Toronto's outdoor advertising companies fought City Hall and lost yesterday.

City councillors voted on Monday to introduce a host of new rules for outdoor advertising and a new tax, in effect for the second half of 2010, which when fully implemented will cost outdoor companies about $10.4 million per year.

The Out-of-Home Marketing Association of Canada (OMAC), which has been spearheading the fight against the proposed changes, claims the new tax will be greater than estimated industry earnings of $8.8 million. The by-law also makes it harder for advertisers to have new billboards approved and increases fines for illegal outdoor signage.

"Certainly we are very disappointed with the outcome of yesterday's meeting," said Rosanne Caron, OMAC president. "We did our best to persuade council of what was at stake with this decision, but they obviously chose to go in a different direction."

Caron said OMAC will meet with members shortly to discuss possible next steps, which could include taking the fight to the courts.

OMAC contends the City did not hold meaningful consultations with industry stakeholders and developed the new bylaw based on false assumptions about outdoor advertising industry revenue.

"Some of the comments [by councillors] showed a lack of knowledge and understanding," she said.

Caron pointed to Mayor David Miller's comment to reporters yesterday after the vote that "A billboard's a licence to print money." 

"It just shows they don't understand the advertising industry," she said.

According to Caron, city staff made incorrect assumptions about outdoor revenue using only rate cards; assuming a 70% rate and that the billboards are sold out all of the time. "I wish that was the case," she said.

OMAC provided the City with Nielsen data which covered spending for the larger census metropolitan Toronto region, from which more accurate City of Toronto data could be extracted, she said. "The City chose not to believe that information. I don't know why."

A request for comment to the City was not returned by press time. 

Though the City approved the tax of about $10.4 million, billboard companies were given the option of providing audited financial statements to try and prove the rate is too high. It's "unprecedented" said Caron, but it is something OMAC will discuss with its members.

Originally, the tax was to go directly to fund the arts in the city and was vigorously supported by a loose alliance of city organizations under the Beautiful City Billboard Fee Alliance. However, the city concluded that the tax revenue will now go into general city coffers with a verbal commitment from some councillors to use the money for the arts.

Devon Ostrom, one of the coordinators for the Beautiful City Alliance, called the decision a "positive step forward for Toronto."

The ruling also represents what the majority of Toronto was looking for, said Ostrom, citing an Ekos poll that suggests 70% of Torontonians support the billboard tax.

During yesterday's hearing Councillor Rob Ford said supporters of the tax shouldn't expect the money to benefit the arts.

"This money is not going to the arts," he said. Everyone in this room knows it's not going to the arts. Remember this, as I'm standing up here, you're not getting this money."

Ford said the city has done nothing to help Toronto businesses, many of which are moving to the "905." He said companies use billboards to promote their business, to generate revenue, which in turn creates jobs.

"You don't know how hard it is to run a business day in and day out, but what a lot of you know around here is tax, tax, tax, spend, spend, spend," said Ford.