regulation Effective Date: Pages: TITLE: ADVERTISING POLICY AND REGULATIONS Procedure History NEW POLICY SUMMARY OF POLICY APPROVED To Create a policy regarding advertising on buses I. POLICY 1.01 Santa Cruz Metro sells space inside and upon its buses, for the display of commercial advertising. The purpose is to raise revenues, supplementary to those from fares and from tax proceeds, to be used to finance Santa Cruz Metro’s operations. The display of advertising is solely for this purpose. It is not intended to provide a general public forum for purposes of communication, but rather to make use of property held in a proprietary capacity in order to generate revenue. 1.02 In order to realize the maximum benefit from the sale of advertising space, the program must be managed in a manner that will procure as much revenue as practicable, while ensuring that the advertising does not discourage the use of Santa Cruz Metro’s transit system, does not diminish Santa Cruz Metro’s reputation in the community it serves or the good will of its patrons, and is consistent with Santa Cruz Metro’s principal purpose of providing safe, comfortable, efficient and affordable public transportation. To attain these objectives, Santa Cruz Metro’s Board of Directors has established these regulations for the advertising displayed in and upon its buses. 1.03 In addition to the foregoing, noncommercial speech is excluded from advertising inside and upon the buses for the following reasons: a. Santa Cruz Metro wishes to maintain a position of neutrality on political, religious, environmental, or other public matters and issues in order to promote its commercial enterprise; b. If advertisement inside and upon the buses is not restricted, the buses and passengers could be subject to violence; c. Preventing a reduction in income earned from selling advertising space because commercial advertisers may be dissuaded from using the forum commonly used by those wishing to communicate political or religious. II. APPLICABILITY 2.01 This procedure is applicable to all District employees and all independent contractors who contract with Santa Cruz Metro, for the placement of advertisement in and upon Santa Cruz Metro’s buses.

97 III. DEFINITIONS: 3.01 Commercial advertising: a. Advertising the sole purpose for which is to sell or rent real estate or personal property for profit, or to sell services for profit. b. Any advertising that both offers to sell property or services and also conveys information about matters of general interest, political issues, religious, moral, or environmental matters or issues, or other public matters or issues, or expresses or advocates opinions or positions upon any of the foregoing. c. Does not convey whether expressly or implied, intentionally or unintentionally, by inference or innuendo, the religious, social, political, legal or moral view of any person or entity as such views are generally understood in Santa Cruz County Community. d. Does not cause the vehicles, if posted individually or in combination with other advertisements, to become a public forum for the dissemination, debate, and/or discussion of public issues. 3.02 Political Advertising: a. Any advertising that supports or opposes the election of any candidate or group of candidates for election to any federal, State, or local government office; b. Any advertising that supports or opposes any referendum conducted by the federal or State government, or by any local government, such as referenda on constitutional amendments, on bond issues, or on local legislation; or c. Any advertising that features any person whose prominence is based wholly or in part upon his or her past or present activity in political affairs, or that represents or implies any such person’s approval or endorsement of the subject matter of the advertising. IV. ADVERTISING STANDARDS: 4.01 All advertising displayed in or upon the Santa Cruz Metro’s buses shall be strictly commercial in nature and purpose. 4.02 Santa Cruz Metro’s transit system, in order to serve the purpose for which it has been established, must of necessity accommodate all persons without distinction of age. It is therefore necessary to exclude advertising unsuitable for exposure to children or persons with immature judgment. The following kinds of advertising therefore will not be displayed in or upon Santa Cruz Metro’s buses: 1. Advertising for cigars, cigarettes, pipe tobacco, chewing tobacco, and other tobacco products. 2. Advertising for alcoholic beverages, including beer, wine, and distilled spirits. 3. Advertising for products or services related to human reproduction or sexuality, including but not limited to contraceptive products or services, other products or services related to sexual hygiene, and counseling with regard to pregnancy, abortion, or other sexual matter. 4. Advertising for products, services, or entertainment directed to sexual stimulation. 4.03 Advertising that explicitly and directly promotes or encourages the use of means of transportation in direct competition with Santa Cruz Metro’s bus service shall not be displayed in or upon Santa Cruz Metro’s buses.

98 4.04 No advertising shall be permitted that in any way denigrates Santa Cruz Metro’s organization, or its operation, or its officers, agents, or employees. This prohibition includes advertising copy and illustrations that state or imply or could reasonably be expected to cause an inference, that Santa Cruz Metro’s service or operations are anything but safe, efficient, affordable and convenient. 4.05 Santa Cruz Metro expects all advertising copy to be truthful. Advertising copy and illustrations should not be exaggerated, distorted, false, misleading or deceptive. 4.06 Medical products or treatments are to be treated in a restrained and inoffensive manner. 4.07 Testimonials are expected to be authentic, and advertisers using them will be required to indemnify Santa Cruz Metro against any action brought in connection with them. Advertising that promotes contests or giveaways is expected to comply with all applicable laws and regulations. 4.08 No advertising in or upon Santa Cruz Metro’s buses shall include language, pictures, or other graphic representations that are unsuitable for exposure to persons of young age and immature judgment, or shall be derogatory or defamatory of any person or group because of race, color, national origin, ethnic background, religion, gender or sexual preference. 4.09 No advertising shall be displayed in or upon Santa Cruz Metro’s buses if the display thereof would violate any federal or State law or regulation, or any law, regulation, or ordinance of any county or municipality in or through which Santa Cruz Metro buses are or may be operated. 4.10 No advertising that is obscene, as defined by federal or California law, shall be displayed in or upon Santa Cruz Metro’s buses. 4.11 Proposed advertisements shall not be accepted if the use, or possession of the property proposed to be advertised, includes a product that is specifically prohibited from use or possession on Santa Cruz Metro’s facilities including its buses and vehicles. These products include firearms, tobacco products, alcohol and weapons. 4.12 No advertising will be accepted if it advocates imminent lawlessness or violence. 4.13 Political advertising will not be accepted. 4.14 Advertising will not be accepted if it promotes or encourages unlawful activity. 4.15 Advertising will not be accepted if it supports or opposes an issue or cause and/or which advocates or opposes a religion or belief. V. USE OF SANTA CRUZ METRO’S NAME 5.01 Use of Santa Cruz Metro’s name, logo, slogans, or other graphic representations is subject to advance approval by Santa Cruz Metro. Santa Cruz Metro does not endorse or imply endorsement of any product or service. VI. ADMINISTRATION OF ADVERTISING REGULATION 6.01 Advertising space on Santa Cruz Metro’s buses is sold through an independent Contractor. The Contractor shall comply with the foregoing policies, and review all advertising with reference to them. They shall refer all such advertising that falls or may fall into any of the categories defined above to Santa Cruz Metro’s designated

99 representative responsible for administering the advertising program, who shall determine whether the proposed advertising will be accepted. If the proposed advertising is rejected, the party or parties proposing it may request that this decision be reconsidered. Upon such request, Santa Cruz Metro’s representative shall consult with Santa Cruz Metro’s District Counsel and with its General Manager or the officer designated by him/her for this purpose. The General Manager or his/her designee, on the basis of such consultation, shall determine whether the proposed advertising will be accepted or rejected. 6.02 Santa Cruz Metro will co-operate with the party or parties proposing the advertising, and with the independent contractor through whom it has been proposed, in a reasonable effort to revise it in order to produce advertising that can be accepted and displayed consistently with the foregoing policies.