In July, two popular stores along SE Division--Portico and Mirador--were told they would be fined $50 a day if the murals decorating their buildings were not removed within a week. Although the murals were innocent enough--one has a dancing blue water sprite in the foreground; the other shows colorful ribbons--they run afoul of strict city regulations.

When the storeowners and patrons in the Southeast shopping district balked that the murals were harmless, city commissioners provided an exemption and held off on painting over them and fining the storeowners. But the problem remained: what to do about other newly painted murals in town or other storeowners who want murals?

Five years ago, Clear Channel won a $1 million lawsuit against the city after it was denied permits for billboards around town--an amount the city has yet to pay. At that time, the media conglomerate complained that the city was violating free-speech allowances by regulating billboards but allowing free reign for murals. The courts agreed and, in response, city council created a "sign code" that lumps murals in with billboards.

"(According to the Supreme Court) free speech rules cannot draw a distinction between a Widmer billboard and a mural," explains city commissioner Randy Leonard. "If you say one is OK, then both have to be OK."

But common sense and storeowners beg to differ. In October, Leonard hammered out a deal with Clear Channel that would clear the way for murals as well as regulate billboards. Under the agreement, Clear Channel agreed to drop its $1.3 million judgement (currently accruing interest before the Oregon Court of Appeals), as well as give Portland $500,000. In addition, the agreement would have limited the number of billboards, removing them from residential areas. Moreover, the agreement removed the moratorium on murals.

But days after Leonard announced his new plan, Katz put the kibosh on it, saying it would create billboard clutter throughout the city. She also promised to put forward her own plan. Last Thursday, she did just that.

With no mention of billboards or the outstanding $1.3 million owed to Clear Channel, Katz proposed that murals be removed from under sign code regulation and be designated "public art." The theory behind Katz's proposal is that changing the legal definition for murals would allow them to duck free-speech regulations.

The new plan was drafted behind closed doors with the city attorney. Even so, Leonard remains skeptical that the new rule will provide a long-term solution.

"(It) leads us right down the same path to lawsuits," says Leonard. Over the next month, the mayor will shop her plan around for comments, before city council votes on the proposed rule change.