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Electronic signs for municipalities: Las Vegas or lost revenues?

There are many municipalities around the Midwest looking for new ways to increase sales tax revenues. Some are into the traditional approaches of bringing in developers to develop open lands and renovate old structures. Others are trying to entice businesses with tax incentives and reduced fees to relocate a business within their municipalities.

This is a common practice with even large municipalities in Chicago giving away tax incentives and adjusting building codes to help shore up the loss of commerce.

Few, though, are looking at simple remedies. As I have stated for many years: "Leading-edge organizations do not maintain their position using trailing-edge technologies." The same goes for municipalities. Leading-edge municipalities will not maintain their tax base by restricting the use of applying technology - such as electronic signs - to generate sales.

What many politicians fail to look at is the framework of obsolete ordinances they have enforced in the past that should be either updated or totally eliminated in order to accommodate the new demands put on existing and relocating businesses. These businesses are trying to compete in a much more complex and accelerated marketplace.

Though the slow, horse-and-buggy days are over, there are still laws on the books that act like a bridle on businesses. One of these horse-and-buggy laws is the sign ordinance.
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'No Flashing Signs'

This is an outdated term that is still found in many municipal ordinances because politicians, administrators and their legal advisors have not kept up with technology and its applications. The tired argument that "we don't want to become Las Vegas" is a lame argument. This is my answer to that: "You wish you had even one week of tax revenue that the strip generates."

As a trustee in a village that's going to lose a Wal-Mart in two years, my focus is that you have to become creative to make up for that major sales tax revenue loss. When you look at the money generated by businesses using electronic message centers versus ones using conventional signs, it's apparent that you must update your city or village ordinance. This includes updating signage for the municipality itself. Electronic signs can be very tasteful.

There have been studies showing that an electronic sign will increase traffic into a business by 15 percent to 150 percent. Though that is a phenomenal range, the average is more like 25 percent to 40 percent. If a business increases its sales by 25 percent, the tax revenues from that business will increase by that amount as well. This should be a no-brainer for any city council.

SBA Says Do It

The Small Business Administration (SBA) states: "Small business is the backbone of the United States economy."

The administration also notes: "An effective on-premise sign is a critical component of visibility and the sign should receive the same careful attention as these other components. Without a properly designed on-premise business sign, a commercial site can't function at its full economic potential."

The SBA has several case studies about this. A critical example of changing out a sign brought this result:

The car wash experienced a 125 percent increase in detailing business and a 15 percent increase in overall business, which translated into an additional $135,000 in gross revenues in the first year. This is nearly nine times the cost of the sign.


In this case, the return on investment is very clear. It paid to change out the sign. In another case, this was the result:

During the 12 months following installation, the restaurant realized a sales increase of 16 percent, which brought annual gross revenues to $323,640. In the second year of installation, revenues increased another 32 percent, which resulted in an annual gross income of $427,204.


Myth: Signs Impact Traffic

There are already studies that have shown electronic signs do not contribute to traffic accidents. In fact, just the opposite has been found as stated in this article:

Government studies have been conducted in attempts to prove that on-premise signage is unsafe, according to the SBA. Not one study has found that on-premise signage is linked to an increase in traffic accidents. Rather, the SBA reports that highway vehicle accidents actually decrease at intersections where there is commercial signage.

Ironically, many of the cities that have strict limits on business sign size - ostensibly as a way to "enhance public safety" by limiting "driver distractions" - also use mobile outdoor advertising on buses as a way to generate revenue, according to Thomas Claus, director of government relations for the International Sign Association.


There are a lot of hypocritical sign ordinances in municipalities and counties that restrict businesses and are based on myths and indefensible arguments (i.e. no big signs because it creates driver distraction but we can allow bus ads because it's a revenue generator for us). The article also goes on to state that signs light up an area and reduce crime.

Good signage is critical for generating business. The more business generated, the more sales tax revenues a municipality will collect. This is a win-win situation in which many municipalities are still in the dark.

Carlinism: Turn on profits by turning on the lights.

James Carlini is an adjunct professor at Northwestern University. He is also president of Carlini & Associates. Carlini can be reached at james.carlini@sbcglobal.net or 773-370-1888. Copyright 2006 Jim Carlini.

The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Comments

Larry Graf responded 7 years ago: #1

Mr. Carlini has done his homework. What a great article!!
Unfortunately, many municipalities are hindring business when they should be helping it. Flashing signs have been proven to help business. No I'm not in the sign business.

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