Transcript 9TH Annual Educational Conference on the Control of Outdoor

9th Annual Educational Conference
on the
Control of Outdoor Advertising
BILLBOARD VALUATION:
WHAT'S THE ISSUE?
Richard K. O’Grady
ODOT – Appraisal Unit Manager
Ohio’s Highway Beautification Act
• ORC 5516.08 (A)
– The director of transportation, or a state,
county, municipal or other local zoning
authority,
– may order the removal of nonconforming
advertising devices that are lawfully
maintained pursuant to section 5516.07 of the
revised code or under a zoning ordinance or
regulation.
Ohio’s Highway Beautification Act, cont’d.
• If the director or zoning authority and any such
owner of a compensable right or interest under
this section do not reach agreement as to the
amount of compensation to be paid for the
taking of such right or interest, the director or
zoning authority shall institute an action to
appropriate the interest of such person in
accordance with Chapter 163. of the Revised
Code. In any such action, loss of business
shall not be considered an item of
compensable damages.
Ohio Eminent Domain Case Law
• Value of the entire property - Before Take
• Value of the residue property - After Take
• (Atlantic & Great Western Railway v. Campbell 1855)
• Appraiser then may state the value of the
part taken and damages (if any) to the
residue.
• (Masheter v. Kebe – 1973)
Condemnation Appraisal
• Appraise the entire
parcel (including the
sign and the land)
Three Approaches to Value
•
•
•
•
(Pokorny v. Local 310)
Cost of reproducing property less
depreciation
Sales comparison approach, utilizing
recent sales of comparable property
Income or economic approach based
upon capitalization of net income
Cost Approach
• Strength
– Easiest to verify and support
• Weakness
– Difficult to estimate depreciation
– May not reflect appropriate soft costs due to
lack of readily available data in the advertising
industry. (Highly competitive industry – little
sharing of data)
Sales Comparison Approach
Often misused due to sales being reflective
of entire companies or large numbers of
signs in one transaction. Sales are not
comparable.
Misuse of Gross Income Multipliers (GIM)
or Gross Rent Multipliers (GRM) which do
not reflect characteristics similar to the
sign in question.
Income Approach
• Income approach may be considered and
may be relevant however, problems
persist:
– Loss of income is not the appropriate
measure of Fair Market Value
• (Ohio Supreme Court - In re Appropriation of
Easements for Highway Purposes -1963)
Income Approach cont’d.
• Capitalizing the income streams from lost
rents is also not permissible.
• (Wray v. Stvartak – 1997)
Going Concern
• Tangible Property
– Personal
– Real
• Intangible Property
–
–
–
–
–
–
–
–
Reputation
Workforce
Contracts
Copyrights
Patents
Trademarks
Other Assets
Other Income
Going
Concern
Valuation
Going
Concern
Value
Going Concern
• Going concern value may not be taken
into consideration in arriving at the amount
which an owner is entitled to recover in an
appropriation action
• (City of Bellevue v. Stedman – 1939)
Going
Concern
Valuation
Business
Value
(Intangible)
Real
Property
Value
(Tangible)
New Publication
• Publisher:
• Author:
Appraisal Institute
Dwain Stoops, MAI (Missouri)
• Due to be published in September 2006
– Sutte text no longer available
Questions?
Richard K. O’Grady
Ohio Department of Transportation
Appraisal Unit Manager
(614) 466-5054
[email protected]