Acquiring a “Sign Site” in Eminent Domain

1. Acquiring a “Sign Site” in Eminent Domain Ron Borree, WisDOT Appraiser Joel Batha, WisDOT Lit. Coor. John Sobotik, WisDOT Attorney

2. This is a Sign (or a “Billboard”)

3. What is Being Acquired? • Personal Property (Structure - Poles and Face) • Real Property (The “Sign Site”) • Lease or Easement • “Right” to have a sign at the location (via permit or nonconforming rights)

4. Do we have to do this? • Sign permits could be issued for a period of years • Sign permits could be personal to the applicant and nontransferable. • Rigorous enforcement of the law and taking prompt action to remove illegal signs would reduce problems as well.

5. How do we do this?

6. Ron Borree • The off-premise sign and its sign site • contributory component to the single fair market value of the property • as if all property components are owned by one entity

7. Fictional Example • Off-premise sign owned by an outdoor advertising company…. • Leased sign site location.

8. Scope of Work Tenant owned billboard structure with a land lease rental from the landowner. The outdoor advertising company owns the sign permit and the sign structure Restaurant rental building owned by the landowner Used Car Dealer Rental Building owned by the landowner

9. Assume for this Example: • The property has two buildings that are rental properties. • The property and the buildings are owned by one entity along a busy freeway. • The off-premise sign is on the property with a land lease rental to an outdoor advertising company. • The outdoor advertising company owns the sign structure and holds the permit from WisDOT.

10. Assume for this Example (cont): • The off-premise sign conforms to WisDOT standards and has a permit. • Off-premise sign does not conform to city and county zoning and sign ordinances. (Nonconforming under city and county law.) • City and county zoning would not allow movement of the sign on the property.

11. Assume for this Example (cont): • WisDOT notifies city that it intends to realign sign under Wis. Stat. s. 84.30(5r). • City directs WisDOT to buy the sign and sign site.

12. How do we appraise the property under the unit/undivided fee rule? • We first look for comparable sales of similar properties that include a similar off-premise permitted sign site with sign structure package under one ownership for a direct sales comparison approach to value. Business value or value based on the expectation of business profits must be excluded from the valuation process.

13. How do we appraise the property under the unit/undivided fee rule? (cont). • The appraiser does a highest and best use analysis to determine the best use of the property. • What components on the property add contributory value. • This analysis is important because the off-premise sign component may contribute to or detract from the highest and best use of the property.

14. How do we appraise the property under the unit/undivided fee rule? (cont). • If comparable sales are not available that include the total real property component for a similar demand off-premise sign owned by the landowner, a real estate rental income valuation for the total permitted sign site with structure package as a potential contributory property component is needed. • Get the sign appraiser involved to assist with that part. • The “permitted sign site with structure” component is then considered for its contributory value to the single property value based on the highest and best use analysis.

15. How do we appraise the property under the unit/undivided fee rule? (cont). • In this case the highest and best use analysis indicates the land is worth more as-vacant than improved with the buildings. • The sign site on the edge of the property does not interfere with the highest and best use potential uses as-vacant into the future. • The sign site is contributory to the unit property value for at least 20 years • The real property component value of the off-premise sign is included in the value conclusion.

16. Considerations for the WisDOT appraisal, owner appraisal, various parties of interest, and the acquisition process • WisDOT and owner’s appraisal needs to be done under the unit/undivided fee rule for the real estate. • All business value or value for expected business profits must be excluded from the valuation. (This is where industry appraisers commonly err.) • The various interests of the landowner, off-premise sign owner, or others in the overall property are included in the single fair market value. • All are parties of interest in the property based on contractual arrangements.

17. Considerations for the WisDOT appraisal, owner appraisal, various parties of interest, and the acquisition process • The sign structure may be purchased as part of the property acquisition or dealt with under relocation. • If purchased in the acquisition, no relocation benefit is appropriate. • All parties of interest are included on the deed and the check paid for the acquisition. • If an award of damages is filed, the check can be deposited with the clerk of courts for apportionment between the parties of interest.

18. Locals and WisDOT share Costs • WisDOT pays award. • Locals owe WisDOT the difference of the award and what WisDOT would have paid to realign the sign. • They pay or we withhold local funds. • If the award is insufficient, WisDOT pays any court-awarded increase.

19. The End