Legal Case Study:	Caddy's v. Hamilton County, Ohio Case No. (a lower court case, no West Law cite)
Illustrates:	Use of sign valuation techniques to support owner's claim for compensation for the true value of on-premise signage where city condemned the building upon which the signage was placed.
Background:	Under eminent domain, the county sued to "take" and demolish a substantial multi-storied building that housed five mini night clubs, collectively known as "Caddys." The reason for the condemnation was to make room for a new municipal stadium for the Cincinnati Bengals football team. The county tax assessor placed a value of $1.3 million on the land, building and contents, and no value on the business' s signage, which was highly visible to the adjacent freeway. Caddy's signs had been "grandfathered in" under a recent sign code revision that did not permit similar new-construction signage. Because Caddy's very distinctive, 3,000 square foot wall murals (see an example below) and large roof sign were non-conforming under present codes, once removed they could not be duplicated on the replacement buildings offered by the county as possible relocation sites. The proposed relocation sites themselves lacked the visibility to major roads that the condemned site enjoyed. Therefore, if income levels were to be maintained after relocation, alternate forms of commercial communication would have to substitute for the clearly foreseeable and substantial loss in visibility to potential customers. Caddy's owner insisted that the signs on the condemned building had an interest and value distinct and separate from the real property itself, and that this value had to be factored into the final condemnation award. Ohio recognizes the "visibility component" of a commercial site as a partial real estate interest. On-premise signage is such a component. The county assessor and attorney continued to argue that the signage had no value. The compensation issue was tried before a jury, and to avoid any question of political influence, a visiting judge.
Legal Issues Raised:	Do the exposures provided by on-premise signs have value that can be separately determined and compensated in eminent domain cases where the underlying real property and improvements are to be "taken" by the government for a public purpose?
Steps Taken:
Attorneys for the owner of Caddy's retained the services of several signage valuation experts, including Dr. R. James Claus, to determine the value of the signage, based on the cost to replace the exposures the signs provided with other mediums.
Results / Conclusion:
During trial on the issue of just compensation for lost visibility, expert testimony established that the cost of visibility replacement in the form of outdoor advertising was $180,000 per year. This number was based on how much the subject signs would have rented for, had they been "outdoor advertising" instead of on-premise signage. The jury found that signs retain value even after full depreciation. Then, using a capitalization rate of 10%, the jury awarded $1.8 million for the value of the lost on-premise signage -- an amount which, if invested at 10% interest per annum, would permit the owner, annually, to afford the cost of off-premise, major media exposures (outdoor advertising, television, radio, print) for a new location lacking on-premise signage visibility. The jury also awarded $1.3 million for the real property, building and contents. The combined award of $3.1 million, which the county did not appeal, provided the owner sufficient money to relocate, and protect the former income stream with funds that, if prudently invested, would cover annual exposure-replacement expenses without adversely affecting sales volume.
More information about the valuation approaches is available in the article by Claus and Bass, "Legislation Matters: The Economic Worth of On-Premise Signs, Part II", Signs of the Times, October 1998, p. 72. Information on possible legal issues is available in the article by Claus and Bass, "Legislation Matters: The Economic Worth of On-Premise Signs, Part I", Signs of the Times, September 1998, p. 58.

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