Have your billboard's diffuse color be the color you want it to turn into: bright blue. Now create a point light somewhere off to the side of your map where the player will not see it. Next, go to the 'Billboard' tab after having it selected, and click the 'Connect' button next to the Connected light name field. Now click on the point light you created.
In your script, call
FadeLightTo("connected_point_light", 0, 0, 0, 0, 0, 0); at OnStart(). Then, when you want the billboard to fade in, call
FadeLightTo("connected_point_light", 1, 1, 1, 1, 1, X); where X is the fade-in time.
Good luck