We're at a conference with the ABA Section of State and Local Government Law in Philadelphia (talking about eminent domain, public use, just comp, and Horne, inter alia), so we haven't had the time to read this opinion -- issued just a few minutes ago -- in detail. But it's a case we've been following keenly, and not just because we filed an amici brief in the case in support of the property owner.
The Texas Supreme Court has issued an opinion in State of Texas v. Clear Channel Outdoor, Inc., No. 13-0053 (Apr. 24, 2015), a case which involves the issue of whether the state DOT took a billboard when it ordered it removed during a road widening project, and if so, how it should be valued. Here's the bottom line:
Consistent with that case, we conclude that a billboard may be a fixture to be valued with the land, and that while the advertising business income generated by a billboard should be reflected in the valuation of the land at its highest and best use, the loss of the business is not compensable and cannot be used to determine the value of the billboard structure.Slip op. at 1. The court rejected the State's contention that the billboards were moveable, and therefore personal property and not "fixtures" (which are generally compensable in eminent domain). Which means the State must pay for the billboard.
But according to the court, that wasn't the end of the analysis and it also rejected the billboard owner's argument that it was entitled to compensation for the business losses which it incurred because it would have to move the billboard (or, more accurately, build a new billboard elsewhere). Clear Channel argued that the value of the billboards should be based on the profits generated by their use in advertising. The court relied on the undivided fee rule to conclude that income generated by a business on taken property is not compensable:
Valuing the billboards separately from the land cannot afford Clear Channel compensation for lost business income that could not be recovered in CESA.Clear Channel argues that capitalizing income from the use of property, as its expert did, is an accepted way of valuing income-producing property. While that is true, the property its expert valued—the billboard advertising operations—was not the property taken.Slip op. at 15 (footnote omitted). The opinion concluded on this note:
Only the billboard structures themselves were excluded from the settlement, and the compensation due for them can be based only on their cost—$25,000 per sign in the State’s view, $15,000 per sign in Clear Channel’s. Clear Channel is not entitled to value the structures based on the income from its advertising operations, and evidence of that income was inadmissible. Its admission clearly resulted in an erroneous verdict.Slip op. at 17. We'll have more once we've had a chance to review the opinion in detail.
State of Texas v. Clear Channel Outdoor, Inc., No. 13-0053 (Tex. Apr. 24, 2015)
