PENNDOT RPPD Date : April 11, Outdoor Advertising Devices As Personal Property

Transcription

1 PENNDOT COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF TRANSPORTATION OFFICE OF CHIEF COUNSEL REAL PROPERTY DmsloN POST OFFICE Box 8212 HARRISBURG, PA TELEPHONE: (717) FACSIMILE : (717) GovERNon's Ornce of GENERAL COUNSEL RPPD Date : April 11, 2005 Subject: To : From : Outdoor Advertising Devices As Personal Property ALL RIGHT OF WAY ADMINISTRATORS CHIEF, UTILITIES AND RIGHT OF WAY ALL ASSISTANT DISTRICT ENGINEERS FOR DESIGN ALL ASSISTANT DISTRICT ENGINEERS FOR SERVICES ALL ASSISTANT COUNSEL--REGIONAL OFFICES ALL ASSISTANT COUNSEL--REAL PROPERTY DIVISION William J. Cressler M Assistant Chief Counsel ~JAJ C~ Attached please find Strike-Off Letter , entitled "New Outdoor Advertising Device (OAD) Acquisition/Relocation Procedures." The new procedures are set forth in the Right of Way Manual at Section 3.03N (Acquisition; Billboards ; p. 3-27), Section 4.05K (Relocation Assistance ; Relocation of Billboards ; p. 4-77), and Section J15 of Appendix A, the Appraisal Guide, p. A-31. Copies of these sections are attached hereto.' The new procedures arise from two cases decided by the Commonwealth Court : In re Right of Way for State Route 0060 (Patrick Media Group), 720 A.2d 154 (Cmwlth. Ct. 1998), and Morgan Signs, Inc. v. Department of Transportation, 723 A.2d 1096 (Cmwlth. Ct. 1999). In both cases, the owners argued the advertising devices were realty and sought substantial compensation based on a revenue multiplier approach. The Department successfully argued that the devices were personal property and compensation for the sign itself should be based on the reproduction cost approach.' ' The Right of Way Manual can be accessed on the P Drive, at PennDOT Shared, ROW Manual. 2 A tenant owner may also be entitled to bonus value for its leasehold interest as explained in Section 315b of the Appraisal Guide. See Pittsburgh Outdoor Advertising Corporation Appeal, 440 Pa. 321, 272 A.2d 163 (1970) ; and Patrick Media Group, 720 A.2d at 157. The sign owner is a displaced person under the Eminent Domain Code because they are a person who moves from real property or moves his personal property from real property as a direct result of a written notice of intent to acquire or the acquisition of COMMONWEALTH KEYSTONE BUILDING 9' FLOOR-400 NORTH STREET HARRISBURG, PA

2 RPPD Outdoor Advertising Devices As Personal Property Both Patrick and Morgan Signs involved billboards owned by a tenant. The new procedures, however, are not limited to only tenant-owned billboards. They apply to all outdoor advertising devices, which are defined as both on-premise and off premise outdoor advertising devices. Of course, while an on-premise device is one which advertises activities conducted on the property on which it is located, an off premise device is one which advertises activities not conducted on the property on which it is located. 36 P.S ' The procedures allow exceptions with the approval of the Office of - Chief Counsel. Right of Way Manual, Section 3.03N3. Treating a sign as realty may be appropriate for those not owned by a tenant, based on the application of fixture law to the particular facts involved. Such a request should be made in accordance with the procedure set forth in Section 1.04 of the Right of Way Manual. That is, the request should be made to the Chief, Utilities and Right of Way, who will then forward it to this Office as appropriate. Such a request should be made as part of the appraisal problem analysis process. Pictures of the sign and a full explanation of the situation should be supplied. Details on ownership, a copy of any lease, how the sign is affixed to the land, and whether it can be moved without injury to it and/or the land would be appropriate.` This Office will expedite such inquiries upon request. Please note that the Commonwealth Court determined in both Patrick and Morgan Signs that the treatment of advertising devices as personal property was not dependent upon whether the device could be relocated. Please also note that these decisions are not over-ruled by the recent Commonwealth Court decision that a cellular phone tower was realty for tax purposes. Shenandoah Mobile Company v. Dauphin County Board of Assessment Appeals, 2005 Pa. Commw. LEXIS 43 (Pa. Cmwlth. 2005). A footnote in that decision indicated that a seemingly opposite decision in a tort case had nothing to do with tax law and was therefore non apropos. Id. at *IS n6. Likewise, the decision in the tax case is not controlling in an eminent domain case. such real property. 26 P.S (8). For this reason, the sign owner should be supplied information on the availability of benefits similar to those provided to other displaced persons. 37 Pa. Code Also, as with other businesses that are displaced, sign owners are to be provided current and continuing information on the availability, purchase prices, and rental costs of suitable properties and locations for relocation, and are to be assisted in obtaining and becoming established in a suitable replacement location. 49 CFR (cX2Xiii). Care must be taken that any replacement site identified by the Department or for which moving costs are paid is in conformance with the requirements of the Outdoor Advertising Control Act. 36 P.S et seq. 3 The procedures use the term billboard, which implies it may only apply to off premise devices. However, the applicability statement for the procedures makes it clear that it applies to both on-premise and off premise signs. Right of Way Manual, Section 4.05K1. Future revisions to the Right of Way Manual will better reflect that the procedures are applicable to all signs. 4 Of course, if the assembled economic unit doctrine applies, the sign will become part of the realty on that basis. She generally Right of Way Manual, Section 2.19E, setting forth the procedures that are to be used in all claims involving the relocation of a business to determine whether the doctrine applies. 2

3 RPPD Outdoor Advertising Devices As Personal Property Under the procedures, a sign owner is in a position very similar to the owner of any other personal property. In addition to moving costs, the owner is entitled to actual reasonable search costs, actual reasonable reestablishment expenses up to $10,000.00, and an appraisal, engineering and attorney fee payment up to $ P.S A(a), (b)(3) and (4), and See generally 49 CFR and (showing the difference between moving costs and reestablishment expenses). If he chooses not to move the device because it cannot be moved without substantially destroying or diminishing its value, whether because of the unavailability of a comparable site for relocation or otherwise, the owner is entitled to the greater of the cost which would have been required to move it and its value in place (based on the reproduction cost approach). 26 P.S A(b)(1). Some claimants would also be eligible to elect the payment up to $20, based on tax returns in lieu of moving and other relocation payments. 26 P.S A(bX5). However, this in lieu of payment is not an option if the advertising device is owned by a company in the business of erecting and maintaining such devices. 26 P.S (definition of "Business").' Because the devices are personal property, the owner does not have the option of having the Department purchase the device and still retaining it at a retention value. The section of the Eminent Domain Code providing for such retention of machinery, equipment or fixtures only applies if it forms part of the real estate. 26 P.S As with other items of personal property, the owner can elect either to retain the device and obtain the benefits afforded in that regard (i.e. moving costs, etc.), or choose to abandon it and obtain the benefits afforded in that regard (i.e. the greater of the cost to move or the value in place). If the owner refuses to move or deliver possession of the sign in a timely manner, the Department should request the Office of Chief Counsel to seek a writ of possession. Right of Way Manual, Section 3.03N8.' Thank you for your consideration of this memorandum. Please contact me if you have any questions. Cc: Andrew S. Gordon, Chief Counsel Andrew H. Cline, Deputy Chief Counsel M.G. Patel, P.E., Chief Engineer Dean A. Schreiber, P.E., Director, Bureau of Highway Design Philip F. Grow, R/W Acquisition, Utilities and Right of Way Carol Myers, R/W Appraisal, Utilities and Right of Way Daniel Seitz, Federal Highway Administration Richard H. Harris, Jr., Director, Operations Review Group Jenny Righter, Division Chief, Internal Review Division, Comptroller's Office s Although the definition of business also excludes advertising device companies from receiving search costs, the Department does so to be consistent with Federal law. ee 49 CFR (aXI3). 6 A declaration of taking will still be necessary where an amicable acquisition is not achieved in order to take the leasehold interest of the sign owner, similar to any non-amicable tenant situation. Care must be taken by the Department to insure there is a legitimate engineering reason for taking land upon which a sign is located. See Right of Way Manual, Section 3.03N6 and 7. See also, Right of Way Manual, Section 3.10C (procedures for requesting writ of possession). 3

4 OS400 (3-89) COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF TRANSPORTATION DATE: March 24, SUBJECT: TO: New Outdoor Advertising Devices (OAD) Acquisition/Relocation Procedures All District Executives FROM : Gary L. Hoffman, P.E. /s/ Deputy Secretary Highway Administration This strike-off letter describes new policies and procedures for the acquisition or relocation of outdoor advertising devices (OAD's). The new policies apply to all OAD's including on-premise signs, off-premise signs and billboards acquired under the highway acquisition program after the date of this letter. Overview: Under Pennsylvania law, OAD's are presumed to be personal property. Therefore, an OAD owner will be considered to be a non-residential displaced person who is eligible for the relocation assistance and payments available to a displaced business. Generally, an OAD owner will be given the opportunity to move the OAD and be paid a moving cost payment or to abandon the OAD in place and be paid a tangible personal property loss payment. An OAD owner may also receive a searching cost payment (even if the search was unsuccessful) and an appraisal, engineering and attorney fee payment. If the owner elects to move the sign, he is also eligible for a business reestablishment payment. In addition to information required in the standard portfolio provided to claimants, RW-592 (Notice of Relocation Eligibility) and the updated Bulletin 47 containing Chapter 12 must be included. Additionally, RW-590B (Advance Notice of Move Date Billboard) and RW-591 B (Notice to Vacate, Move/Abandon Billboard) must be sent before seeking a writ of possession or authorizing a contractor to remove an OAD. Payment Options : The offer is handled as part of the relocation presentation. The OAD owner can choose to be paid the greater of the "fair market value in place" or the moving cost. If they chose the personal property loss payment, the OAD cannot be retained. Two new cost functions for OAD personal property loss and moving costs are listed below : Cost Function Description 1179 OAD Personal Property Loss 1180 OAD Moving Costs

5 New Outdoor Advertising Devices (OAD) Acquisition/Relocation Procedures Page 2 Appraisal Issues : Previously, OAD's were valued as real estate and included in the fair market value. Because OAD's are now considered personal property, they must NOT be included in the fair market value unless an exception is granted by the Office of Chief Counsel. As personal property, they should be separately valued using the procedures described in Section 2.22 of the Right of Way (ROW) Manual. In all cases, the reproduction cost approach is the only acceptable method of appraisal for an OAD in accordance with Pennsylvania law. The Appraisal Problem Analysis should direct the appraiser to separately value the OAD or obtain a machinery and equipment valuation report. Section J.14 of the Appraisal Guide incorrectly states that advertising devices should be valued as part of the real estate. OAD's should be separately valued as personal property consistent with the revised ROW Manual provisions and this letter. The error in Section J.14 will be corrected with the next revision of the ROW Manual. Sources of Information : The above discussion represents a brief summary of changes to existing policy. Refer to the Right of Way Manual for a detailed discussion of procedures. Relocation benefits and payments as they pertain to OAD's are outlined in Chapter 4 of the ROW Manual, Section 4.05K, while acquisition procedures can be found in Chapter 3, Section 3.03N. In both sections, exceptions and non-applicability of this policy to certain OAD's are addressed. Appraisal issues specific to OAD valuation can be found in Section J.15 of the Appraisal Guide. A new Section 12 has been created to augment Publication 47, Bulletin 47. The revised Bulletin 47 should be given to every OAD owner and is available at P :\penndot shared\row Bulletin 47\Bulletin 47.pdf. Bulletin 47 will be published and distributed to the Districts shortly. The updated ROW Manual along with forms RW-590B, RW-591 B, and RW-592 are located on the shared drive at P :\penndot shared\row Manual\ROW Manual. Please contact Phil Grow at (717) or at phqrow(&.state.[)a.us if you have any questions.

6 New Outdoor Advertising Devices (OAD) Acquisition/Relocation Procedures Page /PFG/bjg cc : G. L. Hoffman, P.E., 8th Floor - CKB M. G. Patel, P. E., 8th Floor - CKB E. Madden, Policy Director, 8th Floor - CKB T. Ferguson, P.E., 7th Floor - CKB R. M. Peda, P. E. 6th Floor - CKB R. C. Reed, P.E., 6th Floor - CKB D. A. Schreiber, P.E., 7th Floor - CKB Bureau of Design Division/Section Chiefs William J. Cressler, Legal, 9th Floor - CKB L. Toaso, ADE - Design - District 6-0 All Assistant District Engineers - Design All District Right-of-Way Administrators Right-of-Way Section Chiefs J. A. Cheatham, P.E., FHWA K. Linville, 7th Floor - CKB Penny Frey, Bureau of Office Services, 5 t Floor - CKB

7 Chapter 3-Acquisitions Publication 378 A deed of dedication, including title certification, is prepared and executed by the dedicating agency. The deed is submitted to the Office of Chief Counsel for approval. The plan should accompany the deed. After approval, the deed is returned to the District for recording at the county courthouse. 1, Unknown and Unlocatable Owners. If the name of the owner of an affected parcel cannot be determined after a careful and diligent search of all available public records (register of deeds, prothonotary's office, or county and municipal tax offices) the parcel is considered to be owned by an "unknown owner." An owner who has been identified through a check of the public records but whose whereabouts are unknown is an "unlocatable owner." In either case, the District must file a Declaration of Taking, provide proper notice of the Declaration of Taking and deposit estimated just compensation into court, regardless of the amount, at the earliest possible date. M. Special Terms of Settlement. In addition to the fair market value of acquired real property, special settlement term are sometimes negotiated with a property owner. Examples could include a property owner wanting to keep wood from a tree that is moved from the right-of-way, to leave existing shrubbery in place or to remove existing shrubbery or special fencing requirements. Special terms of this kind are an acceptable part of a settlement with a property owner as long as they do not interfere with the construction of a project. When a special settlement term of this kind is agreed upon with a property owner, it is extremely important that the District Right-of-Way Unit notify the District Construction and/or Utility Units of the special item. Therefore, when a special settlement term is negotiated with a property owner, the District Right-of-Way Unit will send written notification to the District Construction and/or Utility Unit so that they can instruct the highway contractor and utility companies of the special term and can properly follow through with it. N. Billboards 1. General The following outlines the Department's policies with regard to billboards which are in the required right-ofway or other areas to be acquired as a part of a highway project. It explains that billboards, for the most part, will be considered to be personal property and will be eligible for relocation benefits and payments. It gives the exceptions to this policy, and explains what to do in those cases. It also discusses declaration of takings, possession and removal procedures as they apply to billboards. 2. Billboards as Personal Property Under Pennsylvania Law billboards are presumed to be personal property. Since billboards are personal property, a billboard owner will be considered to be a non-residential displaced person who is eligible for the relocation assistance and payments available to a displaced business. Generally, a billboard owner will be given the opportunity to move the billboard and be paid a moving cost payment or to abandon the billboard in place and be paid a tangible personal property loss payment. A billboard owner may also receive a business reestablishment payment, a searching cost payment, and an appraisal, engineering and attorney fee payment. In addition to relocation benefits, the owner of a billboard on land that is leased may be entitled to a leasehold interest payment. See below. Relocation benefits and payments as they pertain to billboards are outlined in Chapter 4, Section 4.05 K, Relocation of Billboards. 3. Acquisition of Billboards 3-2 7

8 Chapter 3-Acquisitions Publication 378 Billboards will not normally be acquired as real property. If a District wants to acquire a billboard as real property, they must first obtain a written legal opinion from the Office of Chief Counsel. The District must follow the procedures for obtaining a legal opinion as outlined in Section 1.04 of Chapter I of this Manual. In those instances where acquisition as real property is approved, the fair market value of the billboard will be determined and included in the fair market value offer. If the billboard is owned by a tenant on the land, it will be considered to be a tenant-owned improvement and those procedures will apply. Refer to Section 3.03 E of this Chapter. In addition, the owner of a billboard on land that is leased may be entitled to a leasehold interest payment. See below. 4. Exceptions ; The Highway Beautification Program and Illegal Billboards The provisions of this Section do not apply to nonconforming Billboards acquired under the Highway Beautification Program using the Outdoor Advertising Control Act 160 of 1971 (OAC Act). See the Highway Beautification Manual. The provisions of this Section also donot apply to Billboards that are considered to be illegal because the owner of the billboard has no legal relationship with the property owner or because the owner is required to have a permit from the Department but does not. A billboard owner that has no legal relationship with the owner of the property upon which the billboard is located has no legally recognized property interest in the property, and is therefore not a condemnee under the Eminent Domain Code. Such a billboard owner is thus not entitled to compensation when the land upon which the billboard is situated is acquired. Moreover, such a billboard owner is also not a displaced person entitled to relocation benefits. The billboard owner only has a right to move the billboard from the property at its own expense. The owner of a billboard that is located within the Department's legal right of way is in a similar position as the owner of a billboard on private land without any legal relationship with the landowner. That is, the owner is not entitled to compensation if required to move the billboard as the result of a project and is not a displaced person entitled to relocation benefits. The Department may allow the owner to remove the billboard from the property at its own expense, or may remove it with or without notice to the persons responsible for placing the sign. The owner of a billboard located outside the legal right-of-way that is required to have a permit from the Department under the OAC Act, but does not, may still be entitled to compensation for its leasehold interest (see Leasehold Interest Payment below) when the land is acquired for a project. See general ly The Appraisal Guide, Section 115, "Billboards and Land with a Highest and Best Use of Billboard Placement." The owner will also be a displaced person if required to move the billboard as a result of the acquisition of the land upon which it is located. However, the Department can avoid this result if the owner is required to remove the illegal billboard pursuant to the authority granted by Section 10 of the OAC Act. Removal of prohibited advertising devices under the OAC Act is an exercise of the Department's police power, not its power of eminent domain. 5. Leasehold Interest Payment It is important to note that the owner of a billboard on property that is leased may be entitled to compensation for the taking of the leasehold based on bonus value. This is a real property interest to be dealt with as part of the real estate claim like any other leasehold interest. That is, the property is to be valued as if owned by one owner, and then the value of the leasehold interest allocated to the tenant and the remainder of the damages allocated to the landlord, See generally The Appraisal Guide, Section 315. The offer and payment to the billboard owner for its leasehold interest would be a real estate (fair market value) damage payment separate and apart from relocation payments for the sign as discussed in Chapter 4, Section 4.05 K. 6. Declarations of Taking Declarations of taking will still be necessary if an amicable acquisition cannot be achieved even though billboards themselves are treated as personalty. The declaration will be required to take the leasehold interest 3-2 8

9 Chapter 3-A cquisitions Publication 378 of the billboard owner. The billboard owner should be designated on the declaration of taking as "tenant", just like any other leasehold owner whose interest is being taken. 7. Extent of Taking A condemnor is given discretion to determine the amount of land required for public projects. That discretion can be reviewed through the filing of preliminary objections to a taking, however, to determine whether fraud, bad faith, or an abuse of discretion exits. In this regard, a condemnor may not appropriate a greater amount of property than is reasonably required for the contemplated public purpose. The Department must be careful not to take more land than necessary in all projects. Special care, however, must be taken in this regard when billboards are being displaced. Billboard owners have not hesitated to file preliminary objections challenging takings as excessive. The Department must have a legitimate engineering reason for the location of right of way lines in all cases, especially those displacing billboards. In no event should there even be an appearance that a right of way line was located for the purpose of eliminating a billboard. 8. Possession and/or Removal of Billboards A billboard owner is a condemnee because it is the owner of a property interest taken, i.e. the land itself or a leasehold. After the expiration of the time for filing preliminary objections has passed, the Department, as the condemnor, is entitled to possession upon payment of estimated just compensation. If the owner refuses to deliver possession, the Department may flea rule to show cause why a writ of possession should not issue. The Court may issue a writ of possession on such terms as the court may direct unless preliminary objections are pending. This applies to tenant-owned billboards as well as billboards owned by the landowner. The above applies even though the billboard is treated as personalty. Before seeking a writ of possession or authorizing a contractor to remove a billboard, the owner must have been given an Advance Notice of Move Date Billboard, RW-590, and a Notice to Vacate, Move/Abandon Billboard, RW-591 B, including a reasonable amount of time to select the option to either move or abandon the billboard. If the owner refuses to select an option, the file must be fully documented prior to seeking a writ of possession ADMINISTRATIVE SETTLEMENTS A. General Policy. It is the policy of the Department that every reasonable effort should be made to acquire real property expeditiously by negotiation. This includes the use of administrative settlements as long as they are reasonable, prudent and in the public interest. B. Authority to Approve Settlements 1 Rescinding Approval Authority. The District Right-of-Way Administrator has the authority to approve administrative settlements where the total acquisition cost is $50,000 or less. On claims where the total acquisition cost is more than $50,000, the District Right-of-Way Administrator and the District Executive together may approve an administrative settlement On claims where the total acquisition cost is more than $250,000 and the amount of the administrative increase is more than 15%, the written concurrence of the Deputy Secretary for Highway Administration, in addition to the signatures of the District Right-of-Way Administrator and District Executive, is necessary. The Central Office Acquisition Unit will review administrative settlements made by the Districts. This review will be conducted as a part of their quality assurance function and will be after the fact. Members of the unit will also be available to provide before the fact functional advice and guidance on proposed settlements as requested by the Districts. If the Chief, Utilities and Right-of-Way Section, determines that a District has developed a pattern of approving settlements that are not, in his opinion, reasonable, prudent or in the public interest, he may inform the District that further administrative settlements are subject to his review and approval before they are made. This restriction on the District approval of settlements will remain in effect until lifted by the Chief, Utilities and Right-of-Way Section. 3-29

10 Chapter 4-Rdocatlon Assismace Publication 378 Form RW-540 (original and two copies) will be utilized to process the claim for payment, accompanied by an itemized, receipted bill from the appraiser, engineer or attorney. The District may not require the claimant to give a copy of the appraisal to the Department as a condition for.payment.. Increased Mortgage Costs 1. General Whenever the acquisition of a property results in the termination of an installment purchase contract, mortgage or other evidence of debt on the acquired property, thereby necessitating an installment purchase contract, mortgage or other evidence of debt on the property purchased for the same use as the acquired property, the owner will be compensated for any increased interest and other debt service costs which he or she is required to pay in financing the acquisition of the replacement property. 2. Eligibility Requirements The acquired property must have been subject to an installment purchase contract or encumbered by a bona fide mortgage or other evidence of debt secured by the property that was a valid lien on the property for not less than 180 days prior to the initiation of negotiations for the acquisition of such property. Note : Initiation of negotiation is the does not apviv to this payment. only key date ; the date of a notice of intent to acquire or order to vacate 3. Computation of the Payment by the Central Office Because of the complexities involved in computing the amount for which the business is eligible, the District will submit the required information to the Central Office. The amount for payment will be computed by Central Office, and the District will be informed of the amount of reimbursable increased interest costs. K. Relocation of Billboards 1. Applicability Under Pennsylvania Law billboards are presumed to be personal property. Since billboards are personal property, a billboard owner will be considered to be a non-residential displaced person who is eligible for the relocation assistance and payments available to a displaced business. The provisions of this Section apply to billboards that must be relocated because they are in the required rightof-way or other areas to be acquired as a part of a highway improvement project. Primarily this applies to tenant-owner billboards. It would also apply to advertising billboards owned by the landowner and on-premise billboards that are a part of an on site business. 2. Non-Applicability The provisions of this Section do not avnly to the following : a. Billboards that are considered to be illegal because the owner of the billboard has no legal relationship with the property owner or because the owner is required to have a permit pursuant to the Outdoor Advertising Control Act 160 of 1971 (OAC Act) from the Department but does not. b. The owner of a billboard that is located within the Department's legal right-of-way without any legal relationship or permit from the Department. c. Non-conforming billboards acquired under the Highway Beautification Program using the OAC Act. See the Highway Beautification Manual. d. Billboards that are acquired as real property as approved by the Office of Chief Counsel as an exception to the personal property policy. Refer to Chapter 3 ; Section 3.03.N, Acquisitions of Billboards

11 Chapter 4-Relocation Assistance Publication 37$ 3. Relocation Assistance Billboard owners are to be provided with information regarding the availability of relocation benefits and payments. They are also to be provided with other, required notices. See Relocation Notices, below. Billboard owners are to be provided current and continuing information on the availability, purchase price, and/or rental costs of suitable properties and locations for relocation and are to be assisted in obtaining and becoming established in a suitable replacement location. Care should -be taken to insure that any replacement site identified as available by the Department, or for which moving costs are paid, is in conformance with the requirements of the OAC Act and local zoning regulations. Although replacement sites may be difficult to identify due to zoning restrictions on the location of billboards, in accordance with Pennsylvania case law, the lack of a suitable replacement site does not change a billboards' designation as personal property. 4. Relocation Notices General Information Notice, Publication 47 Refer to Section 4.02.H.1. A new section 12 added to Publication 47, Bulletin 47 - A General Guide to the Relocation Assistance Program of the Pennsylvania Department of Transportation, has been prepared and is to be given to every billboard owner until such time as the information is included in Bulletin 47 itself. Notice of Relocation Eligibility, RW-592 Refer to Section 4.02.H.3. This notice must be given to every billboard owner on (or within 15 days of) the initiation of negotiations for the parcel depending upon the billboard owners status as an owner or tenant of the land. Advance Notice to Move Date Billboard, RW-590B and Notice to Vacate Billboard, RW-591 B Refer to Section 4.08 B I and 2. The RW-590B, Advance Notice to Move Date - Billboard, is given to every billboard owner at or around the time of the fair market value offer for the parcel in order to fulfill the Departments' responsibility to give at least 90-days notice of the earliest date by which they need to move or, in the case of a billboard, move their personal property. The RW-591 B, Notice to Vacate - Billboard, is given to the billboard owner toward the end of the acquisition phase of a project when actual possession is required for clearance of the project. The RW-591 B states the date that the property is needed. The Notice states that the owner must inform the Department by the date possession is needed of the owners' choice of the option to either move or abandon the billboard and that, if the owner refuses to choose an option, the Department will presume that the billboard is abandoned, will remove it and pay the owner a tangible personal property loss payment. If the owner is unresponsive to these notices, see Section 3.03.N, Possession and/or Removal. 5. Relocation Payments a. General Option The owner of a billboard affected by a transportation project may choose to move the billboard and receive a moving cost payment or choose to abandon the billboard in place and receive a tangible personal property loss payment

12 Chapter 4-Relocation Assistance Publication 378 If the owner moves the billboard, in addition to the moving cost payment the owner may also receive a business reestablishment payment to a maximum of $10,000.00, a searching cost payment to a maximum of S 1, and an appraisal, engineering and attorney fee payment to a maximum of $ if the owner abandons the billboard in place, in addition to the tangible personal property loss payment the owner may also receive a searching cost payment to a maximum of $1, (even though the search was unsuccessful) and an appraisal, engineering and attorney fee payment to a maximum of $ b. Moving Cost Payment General procedures for this payment are found in Section 4.05.D. The moving cost payment is made to reimburse the owner of a billboard for the actual, reasonable costs to disassemble, move, reassemble and erect the billboard at a new location. The Department will obtain moving cost estimates or make a moving cost finding and advise the owner of the appropriate amount. The owner may then choose to hire someone to perform the move or perform a self-move. Eligible costs are listed in Section 4.05.D.2 Cost function 1180, Outdoor Advertising Device Moving Cost Payment, will be used when making this payment. c. Tangible Personal Property Loss Payment General procedures for this payment are found in Section 4.05 E. The tangible personal property loss payment is made to reimburse the owner for the loss of the billboard after giving possession of the billboard to the Department. The payment will be based upon the greater of the estimated cost to move the billboard (see above) or the value in place of the billboard as determined by the Departments valuation expert. The value in place will be determined in accordance with the Departments' valuation policy. See Appraisal Guide and Chapter The owner will be advised of the appropriate amount, which is the greater of the moving cost or value in place. In order to qualify for this payment, the owner must turn possession of the billboard over to the Department Cost function 1179, Outdoor Advertising Device Tangible Personal Property Loss Payment, will be used when making this payment. d. Business Reestablishment Payment General procedures for this payment are found in Section This payment, to a maximum of $10,000, is reimbursement of actual, reasonable expenses incurred in establishing the billboard at a new site. Eligible costs are listed in Section Note that in the future many of the items that are currently eligible for reimbursement under the business reestablishment payment will be transferred and will become items eligible for reimbursement under the moving cost payment. This transfer will take place with the implementation of the revisions to the Federal Uniform Act regulations. The effect of this change will take the items out from under the $10, cap on business reestablishment e. Searching Cost Payment. General procedures for this payment are found in Section 4.05.F. This payment is subject to a maximum of $1, for reimbursement of actual, reasonable expenses incurred in searching for a replacement site. f. Appraisal, Engineering and Attorney Fee Payment 4-79

13 Chapter 4-Relocation Assistance Publication 378 General procedures for this payment are found in Section This payment is for reimbursement of an amount up to $ toward reasonable expenses actually incurred for appraisal, engineering and attorney fees. Owners of Billboards ARE NOT ELIGIBLE to receive the alternative business allowance payment RELOCATION ASSISTANCE A. General 1. The relocation assistance advisory services program will be carried out so that relocatees will receive uniform and consistent services and payments regardless of race, color, religion, sex, or national origin. The services required herein are intended, at a minimum, to assist relocatees in relocating to decent, safe, and sanitary housing that meets their needs. The services shall be provided by personal contact, except, if such personal contact cannot be made, the District will document the file to show that reasonable efforts were made to achieve the personal contact. 2. Eligibility Relocation assistance advisory services will be offered to: Any person who meets the definition of a displaced person. Any person occupying property immediately adjacent to the real property acquired when the Department determines that such person or persons are caused substantial economic injury because of the acquisition. Any person who, because of the acquisition of real property used for a business or farm operation, moves from other real property used for a dwelling, or moves personal property from such other real property. Relocation Offices 1. District Office The District should maintain personal contact and exchange information with other agencies rendering services useful to displaced persons. Such agencies are to include,, but not be limited to: social welfare agencies, urban renewal agencies,-redevelopment authorities, public housing authorities, federal Housing Administration, Veterans Administration, Small Business Administration, Farmer's Home Administration, Department of Community Affairs and local chambers of commerce, and Department of Housing and Urban Development. Personal contact should also be maintained with local sources of information on replacement properties, including private listings, real estate brokers, property managers, apartment owners and operators and home building contractors. Subscriptions will be obtained (where possible) for multiple listing services, apartment directory services, neighborhood and metropolitan newspapers, and other local sources. The District should coordinate its relocation activities with other displacing agencies to the greatest extent practical. Contact should be maintained with the Department of Housing and Urban Development and Veterans Administration relative to properties owned by them that may be available for sale. 2. Project Site Office a. Establishment of a Site Office The need for the establishing a site office to service the relocatee located on a project will be determined on a project-by-project basis by the District Right-of-Way Administrator. An adequate sign, visible to the public, stating "Department of Transportation Relocation Assistance Office" will identify all project site 4-8 0

14 Appendix A -Appraisal Guide Publication 378 Present Value of $2,000 is computed to $7,600 Before Value of Property $90,000 Lessee's Interest $7,600 Lessor's Interest (Difference) $82,400 After Economic Rent $8,500 yr. Contract Rent $8.000 yr. (Difference) $ 500 yr. Present Value of S500 Discounted at 10% S2,000 The After Value Breakdown is as follows : After Value of Property $77,000 Lessee's Interest S2,000 Lessor's Interest (Difference) $75,000 Lessor's Interest would be Before $82,400 After $ Damages $7,400 Lessee's Interest would be Before $7,600 After $2,000 Damages $5,600 Page 28 in the Appraisal Report would show Total Damages $13,000 Landowner (Lessor) $7.400 Leaseholder (Lessee) $5, Tenant-Owned Improvements Appraising real estate improved with structures, M&E or advertising devices takes into consideration the contributory value of all improvements, whether property of the land owner or a lessee. Fair Market Value will include all rights, title, and interest to the property-land and all improvements, fee-owned and tenant-owned as an entirety. The appraiser must make an allocation of damages between the property owner and the tenant based upon the ownership of the affected improvements. This policy complies with Title 49 CFR, Part 24, Subpart B, Section of the Uniform Relocation Assistance and Real Property Acquisition Act as amended, also known as the Uniform Act. 15. Billboards and Land with a Highest and Best of Billboard Placement In General There are fundamental differences between valuation of land having a highest and best use of billboard placement, valuation of the leasehold if there is a lease for a billboard, and valuation of billboards themselves. b. Leasehold Interest to be Valued on Bonus Value Basis When a tenant owns the billboard, there are two elements for consideration : the leasehold interest of the billboard owner in the land taken and the billboard itself. Billboard leases are no different than other leases. That is, where a leasehold is taken in its entirety, just compensation is the difference between the fair rental value of the leased premises and the rent actually reserved in the lease. The value of this differential is referred to as the "bonus value" of the lease."' A- 3 1

15 Appendix A-Appraisal Guide Publication 378 No matter how the billboard itself is treated (personalty or realty), the owner of a billboard lease may be entitled to compensation for the taking of the leasehold based on bonus value. This is a real property interest to be dealt with as part of the real estate claim like any other leasehold interest. That is, the property is to be valued as if owned by one owner, and then the value of the leasehold interest allocated to the tenant and the remainder of the damages to the landlord. c. Billboards are Presumed to be Personal Property and Valued by the Cost Approach Billboards themselves are presumed to be personal property (a trade fixture) under Pennsylvania law. Therefore, their value is not to be included in the fair market value determination for the property. Rather, the billboard owner is entitled to moving and related expenses. However, because the owner may elect to receive actual direct losses with reference to personal property, an appraiser may be directed to determine the value in place of a billboard. If this is part of an assignment, the Appraisal Problem Analysis will so indicate. The following concepts on the value in place of a billboard apply whether the billboard is owned by the landowner or a tenant. They also apply even if the billboard owner is not able to find a suitable replacement site due to zoning restrictions. Consistent with general eminent domain law, income flow evidence is inadmissible in determining the value of either the leasehold interest of a billboard owner or the value of the billboard itself. Approaches to value based on the income derived from the sale of advertising on a billboard are thus not permissible. They must be valued on the basis of their fair market value as severed from the real estate. The reproduction cost approach to value is the only acceptable method of appraisal for the billboard in accordance with Pennsylvania law. This is true even if a billboard would be considered realty. d. Land with a Highest and Best Use of Billboard Placement Valuing land upon which a billboard is or could be located is different than valuing the leasehold interest of a tenant or the billboard itself. A traditional income approach is permissible when valuing land with a highest and best use of billboard placement. That is, an appraiser may capitalize the net rental or reasonable net rental value of the condemned property. Of course, even in this situation, the rent being capitalized may not be based on the income or profits from the sale of space on the billboard itself, but is the rent paid (or economic rent that would be payable) by a sign company for renting the land. As with other types of property, the fact that the traditional income approach is permissible does not preclude use of a sales comparison approach or mean that the income approach is required or appropriate in any given situation. The exception permitted by the Eminent Domain Code allowing capitalization of reasonable net rental values customarily determined by a percentage or other measurable portion of gross sales or gross income of a business which may be reasonably conducted on the condemned property is not applicable to land having a highest and best use of billboard placement. There is insufficient evidence that net rental values for billboard land are customarily determined in this manner. SECTION NUMBERS 16 THROUGH 31 ARE RESERVED FOR FUTURE USE K. SUMMARY These guidelines are issued for the aid. of all persons associated with right-of-way acquisition under jurisdiction of the Commonwealth. Their purpose is to demonstrate the level of competency expected and the procedures that must be followed before appraisals are accepted by the Department. L GLOSSARY Abandonment-Transfer of a state highway facility for continued use by a lesser public authority. Abutter's Riahts - The right of one owner in the property of another by virtue of sharing a common property line ; as an example: right of access. A- 3 2