• by Erik Sass  @eriksass1, September 11, 2006

New York City is cracking down on what is considered illegal outdoor advertising, including posters plastering construction sites. While the city is on firm legal ground, some observers say the "anti-clutter initiative" is actually aimed at squashing signage that competes with the municipal street furniture contracts, which the city recently awarded to a small foreign firm. That award is now the subject of several lawsuits.

The city has a clear stake in enforcing the "anti-clutter" initiative, since news organizations estimate it stands to lose $25 million a year in revenue--totaling $500 million over a 20-year span, the usual term of a contract.

The move to enforce Local Law 31, an anti-clutter measure passed in 2005, could also mean dismantling about one-half of the billboards in New York--with an exemption for a small area around Times Square, critics say. But the law also has sweeping implications for unofficial poster advertising, saying it's "unlawful to erect, maintain, attach, affix, paint on, or in any other manner represent on a building or premises any sign that is under the control of an unregistered outdoor advertising company."

Manhattan Borough President Scott Stringer says advertising "is an important business component to the city," but opposes "an illegal market where the city gets no benefit."

In September 2005, the city granted an outdoor street furniture contract to Cemusa, a Spanish company, which could generate up to $1 billion in revenue over its 20-year span. Cemusa is charged with upgrading and maintaining 3,300 bus shelters and 330 newsstands, as well as installing 20 public toilets. These ad platforms are in competition with nearby scaffolding and other popular poster venues. By clearing adjacent spaces of ads, the city could drive up rates for the officially sanctioned surfaces.

The Cemusa contract has been the subject of considerable controversy. The city's independent newsstand operators brought an unsuccessful lawsuit aiming to stop the deal because it would deprive them of ad revenue from their newsstands. Under the new system, Cemusa would own all 330 newsstands, and the company and the city would split ad revenue.

Mayor Bloomberg and Stringer are putting pressure on the New York City Department of Buildings to remove signs in places as far away as the Long Island Expressway. Stringer also described advertising on construction scaffolds as a "blight" and "corporate graffiti," saying the city has had "enough illegal black market advertising."

Meanwhile, two competing bidders--Clear Channel Outdoor and JCDecaux--are suing the city because they dispute the bidding process. Lawyers for the two companies say Cemusa got the contract because of a last-minute change in the rules of the bidding process; city officials encouraged Cemusa to tender a higher bid.

Calling Cemusa "an inexperienced undercapitalized foreign company," JCDecaux's lawyers note that according to the city's own officials, JCDecaux received the highest ratings for maintenance and service. It also had the highest "guaranteed" bid, until the Cemusa re-bid. Attorneys for New York City dispute this version of events. Opening hearings for the case began at the State Supreme Court in Manhattan on August 24. Local Law 31 went into effect on August 25.