A citizen-driven initiative that banned new digital billboards in Rapid City has been overturned in federal court.
With 66 percent of voters favoring the ban, the ordinance was passed as a ballot initiative in June 2011 and prohibited off-premises digital billboards. Digital signage on the property of businesses was still allowed under the measure.
A second initiative established a 20-year expiration date on sign credits, the city's currency for sign companies to trade in old signs and build new ones, which received 65.5 percent of the vote. A 20 sign-credit cap was also included.
The group Scenic Rapid City circulated petitions for both ballot measures.
Mayor Sam Kooiker called the court ruling unfortunate.
"Any time the will of the voters is overturned, it's a concern," said Kooiker, who was a city alderman when the measure when into effect. "I'm disappointed in the voters' will being overturned. However, all is not lost. There are key pieces of the initiated measure that remained intact."
A U.S. District Court ruled last Friday that the digital sign ban conflicted with state law. Lamar Advertising, which is based in Baton Rouge, La., sued the city in August 2011.
Lamar contends the ordinance violated state law and asserted the digital ban denied its freedom of speech, a claim the court rejected.
The court also ruled that the 20-year sunset clause for sign credits applies prospectively, meaning that the credits Lamar had accumulated prior to the initiatives are not affected.
Distance regulations for the billboards remain under question, however. That includes 1,500-feet radial and 2,000-feet linear distance requirements between off-premises billboards, or billboards that are not on the property of a business.
Hal Kilshaw, the vice president of government relations for Lamar, said a decision on the spacing requirements would require a separate trial.
City Attorney Joel Landeen said the ruling on Lamar's freedom of speech claim disallows the recovery of legal fees, which was the basis of that claim.
"Damages are not an issue at this point," he added. "The council has a decision to make Monday night whether they want to proceed to trial on the spacing issue or whether they want to figure out a way to handle it without a trial."
Landeen said if the city appeals the judge's decision on the legality of the billboard ordinance, Lamar could appeal the decision on its claim of the digital ban violating its constitutional rights. He said that could result in the city paying Lamar's attorney fees that have likely exceeded $100,000.
"It's not like we can appeal our issue and keep our victory on the other ones," Landeen said.
Brendan Casey, owner of the Rapid City firm Epic Outdoor Advertising that's in a similar lawsuit over city's billboard restrictions, said his company will seek $4 million from the city. Casey said his suit involves the city's sign-credit measures and the spacing requirements, which are essentially a "de facto" ban.
"Obviously, the initiated measures were in error as they conflicted with state law, which the city attorney, mayor and city council were well aware of," he said. "We believe it's a regulatory taking of our private property. This Lamar ruling really gives us strong footing in our lawsuit. We're looking to invalidate the Rapid City sign code in its entirety."
Scenic Rapid City President Lisa Modrick said the group's fight over billboards isn't over.
"We need to continue to work on ordinances that work for the city and that give the citizens what they want and that is limitations and reductions of billboards," Modrick said. "They spoke by vote: They don't want digital. You can't take that vote away. It's already out there. The citizens have a right to their vision, so we're not done yet."
The city had argued that state statute doesn't specifically mention digital billboards so its ban was reasonable, according to court documents. The statute reads that "a changeable-message sign is permitted as a off-premises sign, regardless of the technology used..."
Based on that language, Chief Judge Jeffery Viken ultimately ruled that while the state allows local authorities to regulate digital signage, a complete ban is unreasonable.
"In this case, the sign code provisions banning digital off-premises billboards and the South Dakota law permitting the use of off-premises changeable signs, regardless of the technology, cannot be harmonized," Viken wrote.
Landeen said sign companies now have to follow the city's permitting process that goes through committee. He added that digital sign requests still have to follow size and spacing guidelines and there's virtually no space to accommodate them.
"These signs are pretty expensive so they're not going to convert every sign to digital," Landeen said. "They still have to follow the other rules."