1. 9 th Annual Educational Conference on the Control of Outdoor Advertising BILLBOARD VALUATION: WHAT'S THE ISSUE? Richard K. O’Grady ODOT – Appraisal Unit Manager

2. 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.

3. 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.

4. 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)

5. Condemnation Appraisal Appraise the entire parcel (including the sign and the land)

6. 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

7. 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)

8. 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.

9. 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)

10. Income Approach cont’d. Capitalizing the income streams from lost rents is also not permissible. (Wray v. Stvartak – 1997)

11. Going Concern Tangible Property –Personal –Real Intangible Property –Reputation –Workforce –Contracts –Copyrights –Patents –Trademarks –Other Assets –Other Income

12. Going Concern Valuation

13. 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)

14. Going Concern Valuation

15. New Publication Publisher:Appraisal Institute Author: Dwain Stoops, MAI (Missouri) Due to be published in September 2006 –Sutte text no longer available

16. Questions? Richard K. O’Grady Ohio Department of Transportation Appraisal Unit Manager (614) 466-5054 rogrady@dot.state.oh.us