Sacramento leaders have pushed for years to reduce the number of billboards along streets and freeways, calling them visual clutter and blight. Now, the city is proposing allowing four large shopping centers to erect two digital advertising signs each on their property.
The reason: Economics.
As the burgeoning online shopping world continues to take bites out of brick-and-mortar business, retailers want the brightly-lit changeable message boards as a weapon in that war – helping them catch the attention of customers with targeted promotions similar to pop-up online ads.
The four centers being considered for digital displays are Arden Fair mall, Delta Shores, Natomas Marketplace, and The Promenade & The Village in North Natomas. Arden Fair mall officials said they hope to put a digital billboard up at the west edge of their property, near the Capital City Freeway.
Sign Up and Save
Get six months of free digital access to The Sacramento Bee
“The internet really has an advantage to promote something to you at any moment,” Arden Fair marketing manager Nathan Spradlin said. “We’re looking at ways we can combat that. Retailers can promote things that are going on. It’s a more unique message, in the moment.”
Digital signage has been controversial. Some drivers complain the changeable messages and lights are a distraction. Sacramento and other cities have imposed limits on size, brightness and message turnover frequency in order to minimize those distractions.
Councilman Jay Schenirer, head of the city’s Law and Legislation Committee, said the city needs to be proactive in helping key local businesses during a “transitional economy.”
“This is a small action we can take that will enhance their standing within the overall retail sales market,” he said.
The city has a financial incentive of its own to allow the big shopping centers to build digital boards. The city budget, which pays for police, fire, parks, street repairs and multiple other services, is reliant on sales tax revenue. If shopping revenues drop, city services suffer.
“It is in the city’s best interest to let large regional shopping centers attract customers by having digital signage on their properties,” city planner Evan Compton wrote in a report to City Council members. The boards, he said, will help “maintain the health of large tax generators within the city limits.”
The city may require malls to take down older signs in order to qualify for new digital boards. Compton said if that happens, the new digital signage approvals could have “the potential to reduce visual clutter and blight.”
City records show the city of Sacramento received $4.87 million in sales tax revenue from Arden Fair mall between July 2017 and June 2018. Revenue officials said money from the mall represents about 7 percent of the sales tax revenue that flows into the city budget annually.
In recent years, stores and malls have fallen victim to online shopping. Credit Suisse, in a much-quoted 2017 analysis, predicted that as many as 25 percent of shopping malls nationally could fail in the next five years as more people shop online. Individual retail chains have run into trouble too. Sears, a national chain, recently announced it will close 80 stores this month, although the Arden Fair Sears will remain open.
Digital signboards are not merely an economic boon to retailers.
The city of Sacramento has used digital signboard rights as a goodie to help it pursue major league sports. In negotiating a deal to lure investors to Sacramento to buy the Kings and build a downtown arena, the city agreed to allow the ownership group to construct six digital signs along freeways.
That deal was estimated by some to be worth millions of dollars annually to the Kings, and was criticized by arena deal opponents who said the billboards were a lucrative and secret subsidy to the team. A local superior court judge dismissed that argument.
The Kings’ group chose downtown as the site for Golden 1 Center in large part because a shopping mall there, Downtown Plaza, was in a tailspin. Roughly 50 percent of the mall’s stores were closed and the center was sold to the Kings owners at a bargain basement price.
Sacramento city officials now say they likely will offer the Republic FC soccer team the ability to build several digital billboards as a promotional tool and advertising revenue source, if the team wins a Major League Soccer expansion franchise deal.
The proposed city rules change on signage for regional shopping centers would allow each of the four centers to erect two signs on their property, spaced at least a block apart. Sacramento city rules typically require removal of one to three existing billboards for every new one built.
The eight new digital boards will be less than half the screen size of the Cal Expo signboard along the Capital City Freeway or the large billboard next to Highway 50 near California State University, Sacramento.
The proposal likely will go to the City Council for discussion and vote in late April, planners said.