A Market Failure in Outdoor Advertising?

The Land Reutilization Authority (LRA) Commission held its final meeting of 2010 on Wednesday morning. One of the commissioners sported a festive, illuminated vest, but his shiny allusion to the holiday season was the only curiosity of note — the only curiosity, that is, until the commission started voting.

In one of its final actions of 2010, the LRA Commission voted — with two of its three members present — to approve a lease agreement with CBS Outdoor that will permit the LRA to capture revenue from billboards that recently entered the public corporation’s land holdings.

That’s right. In St. Louis city, government owns billboards.

Perhaps I’m old-fashioned, but I see no rationale for government ownership of billboards. Does a market failure really exist for outdoor advertising in St. Louis city?

Although the LRA nominally purports to represent the interests of the St. Louis mayor, comptroller, and Board of Education, little of the public corporation’s revenue ever seems to reach city taxing districts. Furthermore, billboard revenues are not the panacea for the city’s long-term fiscal problems.

Oddly enough, the LRA Commission’s action in 2010 directly contravenes the actions of the LRA Commission in 2001. During the April 25, 2001, meeting of the commission, a commissioner “asked that staff investigate the location and condition of [the LRA’s] billboards, so they can determine how the LRA can get out of the billboard business, in a reasonable amount of time.”

This is not the first case of “mission creep” for the LRA, and I doubt that it will be the last.

My hope for the new year is that the LRA will do right by the taxpayers of St. Louis city by selling its assets. Privatization broadens the tax base, which should lower marginal tax rates.