Billboard Valuation:
What’s the Issue?
National Alliance of Highway
Beautification Agencies Annual
Conference
August 28, 2006 – Cleveland, Ohio
NAHBA Annual Conference – Presented by J. Allen Smith
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
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
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 Comm’n of Mo., 400 F.
Supp. 1050, 1070 (W.D. Mo. 1975).
NAHBA Annual Conference – Presented by J. Allen Smith
Distinguishing Valuation Methods:
Taxation vs. Eminent Domain
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.
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
Billboard Valuation Law
The Court Confirmed Three Billboard
Property Interests to be Valued:
1.Leasehold
2.Billboard Structure
3.Permit
Adams, 2006 WL 1913059, ¶ 89.
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
Billboard Valuation Law
The Nature of Permits…
1. Permits are “valid for a designated
location only”
2. They “terminate when a billboard is
moved”
3. The value “primarily inheres in the permit
because the City has severely restricted
the number of permits” Adams, 2006 WL 1913059,
¶ 85.
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
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.
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
Billboard Valuation Law
Three methods of valuation are equally
applicable to establishing fair market
value in eminent domain cases:
1. Income
2. Cost
3. Sales Comparison
Adams, 2006 WL 1913059, ¶ 87.
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
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.
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
Billboard Valuation Law
In Eminent Domain, fair market value of
a billboard is the price “the
aggregate asset—the lease,
permit and sign—would bring
in the marketplace.” Adams, 2006 WL
1913059, ¶ 88 (citing Vivid, Inc. v. Fiedler, 580 N.W.2d 644, 650
(Wis. 1998)).
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
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.
Adam’s Outdoor Adver., Ltd. v. City of Madison
NAHBA Annual Conference – Presented by J. Allen Smith
“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
Billboard Valuation Law
Other States
Condemnation Cases Consistent with Wisconsin Supreme Court
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Nat’l 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. Comm’n v. Quiko, 923
S.W.2d 489 (Mo. Ct. App. 1996).
New Hampshire v. 3M Nat’l 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
Billboard Valuation Law
Taxation vs. Eminent Domain
Government Argument:
Movable structures should not be
compensable.
NAHBA Annual Conference – Presented by J. Allen Smith
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
Contract Clause
Billboard Valuation Law
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
Contract Clause
Billboard Valuation Law
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 tenant’s reserved
power of removal as against the landlord’s
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
Contract Clause
Billboard Valuation Law
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 tenant’s 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
Billboard Valuation Law
The Government’s 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
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
Billboard Valuation Law
Questions & Answers
NAHBA Annual Conference – Presented by J. Allen Smith