Billboard Valuation: What

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Billboard ValuationWhats the Issue?

• National Alliance of Highway Beautification
  Agencies Annual Conference
• August 28, 2006 Cleveland, Ohio

NAHBA Annual Conference Presented by J. Allen
Smith
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The Law Pertaining to Billboard Valuation

• Fifth Amendment

Nor shall private property be taken for public
use, without just compensation.
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
23 U.S.C.A. 131(g)

• Highway Beautification Act

Just compensation shall be paid upon the removal
of any outdoor advertising sign, display, or
device lawfully erected under State law
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
42 U.S.C. 4652

• Uniform Real Property Relocation and Acquisition
  Act

just compensation to be paid for any building,
structure, or improvement outdoor advertising
structures are structures or improvements
within the meaning of 4652. Whitman v.
State Highway Commn of Mo., 400 F. Supp. 1050,
1070 (W.D. Mo. 1975).
NAHBA Annual Conference Presented by J. Allen
Smith
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Distinguishing Valuation MethodsTaxation vs.
Eminent Domain
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Billboard Valuation Law

• Wisconsin Supreme Court
• Opinion dated July 13, 2006
• Addresses the proper distinctions and approaches
  to valuation of billboard interests in eminent
  domain and taxation scenarios.
• Most recent case that addresses these issues.

Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law

• The Court Confirmed Three Billboard Property
  Interests to be Valued
• Leasehold
• Billboard Structure
• Permit
• Adams, 2006 WL 1913059, 89.

Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law

• The Nature of Permits
• Permits are valid for a designated location
  only
• They terminate when a billboard is moved
• The value primarily inheres in the permit
  because the City has severely restricted the
  number of permits Adams, 2006 WL 1913059, 85.

Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
A billboard permit is real property because a
billboard permit is a right or privilege
appertaining to real property Adams, 2006 WL
1913059, 59. The primary value of the
permits is unrelated to the structures rather,
the primary value of the permits appertains to
the location of the underlying real estate.
Adams, 2006 WL 1913059, 84.
Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law

• Three methods of valuation are equally applicable
  to establishing fair market value in eminent
  domain cases
• Income
• Cost
• Sales Comparison
• Adams, 2006 WL 1913059, 87.

Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
Although the same appraisal methods may be used
to establish fair market value for condemnation
purposes as may be used to establish true cash
value for purposes of personal property tax
assessments, the property valued differs
depending upon the purpose. Adams, 2006 WL
1913059, 88.
Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
In Eminent Domain, fair market value of a
billboard is the price the aggregate assetthe
lease, permit and signwould bring in the
marketplace. Adams, 2006 WL 1913059, 88
(citing Vivid, Inc. v. Fiedler, 580 N.W.2d 644,
650 (Wis. 1998)).
Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
In Contrast, an appraisal for personal property
tax assessment purposes includes only the value
of personal property, and therefore excludes the
value of the leasehold and billboard permit.
Adams, 2006 WL 1913059, 88.
Adams Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference Presented by J. Allen
Smith
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Therefore, we conclude the same methods of
appraisal may be used in eminent domain as are
used in appraising personal property for tax
purposes, provided care is taken to exclude from
a personal property tax assessment any value
attributable to elements other than tangible
personal property. Adams, 2006 WL 1913059, 90.
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
Other States
Condemnation Cases Consistent with Wisconsin
Supreme Court

• Natl Adver. Co. v. Nevada Dept. of Transp., 993
  P.2d 62 (Nev. 2000).
• Florida Dept. of Transp. v. Powell, 721 So. 2d
  795 (Fla. Ct. App. 1998).
• City of Scottsdale v. Eller Outdoor Adver. Co.,
  579 P.2d 590 (Ariz. Ct. App. 1978).
• Louisiana Dept. of Transp. and Dev. v. Chachere,
  574 So.2d 1306, 1311 (La. Ct. App. 1991).
• Illinois Dep. Of Transp. v. Drury Displays, Inc.,
  764 N.E.2d 166 (Ill. App. Ct. 2002).
• Minnesota v. Weber-Connelly, Naegele, Inc., 448
  N.W.2d 380 (Minn. Ct. App. 1989).
• Missouri ex rel Missouri Highway Transp. Commn
  v. Quiko, 923 S.W.2d 489 (Mo. Ct. App. 1996).
• New Hampshire v. 3M Natl Adver. Co., 653 A.2d
  1092, 1094 (N.H. 1995).
• Pa. Morgan Signs, Inc. v. Pennsylvania Dept. of
  Transp., 723 A.2d 1096, 1099 (Pa. 1999).
• Other States Include Arkansas, Virginia,
  Washington, Wisconsin

NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
Taxation vs. Eminent Domain
Government Argument Movable structures should
not be compensable.
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Billboard Valuation Law
Contract Clause for Removable Structures

• Federal Court of Appeals Case
• Long term lease on filling station
• Lessee installed underground tanks, piping, etc.
• Lease provided that the Lessee could remove the
  structures upon termination of the lease.

United States v. Seagren, 50 F.2d 333 (D.C. Cir.
1931).
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
Contract Clause
Government Claims

• The United States contends that the tenant here
  has lost nothing by the taking of the property.
• He reserved the right to remove his structures
  whenever the landlord should terminate the
  tenancy now that the United States has
  terminated his tenancy by taking the land, he may
  exercise his right and remove his structures.
• Nothing has been taken from him, only his
  performance of an inevitable obligation has been
  accelerated. Seagren, 50 F.2d at 335.

United States v. Seagren, 50 F.2d 333 (D.C. Cir.
1931).
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
Contract Clause
Federal Court Finds

• But much the same argument could be made in
  support of murder for all that any murderer ever
  did was to accelerate the debt that every mortal
  owes to nature.
• If the structures here in question have been
  built by the landlord, they would have been taken
  and paid for by the government without question,
  as the government concedes they are now part of
  the realty. Is the tenants reserved power of
  removal as against the landlords termination of
  the lease to work a forfeiture in favor of the
  government? We think not. Seagren, 50 F.2d at
  335.

United States v. Seagren, 50 F.2d 333 (D.C. Cir.
1931).
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
Contract Clause

• Federal Court Orders
• and so the agreement for removal made by these
  parties at another time, for another purpose and
  affecting no interest but their own, must be
  rejected here as irrelevant when set up by the
  United States to control its condemnation
  proceedings against the tenants interest in the
  land. Seagren, 50 F.2d at 355.

United States v. Seagren, 50 F.2d 333 (D.C. Cir.
1931).
NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
The Governments Fiduciary Duty

• When condemning the land, the government is in a
  better position than the average purchaser
  because it is able to compel the sale. To
  balance the transaction and to ensure the
  property owner is not burdened with the cost of
  community benefits, our constitution requires the
  property owner receive just compensation for his
  property. Biggar, 873 S.W.2d at 13 (citing
  Armstrong v. United States, 364 U.S. 40, 49
  (1960)).

NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
U.S. Supreme Court
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
(1922)

• A strong public desire to improve the public
  condition is not enough to warrant achieving the
  desire by a shorter cut than the constitutional
  way of paying for the change.

NAHBA Annual Conference Presented by J. Allen
Smith
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Billboard Valuation Law
Questions Answers
NAHBA Annual Conference Presented by J. Allen
Smith