Signs of the Times - March 2013 - (Page 74)

Compensability and Valuation of Billboards in Condemnation The tenets should be applicable for on-premise signs. By Richard Rothfelder The best and highest-renting the most motorists and billboards are located where they can be viewed by potential customers – next to the busiest highways. The busiest highways, in turn, are likely to eventually be widened or otherwise improved, so they can accommodate even more of the increased traffic demand. Logically, then, the most-expensive billboards are among the property interests that must removed in highway widenings. This article addresses two of the most hotly contested questions in condemnation law: when the government widens a highway, or undertakes some other public improvement that requires billboard removal, is it required to pay the owner just compensation? Further, if such compensation is required, how is the billboard to be valued in eminent domain? Governmental entities typically say no compensation is required; they argue that billboards are personalty (personal property) only entitled to relocation benefits. If it must pay for billboard removals to accommodate the highway widening, the government says to use only the cost approach, which means using lower valuations. Billboard owners, by contrast, claim billboards are like any other private property; if the government takes or damages them for a public purpose, it must pay just compensation without regard of the property’s characterization. Similarly, they argue their billboards should be appraised in eminent domain under the traditional income and comparable-sales approaches, similar to hotels, apartments, office buildings and other income-producing properties. The government argument The Court, in Harris County vs. Clear Channel Outdoor, Inc., 2008 WL 1892744 (Tex.App. Houston [14th Dist.] 2008, no pet.) explained the position of the Texas Dept. of Transportation (“TxDOT”), representative of most DOTs and other governmental entities, on billboard compensability in eminent-domain cases: Prior to December 2004, both TxDOT policy and federal law considered billboards to be real property and required that the billboard owner be compensated for the loss of the sign or the cost of relocating the sign. However, in late 2004, for reasons not disclosed in the record, TxDOT initiated changes in the regulations addressing how billboards affected by transportation projects should be handled. These changes, which took 74 SIGNS OF THE TIMES / MARCH 2013 / www.signweb.com effect in December 2004, dictated that billboards affected by transportation projects would no longer be treated as real property, and sign owners would no longer be offered compensation for the loss of the sign. Under its current policy, TxDOT and most other governmental entities offer only relocation benefits under federal and state laws for billboards displaced by highway improvements. (see Uniform Relocation Assistance and Real Property Acquisition Policies Act, 42 USC §4601; Texas Property Code, §21.043). The government sometimes doesn’t even name the billboard owner in the eminent-domain case, especially if the lease isn’t recorded, or if the fee interest is acquired through voluntary purchase. In support of its position, the government argues that billboards are characterized as personal property, for which compensation is not required in a condemnation proceeding. Assuming only real property is compensable, the government then utilizes the threepart test under Logan v. Mullis, 686 S.W. 2d 605 (Tex. 1985), to argue that billboards are characterized as personalty: (1) the mode and sufficiency of annexation, either real or constructive; (2) the adaptation of the article to the use or purpose of the realty; and (3) the intention of the party to annex the chattel to the realty. Because the third element, regarding the intent of the party placing the property, is preeminent under the Logan test, Sonnier v. Chisholm-Rider Co., Inc., 909 S.W.2d 475, 479 (Tex. 1995), the government emphasizes the provision often found in billboard ground leases, which reserves the right of the owner to remove his billboard after the termination of the lease. Similarly, governmental entities often argue billboards should be characterized as personal property because they’re considered personal property by local taxing and appraisal authorities, (Clear Channel Outdoor, Inc. v. City of Milwaukee, 2011 WL 3050131 (Wis. App. 2011), and to qualify for federal taxinvestment credits (Whiteco, Inc. v. Commissioner, 65 T.C. 664 (1975). Citing cases from other states, TxDOT then concludes billboards are personal property and not compensable in eminent domain under the Logan test (see, e.g. Rite Media, Inc. v. Secretary of the Massachusetts Highway Department, 712 N.E.2d 60 (Mass. 1999); Department of Transportation v. East Side Development, L.L.C., 892 N.E.2d 136 (Ill. App. 2008, pet. for http://www.signweb.com

Table of Contents for the Digital Edition of Signs of the Times - March 2013

Signs of the Times - March 2013
Contents
ST Update
Smart Inking
Technology Update
Vinyl Apps
Strictly Electric
Lighting Techniques
The Moving Message
Technology Review
Technology Review
Design Matters
New Products
ADA: One Year Later
The Supergraphic Connection
ISA Sign Expo 2013 Preview
Compensability and Valuation of Billboards in Condemnation
Industry News
Advertising Index
Editorially Speaking

Signs of the Times - March 2013