One for you just compensation mavens. In City of Wichita v. Denton, No. 97952 (Kan. Jan. 4, 2013), the Kansas Supreme Court held that the city owed no compensation for the value of a billboard or the advertising income it produced for its owner when the city condemned the land on which the billboard was located. The court concluded that as a matter of law, the billboard was the personal property of its owner, not part of the taken land, and thus not a compensable item, and evidence of its value must be withheld from the jury.
The court started with the "undivided fee" rule (aka the "unit rule"), under which the court values the property taken as if it were owned by a single entity, even though it is not (more on that here).
Because the current case is an appeal from the valuation stage of the eminent domain proceedings, we are not concerned with the compensation that is specifically due Denton or Clear Channel, but rather with the value of the entire tract taken. For this reason, we treat the land as if it were held in a single ownership and do not differentiate between Denton's or Clear Channel's interests for valuation purposes. See Phillips Petroleum Co., 205 Kan. at 247. Our sole concern is whether the district court was correct in ruling as a matter of law that the appraisers' award provided just compensation for the tract of land taken in this condemnation action. See K.S.A. 2011 Supp. 26-508(a); K.S.A. 26-513(a), (b). We conclude that the district court was correct in concluding that the billboard structure was a noncompensable item and that evidence of the billboard and its advertising income must be excluded. We therefore affirm the district court.
Slip op. at 14 (emphasis original).
We won't go into great detail here, but suffice it to say that the issue came down to whether the billboard was removeable, or had become part of the property taken because it was anchored in concrete and had been there for twenty years. The court held that because the billboard owner had the right to remove it at the end of its lease with the property owner, it was not a "fixture" and thus not compensable. Because there was no question in the court's mind that the billboard owner had the ability to remove it, the issue was not one for the jury. Compare the Kansas court's approach of the "fixture" issue with that of the Virginia Supreme Court in this case, in which it held that if there's a question of use, the jury makes the call.
The supreme court also agreed with the trial court that evidence of the income stream produced by the billboard for its owner was not admissible. The owner claimed that the value of the billboard was not the billboard itself, but its prime location, which meant that the billboard could be leased out to advertisers for big bucks (approximately $80k per year). That seems about right to us. The court concluded that the income the billboard generated was not income "derived from the land" so was not compensable. The only admissible evidence was that regarding the income generated by the billboard for the parcel owner for leasing the space to the billboard owner (about $13k) per year).
Thus, the rental income the billboard generated for the property owner was compensable, but the billboard itself was not. Nor was the income generated by the billboard for its owner -- by far the most valuable element of owning a billboard.
Isn't eminent domain law grand?