Acquiring a “Sign Site” in Eminent Domain

Kathleen Batha, WisDOT AttorneyCurt Van Erem, WisDOT RE Supervisor

September 29, 2015

Is this a Sign or a Billboard?

Definition of Sign in § 84.30(2)(j)

“Sign means any outdoor advertising sign, display, device, notice, figure, painting, drawing, message, placard, poster, billboard, or other thing, which is designed, intended, or used to advertise or inform, any part of the advertising or informative contents of which is visible from any place on the main-traveled way of any portion of an interstate highway or primary highway. “

Sign Regulation

HISTORY OF SIGN REGULATION UNDER WIS. STAT. § 84.30

• Lady Bird Johnson’s Federal Highway Beautification Act of 1965, 23 U.S.C. § 131.

• “[T]o protect the public investment in such highways, to promote the safety and recreational value of public travel, and to preserve natural beauty.” States were asked to make “provision for effective control of the erection and maintenance along the Interstate System and the primary system of outdoor advertising signs, displays and devices.”

Sign RegulationHISTORY OF SIGN REGULATION UNDER WIS. STAT. § 84.30, CONT’D • When Wisconsin enacted the legislation conforming to the federal law in

1972, the Legislature intended Wis. Stat. § 84.30 to be interpreted to comply with the federal requirements.

• The regulatory scheme generally prohibits signs along state highways, with certain exceptions.

• Signs that were lawfully in existence when the 1972 act was passed, but that did not comply with the new regulations, are categorized as “nonconforming.” These “nonconforming” signs were eventually to be removed and just compensation would be paid upon removal.

Sign RegulationHISTORY OF SIGN REGULATION UNDER WIS. STAT. § 84.30, CONT’DHowever, to maintain the compensable status of “nonconforming” signs,

certain conditions have to be satisfied or else the signs lose their compensable “nonconforming” status.

• The sign must have been lawful on March 18, 1972, the date Wis. Stat. § 84.30 took effect;

• The sign must remain substantially the same, and may not be enlarged.• The conditions placed on “nonconforming” signs are consistent with the

conditions applicable to nonconforming uses in general.• Under Wisconsin zoning law, policy favors elimination of the

nonconforming use.

Definitions

ON-PREMISES SIGN – Advertises a business that is conducted on the property. Sign must be located in “immediate vicinity” of the business, i.e., within 50 feet of the area bounded by buildings, driveways and parking areas in which the activity is conducted.

Definitions

OFF-PREMISES SIGN - Sign that is not an on-premises sign.

Definitions CONFORMING SIGN - Note: Only a conforming

sign may be issued a sign permit. A conforming sign “conforms” or satisfies the criteria in Wis. Stat. § 84.30.– The criteria consist of the following: – The sign must be located in a “business area”

and must follow the size, lighting and spacing requirements set forth in the statute.– The sign must have a permit.

Definitions

NONCONFORMING SIGN • Sign that lawfully existed on March 18, 1972

outside of a business area, or• Sign that was lawfully erected after March 18,

1972 that subsequently does not conform to either Wis. Stat. § 84.30 or Wis. Adm. Code ch. Trans 201.

Non-Conforming Sign

Definitions

• BUSINESS AREA - Area zoned for business, industrial or commercial activities. Or not zoned, but must constitute an unzoned commercial or industrial area defined in Wis. Stat. § 84.30(2)(k). In adjacent area of an INTERSTATE, “business areas” are commercial or industrial zones within boundaries of incorporated municipalities, “as those boundaries existed on September 1, 1959.”

Definitions• UNZONED COMMERCIAL OR INDUSTRIAL AREA (§

84.30(2)(k)) - "Unzoned commercial or industrial areas" mean those areas which are not zoned by state or local law, regulation or ordinance, and on which there is located one or more permanent structures devoted to a commercial or industrial activity or on which a commercial or industrial activity is actually conducted whether or not a permanent structure is located thereon, and the area along the highway extending outward 800 feet from and beyond the edge of such activity.

Definitions

GRANDFATHERED SIGN - Sign lawfully existed before March 18, 1972 in a business area that does not conform to the size, spacing or lighting restrictions of Wis. Stat. § 84.30(4).

Definitions

• ILLEGAL SIGN - A sign erected after March 18, 1972, without a permit, a sign that is erected or maintained in a manner that violates any requirement of a permit, Wis. Adm. Code ch. Trans 201, or s. 84.30, Stats., a non-conforming sign that has lost its nonconforming status, or a grandfathered sign that has lost its grandfathered status.

Flow Chart

84.30 (5R)REALIGNING A SIGN THAT CONFORMS TO STATE LAW BUT DOES

NOT CONFORM TO A LOCAL ORDINANCE• Under Wis. Stat. § 84.30(5r) such a sign may be realigned on

the same site.

• If in connection with a highway project DOT proposes to realign a sign on the same site, DOT shall notify the local government that adopted the ordinance that caused the sign to be nonconforming under the local ordinance.

84.30 (5R)

REALIGNING A SIGN THAT CONFORMS TO STATE LAW BUT DOES NOT CONFORM TO A LOCAL ORDINANCE, continued

• Upon notification, local government may either agree to allow realignment, or may petition DOT to acquire the sign and any real property interest of the sign owner.

• If DOT condemns the sign, the local government is responsible for the amount of the condemnation award, minus the amount DOT would have paid to realign the sign rather than condemning it.

Police Power Removal

• Illegal signs may be removed pursuant to Wis. Stat. §84.30 and Ch. Trans 201 without compensation.

• Signs violating local ordinances may be removed by the applicable local government.

Police PowerTop 8 Reasons a Sign May be Illegal

1. Visible from §84.30 controlled highway and erected after March 18, 1972 without a permit.

2. Not built at permitted location.3. Exceeds permitted sign size.4. Encroaches on highway (overhangs the right-of-way)5. Nonconforming sign illegally altered or enlarged.6. Change to message outside of sign’s category. (Message not

consistent with category, such as official sign with commercial advertising message.)

7. Fraud or misrepresentation in the application (such as rezoned to erect signs, or misrepresentation of facts.)

8. Landowner did not authorize.

Considerations when acquiring a parcel with an Off-Premise Sign.

• 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)

• Classifying the Sign Structure– Is the sign a fixture to the real estate owned by the underlying fee

owner? (If so, it is part of the RE)– Or is it personal property that the tenant owns and can remove at

the end of a lease term? (trade fixture)

Twelve Questions to Answer when Impacting Billboards

1. If you see a sign, you have a real estate issue to resolve. Often, neither billboard owners nor landowners record their real estate interests in the register of deeds offices, and therefore, the title report may not reflect whether there is a real estate interest associated with the sign.

Twelve Questions to Answer when Impacting Billboards

2. Identify the owners of the property and sign. Note: Please work with the DOT regional Sign Coordinator to answer them.– DOT Records– County Records– Name listed on billboard structure

3. Verify that the OASIS Sheet information is correct.

Twelve Questions to Answer when Impacting Billboards

4. Identify the legal status and category of the sign: Whether the sign is legal or illegal under state law and whether it is legal or illegal under local ordinance. The possible categories for off-premise signs consist of: conforming, non-conforming or grandfathered to WisDOT and to local governing authorities. Both WisDOT and the local governing authorities need to be checked for legal status and category of billboard.– Start sign research based on the flow chart when the cost estimate

is being completed and before 30% design. This research is for the legal status, sign category and relocation/realignment options.

– Ask PDS to pull in the slope intercept to miss the sign, if possible.

Twelve Questions to Answer when Impacting Billboards

5. Review the sign acquisition flowchart. 6. Review Wis. Stat. § 84.30 (5r) for realignment options.7. Submit a request for OGC help, if there are legal problems

or issues to resolve.8. Order Unit Rule Appraisal / Select a qualified appraiser. This

is done AFTER the issues of legal status are determined, the category of sign identified and realignment or relocation options are identified. Only order an appraisal if the sign is legal and conforming, non-conforming or grandfathered and if the billboard with its sign site must be purchased rather than avoided or realigned.

Twelve Questions to Answer when Impacting Billboards

9. Present the offering package to the land-owner and sign company including the same paperwork and appraisal.– Make sure both parties (fee owner and sign owner )

understand DOT will require a unit rule appraisal for the landowner appraisal and not two separate appraisals that include the land and also one for the sign real estate interests. The fee owner and the sign owner can, if they desire, combine resources to get one appraisal. Note: WisDOT normally pays for one landowner appraisal.

– Make sure both parties understand DOT is not allowed to pay for business value of a billboard, alleged loss of current or future business profits or expectation of lease renewal .

Twelve Questions to Answer when Impacting Billboards

10. Issue the J.O. if negotiations fail and include all parties of interest.– Note: Curt prefers to purchase the sign structure as part of the unit rule acquisition, so

relocating or re-aligning the sign does not interfere with the construction or certification timeline. If the sign structure is relocated or realigned instead of acquired, Curt aims to have this accomplished well before the PS&E.

– When WisDOT does not acquire the sign structure as part of the real property, the Department will reimburse the sign owner for search expenses up to $2,500 and for the actual moving expenses related to the relocation of the structure consistent with Wis. Adm. Code § ADM 92.64. To remove the sign, the Relocation Specialist must send a 90-day notice to vacate the property to the sign owner. If the sign owner removes the sign, the owner has 2 years to file a claim for relocation benefits. If the sign owner does not remove the sign by the date specified in the notice, WisDOT may remove the sign. The sign owner may then file a claim for the depreciated reproduction cost of the sign as determined by WisDOT, or the estimated cost of moving the sign, whichever is less. Alternatively, the sign owner may claim a payment in lieu of actual and reasonable moving costs under ADM 92.64 (5).

– Make sure the sign company is named on the deed and that all acquisition and deed documents have the OGC approved language that describes the billboard real estate interests being acquired.

Twelve Questions to Answer when Impacting Billboards

11. Request that property management remove the sign structure if it is purchased-or- if it has not been removed by the owner by the date identified in the 90-day notice (see ¶ 10).

12. Notify the sign coordinator to insert DOT as the owner of the sign site on the OASIS records. WisDOT owns all right to erect signs on the remainder parcel if such rights were acquired.

Presence of a Billboard Creates a Right in Real Estate

ADAMS OUTDOOR ADVERTISING, LTD. V. CITY OF MADISON, 2006 WI 104.Note: Although Adams addressed a permitted sign, remember that the right to maintain a non-conforming sign that has no permit may constitute a real estate interest so long as the sign has been maintained consistent with law.

• Holding #3: Billboard permits are not tangible personal property. For property tax purposes, billboard permits constitute an interest in real property, as defined by Wis. Stat. § 70.03.

Schedule of

Sign Structures

Does DOT need to condemn both the landlord and the tenant to a billboard lease?

• Yes.• The Wisconsin Supreme court recently approved

WisDOT’s approach to condemning billboard-lease encumbered property in The Lamar Company, LLC v Country Side Restaurant, Inc., 2012 WI 46. – ¶2 Pursuant to its power of eminent domain, the Wisconsin

Department of Transportation (DOT) acquired a 76,628 square foot parcel of land owned by Country Side, a portion of which Country Side leased to the Lamar Company, LLC (Lamar) for the purpose of constructing and maintaining a billboard. As compensation for the taking, the DOT issued to Country Side and Lamar an award of damages totaling $2,000,000.

Countryside Image

Does DOT need to condemn both the landlord and the tenant to a billboard lease?

(Countryside cont.)• COUNTRY SIDE ¶24 • …Consequently, for purposes of condemnation law,

"[i]t is well settled that a lessee has a property interest; and, when that interest is completely taken by a condemning authority, the lessee is entitled to compensation.“

• Moreover, this court has already determined that a billboard permit, which confers a right or privilege to erect and operate a billboard on a designated piece of land, constitutes an interest in real property.

Does DOT need to condemn both the landlord and the tenant to a billboard lease?

(Country Side cont.)• COUNTRY SIDE ¶24 …In this case, it is undisputed that

the DOT took for public use a parcel of land owned by Country Side and was thus required to provide just compensation therefor.

• It is further undisputed:– that since April 1, 2006, Country Side had leased a portion

of its property to Lamar for the purpose of constructing and maintaining a billboard and

– that such billboard was permitted. • Under Wisconsin law, a lessee of more than one year is

considered a joint owner of the leased property.

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.

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.

The End