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HomeMy WebLinkAboutAgenda Packet - 2002-04-16 PMCITY COUNCIL MEETING OF AQrdl! hoz tnq INCLUDES MINUTES, AGENDA FOLLOW UP*, AGENDA AND PACKET. (NOTE: BLANK NUMBERED PAGES IN PACKET WERE REMOVED PRIOR TO MICROFILMING). *FOLLOW-UPS MIGHT NOT HAVE BEEN DONE FOR MORNING AND SOME EVENING MEETINGS. City Council Judie Hammerstad, Mayor Ellie McPeak, Council President Jack Hgfnan .1 R hd CITY COUNCIL REGULAR MEETING AGENDA Tuesday, April 16, 2002 6:00 P.M. Council Chambers City Hall 380 A Avenue Kat o e Also published on the intemet at: ci.oswego.or.us Bill Schoen Contact: Robyn Christie, City Recorder Gay Graham E -Mail: public_affairs@ci.oswego.or.us John Turchi Phone: (503)675-3984 This meeting is in a handicapped accessible location. For any special accommodations, please contact I Public Affairs, (503) 635-0236, 48 hours before the meeting. Estimated Start Time Pa e # 6:00 1. CALL TO ORDER 2. ROLL CALL 6:05 3. PRESENTATIONS 3.1 Springbrook Creek Restoration Presentation 6:20 4. CONSENT AGENDA ♦ The consent agenda allows the City Council to consider items that require no discussion. ♦ An item may only be discussed if it is pulled,/i•ont the consent agenda. ♦ The City Council makes one motion covering all items included in the consent agenda 4.1 RESOLUTIONS 4.1.1 Resolution 02-24, authorizing the Mayor to sign an amendment .....................1 to the intergovernmental agreement between the City and Clackamas County Department of Ilunuut Services Social Services Division for fiscal year 2001-02 Action: Adopt Resolution 02-24 City Council Agenda April 16, 2002 Page 1 of 4 4.2 APPROVAL OF MINUTES 4.2.1 March 5, 2002, morning mecting.................................................................... 9 4.2.2 March 19, 2002, morning meeting.................................................................... 17 Action: Approve minutes as written (or as corrected if Council adds corrections to the motion) MOTION TO APPROVE THE CONSENT AGENDA VOICE VOTE END CONSENT AGENDA 5. ITEMS REMOVED FROM THE CONSENT AGENDA 6:25 6. CITIZEN COMMENT The purpose of citizen comment is to allow citizens to present information or raise an issue regarding items not on the agenda. A time limit of three minutes per citizen shall apply. 7. PUBLIC HEARING ().',I I 7.1 An appeal of the Development Review Commission's denial of the ............... 25 applicant's request for approval of two variances to the Sign Code (Ramsay Signs/GK Travel) AP 02-031AP 01-07/LU 01-00601 Public Hearing Process: Review of hearing procedure by City Attorney Public Testimony • 15 minutes for the appellant's presentation; Testimony will be taken in the following order: In support of appeal, In opposition to appeal, neutral. • 10 minutes for a representative of a recognized neighborhood association, homeowner association, or government agency, or other incorporated public interest organization; • 5 minutes for other persons; • 5 minutes for rebuttal. Questions of Staff Motion: Depends upon decision. Discussion City Council Meeting April 16, 2002 Page 2 of 4 ":30 8. INFORMATION FROM COUNCIL This agenda itent provides an opportunity for individual Councilors to provide information to the Council on matters not otherwise on the agenda. Each Councilor will be given five minutes. 8.1 Councilor Information 8.2 Reports of Council Committees, Organizational Committees, and Intergovernmental Committees -:45 9. REPORTS OF OFFICERS 9.1 City Manager 9.1.1 Authorizing the City Manager to execute an amendment to a ........................33 personal services contract with MWH Americas, Inc. to provide additional design and construction management services for Clackamas River Intake Fish Screen Modifications Motion: Move to authorize the City Manager to execute an amendment to a personal services contract with MWH Americas, Inc. in the amount of $145,900 to provide additional design and construction management services for Clackamas River Intake Fish Screen Modifications 9.1.2 Award a Construction Manager/General Contractor (CM/GC) ....................41 construction phase contract to Natt McDougall Company for the Clackamas River Intake Fish Screen Modifications project Move to award a Construction Manager/General Contractor (CM/GC) construction phase contract to Natt McDougall Company in the amount of $1,288,978 for the Clackamas River Intake Fish Screen Modifications project 9.1.3 Resolution 02-22, authorizing the Mayor to sign an.........................................47 intergovernmental agreement between Clean Water Services and the City of Lake Oswego for the Tualatin Basin Floodplain Restudy Motion: Move to adopt Resolution 02-22 9.1.4 Completion of the Infill Development "Task Force.............................................55 Motion: Move to authorize the City Manager to execute a contract extension with the University of Oregon for up to $14,000 for the consulting services of Ron Kellett in regard to the Infill Task Force. City Council Meeting April 16, 2002 Page 3 of 4 9.2 City Attorney 10. ADJOURNMENT CABLE VIEWERS: The Regular City Council meeting is shown live on AT&T Tualatin Valley, Channel 22/28, at 6:00 p.m. The meeting will be rebroadcast on Channel 22/28: Tuesday 11:00 p.m. Wednesday 7:00 p.m. Thursday 10:00 a.m. Friday 11:00 p.m. Saturday 2:00 p.m. Monday 10:00 a. in. City Council Mccting 1"we •l ()I'-1 April 16, 2002 CITY OF LAKE OSWEGO AGENDA REPORT SUMMARY 4.1.1 04/16/02 MEETING DATE: April 16, 2002 SUBJECT: Resolution 02-24. A resolution of the City Council of the City of Lake Oswego authorizing the Mayor to sign an amendment to the intergovernmental Agreement between the City and Clackamas County Department of Human Services, Social Services Division for fiscal year 2001-02. RECOMMENDED MOTION: Approve Resolution #02-24. EST. FISCAL ATTACHMENTS: NOTICED (Date): IMPACT: • March 19, 2002 Gilmer --------- --- — STAFF COST: $none memo BUDGETED: • Resolution # 02-24 Y N X Ordinance no.: ................. Resolution no.: 02-24 FUNDING SOURCE: $695 in additional revenues expected from Previous Council Clackamas County. consideration: no �/ Z A� ---- sign ff/d to K: A KristiA rptcov.99 ASST. CITY MANAGER signoff/date CITY MAN ER signoff/date Parks and Recreation Memorandum TO: Doug Schmitz, City Manager From: Kim Gilmer, Director of Parks and Recreation Prepared By: Debra Carline, Director of Adult Community Center Subject: Resolution 02-24 Amendment to Intergovernmental Agreement with Clackamas County Department of Human Services Date: March 19, 2002 Purpose To request that the City Council approve Resolution 02-24, which authorizes the Mayor to execute an amendment to the intergovernmental agreement with the Clackamas County Department of Human Services compensating the City for delivering social services to the community. Background On June 5, 2001, the City Council adopted Resolution 01-89, which authorized the Mayor to sign an intergovernmental agreement with Clackamas County Department of Human Services to financially compensate the City for delivering social services to the community via the Adult Community Center. The County has recently informed us that $695 in additional funding is available from the Older Americans Act Title III -D Funds for medication management services. This additional funding will allow the Adult Community Center to offer drug education programs. In order to receive these funds, an amendment to the existing intergovernmental agreement is required. Recommendation To adopt Resolution 02-24 RESOLUTION 02-24 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE OSWEGO AUTHORIZING THE MAYOR TO SIGN AN AMENDMENT TO THE INTERGOVERNMENTAL AGREEMENT BETWEEN THE CITY AND CLACKAMAS COUNTY DEPARTMENT OF HUMAN RESOURCES, SOC A,L SERVICES DIVISION, FOR FY 2001-2002 TO RECEIVE ADDITIONAL REVENUES. WHEREAS, the City of Lake Oswego and Clackamas County Department of Human Services, Social Services DiNlsion have entered into an intergovernmental agreement for the provision of a variety of social services to be proNlded by the Adult Community Center for FY 2001-2002; and WHEREAS, Clackamas County Department of Human Services, Social Services Division has additional funding to zompensate the City of Lake Oswego for providing additional social services; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lake Oswego authorizes the Mayor to execute on behalf of the City of Lake Oswego an amendment to the intergovernmental agreement with Clackamas County Department of Human Services, Social Services Division for FY July 1, 2001 to June 30, 2002. in order to increase County funding by an additional $695.00. A copy of the intergovernmental agreement (Exhibit A) is attached hereto and incorporated herein by reference. This resolution shall be effective upon passage. Considered and enacted at the regular meeting of the City Council of the City of Lake Oswego, on the 16th day of April, 2002. AYES: NOES: EXCUSED: ABSTAIN: ATTEST: APPROVED AS TOOR I / City Attorney's Office Judie Hammerstad, Mayor Robyn Christie, City Recorder Attachments are available for review in the City Recorder's Office. I 4.2 04/16/02 CITY OF LAKE OSWEGO AGENDA REPORT SUMMARY MEETING DATE: April 16, 2002 SUBJECT: Approval of Minutes from: 1. March 5, 2002, morning meeting 2. March 19, 2002, morning meeting RECOMMENDED MOTION: Approve minutes as written (or as corrected if Council adds corrections to the motion) EST. FISCAL IMPACT: STAFF COST: $ BUDGETED: Y N FUNDING SOURCE: ATTACHMENTS: Minutes from: • March 5, 2002, morning meeting • March 19, 2002, morning meeting NOTICED (Date): Ordinance no.: Resolution no.: Previous Council consideration: — 44�4 CITY MAN GER signoff/da e 4.2.1 0-41/10/02 MINUTES OF MARCH 5, 2002 MORNING MEETING CITY COUNCIL MINUTES March 5, 2002 Mayor Judie Hammerstad called the special City Council meeting to order at 7:30 a.m. on March 5, 2002, in the City Council Chambers. Present: Mayor Hammerstad, Councilors Graham, Hoffman. McPeak and Turchi. Councilors Rohde and Schoen were excused. Staff Present: Doug Schmitz, City Manager; David Powell, City Attorney; Robyn Christie, City Recorder; Bob Kincaid, Chief of Staff, Stephan Lashbrook, Community Development Director 3. REVIEW EVENING AGENDA Mayor Hammerstad noted that Councilor Graham would review the consent agenda and Councilor McPeak would present the goals update. Item 4.2.1 Resolution 02-15 Tom Tushner, Principal Engineer, clarified for Councilor Hoffman that the City was negotiating for the property owner's permission to go beyond the existing right-of-way on the southeast corner of Upper Drive and Bryant Road in order to install the signals. He indicated that staff hoped it would cost very little. Item 4.2.3 Resolution 02-18 Doug Schmitz, City Manager, explained to Councilor Graham that the project cost was $215,000; $207,000 came from available resources while $7,000 came from contingency. There were no corrections to the minutes. Item 3.2 Metro Excise Tax Mayor Hammerstad mentioned that the information on the Metro excise tax currently indicated a 5 cents per month figure per household. She asked for a sense of where the Council stood on this matter, observing that it would be embarrassing to ask Metro to make its presentation and then the Council not support their efforts. Councilor Turchi mentioned that Bob Kincaid represented Lake Oswego at the meetings with a position favoring the excise tax over the property tax. Bob Kincaid, Chief of Staff, clarified that this recommendation was for Metro's operations, and different from the Greenspaces recommendation. Mayor Hammerstad noted that this request was for interim funding until Metro developed a permanent financing proposal for the whole greenspaces program. She explained that Metro needed the nickel to maintain the parks and greenspaces that it currently owned, including the Multnomah County parks that it took over in 1996 with no accompanying funding. She said that this was Metro's only funding option. Councilor Hoffman said that he had no problem with the nickel but he was curious as to how they rationalized a nexus between solid waste and parks. Mayor Hammerstad commented that that was what they would hear about tonight. She explained that Metro's problem was that they had no property tax or general fund revenues other than the excise taxes it collected on all its enterprises because the voters never gave them the taxing authority. City Council Morning Meeting Minutes Page 1 of 6 March 5, 2002 11 Mayor Hammerstad concurred with Councilor McPeak that this was similar to the street utility fee, in that every household paid a little bit and received a benefit. She conceded that garbage was a stretch. She said that if anyone had grave reservations about this tax increase, she would appreciate hearing about it before the meeting. Mayor Hammerstad commented that last night's presentation from the Upper Drive neighbors was good, and that TAB seemed okay with the Council action. Item 8 Information from Council Councilor Graham mentioned an announcement about the groundbreaking celebration at the Adult Community Center. Councilor McPeak mentioned a brief summary of the Regional Emergency Management Group meeting and an announcement about TVCA classes on cable TV production. Councilor Turchi discussed a request for a municipal grant for the Good Neighbors Center in Tigard, an organization that provided temporary care and a place for homeless people in Washington and Clackamas County. He mentioned that he was on the Board of Directors. He noted that Lake Oswego has not participated in funding their efforts in the past, and he would like to consider a small $2,000 to $3,000 grant to help them. Councilor McPeak suggested that the request go through the City's budget process for handling these types of requests. Mayor Hammerstad explained that she has not reported on MPAC meetings at the Council meeting because they were incomprehensible in a three-minute report. She said that Mr. Lashbrook gave she and Councilor Hoffman a good rundown on the subregional analysis of data discussed at the last MPAC meeting, which neither attended. She noted that the subregional analysis could affect movement of the urban growth boundary, affordable housing targets, and the jobs housing balance. Mayor Hammerstad mentioned their conclusion during their meeting with Mr. Lashbrook that it was probably a good thing that Lake Oswego elected representatives did not attend that MPAC meeting because they would have had to take sides on subregional analysis: Washington County wanted it and Portland adamantly opposed it. She reported that MPAC did vote to ask LCDC to render an opinion on whether subregional analysis would fly legally. Mayor Hammerstad indicated to Councilor McPeak that LCDC has never supported subregional analysis in the past, since they viewed this area as a region with regional needs. She explained that Washington County wanted to circumvent the prohibition against bringing EFU (farmland) into the urban growth boundary (specifically St. Mary's). She observed that Washington County also had the jobs. Councilor Hoffman explained that Clackamas County wanted jobs, and did not like being the `housing stock' for Hillsboro. He said that Lake Oswego was caught in the middle because everyone looked at Stafford. Mayor Hammerstad explained to Councilor Graham that Portland opposed subregional analysis because they saw their abundant industrial land as a regional resource, and they did not want other industrial sanctuaries to locate around the edges. Councilor Hoffman explained that Portland wanted consolidation of industrial lands within its boundaries because it wanted to keep the young families living in Portland and attending Portland schools, among other issues. Mayor Hammerstad said that the biggest problem, now that MPAC sent this to LCDC, was Metro running out of time because its periodic review ended on December 31; it had to make an urban growth boundary decision by then. 4. REVIEW FUTURE AGENDA ITEMS Mayor Hammerstad noted that there was an April 23 meeting, as that was not the last Tuesday of the month. City Council Morning Meeting Minutes Page 2 of 6 March 5, 2002 12 Mayor Hammerstad commented that when the 5'h and A Avenue crossing came back to the Council on March 19, the Council had to make a decision on it. She spoke to thinking about what kind of compromise they could craft that would satisfy the neighbors. Mr. Schmitz indicated that his conversation with Lynn Peterson persuaded him in a direction. Mayor Hammerstad referenced Councilor Graham's observation that taking out a crosswalk seemed counter to Lake Oswego's desire to be a pedestrian friendly town. She described it as a symbolic action, regardless of what the traffic engineers said. She contended that both the Council's actual and symbolic actions were important. Councilor McPeak spoke against ignoring what the traffic engineers had to say because the Council did not like what they said. She suggested calling attention to the crosswalk as a way of increasing the safety. Mayor flammerstad said that Mr. Schmitz was looking into ways to call attention to the crosswalk. Councilor McPeak asked staff to find information on the death in a crosswalk that occurred in Portland during the week of the Council's last discussion of the crosswalk. Mayor Hammerstad commented that the Council would need a study session on the flood plain standards before the April 16 public hearing. Mr. Schmitz indicated that the meeting this afternoon with the Lake Corporation might delay when this issue left the Planning Commission and came to Council. The Council discussed Councilor Graham's question of whether to encourage testimony from the public at the March 19 discussion on the temporary sign ordinance. Mayor Hammerstad held that they would have to take public testimony. She cited the number of letters received on the subject. She asked staff to condense the arguments in the letters, pro and con, to bullet form. Councilor Graham mentioned that the estate sales people discussed this issue at an antique show she did this weekend, and indicated that they wanted to be part of the discussion, instead of merely in the background. Mayor Hammerstad pointed out that the workable solution they needed to find would entail compromise. Councilor McPeak commented that her sense of the letters from the realtors was that they were comparing the proposal to the possibility of a different proposal, and not to the reality, indicating some confusion among realtors. Mayor Hammerstad said that PMAR did a disservice in sending out that postcard urging realtors to ask the Council not to pass the ordinance, especially when the realtors themselves requested the ordinance. Councilor Hoffman asked if the City has received anything back from the churches, schools and neighborhood associations. Mayor Hammerstad said that they have received nothing from the churches and schools but Glenmorrie and First Addition replied. Stephan Lashbrook, Community Development Director, advised the Council that it would likely get a letter from LONAC reporting its vote on Saturday to leave the ordinance the way it was but to enforce it (7 to 6 with four abstentions). Councilor Hoffman discussed his concern that they were still getting only half the picture without responses from the schools, churches and neighborhood associations, given that those were the three big landowners in the city. Robyn Christie, City Recorder, said that a letter accompanying the packet with the color pictures went out to the churches asking for comments by February 26. She indicated that she would check with Ms. Schultz to see if it went out to all the schools. Councilor Hoffman asked for a copy of what was sent out. Councilor McPeak spoke to drawing the line at some date for public testimony. Mayor Hammerstad clarified that Mr. Powell asked the Council to narrow the possibilities, and to give him some direction about what kind of ordinance it wanted him to bring back. She said that the discussion would include the hours, days of the week, sign placement, generic sign and other City Council Morning Meeting Minutes Page 3 of 6 March 5, 2002 13 issues discussed earlier. She spoke of putting the issues in a matrix. She confirmed to Councilor McPeak that she wanted to make a decision this spring. Councilor Hoffman asked staff to provide copies of temporary right-of-way sign ordinances from other metro -area jurisdictions. David Powell, City Attorney, said that PMAR told the City that only Portland and Wilsonville had such ordinances, although Durham and Sherwood were looking into the question. He indicated that he would check with the League of Oregon Cities. Mayor Hammerstad suggested that the Council not accept public testimony at the March 19 meeting and hold its discussion of the various issues based on all the information it already had, with another public hearing on April 2. She noted that they have already had two opportunities for public testimony. Councilor Hoffman suggested telling the industry representatives at the March 19 meeting what the issues were that the Council wanted to address at the public hearing. Mr. Powell indicated to Mr. Schmitz that his office could draft and advertise the ordinance within the time allotted. He clarified that what he expected from the March 19 meeting was the points that the Council wanted in the ordinance, although the Council could make adjustments at the April 2 meeting. 5. OTHER BUSINESS Mayor Hammerstad noted that the Council had a number of issues about advisory committees. She referenced Ms. Schultz' memo regarding the Arts Commission and its one unexpired term to July 31 with 10 candidates and the four vacancies coming up as of July 31, and her question on whether they could consolidate the interviews. She agreed with Councilor McPeak that an option was to not fill the unexpired term and to advertise five vacancies as of July 31. No one had any objection to doing so. Councilor McPeak commented that she thought it was standard procedure to include the chair of the relevant board or commission on the interview panel as a co -equal participant in the process, which typically used a consensus method, as opposed to taking a vote. She said that recently someone on the Council mentioned that the co-chairs did not have a vote. She inferred from the Council's reaction that it remained a consensus process with the co-chairs as equal participants. Mayor Hammerstad mentioned that recently the Natural Resources Advisory Board chair had not wanted to sit on the interview committee, since he had applied for re -appointment. She indicated that it was still appropriate to invite the chairs but if the chair did not want to participate, then the interview committee should accommodate them. She noted that the NRAB interview committee was Councilors Turchi, Graham and Hoffman. Mayor Hammerstad commented that the NRAB interviews were unusual in that four good people who have been on the board a long time were reapplying. She said that this meant that the Council would ask people like Chris Roth to consider stepping down in order to allow others the opportunity to serve. Councilor McPeak recalled that the Council gave emeritus status to the long-term members of the Arts Commission. Mayor Hammerstad observed that the full Council needed to discuss the issue of term limits, as there was disagreement on it. Councilor Graham asked to discuss at the same time how to set up a better interview process. She suggested using a process, such as setting the first Saturday of every month as an interview day, so that everyone knew when the Council would hold the interviews. That way everyone could arrange their schedules around that date, rather than the current practice of trying to arrange the interview date around everyone's schedules. Mayor Hammerstad noted that the Councilor's comments included the issue of absent interviewees (those who still wanted to serve but were out of town or the country on the interview date). Mayor Hammerstad observed that when the Council liaison to a particular board or commission had once served on that board or commission, that Councilor tended to have more ownership and City Council Manning Meeting Minutes Page 4 of 6 March 5, 2002 14 could come close to advocating for the group. She suggested changing the Council liaison order in order to avoid that potential situation. Councilor Hoffman asked staff to notify the Board and Commission chairs of the Council discussion in order to avoid the appearance of doing something in secret. He indicated to Councilor Graham that the chairs were sensitive and wanted to know what was going on. He described notifying them as a courtesy, since last year, the Council had asked their opinion on these issues, and now the Council might change the process contrary to their opinion. He clarified to Councilor McPeak that notifying them did not include inviting them to participate in the discussion; he only meant that they might want to listen to it. Mayor Hammerstad asked who was interested in attending the 25`h anniversary gala event at the Portland State University College of Urban and Public Affairs on Tuesday, May 7. Councilor Turchi said that he might go. Mr. Schmitz indicated that he would reserve a table for the City. Mayor Hammerstad announced that the Arts Downtown exhibit won an award from the Oregon Downtown Development Association, which ODTA would present at its April 25/26 conference in Eugene. She suggested that she, Councilor Hoffman and the Arts Commission co-chairs go down to receive the award. Councilor McPeak suggested inviting the Arts Downtown Chair, Martha Reisdorf, as well. Mr. Schmitz noted Mr. Powell's hard work in getting eight sets of findings ready for this week. Mayor Hammerstad thanked Mr. Powell, observing that this meant that the Council was finished with these items. Mr. Schmitz announced that, after 20 years, as of 8:32 p.m. last night, they had an official project for Block 138. He said that the findings would come forward next month, and that no one spoke in opposition. He stated that there should be no appeal. Mr. Powell described to Councilor McPeak the minor change made to the mezzanine level at the corner. Mr. Schmitz mentioned that there were other minor changes as well. Mayor Hammerstad indicated to Councilor Hoffman that the Council would not meet this quarter with the School Board because of ex parte contact issues. Councilor Hoffman mentioned that he was thinking of going to the River Cities 2002 Conference, Reconnecting with the Willamette. Mr. Schmitz indicated that he was thinking of attending as well. Councilor Graham asked who was going to the event for Dick Townsend on April 5. Mr. Schmitz said that Councilor Rohde was probably going, as he was on the Board. Councilor Hoffman said that he was going to say hello to some people. Jerry Knippel said that he was attending for personal reasons but he would be happy to serve as a representative for Lake Oswego. 6. EXECUTIVE SESSION Mayor Hammerstad recessed the meeting at 8:20 a.m. to Executive Session pursuant to ORS 192.660(1)(1), to consider records that are exempt by law from public inspection, and (e), to conduct deliberations with persons designated by the governing body to negotiate real property transactions. Mr. Powell reviewed the Executive Session parameters. 7. RETURN TO OPEN SESSION Mayor Hammerstad reconvened the morning meeting at 8:50 a.m. 8. ADJOURNMENT Mayor Hammerstad adjourned the meeting at 8:50 a.m. City Council Morning Meeting Minutes Page 5 of 6 March 5, 2002 15 Respectfully submitted, Robyn Ch istie City Recorder APPROVED BY THE CITY COUNCIL: ON Judie Hammerstad, Mayor City Council Morning Meeting Minutes March 5, 2002 Page 6 of 6 UP 4.2.2 04/16/02 MINUTES OF MARCH 19, 2002 MORNING MEETING y,1 O, ll1[! OSIy``O CITY COUNCIL MINUTES March 19, 2002 CREW" Mayor Judie Hammerstad called the special City Council meeting to order at 7:30 a.m. on March 19, 2002, in the City Council Chambers. Present: Mayor Hammerstad, Councilors Turchi, Graham, McPeak, Hoffman, Rohde and Schoen. Staff Present: Doug Schmitz, City Manager; David Powell, City Attorney; Robyn Christie, City Recorder; Stephan Lashbrook, Community Development Director; Chris Jordan, Assistant City Manager; Bob Kincaid, Chief of Staff Historic Review AB: Jeanie McGuire, Kasey Holwerda; Kim Grueter; Gary Mimnaugh 3. REVIEW EVENING AGENDA Mayor Hammerstad noted that Councilor Hoffman would review the consent agenda. She pointed out that they have moved long-term housing findings to April 2, leaving the temporary sign ordinance as the only substantive discussion item at tonight's meeting. Councilor Graham said that she had a brief conference report. Councilors McPeak and Rohde agreed to present brief reports on the National League of Cities conference. Mayor Hammerstad commented that she thought that the Metro conference on Friday and Saturday, which she and Councilor Hoffman attended, was good. She mentioned that she did not attend Saturday. 4. REVIEW FUTURE AGENDA ITEMS Mayor Hammerstad mentioned that Andy Harris wanted to give a PowerPoint presentation on Springbrook Creek to the Council. She said that if it were something of interest to the public, they would schedule it for a TV night; otherwise, they would put it on a dinner night. 5. OTHER BUSINESS 5.1 Historic Resources Advisory Board Recommendation for Hart Property Councilor Rohde reported on the call he received from Bill Headlee regarding the Council's consideration of restoring the house on the Hart property. He described Mr. Headlee as antagonistic and angry. He relayed Mr. Headlee's comments: the house was only an outbuilding that should be demolished immediately, as it represented no valuable historic process, and, since the Council bought the property with open space bonds, it should not violate the public trust. Mayor Hammerstad mentioned that Mr. Headlee spoke to her at Rotary yesterday. Jeanie McGuire, HRAB Chair, argued that the City had an opportunity, given that this was its own property, to show the community that it cared about historic preservation. She spoke to trying something new and implementing one of the options listed in the Board's recommendation. She discussed the actions that the Board would take, including listing the property on the local landmarks list and nominating it to the National Register. City Council Morning Meeting Minutes Page 1 of 6 March 19, 2002 1 114 Ms. McGuire observed that the City has done many wonderful things to improve the city. She argued that the missing element was historic preservation. She spoke to turning that around and showing the citizens that the Council did care about history. Councilor Rohde asked why the Hart property was not on the list to begin with. Ms. McGuire explained that the list had had 160 items, which the Board reduced to 93 at the Council's request. She said that the Hart property did not make the cut; at the time, the Board deemed other items more historically important. Councilor Rohde recalled that the Board cut back the list in the face of individual property owners protesting their inclusion. He asked if the Historic Review Commission had thought it valuable but bowed to political pressure. Ms. McGuire said not to her knowledge. She explained that the property had not been on the list from which property owners in the early 1990s requested removal; the consultant Jane Morrison had already removed it. Kasey Holwerda clarified that the original inventory did include the Hart property but they removed it when the Council wanted the number of properties reduced; there were other homes more architecturally significant. Councilor Rohde asked what the motivation of the Council at the time was for paring the list down. Ms. Holwerda mentioned the condition of the homes (some had not been maintained in good condition). Ms. McGuire indicated to Councilor McPeak that the criteria for the original list had included that a building be 50 years old at the time and architecturally historic. Mayor Hammerstad mentioned the criteria under Goal 5 for an ESEE analysis, and the point system developed by the HRAB to rank the properties. She noted that many of the items came out of the Clackamas County Cultural Resource Inventory. She recalled that those homes in a deteriorated condition and unlikely to attract someone interested in reconstructing them to the period style were dropped off the list. Ms. McGuire commented that homes that appeared insignificant might be on the list for other reasons, such as they were the last example of a housing use (a worker's cottage) or someone important had lived there. Other reasons included that a noted architect had designed it or it represented a particular architectural style not common in the city. Ms. McGuire indicated to Councilor Rohde that the Hart property house did not make the cut due to the deteriorated condition of the house. Councilor Rohde contended, based on the Council's tour of the home, that it was something that could be restored. Ms. Grueter recalled that, at the time of the paring down of the list, there were monumental properties around the lake that were listed on the National Register, and the Board felt that it had best put those on its limited list instead of something in poorer condition; since then, those lake homes have been demolished. Ms. McGuire indicated to Councilor Rohde that the original house had been demolished long before the original inventory. She mentioned to Councilor Turchi that the Morrie house, which had been part of the home estate, was still on site but slated for demolition. She argued that the demolition of the Morrie house was a reason to save the Trueblood house, which would be the only house in that part of town remaining on the landmarks list. Mayor Hammerstad directed attention to the decision tree provided by Mr. Powell. She asked if the Council had an interest in attempting to preserve the property. Councilor Hoffman spoke in support of trying to preserve the property and following the HRAB's recommendations in trying to find someone willing to rehabilitate the property. He observed that there were many legal methods to accomplish that. Councilor Hoffman argued that the Council did not do a disservice to the open space concept if the pathway to the river went by a house with a little yard. He mentioned seeing preserved houses in Europe that were in natural settings with pathways going by them. City Council Morning Meeting Minutes Page 2 of 6 March 19, 2002 �U Councilor Graham observed that 16 neighbors have expressed an interest in preserving the home. She said that her impression was that the neighbors did not want the building razed but rather removed. Councilor Rohde concurred but indicated that Mr. Headlee had said that all the neighbors were opposed to the house at that location. Councilor Schoen observed that the neighbors did not want the house unoccupied. Councilor McPeak spoke in support of attempting to preserve the house, but only if the market generated a buyer and it did not cost the City any money. She suggested imposing a time limit and a City resource limit. She commented that she would be delighted if a private party with money stepped forward to rehabilitate the house. Councilor Schoen asked what the intention of the seller of the property had been. David Powell, City Attorney, said that the deed required keeping the property in open space with the exception of any use of the residence on the property. Councilor Schoen concurred with Councilor McPeak's comments that no City funds be spent on the rehabilitation, with the exception of a little bit of staff time. Ms. McGuire asked if the City would spend fiends upfront (for administrative and legal fees) if it were subsequently reimbursed from the sale or lease of the property. Gary Mimnaugh noted that the City would have demolition costs, if it chose that route. He suggested that the City agree to spend at least $15,000. Councilor Schoen stated that, given the pressure on the budget, he did not consider spending $20,000 on this house to be a high priority, when they had so many $20,000 needs. He indicated that if they could recoup upfront expenses, he would go along with it but not spending money as an investment. Councilor Graham referenced the letter from Kenwood Construction Company, which mentioned a demolition cost of $13,850. Councilor Schoen held that they could demolish it for less money. Councilor Turchi concurred with Councilor Hoffman that it would not be difficult to find people interested in moving into an old home and fixing it up. He commented that he thought it would cost less than the $300,000 outlined in the HRAB's memo. He said that he was not anxious to spend City money on it either, observing that staff time was also money. He reiterated that, with the proper incentive and right conditions, someone would move in and fix it up. Ms. Grueter recounted an anecdote in which her young daughter saw the house and wanted to preserve it to the extent that she was willing to give up the "extras in Lake Oswego" in order to do so. She stated that she would resign from the Board, and her family would put in a bid for the house. She mentioned that six other people have asked to be notified when the house was for sale. She concurred that there were people interested in preserving these homes. Ms. Grueter informed that Council that she contacted Dr. Sam Trueblood in Los Angeles, who was born in that house and was very interested in sharing its history. She described this as an opportunity for the community to walk into the house and enter a `time warp.' She agreed that they needed to put it on the market. Mayor Hammerstad commented that her sense of the Council was that it was willing to do something other than demolish the house, and therefore, the City would look at attempting to preserve it. She spoke in support of leaving their options for preserving it open-ended in order to allow people to respond to an RFP with their best solution for the house. She observed that whoever bought the house had to be willing to allow public access through the property, since the City bought the property in order to provide a connection down to the George Rogers pathway. Mayor Hammerstad agreed with Councilor McPeak that the City needed to put a timeline on the restoration, rather have the house sit for 10 years in the process of restoration. She observed City Council Morning Meeting Minutes Page 3 of 6 March 19, 2002 N1 that it had a lot of potential and a lot of problems, especially if people, in responding to an RFP, came up with solutions that were incompatible with the public use of the property. She commented that it was worth trying. Councilor Hoffman asked if anyone knew the process that other jurisdictions used when they had a property that they wanted to sell and rebuild. Ms. Grueter said that she could not speak to that, although she tried to find out, as it happened a great deal on the East Coast. She mentioned the use of a long-term lease with very strict guidelines and deed restrictions. She indicated to the Councilor that they were in the process of gathering the documentation from other jurisdictions. Mr. Powell noted that, if the Council moved forward with this, he would contact the Historic Preservation League and other organizations to gather information. Ms. Holwerda recommended contacting the U.S. Forest Service, which had a 100 -year lease on Mt. Hood. Councilor Rohde suggested sending this back down to the HRAB and charging them with finding a way to save the house. Mayor Hammerstad noted that the Board would need to work with the City Attorney. She observed that the Board also needed to involve the community in order for its effort to be successful. She suggested that the Board also talk with Mr. Headlee. Mayor Hammerstad mentioned the background of the purchase. She explained that, when the City purchased the property, the owner was going to donate the proceeds to the Lakewood Center; that did not happen and there were bad feelings now. Councilor Hoffman spoke to HRAB moving quickly on this issue. Mayor I-Iammerstad directed the Board to develop a time line, per Councilor McPeak's suggestion, with an outside maximum of accomplishing the sale or lease by one year from now. Mayor Hammerstad recalled that the neighbors had asked for no further action on a pathway or public use of the property until the Council made a decision on the use or demolition of the house. She held that the Council's statement that it would not demolish the house at this point allowed the City to move forward with planning on that property. Councilor Schoen spoke to developing a footprint in order to establish clearly what went where and what rights went with it. Mayor Hammerstad said that HRAB would develop alternatives. She mentioned one alternative of selling off the front portion of the property up to Highway 43, which would re- route the pathway closer down to George Rogers Park. She indicated to Councilor Schoen that the City could sell the land if it put the purchase price back into the open space pot of money. Mayor Hammerstad commented that the City did not want to be left with a conflict and headache about the use of the property with respect to public use and private ownership. She observed that it would not have heavy public use. Councilor Schoen mentioned the prohibition on partitioning the property. Mayor Hammerstad clarified to Jay Lewis that the City could sell off the property with deed restrictions requiring preservation of the current house and prohibiting partitioning. She explained that this effectively meant that the only thing that could be done with the property was preservation of the current house; no one could build an apartment complex on the land. She emphasized that this large piece of property would remain in its current state. Mayor Hammerstad indicated to an audience member that the City would not improve the property to a park; the only thing that the City would do would be to build the pathway. 6. EXECUTIVE SESSION Mayor Hammerstad recessed the meeting at 8:50 a.m. to Executive Session pursuant to ORS 192.660(1)(i), to consult with counsel regarding litigation, and (e) to consult with persons authorized to conduct real property transactions. Mr. Powell reviewed the Executive Session parameters. He noted that one of the Executive Session items was the Field Turf matter, with City Council Morning Meeting Minutes Page 4 of 6 March 19, 2002 r ,. N % which Councilor Hoffman had a conflict of interest, as a member of his firm represented Bones Construction. Councilor Hoffman said that he would leave when the Council discussed that item. 7. RETURN TO OPEN SESSION Mayor Hammerstad reconvened the morning meeting at 9:00 a.m. Councilor Schoen moved to approve the stipulated peremptory writ of mandamus. Councilor Graham seconded the motion. A voice vote was taken and the motionan ssed with Mayor Hammerstad, Councilors Turchi, Graham, McPeak, Roffman, Rohde and Schoen voting `aye.' 17-01 • Temporary Sign Ordinance Mayor Hammerstad mentioned that she would probably invite testimony from audience members. She referenced Mr. Powell's decision tree. She expressed her hope that the result of the discussion would be Council direction to Mr. Powell on the ordinance he would bring back to Council in two weeks. She discussed the procedure she preferred to follow with respect to handling different options. Councilor Schoen indicated that he would have to leave. He mentioned his support on the Bones Construction matter. He stated that he did not support hearing numerous Portland people testifying before the Council on the Lake Oswego sign code. He suggested limiting discussion to new items. Mayor Hammerstad said that she would try to do so. Mayor Hammerstad asked for permission from the Council to limit the testimony at the public hearing on the sign ordinance. Councilor Schoen moved to authorize the Mayor to limit the testimony at the temporary sign ordinance public hearing in two weeks, to five minutes for neighborhood organizations and three minutes for individuals. Councilor McPeak seconded the motion. Councilor Schoen left the meeting at 9:05 a.m. Mayor Hammerstad indicated to Councilor Graham that this permission applied only to the public hearing; it was not carte blanche permission applying to all public hearings. A voice vote was taken and the motionap ssed with Mayor Hammerstad, Councilors Turchi, Graham, McPeak, Hoffman, and Rohde voting `aye.' 16-01 Councilor Rohde asked if the Council would make the decision this evening or simply take testimony and make the decision in two weeks. The Council discussed the question. Councilor McPeak spoke of discussion tonight and decision in two weeks. Mayor Hammerstad argued that the Council should be able to make a decision at the public hearing, as it would have an ordinance before it. Mr. Powell directed (lie Council to the options listed on page 9 regarding limiting the number of signs or the location of signs. He indicated that, while the options were legally all right, they did pose an enforcement problem. Mr. Powell discussed the possibility of the directional arrow language (which was similar to the Wilsonville ordinance) as leading to non -content neutrality. He explained that it effectively limited right-of-way signs to those advertising an open house, some kind of sale or some event on the property. Fie noted that the courts were muddled on content neutrality. He said that the safe tack was complete content neutrality (as Portland did) and not to have those kinds of restrictions. Mr. Powell acknowledged that there were ordinances out there that had those restrictions. He advised the Council that in moving towards that kind of ordinance, it was pushing the envelope a bit. City Council Morning Meeting Minutes Page 5 of 6 March 19, 2002 At Mayor Hammerstad's request, Stephan Lashbrook, Community Development Director, described the directional open house signs used in Wilsonville. He explained that Wilsonville required them at the corner, based on the theory that that was where they needed to be in order to direct people to the location. He said that Wilsonville allowed more than one sign per corner. Mr. Lashbrook recalled that he raised the same enforcement issues mentioned by Mr. Powell but the Council adopted it anyway, and it seemed to work. The Council discussed the process for the evening. Mr. Powell indicated to Councilor Turchi that his having a property for sale by a local realtor did not constitute a conflict of interest because of the class exception. He mentioned that he could declare a potential conflict. Councilor McPeak noted that the letters showed a great deal of misunderstanding. She spoke to clarifying for the audience that the City currently had a basic temporary sign ordinance, which the ordinance proposed changing but not as indicated in the letters. 8. EXECUTIVE SESSION Mayor Hammerstad recessed the meeting at 9:10 a.m. to Executive Session pursuant to ORS 192.660(1)(i), to consult with counsel regarding litigation. Mr. Powell reviewed the Executive Session parameters. Mayor Hammerstad excused Councilor Hoffman. 9. RETURN TO OPEN SESSION Mayor Hammerstad reconvened the morning meeting at 9:20 a.m. Councilor Graham mentioned receiving a letter from attorney Martin Schedler regarding floodplain standards. She asked if his concern related to Measure 7 issues. Mr. Powell indicated that anytime the Council did a legislative enactment that limited the ability to use property, Measure 7 could potentially apply. He said that he would review the letter. Mayor Hammerstad pointed out that the Planning Commission was currently trying to work out the more difficult issues involved. She said that the Commission working group was looking at the use of the developed property that lay within the 100 -year flood plain. Mr. Powell observed that, in order to get FEMA flood insurance, a jurisdiction had to commit to most of the controversial elements under discussion. 8. ADJOURNMENT Mayor Hammerstad adjourned the meeting at 9:25 a.m. Respectfully submitted, Robyn qristie City Recorder APPROVED BY THE CITY COUNCIL: N udie Hammerstad, Mayor City Council Morning Meeting Minutes March 19, 2002 Page 6 of 6 ?.1 CITY OF LAKE OSWEGO 04/16/02 AGENDA REPORT SUMMARY MEETING DATE: April 16, 2002 SUBJECT: AP 02-03 [AP 01-07/LU 01-0060]; an appeal of the Development Review Commission's denial of the applicant's request for approval of two variances to the Sign Code (Ramsay Signs/GK Travel). RECOMMENDED MOTION: Move to affirm the decision of the Development Review Commission by denying AP 02-03, and direct staff to prepare the Findings, Conclusions and Order. EST. FISCAL ATTACHMENTS: PUBLISHED NOTICES IMPACT: (Date): Council Report Attachments are available for review STAFF COST: N/A in the City Recorder's Office. Ordinance no.: NIA BUDGETED: Resolution no.: N/A Y N Previous Council FUNDING SOURCE: ------vzv.RSV. MANAGER COM. DEV. DIRECTOR CITY ANAGER signoff/date / 2- signoff/date S o2 signoff/date CITY OF LAKE OSW EGO COUNCIL REPORT TO: Douglas J. Schmitz, City Manager FROM: Sandy Ingalls, Code Enforcement Specialist SUBJECT: [An Appeal of a Variance Deniall AP 02-03 [AP 01-07/LU 01-0060]; an appeal of the Development Review Corrunission's denial of the applicant's request for approval of two variances to the Sign Code . This site is located at 15835 Boones Ferry Road (Tax Lot 100 of Tax Map 21 E 08CB). DATFI: April 1, 2002 ACTION: The action before the City Council is an appeal by Ramsay Signs, Inc. (Exhibit A 1) of the Development Review Commission's (DRC) decision to deny the applicant's request for approval of two variances to the Sign Code, in order to retain an existing pole sign at 15835 Boones Ferry Road. The existing sign is classified as a non -conforming sign that is required to come into compliance with the Code with a change in business [LOC 47.04.100]. The applicant made the following requests: a) A v..ariance to retain the existing pole sign [LOC 47.10.410(1)(D)]. b) A variance to increase the sign size from the maximum of 32-sqaure feet to 42.5 -square feet [LOC 47.10.410(1)(A)]. The details of the applicant's proposal are found in the December 17, 2001, staff report (Exhibit D1), and the January 11, 2002 and February 15, 2002, staff memoranda (Exhibits D2 and 133). DRC DECISION: Following the public hearings on February 4 and February 20, 2002, the DRC voted unanimously a to deny the applicants request. Other than testimony on behalf of the applicant, there was no testimony in favor or opposition to the application. Please see exhibits C1 and C2 for DRC minutes. Council Report AP 02-03 [AP 01-07/LU 01-0060] Page 1 of 6 BACKGROUND: In early 2001, the applicant changed the then existing sign face (change of copy) from Journey's Travel to GK Travel, when the business ownership changed. The Sign Code requires that when a business ownership changes then the sign shall come into conformance with the Code [LOC 47.04. 1 00(l)). This did not happen. The applicant did not apply for a new sign permit, but rather changed the copy of the existing sign. As Exhibit F4 demonstrates, staff communicated this issue with the applicant on April 27, 2001. On May 29, 2001, the applicant submitted an application to retain the existing pole sign (Exhibit F3). On August 30, 2001, staff denied the application, because it did not comply with the required criteria of LOC 47.10.410. In response to the staff denial, the applicant applied for two variances to the Sign Code on October 4, 2001. Staff denied the requests on December 17, 2001, (Exhibit D1). This decision was made due to failure of the applicant to meet the variance criteria [LOC 47.12.500]. On December 26, 2001, the applicant appealed staff's decision (Exhibit A2) to the Development Review Commission. An appeal of a minor development decision is permitted by LOC 49.40.820(4). The Development Review Commission received testimony from the appellant on February 4, 2002. During the proceedings, the appellant requested a 7 -day continuance in order to submit additional written materials. That time period lapsed on February 11, 2002, without further written submittals by the appellant. On February 20, 2002, the Development Review Commission denied the appeal finding that the appeal did not comply with the required Sign Code criteria. The details of that decision are provided in Exhibits B, C1 and C2. On March 15, 2001, the appellant appealed the Development Review Commission's decision, (Exhibit Al). This appeal is being processed according to the provisions of LOC 49.50.1100 — 49.50.1120. This matter is being forwarded to the City Council as required by LOC 49.50.1115(2) and LOC 49.50.1130. Because the matter is quasi-judicial, affecting only one development site, the City Council's consideration of the proposal must be based on the record. Review of Issues Raised before the Citv Council: The following is a summary of the issues raised by the appellant in the Notice of Appeal (Exhibit Al). The appellant's issues are bolded. The appellant suggests in the notice that the Development Review Commission did not correctly reach a decision with regard to the following issues: 1. The appellant contends that the existing pole sign should be retained primarily because it already exists. The Commission found that just because the sign was in existence prior to GK Travel purchasing the property is not a reason to continue to use the pole sign, as it does not Council Report AP 02-03 [AP 01-07/LU 01-0060] Page 2 of 6 (n NV conform to the City Sign Code. All non -conforming signs are to come into compliance with the Sign Code by May 21, 2004, or when there is a change in business or use. 2. The site has unusual circumstances to warrant the continued use of the sign. The Development Review Commission found that the site is not unique; there were no unusual circumstances, such as the site or building location, building design, or physical features on the property. The only unique circumstance about the site is the oversize pole sign that has been in existence for many years advertising the different businesses that have occupied the site. The Commission found that the site has street visibility that is at least as good as, if not better than, any other site along Boones Ferry Road. Therefore, the site does not qualify for variances to the Sign Code for the continued use of the existing oversize pole sign, (Exhibit B). 3. The appellant contends that the site has a vision clearance problem. The Commission found after reviewing evidence in the record that the site did not meet the Code requirement that would allow pole signs to be installed at sites "when necessary to provide vision clearance at driveways or intersections and when there is no alternative, visible on -building or monument sign location, " [LOC 47.10.410(1)(D)j. The appellant stated, but did not submit any evidence, that the site has a vision clearance problem and that cars parking in front of the sign would block a monument sign. Even if there were a vision clearance problem at the site, the situation could be remedied by landscaping around a monument sign, then the sign would be visible from Booties Ferry Road, as is the case with most of the other monument signs on the street. The Commission found that by eliminating two excess parking spaces in the front of the building, a monument sign could be installed along the building frontage and by landscaping around a monument sign, the site to continue to meet the required minimum number of parking spaces with parking on the side and rear of the building. The Commission found that without a traffic study to support the applicant's position the site is not unique, nor does it have specific vision clearance problems that require an oversized pole sign (Exhibit B). 4. The existing sign would not impact the neighborhood. The Commission found that granting a variance for a pole sign, in an area that will be limited to monument signs or band signs, will adversely affect the surrounding neighborhood because the sign will be uniquely visibly inconsistent with all other signs around it, (Exhibits B and D1). This would be inconsistent with the purpose of the Sign Code: "The City Council finds that to protect the health, safety, property and welfare of the public, to provide the neat, clean, orderly and attractive appearance of the community, to improve the effectiveness of signs, to provide for safe construction, location, erection, and maintenance of signs, to prevent proliferation of signs and sign clutter, and to minimize adverse visual safetyfactors to travelers on public highways and on private areas open to Council Report AP 02-03 [AP 01-071LU O1-00601 Page 3 of 6 . . 2J public travel, it is necessary to regulate the design, quality of materials, construction, location, electrification, illumination and maintenance of signs visible from public property, public rights-of-way and private areas open to public vehicular travel. " LOC 47.03.010 "orderly and attractive appearance of the community, to improve the effectiveness of signs ", and "prevent proliferation of signs and sign clutter". 5. The appellant claims that a monument sign is not appropriate for the site. The Commission found that a monument sign could be accommodated on the site. It found that there were many examples on Boones Ferry Road where existing monument signs, surrounded by vegetation, were visible from the street. The appellant disagrees with the Commission stating that when cars park in front of the signs, they are not visible from the street. The Commission disagreed with the appellant. It found that Boones Ferry Road doesn't have on -street parking and has a sidewalk along the northern side of the street, leaving the private properties an unobstructed view to the street unless there are cars parked along the Boones Ferry Road side of the property. As discussed above, the site has excess parking. The Commission found that the visibility issue could be satisfactorily addressed if two parking spaces in the front were replaced by new landscaping around the recommended sign. The appellant, through the variance process, is requesting that the 42.5 square foot pole sign should be legalized. This sign is 10.5 square feet larger then the maximum allowed by the Sign Code. The Commission found that the proposal was excessive, and there no credible evidence was submitted in support of keeping such a large sign. The Commission found that the appellant shall comply with the Sign Code by replacing the con -conforming pole sign with an approved sign. 6. The appellant argues that the Development Review Commission's decision was arbitrary. The Commission's decision was not arbitrary. The Commission, guided by the City Code, reviewed all evidence submitted by the appellant, and concluded that the request failed to meet the applicable criteria. 7. Ex parte contact between the Development Review Commission and staff. Communications between the Development Review Commission and staff are not considered Ex parte contact. The information provided in the February 15, 2002, staffs memorandum simply restated the issues covered in previous staff reports. There was no new information presented in that memorandum. CONCLUSION Based upon evidence in the record, the Development Review Commission concluded that the applicant's evidence did not fully support approval. The Commission found that the applicant request for two variances to the Sign Code did not satisfy the relevant criteria, and appropriately denied AP 01-07 [LU 01-0060]. Council Report AP 02-03 [AP 01-07/LU 01-0060] Page 4 of 6 30 RECOMMENDATION Staff recommends that the Council affirm the decision of the Development Review Commission, and deny AP 02-03 [LU 01-0060/AP 01-07]. A. NOTICE OF INTENT TO APPEAL Al. Letter by Ramsay Signs, Inc., dated March 12, 2002 (Appeal to City Council) A2. Letter by Ramsay Signs, Inc., dated December 26, 2001 (Appeal to Development Review Commission) B. FINDINGS, CONCLUSION AND ORDER AP 01-07 [LU 01-0060], dated :March 4, 2002 C. MINUTES OF DEVELOPMENT REVIEW COMMISSION Cl. Minutes of February 4, 2002 C2. Minutes of February 20, 2002 D. STAFF REPORTS AND MEMORANDUMS D1. December 17, 2001, Staff Report on LU 01-0060 D2. January 11, 2002, Staff Memorandum on AP 01-07 [LU 01-0060] D3. February 15, 2002, Staff Memorandum on AP 01-07 [LU 01-0060] E. GRAPHIC/PLANS E 1. Tax Map E2. Plot Plan E3. Proposed Sign E4. Existing Pole Sign E5. Applicants Enhanced Photographs of Site with a Monument Sign E6. Enhanced Aerial Photograph of Site with Reconfigured Parking E7. Sample Signs E8. Photograph of Journeys! Of Lake Oswego Sign E9. Photographs of Site F. WRITTEN MATERIALS F1. Applicants Narrative, Dated, October 3, 2001 F2. Applicants Supplemental Narrative, Dated, November 9, 2001 F3. Sign Permit Application # 01-0023 F4. Staffs Denial Letter, Dated, August 30, 2001 F5. Memo from Kathy Marcott, Traffic Engineering Technician, Dated, November 28, 2001 F6. Comments from GK Travel, Dated, December 5, 2001 Council Report AP 02-03 [AP 01-07/LU 0 1 -00601 Page 5 of 6 31 F7 The Value of Signs: A Guide for Property Appraisers, Sign Users and Municipal Planners, by R. James Claus, PhD, et al, dated 2002. (Book: Too Large to Reproduce) * F8 Unmasking the Myths about Signs: Learning to Use Signage as a Planning Tool for Intelligent Community Development, by R. James Claus, PhD, et al, dated 2001. (Book: Too Large to Reproduce) * G. LETTERS [No exhibits] Books are available at the City Recorder's Office for review. Council Report AP 02-03 (AP 01-071LU 0 1 -0060] Page 6 of 6 �FGOV�� ♦ U SD w � 15290 GC rh Geographic HERiTA ►91g P• o D I� v o W r U 547 GE L HARVEY WAY Information N m w 548 '5'15 4 n+Wi 1 A a, � 1551 w1551 153;0 N Services - A N i15389 � a3�y W W A' A • + A,153'° a v N -- COLLINS WAVY UGA �3j8 cA.j N W M I I g N o N 0 V, ry a 15455 Op 15481 N 15444 n 15483 15488 .aW. + N N r �• �. ,► + ¢ Ao Lj 15561 .• A� 90 Ii W �j U I jj N N = W 390 n PARR 9-180 T2 S R 1 E 15505 1.533 W m W I N o 0 15645 15550 I i 1 SCHOOL DISTRICT SHOP 1 � 15659 15 «• fi %��' +. 'i] � � � 15650 BUS SHOP BUSS LAKE GROVE 156: A Q- = ELEMENTARY A3a3 15777 6 5 4 a 4,740 SCHOOL 15700 Q KE GROVE 15751/ SITE .CH STIAN 15750 GC/R-0 i 15780 15790 BOSTON 7i X �H H - 15760 _ - 15794 MARKET - -- W 15875 '• ;582 ,LAKE /s sea OPS /Se 9� 18 17 16 Z ! N C .5850 5880 N GROVE SHON POST S /S �, PROF. ,; ,.r OFFICE S '�4 v CENTS TAY . 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N0. • ,r 0058 City of Lake Oswego Robyn Christie, City Recorder P.O. Box 369 Lake Oswego, OR 97034 RE: Notice of Intent to Appeal File #AP 01-07 LU01-0060 Decision dated March 4, 2002 Applicant: Ramsay Signs, Inc. 9160 SE 74`h Ave Portland, OR 970206 Notice of Intent to Appeal March 12, 2002 AP �3-0 DATE REm 3 -1:5 -Oa TIME 1922- We es"" ci Itrcnrder Ramsay Signs, Inc. wishes to appeal the Development Review Committee's decision for its variance application for their leased sign at 15835 Boones Ferry Road, tax lot 100, of tax map 21E08CB, We believe the Development Review Committee acted arbitrarily and was furnished additional comments and information by staff after the hearing was closed (staff report dated February 15, 2002), Ramsay Signs, Inc. did indeed offer evidence in support of our appeal and the information was ignored. Photo's and details were provided that clearly indicated that circumstances at this particular site would deny our customer a reasonable opportunity to communicate his business to vehicular traffic. The vision clearance problems associated with this site provide for the use of a pole sign according to the code. There is no specific requirement for a traffic study in order to meet this requirement. The s,agn has provided an effective means of advertising for many years, it is an important part of the business and would severely impact the success of this company. This variance request would not impact the neighborhood and the Development Review Committee failed to recognize this. The development review committee should have granted the appeal because the code provides for a pole sign under these circumstances and should have allowed the additional square footage because the sign is existing. The commission states in error that there are many examples on Boones Ferry Road where monument signs, surrounded by vegetation are visible from the street. Are they effective, no. Are they readable, no. When cars park in front of them are they visible, no. '%Na believe the Design Review Committee did not weigh the facts and circumstances fairly.. Respectfully, R.Wulsen, D President oh 111 9 16 0 SE 72 T AVENUE PORTLAND, OREGON 97206 EXHIBIT Al AP 02-03/AP 01-07/ LU 01-0060 (, 503 711.4555 ( 800 613.4555 Q:-503 111.0220 Oil Lake Oswego City Hall Robyn Christie, City Recorder P.O. Box 369 Lake Oswego, OR 97074 Re: Written request for a hearing File #LU01-0060 Date of Decision: December 17, 2001 Appellant: Ramsay Signs, Inc. 9160 SE 74`h Ave. Portland, OR 97026 AP --L O� December 20, 2001 C .F_. .z CITY Appellant requests that a hearing be scheduled for the appeal of staffs decision to deny variance application. Thank You, Ramsay Signs, Inc. Darry au sen, President DP/111 EXHIBIT A2 AP 02-03/AP 01-07/ LU 01-0060 'E 74TH AVENUE PORTLAND, OREGON 97206 ( 503 777.4555 C 800 613.4555 G, 503 777.0221 013 t 2 a 4 5 6 7 8 9 71 a.� 93 84 65 26 ➢7 a8 �o :0 21 w� 24 2"5 26 2.8 2'9 .1 *3 14 �5 ?�5 �7 39 -W 41 42 s3 •A j -Ade 4 , 4.8 BEFORE THE DEVELOPMENT REVIEW COMMISSION OF THE CITY OF LAKE OSWEGO AN APPEAL OF THE PLANNING DIRECTOR'S ) AP 01-07 [LU 01-0060] - 1465 DECISION DENYING SIGN VARIANCES. ) GK Travel FINDINGS, CONCLUSIONS & ORDER NATURE OF APPLICATION An appeal of the Planning Director's denial of LU 00-0060, an application filed by Ramsay Signs, Inc. for GK Travel. The applicant requested approval for two variances to the Sign Code, as follows: a. a variance to retain the existing pole sign. b. a variance to increase the sign size from the maximum of 32-sqaure feet to 42.5 -square feet. The site is located at 15835 Boones Ferry Road (Tax Lot 100 of Tax Map 21E 08CB). HEARINGS The Development Review Commission held a public hearing and considered this application at its meetings of February 4, and 20, 2002. The following exhibits were presented to the Development Review Commission at its meeting of February 4, 2002, and were entered into the record: Exhibit F7 The Value of Signs: A Guide for Property Appraisers, Sign Users and Municipal Planners, by R. James Claus, PhD, et al. Exhibit F8 Unmasking the Myths about Signs: Learning to Use Signage as a Planning Tool for Intelligent Community Development, by R. James Claus, PhD, et al. CRITERIA AND STANDARDS A. City of Lake Oswego Development Code (LOC Chapter 49): In PAGE 1 LOC 49.16.015 LOC 49.16.020 LOC 49.16.025 LOC 49.16.055 LOC 49.20.110 LOC 49.22.200 LOC 49.22.205 IAC 49.22.225 LOC 49.36.710 LOC 49.40.800-49.40.820 Definitions Application of Code Authority of Planning Director Evidence of Violation Minor Development Burden of Proof Development Standards Condition of Approval Determination of Completeness Review of Minor Development Applications City of Lake Oswego Sign Ordinance (LOC Chapter 47): LOC 47.10.400 AP 01-07 [LU 01-0060]-146 Signs Requiring Permits EXHIBIT B AP 02-03/AP 01-07/ 015 1J LU 01-0060 I LOC 47.10.4 10 2 3 4 LOC 47.12.500 5 6 C. Previous Actions: 7 Resolution # 01-0079 Permanent Signage Requiring Permit Allowed in Commercial Zones (GC, NC, OC/R-2.5, OC/NC, and R -2.5/W) Variances 10 1 t CONCLUSION 12 13 The Development Review Commission concludes that AP 0 1 -07 [LU 01-0060] does not comply with all 14 applicable criteria. 15 16 17 FINDINGS AND REASONS 18 19 The Development Review Commission incorporates the December 17, 2001, Staff Report, and the January 20 11, and February 15, 2002, memoranda for AP 0 1 -07 [LU 01-0060] (with all exhibits attached thereto), as 21 support for its decision, supplemented by the further findings and conclusions set forth herein. In the event 22 of any inconsistency between the supplementary matter herein and the staff report, the matter herein controls. 23 To the extent they are consistent with the approval granted herein, the Commission adopts by reference its 24 oral deliberations on this matter. 25 26 Following are the supplementary findings and conclusions of this Commission: 27 28 1. The Commission heard testimony from the applicant that the City's Sign Code was 29 unconstitutional and infringed on their first amendment rights of freedom of speech. The 30 Commission finds that they do not have authority to hear constitutional issues. 31 32 2. The Commission heard from the applicant that the City was restricting signage on a unique and 33 unusual site that needed to retain the existing pole sign to advertise the business. The applicant 34 stated the site is unique because it is located on a curvilinear road and is partially hidden by the 35 Lake Grove Elementary School fence and vegetation on the north side. Further, the 18 -foot tall 36 pole sign can easily be seen from Boones Ferry Road, where as a monument sign surrounded by 37 parked vehicles would be obscured from view of moving traffic along Boones Ferry Road. 38 39 3. The Commission finds that the application does not comply with the required Sign Code variance 40 criteria [LOC 47.12.500(2)(A -C)]. The applicant did not offer evidence in support of their 41 position, or evidence against alternative signage on the site. The applicant was unable to prove 42 that "strict application of the code requirement would deny the applicant a reasonable 43 opportunity to communicate by sign in a manner similar to like persons or uses because of an 44 unusual or unique circumstance relating to the property or the proposal, such as site or building 45 location, building design, physical features on the property, or some other circumstances 46 [LOC 47.12.500(2)(A)]. 47 48 4. The applicant contended that the retention of the existing sign would not "affect the surrounding 49 neighborhood or other property ... in a manner materially inconsistent with the purpose of the 50 Sign Code", [LOC 47.12.500(2)(B)]. The Commission finds that the applicant was viewing the 51 neighborhood as it exists today, writh a collection of non -conforming signs; not as how the 52 neighborhood will appear after all non -conforming signs have come into compliance by May 21, 53 2004. 54 PAGE 2 AP 01-07 [LU 01-0060]-146 016 1 5. The Commission finds that the application does not comply with LOC 47.12.500(2)(C), as the 2 "degree of the variance is limited to that reasonably necessary to alleviate the problem created 3 by the unique or unusual circumstance identified pursuant to subsection 2(A) of this section ", 4 because the site is not unique or unusual in the neighborhood. There are other properties a short 5 distance from the site with similar obstacles that enjoy adequate signage. 6 7 6. The Commission heard and discussed the vision clearance issue in relation to the Code 8 requirement that would allow pole signs to be installed at sites only "when necessary to provide 9 vision clearance at driveways or intersections and when there is no alternative, visible on - 10 building or monument sign location, " LOC 47.10.410(1)(D). The Commission finds that I t without a traffic study to support the applicant's position, the site is not a unique site, nor does it 12 have specific vision clearance problems that require an oversized pole sign. To the contrary, it 13 appears that with elimination of a few parking spaces in the front, the sign could be placed in 14 compliance with vision clearance requirements, and remains visible to motorist. 15 16 7. The Commission finds that the site has adequate parking as required by the Code. The parking 17 configuration can be realigned similar to Exhibit E6, to accommodate a monument sign to be is installed in front of the structure. The sign can be designed and installed so parked vehicles do 19 not obscure it. The Commission also finds that there are many examples on Boones Ferry Road 20 where monument signs are surrounded by vegetation and visible from the street. 21 22 8. The Commission finds that GK Travel is a new business (new owners). The Sign Code requires 23 that all non -conforming signs come into compliance at the time of change in business. 24 Therefore, the existing non -conforming pole sign should be replaced with a conforming legal sign. 26 27 28 30 ORDER 31 HAS IS ORDERED BY THE DEVELOPMENT REVIEW COMMISSION of the City of Lake Oswego 3_ that: l . AP 0 1 -07 [LU 01-00601 is denied. It, PAGE 3 AP 01-07 [LU 01-0060]-146 017 I a 4 J 6 9 4 IU 11 1 14 1: ib i' I 19 20 26 ,g 30 I CERTIFY THAT THIS ORDER was presented to and APPROVED by the Development Review Commission of the City of Lake Oswego. DATED this 4th day of March, 2002. Sheila Ostly, Chairman �— Development Review Commission Janice Bader Secretary ATTEST: ORAL DECISION - February 20. 2002 AYES: Ostly, Powers, Stadnik, Fagelman NOES: None ABSTAIN: None ABSENT: Tierney, Binkley and Morales WRITTEN FINDINGS - March 4. 2002 AYES: Ostly, Powers, Stadnik, Fagelman NOES: None ABSTAIN: Tierney, Binkley and Morales ABSENT: None PAGE 4 AP 01-07 [LU 01-0060]-1465 0A 11 0 1. CALL TO ORDER fl r City of Lake Oswego Development Review Commission Minutes February 20, 2002 Chair Sheila Ostly called the Development Review Commission meeting of Wednesday, February 20, 2002 to order at approximately 7:00 PM in the Council Chambers of City Hall, at 380 "A" Avenue, Lake Oswego, Oregon. 11. ROLL CALL Members present were Commissioners Sheila Ostly, Dave Powers, Krytsyna Stadnik and Gary Fagelman. Members absent were Nan Binkley, Julie Morales and Bill Tierney. Staff present were Hamid Pishvaie, Development Review Manager; Sandy Ingalls,Code Enforcement Specialist; Evan Boone, Deputy City Attorney; and Janice Bader, Senior Secretary 111. APPROVAL OF FINDINGS, CONCLUSIONS AND ORDER AP 01-06 1LU 01-00261, an appeal of the Planning Director's decision to approve a minor modification to an earlier planned development (Skyland Heights PD 1-96). Mr. Powers moved for approval of AP 01-06 1LU 01-00261 Findings, Conclusions and Order. Ms. Stadnik seconded the motion and it passed with Commissioners Ostly, Powers, Fagelman, and Stadnik voting yes. IV. PUBLIC HEARING AP 01-071LU 01-00601, an appeal by Ramsey Signs, Inc. of the Planning Director's decision to deny a request for two variances to the Sign Code including a variance to retain the existing pole sign, and a second variance to increase the sign size from the maximum of 32-sgaure feet to 42.5 -square feet. Location of Property: 15835 Boones Ferry Road (GK Travel), Tax Lot 100 of Tax Map 21 E 8CB. Staff coordinator is Sandy Ingalls, Code Enforcement Specialist. This hearing was continued from February 4, 2002 meeting for deliberation purposes only. Chair Ostly opened the public hearing and explained the procedures and time limits to be followed. She asked the commissioners to report any ex parte conflicts, biases or conflicts of interest. Ms. Ostly, Mr, Powers, Ms. Stanik and Mr. Fagelman reported City of Lake Oswego Development Review Commission age 1 of 3 Minutes of February 20, 2002 EXHIBIT C1 AP 02-03/AP 01-07/ LU 01-0060 019 they had driven by the site. No one challenged any commissioner's right to hear the application. Mr. Fagleman stated there are a lot of signs similar to this sign along that section of Boones Ferry Rd. It's impossible to ignore because of it's location. He understands that there is a sunset on those signs in two years, and he thinks that it's for the best to make them comply. Mr. Powers agrees the sign is too big and too high, but trying to locate a monument sign in the front of the building would be very difficult. There are a lot of trees, a fence, vegation and cars. However, he supports the Code requiring the change of ownership to comply with the Sign Code. Ms. Stadnik understands this is the same type of business; however, with the new ownership in mind they should abide by the Code. Ms. Ostly stated this is a one of kind situation and a very difficult site. Since there are so many other factors that impact this site, at this point, the Code should be enforced. She asked if there are any provisions for exceptions to allow a pole sign? Ms. Ingalls replied that there is a provision for an exception to the pole sign requirement, if you have a vision clearance problem, a pole sign could be put there. Ms. Ostly suggested that it's a dangerous enough location, that a pole sign brought into compliance might be okay there. She also noted that if there was a sign on the building, it may become more of a hazard with people seeing the sign late, stopping fast and trying to get into the property. With the post office located next door, and a bad ingress from Boones Ferry Rd., that could create potential traffic problems. Mr. Pishvaie stated there isn't enough evidence in the record to show that sight distance is a problem, however, there may be a perceived problem. He explained that staff has determined there is enough parking in the back, and if the parking spaces out front could be reconfigured it would allow for a monument sign to be placed in the front of the property. Mr. Powers asked if the Commission can require the applicant to redeisgn their parking? Mr. Pishvaie noted the Commission could make a finding requiring a redesign of the parking lot in such a way that it would allow for placement of a monument sign outside the sight distance area, therefore, negating the need for a variance or reducing the amount of variance necessary. Mr. Fagelman asked if we were to approve the pole sign, would they still have to replace it in 2 years? City of Lake Oswego Development Review Commission Minutes of February 20, 2002 040 Page 2 of 3 Mr. Pishvaie noted if the Commission were to approve the variance, then you will allow the sign to stay forever. He noted the business rents the sign, so the applicant (Ramsey Sign) is the owner of the sign, rather than the business which uses the sign, GK Travel. Mr. Powers stated that the existing pole sign is too high and too big, but the Commission needs sight distance information. Ms. Ostly stated the Commission didn't have any information presented on the sight distance issue or showing any hardship because of that. Ms. Stadnik asked if the monument sign would have to be reviewed? Mr. Pishvaie replied yes, staff would have to review the sign. He noted that Exhibit E-2 provides a site plan with vision clearance area that was put together by the Engineering staff, showing the required sight distance area and that there is enough room at the site to place the monument sign outside the vision clearance area. He noted the monument sign would have to be outside the triangular sight distance area. Mr. Fagelman doesn't think that the Commission should set a precidence for all the other pole signs in the area. Mr. Powers moved to deny AP 01-07 ILU 01-00601. Mr. Fagelman seconded the motion and it passed with Commissioners Ostly, Powers, Fagelman, and Stadnik voting yes. Binkley, Morales and Tierney were absent. V 1. GENERAL PLANNING & OTHER BUSINESS VII. ADJOURNMENT There being no further business, Chair Ostly adjourned the meeting at 7:25 PM. Respectfully submitted, l'f `Janice Bader / Senior Secretary L:\pc\minutcs\02-20-02.doc City of Lake Oswego Development Review Commission Minutes of February 20, 2002 021 Page 3 of 3 I. CALL TO ORDER City of Lake Oswego Development Review Commission Minutes February 4, 2002 Chair Sheila Ostly called the February 4, 2002 meeting of the Development Review Commission to order at 7:00 PM in the Council Chambers of City Hall at 380 A Avenue, Lake Oswego, Oregon. 11. ROLL CALL Commissioners present besides Chair Ostly were Vice Chair Nan Binkley, Julie Morales, Dave Powers Krytsyna Stadnik and Gary Fagelman, Bill Tierney was excused. Staff present were Hamid Pishvaie, Development Review Manager; Paul Espe, Associate Planner; Evan Boone, Deputy City Attorney; and Jean Hall, Secretary. III. MINUTES Ms. Binklev moved for approval of the Minutes of November 29, 2001. Mr. Powers seconded the motion and it passed with Ms. Binkley and Mr. Powers voting yes. Ms. Morales, Ms. Ostly, Ms. Stadnik and Mr. Fagelman abstained from the vote. Mr. Tierney was not present for the vote. Ms. Ostly moved for approval of the Minutes of December 3, 2001. Mr. Powers seconded the motion and it passed with Ms. Ostly and Mr. Powers voting yes. Ms. Binkley, Ms. Morales, Ms. Stadnik and Mr. Fagelman abstained from the vote. Mr. Tierney was not present for the vote. IV. APPROVAL OF FINDINGS, CONCLUSIONS AND ORDER None. V. PUBLIC HEARING AP 01-061LU 01-00261, an appeal of the Planning Director's decision to approve a minor modification to an earlier planned development (Skyland Heights PD 1-96) in order to remove Lot 10 from the project. City of Lake Oswego Development Review Commission EXHIBIT C2 ge 1 of 10 Minutes of February 4, 2002 pp 0XHIBI P 01-07/ 01-0060 The site is located at 1186 Crestline Court, Tax Map 2 1 E 15DA, Tax Lot 3200. The staff coordinator is Paul Espe, Associate Planner. The hearing was continued from the January 23, 2002, meeting. No additional oral testimony was to be allowed. Ms. Ostly opened the public hearing and explained the procedures and time limits to be followed. She asked the Commissioners to report any ex parte contacts, biases or conflicts of interest. Ms. Morales reported she had left the previous hearing earlier than its end. Ms. Stadnik reported she had visited the site. Ms. Binkley reported that an audience member whose name she did not know had approached the commissioners' table after the previous hearing to begin a discussion and that nothing that would bear on the Commission decision had actually been discussed. Mr. Boone advised the Commissioners to invite the applicant or any interested person who desired to do so to inquire about the nature of the discussion. No one responded or challenged any Commissioner's right to hear the application. The applicants waived their right to an additional seven-day period in which to submit a final written argument. Paul Espe, Associate Planner, reported that during the time period allowed for submission of additional testimony, the staff had received a memorandum from Harold Morley (Exhibit G103); a copy of a section of the CC&Rs of the Skylands of Oswego No. 3 from Scott Borg (Exhibit G104); and a letter in opposition to the application from Dale Dyke Vandenburg Jr. (Exhibit G105). He reported that the applicants had responded to the new testimony with a letter from Aaron K. Stuckey of Hagen, Dye, Hirschy & DiLorenzo, PC, dated February 2, 2002 (Exhibit F-14). He noted that although the applicants' response indicated that Mr. Vandenburg had not testified during the previous hearing, the staff had confirmed that Mr. Vandenburg had testified at that hearing. Deliberations The staff clarified for the Mr. Fagelman that contiguous lots that were not within a Planned Development were allowed to be combined into one consolidated lot and that action would not require a review by the Commission, but might require a procedure to extinguish any easements on the property. Mr. Fagelman observed the owner could build a large house on the consolidated site. Mr. Powers acknowledged that the Commissioners were not reviewing any proposed structure, but he understood that the location of a large house on the combined lot was important to the residents of homes adjacent to and above the site. Ms. Binkley recalled the Commission had considered and approved the PD with specific setbacks for the subject lot and she said that to change them now would change the PD, because it would result in a larger building envelope on that lot. She suggested the Commissioners establish a building envelope size based on minimum setbacks (similar to the PD's setbacks) that would allow the envelope to be moved. She calculated that if the envelope was limited to a maximum size of 6,500 square feet and City of Lake Oswego Development Review Commission Minutes of February 4, 2002 024 Page 2 of 10 the applicants were allowed to build up to 30% lot coverage, the house footprint would cover approximately 12.5% of the parcel. She said that restriction would reflect the purpose of the setbacks that had been imposed on the original PD if the lot was removed from the PD. Mr. Fagelman observed that since the front lot of the combined lots was supposed to be "unbuildable" and had not been built on, the actual setback from the street was greater than required and a very large house on the combined lot would be 30 feet closer to the street than if the two lots were never combined. Ms. Binkley agreed and added that to restrict a structure to the rear 25% of the 52,000 square foot parcel would make the parcel seem lopsided. Mr. Fagelman recalled that the Commissioners had been advised that the applicants had a right to remove the lot boundary line. Ms. Binkley anticipated that if the building envelope were allowed to move closer to the center of the site there would be greater surrounding buffer area for the structure that would help to reduce its mass. She asked how the Commissioners could construct a condition that allowed the house to be pulled further toward the middle of the consolidated parcel and did not harm the PD. Ms. Ostly indicated her concern that to allow the structure to be moved would change the carefully thought out setbacks that had been imposed on the PD and affect the rest of its lots. Mr. Fagelman observed the applicants could still build a 12,000 square foot house within those setbacks, but the Commission's decision in the current application would show where it could be located on the lot. Ms. Binkley noted that after the lot was removed from the PD, it would be subject to a different lot coverage requirement of the R-15 Zone. She suggested that the language in reconunended Condition A(2)(b)(iii), lot coverage for the consolidated lot be modified from "25 percent" (approx. 5,500 sq. ft.) to "6,500 square feet," or some number of square feet that would make sense. She suggested that the limitation under "Required Setbacks Without Consolidating Lot 10 with Tax Lot 1800" would allow an additional 1,000 square feet. Mr. Fagelman recalled the neighborhood had requested that the Commission not allow a house to be located beyond the existing Lot 10 setback and he suggested the Commissioners designate a general area where it would be allowed. Ms. Binkley held that if the applicants decided to build the house where the existing footprint was allowed on Lot 10, the site should resemble the one approved with the PD. She clarified for Ms. Stadnik that the existing lot coverage requirement would limit the footprint to 6,500 square feet. She confirmed for Ms. Ostly that her proposed limitations would result in what people had reasonably expected would result from the original PD approval and could result in a larger setback (80 feet instead of 50 feet) from the adjacent Skyland Heights neighbor. Ms. Morales cautioned Ms. Binkley that she was assuming that Lot 68 could not be built on. Ms. Binkley observed that if that lot was buildable and the typical setback along Skyland Circle was 25 feet the lot owner might build on a 6,500 square foot footprint that close to Skyland Circle. She explained that the modified conditions she had suggested met the intention of the original conditions imposed on the Skyland Heights PD. Ms. Morales acknowledged that the modified conditions could maintain the site's relationship with that PD, but she noted City of Lake Oswego Development Review Commission Minutes of February 4, 2002 025 Page 3 of 10 that the other neighborhood association was concerned about the potential 30 -foot reduction in setback if the footprint was moved closer to the edge of the hillside. Mr. Fagelman observed that the applicants would be able to build a large house on the parcel no matter what the Commission decided. Ms. Binkley observed that it would be possible for the applicants to design many different structure shapes within the footprint. Ms. Binkley moved to approve LU 01-0026, subject to the conditions of approval recommended by the staff, with the following modifications: Under Condition A(2)(b): • Required Setbacks Consolidating Lot 10 with Tax Lot 1800, (iii) Lot Coverage: Replace 1125 percent" with "The maximum building envelope is to be 6,500 square feet in area." Required Setbacks Without Consolidating Lot 10 with Tax Lot 1800: add the language "Maximum building envelope of 6,500 square feet". Discussion followed. Ms. Morales observed the proposed conditions would result in similar dimensions as were originally intended on the subject lot. Mr. Fagelman observed the applicants could still build a 13,000 square foot house on the site. Ms. Binkley clarified for the staff that the building would be allowed to move on the lot, but the front yard setback would remain the same. The Commission invited the applicants' representative to comment on the constitutionality of the changes the Commissioners had discussed. Bruce Goldson, Compass Engineering, 6564 SE Lake Road, Milwaukee, Oreton, 97222, indicated that the applicants questioned the constitutionality of the limitations the Commissioners were considering. He said those conditions would significantly reduce the applicants' development from the 25% lot coverage the Code allowed. He pointed out the parcel was over an acre in size, and the Code provided for specific setbacks. He worried that if the applicants desired a house shape that was slightly larger than the suggested limitation they would have to apply for another review, which he said was a constitutional problem. Ms. Binkley explained that the proposed change in the staff -recommended conditions for allowing removal of the PD overlay from Lot 10 would increase the maximum lot coverage on Lot 10 by 30%. Mr. Goldson disagreed with that calculation on the basis that the parcel was a combination of lots. Mr. Boone confirmed for Ms. Ostly that the Commission also had the option to not release the lot from the PD. He advised the Commissioners to consider whether approval of the application would significantly affect other property or uses. Mr. Pishvaie calculated that the building envelope of approximately 6,517 square feet that was shown on Lot 10 in the original application was about 1,000 square feet too large to meet the 25% lot coverage limitation on that lot. Ms. Morales observed that the proposed modification to the recommended conditions of approval would increase the allowable lot coverage to 30%. City of Lake Oswego Development Review Commission Minutes of February 4, 2002 026 Page 4 of 10 Ms. Morales seconded the motion and it passed with Ms. Binkley, Ms. Morales, Ms. Ostly, Mr. Powers, Ms. Stadnik and Mr. Fagelman voting yes. Mr. Tierney was not present. There were no votes against. Ms. Ostly announced that the final vote on the findings, conclusion and order would be held on February 20, 2002. AP 01-07(LU 01-00601, an appeal by Ramsey Signs, Inc. of the Planning Director's decision to deny a request for two variances to the Sign Code including a variance to retain the existing pole sign, and a second variance to increase the sign size from the maximum of 32-sqaure feet to 42.5 -square feet. Location of Property: 15835 Boones Ferry Road (GK Travel), "T,ix Lot 100 of Tax Map 2 1 E 8CB. Staff coordinator is Sandy Ingalls, Code Enforcemcnt Specialist. Chair Ostly opened the public hearing and explained the procedures and time limits to be followed. She asked the commissioners to report any ex parte conflicts, biases or conflicts of interest. Ms. Morales, Ms. Brinkley and Ms. Ostly reported they drove by the site on a daily basis. Mr. Powers and Ms. Stadnik also reported they had driven by the site many times. No one challenged any commissioner's right to hear the application. Sandy Ingalls, Associate Planner, presented the staff report, dated December 17, 2001; and staff memorandum, dated January 11, 2002. She clarified that the appellants' request for a hearing was to be labled as Exhibit A and the staff memorandum was to be labeled as Exhibit D. She reported that G K Travel was a new business that was requesting to retain a 42.5 square foot pole sign, which was 10 feet larger than the 32 square foot sign allowed in the GC Zone. She related that the pole sign had been used for many years and the sign text had been changed for G K Travel when that business owner purchased the building in 2001. She said research showed that none of the prior owners had applied for sign permits. She said the City had notified G K Travel in an April 27, 2001, letter that they were a new business on the site, and that the sign had to comply with the Sign Code. She recalled that the applicant had submitted an application for the pole sign on May 29, 2001, and discussed signage options with the staff. She said the staff denied the application on August 30, 2001, on the basis that it did not demonstrate compliance with applicable criteria. Ms. Ingalls explained that the Sign Code specifically provided that a nonconforming sign could be maintained unless there was a new business or use at the site. She said the signage at the site was to comply with the Code because G K Travel was a new business. She said the GC Zone allowed a sign up to 32 square feet in size along any frontage of a site. She related that staff had suggested the applicant use a monument sign that was permitted by the Code. She said monument signs were the only type of freestanding sign permitted by the Code, unless the business could prove there would be a problem with vision clearance for a monument sign. She reported that the City's Engineering staff had found no problem with vision clearance at the site. She then explained that the criteria for a sign variance required an applicant do demonstrate that alternatives, such as a wall or awning sign, would not work at the site. She noted that City of Lake Oswego Development Review Commission Minutes of February 4, 2002 027 Page 5 of 10 other businesses in the area used monument signs. She pointed out the staff report included photographs of other randomly chosen signs in the area. She pointed out signs shown in the photographs often had vegetation, utility poles, trees or other structures in front of them. She reported that the businesses in the photographs had either come into compliance at startup or sometime within the past two years. She advised that the Code also provided that all nonconforming signs were to be brought into compliance with the Code by May, 2004. She related that the nearby McDonald's business had voluntarily begun compliance discussions with the City. She pointed out the staff had created Exhibit E-6 to show how the parking at the site could be reconfigured to add more parking spaces in the rear and on the side of the building, and prevent a monument sign from being obscured by parked vehicles. She clarified for the Commissioners such a sign could be up to eight feet high, and the outlined sign in Exhibit E-5 was approximately six feet high. She recalled the staff -suggested location for the sign had been determined after they had considered the most logical and typical location of a sign, where it would receive optimum exposure, and what location would best facilitate a utility connection. Ms. Ingalls explained the applicant had requested two variances: a variance to retain the nonconforming pole sign, and a second variance to increase the maximum allowed size of the sign in the event the first variance was granted. She related that the staff believed that if a variance was granted to allow the applicant's pole sign, that approval would encourage other businesses to ask for similar variances. Applicant Darryl Paulsen, Ramsay Signs, 11275 SE 121" Ct., Clackamas, Oregon, 97015, testified that his company owned the subject sign and leased it to G K Travel. He said the record should indicate that ownership of the sign had not changed, the type of business and the use at the site had not changed, and only the name on the sign had changed. He opined that if business owner, Bud Gillison, had elected to keep the name "Journey Travel" on the sign the issue would never have arisen. He asked what had triggered the City's citation. Evan Boone, Deputy City Attorney, advised the Commissioners to determine whether the request for variances from the Sign Code should be granted without making a determination as to whether the existing sign was legal. Dr. Robert J. Claus, 22211 SW Pacific Highway, Sherwood, Oregon, 97140, held the issue was a constitutional one and the City was attempting to enforce a Sign Code that the applicant believed was neither time, place or manner, nor content neutral by the City's own definition. He said the issue was whether the City had the authority to deny the applicant's request for a variance. Ms. Ostly explained that the Commissioners were to make a determination about the sign, even if litigation followed that decision. Ms. Binkley asked how long an owner was given to change a sign. The staff advised that a nonconforming sign was to be City of Lake Oswego Development Review Commission Minutes of February 4, 2002 028 Page 6 of 10 brought into compliance with the Sign Code at the time the business ownership changed, and did not hinge on what the sign said. Dr. Claus predicted that if the variances were not granted, the applicant would proceed to litigate the matter. He held the applicant had only changed the copy on the sign and the City could not regulate sign content. He said that if the Sign Code was not time, place and manner content neutral, the City must carry a substantial proof that there is some benefit and they must go no further than necessary. He said if the City allowed changes in reader boards or electronic message boards it was allowing change of copy and it could not establish a benefit. He said the issue was one of censorship. Ms. Ostly explained the Commission was not authorized to decide that issue. Mr. Paulson contended that the City citation had been triggered by a change in the copy on the sign, which he explained was a maintenance action that did not require a permit. Mr. Boone advised that the legality of the sign was not an issue for Commission determination. Mr. Paulson pointed out that Exhibit E-5 showed the outline of where a six -foot -tall monument sign was suggested and he pointed out a vehicle could obscure the sign and that an unreadable sign would not serve the business. He said there was no good reason to not allow the existing sign to remain as it was until 2004. He said that to require the business to change it now would create additional expense for his client, who would have to reconfigure the parking. He observed that the signs in the staff -provided photographs of other businesses could not be easily read from the street. He said the use at the site had been the same for 15 years. He stated that the Code allowed a freestanding sign when there was no other reasonable place to locate it, as was the case at the site. Dr. Claus addressed the staff findings. He said that in sign cases the burden of proof was not on the applicant. He recalled cases in other jurisdictions where courts had found that in order to avoid a First Amendment infringement, any City enforcement action should result in a significant benefit and go no further than was necessary. He said the sign standards in the Manual for Uniform Traffic Control (MUTC), which was the used by the State of Oregon and transportation engineers, were fair standards that should be used by the City. He said the MUTC's minimum standard was seven feet to base and 18 feet to the top. He observed the applicant's sign was not inconsistent with the neighborhood and there had been no complaints. He entered two casebooks into the record (Exhibits E-7 and E-8). He said there was nothing that allowed the City to limit an accessory use below the federal standard of care and the minimum standard of reasonable, not arbitrary and noncapricious. He said the proposed sign fell outside of that standard. He pointed out that the nearby Chevron and Texaco signs did not fit the City's definition of a sign, which provided that graphics were not considered a sign (listing of nearby monument signs on page 6 of the staff report). He said the City's definition was not content neutral because it specified that graphics were not considered a sign. He said it was wrong to suggest that the applicant's "signature business" sign of 40 square feet was excessive. He said that loss of the sign could result in loss of business and closure of the business. He said that case studies showed that travel agencies that lost their signs had been the result of a "taking" of the business. He said City of Lake Oswego Development Review Commission Minutes of February 4, 2002 029 Page 7 of 10 the Sign Code was not content neutral, the City was not following its own standards regarding size of signs, the sign would not be visible to traffic at eight feet high. He said that "content neutrality" meant that the City should allow anyone to change the face of a nonconforming sign until 2004. He held that that the applicant's request was not an excessive or burdensome request. He opined that if McDonald's changed ownership, the City would have no way of knowing that as long as the corporate name remained the same. He said the current action was obviously discriminatory. He said the business owner was operating at the site at the time the Sign Code was changed; the staff's requirements were not made as a condition for obtaining a business license. He summarized that the business owner he had relied in good faith on the fact that the sign existed and he could stay in business. Mr. Paulson clarified for the Commissioners that his firm owned the sign and the site's business owner desired to be allowed to use the sign until 2004. Fle recalled the sign had been installed over 20 years ago, but he had recently found there was no City record to show that. He said that did not mean that a permit had never been issued. Mr. Claus, testified that the trigger for City action had been a change in the sign face, but there had been no change in the use of the site or of the type of business there. He added that the sign's size and geometry had not been changed -- only its text. He opined there was a First Amendment issue to be addressed. He explained that existing case law showed the context of a sign was to be considered under less obtrusive methods. He said the City's regulation also discriminated against new businesses and favored existing ones. He said that the MUTC was the applicant's evidence of fair standards of sign traffic safety and the monument sign suggested by the staff would not comply with MUTC standards. He said staff's concern that the granting of the variance request for the subject business would encourage other businesses to do the same was not a valid reason for denying the variance, but was a valid reason for reviewing the fairness of the City Code. Dr. Claus advised that if the applicant had correctly identified the City's action as a First Amendment violation (as was determined in Blockbuster vs. the City of Tempe), the City would be held responsible for the costs of litigation and for the demise of the business. Mr. Boone clarified for Ms. Morales that any request for a change in the Sign Code was to be decided by the City Council. Mr. Pishvaie clarified for Ms. Morales that the Sign Code allowed a nonconforming sign to undergo a change of copy, but if the business changed, the sign was to conform to the Code. He said the application for a business license had indicated a change in the business. He further clarified that the City did not normally take action against nonconforming parking and landscaping until the site occupant applied for an addition or change of type of use. Mr. Boone advised that the Zoning Code allowed a nonconforming use to continue so long as the use continued, and ownership was not the triggering factor. If a change of use occurred (even if there was no change of business) the City would then consider square footage, parking and other requirements. City of Lake Oswego Development Review Commission Minutes of February's, 2002 030 Page 8 of 10 Mr. Boone recalled for the Commissioners that the applicant had testified that a new ownership occurred with regard to the use - even if the business remained a travel agency — but the Sign Code did not mention "use", it only talked about a new business. Mr. Pishvaie advised that a nonconforming painted wall sign could not be changed unless it was brought into conformance with the Code. Mr. Paulson reported that the Cities of Portland and Salem had both abandoned requirements for copy change permits for signs, including wall signs, due to constitutional issues. Proponents None. Opponents None Neither for nor Against None. The applicant requested that the record be left open for an additional seven days to allow them to submit a final written argument. Ms. Morales moved to continue AP 01-071LU 01-00601 to February 11, 2002 for written testimony only. Written testimony was to be submitted by 5:00 PM February 11, 2002. Mr. Powers seconded the motion and it passed with Ms. Binkley, Ms. Morales, Ms. Ostly, Mr. Powers, Ms. Stadnik and Mr. Fagelman voting yes. Mr. Tierney was not present. There were no votes against. VI. GENERAL PLANNING & OTHER BUSINESS Restaurant in Block 136 Development The staff clarified that the development had been approved as a mixed-use office/retail project that could feature a minor amount of restaurant use as long as there was adequate parking for the uses. Mr. Pishvaie agreed to find out if the site owner intended to use part of the space for a restaurant. Timing cit' AI)I lirant Comments About Suggested Conditions of Approval Mr. Pishvaie advised that although staff typically suggested conditions for the Commissioners to use in approvals of applications, the Commissioners could modify or delete them based on testimony. He said that when that happened it was fair to an applicant to afford him an opportunity to discuss the acceptability and constitutionality of the conditions. He noted that by the time the Commission considered an application, City of Lake Oswego Development Review Commission Minutes of February 4, 2002 031 Page 9 of 10 the applicant had usually been discussing conditions with the staff for several months and would not be surprised by the recommendation of the staff at the hearing. Ms. Ostly asked if the Commissioners should be working out compromises at a hearing. Ms. Binkley and Ms. Morales recalled the Commission often considered how to bring about a compromise through deleting or adding changes to the recommended conditions. Mr. Boone advised that the applicant could chose how to use his allotted time for testimony — whether the testimony was relevant to the decision or not. He said the best time for an applicant to raise an issue related to conditions of approval was when the staff report was issued and the deliberation phase of the hearing was not an opportune time to raise an issue; however, the applicant was given an opportunity to comment on the constitutionality of modifications to conditions of approval during that phase to ensure fairness and due process. Joint DRC/ Planning Commission Meeting The staff announced that a joint meeting of the DRC and the Planning Commission to discuss the work of the Infill Development Ad Hoc Task Force had been scheduled. VII. ADJOURNMENT There being no further business, Ms. Ostly adjourned the meeting at 8:45 PM. Respectfully submitted, ?lean Hall Secretary L:\pc\drc\niinutes\02-04-02.doc City of Lake Oswego Development Review Commission Minutes of February 4, 2002 032 Page 10 of 10 REPORT CITY OF LAKE OSWEGO PLANNING DIVISION APPLICANTS: Ramsay Signs Inc. PROPERTY OWNERS: GK Travel LEGAL DESCRIPTION: Tax Lot 100 of Tax Map 21E 08CB LOCATION: 15835 Boones Ferry Rd COMP. PLAN DESCRIPTION: GC 1. APPLICANT'S REQUEST FILE NO: LU 01-0060 STAFF: Sandy Ingalls DATE OF REPORT: December 17, 2001 NEIGHBORHOOD ASSOCIATION: Lake Grove ZONING DESIGNATION: GC The applicant is requesting approval of two variances to the Sign Code, as follows: (1) A variance to LOC 47.10.410(l)(D) in order to retain the previously non -conforming (now illegal) pole sign rather than replacing it with an alternative sign (such as a monument sign) on the site. (2) If a variance is granted to retain the existing sign, then a variance to LOC 47.10.410(1)(A) for an increase in the maximum sign area from 32 -square feet to 42.5 -square feet would be required. The existing pole sign is located at 15835 Boones Ferry Road in front of GK Travel, Exhibits E2, E4, E9, F 1, F2 and F4. II. DECISION Denial of LU 01-0060. 033 EXHIBIT Di AP 02-03/AP 01-07/ LU 01-0060 LU 01-0060 Page 1 of 8 III. APPLICABLE REGULATIONS A. City of Lake Oswego Development Code (LOC Chapter 49): LOC 49.16.015 LOC 49.16.020 LOC 49.16.025 LOC 49.16.055 LOC 49.20.110 LOC 49.22.200 LOC 49.22.205 LOC 49.22.225 LOC 49.36.710 LOC 49.40.800-49.40.820 Definitions Application of Code Authority of Planning Director Evidence of Violation Minor Development Burden of Proof Development Standards Condition of Approval Determination of Completeness Review of Minor Development Applications B. City of Lake Oswego Sign Ordinance (LOC Chapter 47): LOC 47.10.400 Signs Requiring Permits LOC 47.10.410 Permanent Signage Requiring Permit Allowed in Commercial Zones (GC, NC, OC/R-2.5, OC/NC, and R -2.5/W) LOC 47.12.500 Variances C. Previous Actions: Resolution # 01-0079 IV. FINDINGS A. Background/Existing Conditions: 1. The triangular shaped 8,250 square feet site is located at 15835 Boones Ferry Road, Exhibits El, E2, E6, F1 and F2. The site is developed with a 1,832 -square foot building that was constructed in 1949, presumably as a residence. At some point the structure was converted into an office building, and exists as one today. 2. The surrounding land uses include: North: Lake Grove School, zoned R-7.5, South and West: Lake Grove Post Office, zoned R-0 and GC, East: Boones Ferry Road, zoned GC. GK Travel, a new business, currently has a 42.5 -square foot pole sign located along the front of the property at 15835 Boones Ferry Road, Exhibits E3, E4, Fl and F2. It appears that the pole sign has existed for many years. The sign text was changed when Apollo Travel occupied the premises. The text changed again for Journeys of Lake Oswego in 1997, and early 2001, when GK Travel purchased 034 LU 01-0060 Page 2 of 8 the business (Exhibits E4 and E8). It appears that sign permits were not applied for by any of the above prior property owners. In a letter dated April 27, 2001, to the new owners, staff advised that since GK Travel was a new business, the sign must come into conformance with the Sign Code (LOC 47.04.100). Staff enclosed a copy of the Sign Code and an application form with the letter. 4. The applicant submitted a permit application on May 29, 2001, for the existing pole sign (Exhibit F4). Staff discussed sign options for the site with the applicant in further correspondences. At the end, in a letter dated August 30, 2001, staff denied the application, because it did not demonstrate compliance with the required criteria of LOC 47.10.410 (Exhibit F4). B. Compliance with Criteria for Approval: 1. The burden of proof in all cases is upon the applicant seeking approval. The applicant has submitted some of the information required by LOC 47.12.500. These documents are listed as exhibits that accompany this report. The subject variance application is appropriately being processed as two variances [LOC 47.12.500]. The variance criteria are addressed below. There are no other Code provisions applicable to the subject request. Variance Criteria and Analysis ILOC 47.12.5001 As per LOC 47.12.500, sign variances shall follow the same procedure as Class I variances to the Development Code, and are regulated pursuant to LOC 49.28.400(2). As per LOC 47.12.500(2), a variance to any requirement of Chapter 47 may be approved if the applicant demonstrates the following: a. Strict application of the Code requirement would deny the applicant a reasonable opportunity to communicate by sign in a manner similar to like persons or uses because of an unusual or unique circumstance relating to the property or the proposal, such as site or building location, building design, physical features on the property, or some other circumstance. GK Travel is located on a triangular parcel that has frontage on Boones Ferry Road, a four lane major arterial street (Exhibit E1). Boones Ferry Road is a primary street for purposes of vehicle and pedestrian traffic. The existing pole sign was recently altered without a City approved sign permit, when GK Travel purchased the property. Staff contacted GK Travel concerning the need for a conforming sign, explaining the requirements of the Code and GK Travels options for signage. The options for signage in the GC zone include freestanding signs such as a monument sign, or a sign attached to the building such as a wall sign, sign band or an awning sign. LOC 47.10.410(1-3) LU 01-0060 035 Page 3 of 8 A sign application was filed with the City to allow for the existing non -conforming sign to be retained. This application was denied. LOC 47.04.100(1) states that: "a non- conforming sign in all zones other than the EC zone as described and established by the Lake Oswego Zoning Code may be maintained or undergo a change of copy without complying with the requirements of this chapter, with the exception that any change for a new business or use or any changes in a wall sign which is painted on a structure will comply with this chapter at such a time as change in copy or alternation occurs. " [Emphasis added] Staff explained that since GK Travel was a new business at the site, it required compliance with the sign Code. The applicant contends that the a monument sign "would severely impact visibility due to the small size of the lot. Anyone parking in front would also block a monument sign from view" (Exhibit F1). The applicant further states, "The existing sign cannot be modified without removing the sign and manufacturing a new sign. The lot size is relatively small with neighboring trees blocking the approach from the northeast. Customer parking fills the front of the property and the post office driveway abuts the west. Reducing the sign size would require the manufacture and installation of a sign to comply not only with a reduced square footage, but a reduced height. A monument sign would not be visible at all when cars are parked in the lot, which there is quite frequently. Parking in the front of the building would have to be eliminated completely in order for the sign to be seen " (Exhibit F2). Staff disagrees. A monument sign could be installed outside of the vision clearance triangles (10' by 10') in front of the structure with cars parked elsewhere on the site, Exhibits E6 and F5. The vision areas are conceptually illustrated (dark lines) in Exhibit F5. The existing pole sign appears to be located within a vision clearance area. The Sign Code, states in LOC 47.10.410(1)(D), "pole signs shall only be allowed when necessary to provide vision clearance at driveways or intersections and when there is no alternative, visible on -building or monument sign location. " The applicant has not demonstrated that the site has unique or unusual circumstances that would prohibit the use of alternative sign types. The applicant has the opportunity to erect a variety of sign types on this site. All options will be visible from the street. The Parking Standards [LODS 7.020] requires that the existing 1,832 -square foot building provide a minimum of 8 parking spaces. As illustrated in Exhibits E2 and E9, there are currently at least 12 parking spaces on the site, including the 3 spaces in the rear of the structure, one along the southwest side of the structure and 8 more in the front of the site. This is 4 spaces more than the minimum Code requirements. The parking spaces could be reconfigured as illustrated in Exhibit E6, so that 5 cars could park in the rear of the structure, one along side the structure, leaving a minimum of 2 spaces in the front eastern comer of the site. This reconfiguration would equal what is required by Code. This parking reconfiguration will allow plenty of room between the structure and the Boones Ferry Road property line to install a monument sign. Alternatively, an awning sign or sign band may be installed on the building without compromising vision clearance regulations or sign visibility from Boones Ferry Road (Exhibits E8 and F5). LU 01-0060 036 Page 4 of 8 Staff finds that the applicant did not satisfy this criterion. There appears to be other sites along Boones Ferry Road with similar site characteristics that have installed alternative types of signs that comply with the Code requirements, including monuments signs (Exhibit E7). b. The sign which would result from the variance will not affect the surrounding neighborhood or other property affected by the request in a manner materially inconsistent with the purpose of the Sign Code expressed in LOC 47.03.010. Staff finds that the existing pole sign is approximately 25% larger than what is allowed by the Sign Code. The Sign Code requires all non -conforming signs in the GC zone to come into compliance by May 21, 2004, or when the signs are altered or when there is a change of business or use of a site [LOC 47.04.100]. Staff notes that if the variances were granted and all other signs in the neighborhood were brought into compliance by May 21, 2004, then this sign would be inconsistent with other signs, and would visually affect the neighborhood as the only oversized pole sign. Staff requested that GK Travel come into compliance with the Sign Code as a new business. As discussed above, the sign permit application submitted to the City by the applicant was for an oversize pole sign, that is, the existing sign. The applicant states in his variance application that the existing sign would not affect the neighborhood (Exhibits F1 and F2). However, he does not give adequate evidence of how the sign would not affect the neighborhood, except that there are other similar size pole signs in the immediate area at the present time. Staff notes that in the last several years other businesses, either new or established firms have come into compliance with the Sign Code. These are businesses in similar circumstances as GK Travel, with potentially natural or manmade obstacles that could partially obscure their signs from the view from travelers along Boones Ferry Road, as seen in Exhibit E7. The matrix below is a sample of businesses operating along Boones Ferry Road with similar visual constraints to GK Travel. Please note that the majority of signs are at or below the maximum sign area (32 square feet) allowed by the Sign Code. LU 01-0060 Page 5 of 8 037 Staff finds that the applicant has not provided adequate evidence that the existing pole sign would not adversely affect the surrounding neighborhood and that alternative signs are available, as demonstrated by the above examples. The applicant did not take into account that the other pole signs in the immediate area will also have to come into compliance with the Sign Code within the next three years. This standard is not met. c. The degree of the variance is limited to that reasonably necessary to alleviate the problem created by the unique or unusual circumstance identified pursuant to subsection 2(a) of this section. There is no reasonable evidence in the application suggesting that other sign types would not work in this location. The applicant states that cars parked on site would block a monument sign (Exhibits E5, Fl and F2). Staff disagrees. As discussed above, and illustrated in Exhibits E6 and E7, that there are alternative design solutions that would address this issue. Evidence has not been forthcoming suggesting that the site is unique enough to allow an illegal pole sign to exist. With the lack of evidence, staff finds that this site is neither unique nor different from other sites along the Boones Ferry Corridor as demonstrated by the above matrix and Exhibit ET V. CONCLUSION Based upon the materials submitted by the applicant and findings presented in this report, staff concludes that LU 01-0060 does not comply with all applicable criteria of the Sign Ordinance [LOC Chapter 47]. The existing sign must be removed and replaced with a new sign in full compliance with the Sign Code. VI. ACTION TAKEN Staff denies LU 01-0060. LU 0 1 -0060 038 Page 6 of 8 Examples of Monument Signs in the Boones Ferry Road Corridor Site No. Business Address Monument Sign Area 1 W. L. Avery's Building at 15540 Boones Fe Rd 20 s . ft. 2 Riccardo's Restaurant at 16035 Boones Fe Rd 27 s . ft 3 � La Provence at 15964 Boones Fe Rd 27.77 s . ft. 4 Chevron as stations at 15905 Boones Fe Rd 26.5 s . ft. 5 Hyde building at 16016 Boones Fe Rd 32 s . ft 6 Aaron Brothers at 16130 Boones Fe Rd 32 s . ft 7 Oregon Business Bank at 16099 Boones Fe Rd 29.14 s . ft. 8 Texaco at 16211 Boones Fe Rd 20 s . ft. 9 Lake Grove Building at 16325 Boones Fe Rd 32 s . ft. 10 Lake Oswego Crossing at 17437-49 Boones Fe Rd 31.5 s . ft. Staff finds that the applicant has not provided adequate evidence that the existing pole sign would not adversely affect the surrounding neighborhood and that alternative signs are available, as demonstrated by the above examples. The applicant did not take into account that the other pole signs in the immediate area will also have to come into compliance with the Sign Code within the next three years. This standard is not met. c. The degree of the variance is limited to that reasonably necessary to alleviate the problem created by the unique or unusual circumstance identified pursuant to subsection 2(a) of this section. There is no reasonable evidence in the application suggesting that other sign types would not work in this location. The applicant states that cars parked on site would block a monument sign (Exhibits E5, Fl and F2). Staff disagrees. As discussed above, and illustrated in Exhibits E6 and E7, that there are alternative design solutions that would address this issue. Evidence has not been forthcoming suggesting that the site is unique enough to allow an illegal pole sign to exist. With the lack of evidence, staff finds that this site is neither unique nor different from other sites along the Boones Ferry Corridor as demonstrated by the above matrix and Exhibit ET V. CONCLUSION Based upon the materials submitted by the applicant and findings presented in this report, staff concludes that LU 01-0060 does not comply with all applicable criteria of the Sign Ordinance [LOC Chapter 47]. The existing sign must be removed and replaced with a new sign in full compliance with the Sign Code. VI. ACTION TAKEN Staff denies LU 01-0060. LU 0 1 -0060 038 Page 6 of 8 Examples of Monument Signs in the Boones Ferry Road Corridor Site No. Business Address Monument Sign Area 1 W. L. Avery's Building at 15540 Boones Fe Rd 20 s . ft. 2 Riccardo's Restaurant at 16035 Boones Fe Rd 27 s . ft 3 � La Provence at 15964 Boones Fe Rd 27.77 s . ft. 4 Chevron as stations at 15905 Boones Fe Rd 26.5 s . ft. 5 Hyde building at 16016 Boones Fe Rd 32 s . ft 6 Aaron Brothers at 16130 Boones Fe Rd 32 s . ft 7 Oregon Business Bank at 16099 Boones Fe Rd 29.14 s . ft. 8 Texaco at 16211 Boones Fe Rd 20 s . ft. 9 Lake Grove Building at 16325 Boones Fe Rd 32 s . ft. 10 Lake Oswego Crossing Prepared by: Sand In all Y g Date Code Enforcement Specialist Approved by: 2- l a ------- Evan Boone J Date Deputy City Attorney Reviewed By: ishvaie Date Development Review Manager VII: EXHIBITS A. [No current exhibits; reserved for hearing use] B. [No current exhibits; reserved for hearing use] C. [No current exhibits; reserved for hearing use] D. [No current exhibits; reserved for hearing use] E. GRAPHIC/PLANS El. Tax Map E2. Plot Plan E3. Proposed Sign E4. Existing Pole Sign E5. Applicants Enhanced Photographs of Site with a Monument Sign 039 LU 01-0060 Page 7 of 8 E6. Enhanced Aerial Photograph of Site with Reconfigurcd Parking E7. Sample Signs E8. Photograph of Journeys! Of Lake Oswego Sign E9. Photographs of Site F. WRITTEN MATERIALS Fl. Applicants Narrative, Dated October 3, 2001 F2, Applicants Supplemental Narrative, Dated November 9, 2001 F3. Sign Permit Application # 01-0023 F4. Staffs Denial Letter, Dated, August 30, 2001 F5. Memo from Kathy Marcott, Traffic Engineering Technician, Dated November 28, 2001 F6. Comments from GK Travel, Dated December 5, 2001 p:Cases/2001 /LU 01-0060/LU01-0060 — Ramsay Sign Co for GK Travel Report.doc LU 0l -0060 040 page 8 of 8 TO: Development Review Commission FROM: Sandy Ingalls, Code Enforcement Specialist DATE: January 11, 2002 SUBJECT: AP 01-07 [LU 01-0060]—GK Travel Sign Variances BACKGROUND On December 17, 2001, the Planning Director issued a decision denying LU 00-0060, an application filed by Ramsay Signs, Inc. for GK Travel. The applicant requested approval for two variances to the Sign Code, including a variance to retain the existing pole sign, and a second to increase the sign size from the maximum of 32-sqaure feet to 42.5 -square feet. The sign is located in front of the structure at 15835 Boones Ferry Road. The Planning Director determined that the applicant had not provided adequate prool'that the variances were necessary in order to provide signage at the site On December 26, 2001, Mr. Darryl Paulsen, president of Ramsay Sign, Inc. appealed the Planning Director's approval (Exhibit A). An appeal of a minor development decision is permitted by LOC 49.40.820(4). Planning Staff believes that the proposal does not meet the applicable criteria for the sign variances pursuant to LOC 47.12.500 and 49.28.400(2). Staff found that there were alternative signages available to the site that would meet the criteria of the Sign Code and vision clearance requirements. A detailed analysis of all applicable criteria and related issues is provided in the December 17, 2001, staff report (Exhibit D). The appellant did not identify any issues in the notice of appeal (Exhibit A). If any issues are raised following the preparation of this memorandum, staff will provide the Development Review Commission its analysis. Pursuant to LOC 49.40.820(4), appeals of Planning Director's decisions are heard de novo (i.e., as if no decision had been rendered) at a public hearing before the Development Review Commission. This means new evidence may be submitted prior to, and during the hearing. Attached are exhibits received since the appeal was filed on December 26, 2001, as well as the original Planning Director's report and decision, as follows: EXHIBITS A. Request for Hearing by Ramsay Signs, Inc., dated December 26, 2001 B. [No current exhibits; reserved for hearing use] C. [No current exhibits; reserved for hearing use] D. December 17, 2001, Staff Report LU 01-0060. EXHIBIT D2 AP 02-03/AP 01-07/ LIJ 0 1 -0060 041 E. GRAPHICIPLANS El. Tax Map E2. Plot Plan E3. Proposed Sign E4. Existing Pole Sign E5. Applicants Enhanced Photographs of Site with a Monument Sign E6. Enhanced Aerial Photograph of Site with Reconfigured Parking E7. Sample Signs E8. Photograph of Journeys! Of Lake Oswego Sign E9. Photographs of Site F. WRITTEN MATERIALS F1. Applicants Narrative, Dated October 3, 2001 F2. Applicants Supplemental Narrative, Dated November 9, 2001 F3. Sign Permit Application # 01-0023 F4. Staffs Denial Letter, Dated, August 30, 2001 F5. Memo from Kathy Marcott, Traffic Engineering Technician, Dated November 28, 2001 F6. Comments from GK Travel, Dated December 5, 2001 G. LETTERS [No current exhibits; reserved for hearing use] CONCLUSION Based upon the evidence submitted to date, staff finds the applicants have not satisfied the criteria for approval for the two sign variances, as noted in the December 17, 2001 staff report. RECOMMENDATION Staff will make its recommendation to the DRC following the submission of all evidence and argument by the applicant and any additional interested persons. L:\Cases\2001\1.U01-0060\LU-01-0060 [AP 01.07]AppealtoDRC - Memo.DOC Memorandum to DRC, January 11, 2002 042 Page 2 of 2 BACKGROUND TO: Development Review Commission FROM: Sandy Ingalls, Code Enforcement Specialist DATE: February 15, 2002 SUBJECT: AP 01-07 [LU 01-0060]—GK Travel Sign Variances On December 26, 2001, Mr. Darryl Paulsen, president of Ramsay Sign, Inc. appealed the Planning Director's denial of LU 00-0060, an application filed by Ramsay Signs, Inc. for GK Travel. The applicant requested approval for two variances to the Sign Code as follows: a. a variance to retain the existing pole sign. b. a variance to increase the sign size from the maximum of 32-sqaure feet to 42.5 - square feet. On February 4, 2002, the applicant appeared before the Development Review Commission. During the proceedings, the applicant asked for a 7 -day continuance for additional written materials to be submitted. That period expired at 5:00 pm on Monday, February 11, 2002 Without further submittals by the applicant. DISCUSSION Planning Staff believes that the proposal does not meet the applicable criteria for the sign variances pursuant to LOC 47.12.500. Much of appellant's testimony was to challenge the constitutionality of the Sign Code's provision as to when non -conforming signs must comply with the Sign Code. The appellant did not argue that the variance criteria itself was unconstitutional. Staff submits that any constitutional challenges to the Sign Code must be made in proceedings related to enforcement of the Sign Code. Appellant apparently believes that it must raise constitutional challenges when seeking a variance. Staff believes that appellant misconstrues any requirement for "exhaustion of remedies" before raising constitutional challenges to ordinances: although the applicant may first have to seek a variance before challenging the constitutionality of the Sign Code, a constitutional challenge to the Sign Code is not alternative variance criteria in deciding whether or not a variance should be granted. Accordingly, the Commission needs only to apply the evidence submitted to the variance criteria, not adjudicate the constitutionality of the Sign Code in a variance proceeding. Applying the evidence to the criteria, staff finds that applicant had not presented sufficient evidence to substantiate the variance application. EXHIBIT D3 n AP 02-03/AP 01-07/ V 4 3 1,1101-0060 A. Variance to Type of Sign Required — Pole Sign instead of Monument Sign or Band Sign. 1. Strict application of the Code requirement would deny the applicant a reasonable opportunity to communicate by sign in a manner similar to like persons or uses because of unusual or unique circumstance relating to the property or the proposal, such as sign or building location, building design, physical features on the property, or other circumstances. LOC 47.12.500(2)(A). Examining the evidence to the criterion in reverse order: a. Unusual or unique circumstances relating to the property or to the proposal. The applicant did not submit M evidence that the property had unusual or unique circumstances, such as the site or building location, building design, or physical features on the property. All along Boones Ferry Road there are sites with similar circumstances as GK Travel [LOC 47.12.500(2)(A)]. b. Communicate by sign in a manner similar to like persons. The Commission must first define the category of "like persons". Staff submits that "like persons", for purposes of determining whether a variance from a code requirement should be granted, are those persons and property that are in conformance with the code requirement from which the appellant seeks a variance. Therefore, the "like persons" would be properties that comply with the Sign Code. Staff has noted in the original staff report a number of businesses along Boones Ferry Road that have complied with the Code, and have monument signs or sign bands that conform to the Code. (All non -conforming signs are required to be in compliance with the Sign Code [LOC 47.04.100(5)] by May 21, 2004.) Applicant has noted that a monument sign could be obscured if a vehicle were parked alongside the monument sign. Staff has calculated the required off-street parking, and as illustrated on Exhibit E-2 and E -G, even applying 125% of the required parking, there is adequate space on -the site to provide permanent vehicle parking at a reasonable location away from the monument sign. While it is true that if vehicle parking surrounded the sign, its effect would be diminished, applicant must first show that any vehicle parking along the sign is reasonably necessary under the Code. Further, as Exhibit E-7 shows, other property owners have used landscaping or other "no parking" techniques around the monument sign to assure that vehicle parking spaces are not permanently located in a manner to obscure the monument sign. Staff and the applicant disagree on the vision clearance issue. Staff funds that the site does not have a vision clearance problem requiring a sign variance. The applicant stated, but did not submit any evidence, that the site has a vision clearance problem and that a monument sign would be blocked by cars parking in front of the sign. Staff funds that if landscaping surrounded a monument sign, then the sign would be visible from Boones Ferry Road, as is the case with most of the other monument signs on the street. Staff funds that by eliminating two excess parking spaces in the front of the building, to landscape around a monument sign, the site can Memorandum to DRC, February 15, 2002 Page 2 of 5 still meet the required minimum number of parking spaces with parking on the side and rear of the building. If the appellant were to receive a variance for a pole sign, staff submits that the result would be that the applicant would have better sign communication than the surrounding complying properties. Picture Boones Ferry Road with a row of monument signs, and a pole sign for GK Travel. The pole sign will be a glaring anomaly. The sign would adversely affect the surrounding commercial sites with its conflicting size, sign type, height and construction. The sign would not blend in with the other signs along Boones Ferry Road. C. Reasonable opportunity As noted above, the appellant's request for a variance would be be and a reasonable opportunity to communicate because it would exceed the level of communication that other complying businesses would have. The appellant's argue that there may be times during which a large delivery truck would be parked in such a manner as to obscure the visibility of a monument sign. First, as shown on Exhibit E-2, the truck can be parked behind the monument sign, so it would remain visible from the street. Even if it could not be, temporary blockage of the sign would be for a small, limited time. It would be unreasonable, in comparison with the adjacent complying properties, to have 100% "never blocked" signage. The appellant has produced no evidence which would show that any blockage of the sign would (1) be other than theoretical, and even if it would occur, (2) would be for any significant period of time during the business hours. 2. The sign which would result from the variance will not affect the surrounding neighborhood or other property affected by the request in a manner materially inconsistent with the purpose of the Sign Code expressed in LOC 47.03.010. "The City Council finds that to protect the health, safety, property and welfare of the public, to provide the neat, clean, orderly and attractive appearance of the community, to improve the effectiveness of signs, to provide for safe construction, location, erection, and maintenance of signs, to prevent proliferation of signs and sign clutter, and to minimize adverse visual safety factors to travelers on public highways and on private areas open to public travel, it is necessary to regulate the design, quality of materials, copstruction, location, electrification, illumination and maintenance of signs visible from public property, public rights-of-way and private areas open to public vehicular travel." LOC 47.03.010 As noted above, staff believes that granting a variance for a pole sign, in an area that will be limited to monument signs or band signs, will adversely affect the surrounding neighborhood because the sign will be uniquely visibly inconsistent with all other signs around it. This would be inconsistent with the purpose of the Sign Code: "orderly and attractive appearance of the community, to improve the effectiveness of signs", and "prevent proliferation of signs and sign clutter". Memorandum to DRC, February 15, 2002 045 Page 3 of 5 3. The degree of the variance is limited to that reasonably necessary to alleviate the problem created by the unique or unusual circumstance identified pursuant to subsection 2(A) of this section. Staff finds that the site does not have any unusual or unique circumstances requiring a variance and appellant has submitted no evidence that the site is unique. To the contrary, the evidence shows that the site has at least as good as, if not better, street visibility than any other site along Boones Ferry Road. B. Variance to Amount of Sign Area Assuming, for the sake of argument, that appellant has produced sufficient evidence to warrant a variance from the type of sign — pole sign, staff submits that there is no evidence whatsoever relating to the alleged necessity for a sign face greater than the amount of sign face permitted by the Code. 1. Strict application of the Code requirement would deny the applicant a reasonable opportunity to communicate by sign in a manner similar to like persons or uses because of unusual or unique circumstance relating to the property or the proposal, such as sign or building location, building design, physical features on the property, or other circumstances. LOC 47.12.500(2)(A). a. Unusual or unique circumstances relating to the property or to the proposal. Assuming a pole sign variance were granted, appellant has presented no evidence of any unusual or unique circumstance that would require a greater sign face than permitted under the Code. Instead, what has driven the application for a variance to the area of the sign is the fact that the existing sign, which appellant seeks to "legalize", happens to be 42.5 square feet. That is the only "unusual or unique circumstance" — that appellant seeks to legalize an existing sign — and that is not unusual or unique. b. Communicate by sign in a manner similar to like persons. Appellant has submitted no evidence whatsoever that a larger sign area than others is required to attract the attention of the public. To the contrary, appellant's request would result in appellant communicating by sign in a manner GREATER than like persons. C. Reasonable opportunity Since the effect of a pole sign, with the 32 sq. ft sign face, would be uniquely visibly inconsistent in comparison to other complying businesses along Boones Ferry Road, appellant's request for an even larger sign face on a pole sign goes beyond "reasonable opportunity" to "better than others". 2. The sign which would result from the variance will not affect the surrounding neighborhood or other property affected by the request in a manner materially inconsistent with the purpose of the Sign Code expressed in LOC 47.03.010. Memorandum to DRC, February 15, 2002 [two • Page 4 of 5 "The City Council finds that to protect the health, safety, property and welfare of the public, to provide the neat, clean, orderly and attractive appearance of the community, to improve the effectiveness of signs, to provide for safe construction, location, erection, and maintenance of signs, to prevent proliferation of signs and sign clutter, and to minimize adverse visual safety factors to travelers on public highways and on private areas open to public travel, it is necessary to regulate the design, quality of materials, construction, location, electrification, illumination and maintenance of signs visible from public property, public rights-of-way and private areas open to public vehicular travel." LOC 47.03.010 A singularly large sign, on a pole, would be inconsistent with the purpose of the Sign Code: orderly and attractive appearance of the community" and "to prevent proliferation of signs and sign clutter". 3. The degree of the variance is limited to that reasonably necessary to alleviate the problem created by the unique or unusual circumstance identified pursuant to subsection 2(A) of this section. Absent an unusual or unique circumstance, this criterion also cannot be met. CONCLUSION Based upon the evidence submitted to date, staff finds the applicant has not satisfied the criteria for approval for the two sign variances, as noted in the December 17, 2001, staff report and the January 11, 2002 staff memorandum. RECOMMENDATION Staff recommends denial of AP 01-07 [LU 01-0060]. Memorandum to DRC, February 15, 2002 Page 5 of 5 047 0 2S.R.1E. W.M. 01 2 IE 8CB 1 N TY o ayLAKE OSWEGO o' � � 6 SITE 3 a P P� PA CANCELLED TLS P 2 1E 8 6 C ¢ Py y�g a �h 2101 6400 3401 v �,L°r t,��PiPP P{° 4101 4800 3502 y 4201 3200 3601 �o• .` { �y 1°�g54'�Q 6301 2301 6504 �: �za za z• .�....� �G , , ti 6 401 2401 6801 1581 r7 0 01 o g b JP gp a 200 4001 6901 15x15 I I ° g°� 0 -1 �v�Or'p��p 4302 00 Al 711011 P> 4301 A p 901 4202 is S P 1601 3500 Al 59p0 h �a 1300 6000 o 6101 N 902 N �' �__ �� � 0 \ w ec R 1500 6201 �OaO 35� 1201 �l or a v >� 5001 `001 � a 5003 I hems/ ^O�L 2600 _�n(� 7600 —'� 4� °�`� °% °g Y 102 201 pp����/� ieo. 9�• u (L9e. 8J .A S • \'�b �'o �ag 135 501 r1VMDSd'+'Os'G 9 yo 7a. ss Y Fb fo ��47 r' O 2303 103 100 100 zv i i�2FdP�_-.�ot(oy� 1 �� w,2201 -tp CP 4 66 . , I'pf� "ewe v bTfti / 6 gw 3 7905 / p�� _ .^ a /�25q \5o M� py is4e•8 �g o o ` ,e2p�� AVENUE - _ SEE MAP "\A' a 2 1 E 3C B c =y� O � 9°• @ � X00°Q v. �,�9 s mm \ +,✓ ° \5fo e� 98..0 4 n 054 C 10 v, \� 10. 2 °y641 ' \6 a v 0 N w 46 now a' ° O '� ,�``1s � � � -2900 � .E �"i2$O pc• ��r0 � or \00 Id$OOQPR S�• 1 c �,,. 11B• 9 ao6\\�R° 0 G ,�k•AQ'3 9 \ 0 5 (o ` "`le 6600 \ %\� — — 6100 O \\00 s EXHIBIT E-1 6vC y 1,11 0 1 -0060 $ 630 '� - --- — Ul 0 RECEIVED NOV *1 -1 '1001 CITY OF LAKE OSWEGO Dept. oi manning & Development 61 (- -1-v a .) -.e- I e't, D 6T. EXHIBIT E-2 1, 1," 01-0060 -Pf-o-r olt-At-j 14 of -T-0 s Ga C) cn 9 6r r T'Z Pt(& L F —A ............. EXHIBIT E-2 1, 1," 01-0060 -Pf-o-r olt-At-j 14 of -T-0 s Ga 1 Ko TfMVEL GROUPS • TOURS • CRUISES (omplete Travel Services •Domestic &International SCALE: Y.- = V - 0" REFACE EXISTING DOUBLE FACED ILLUMINATED PYLON DISPLAY WITH (2) NEW LEXAN FACE REPLACEMEN IS FACES) WHITE LEXAN GRAPHICS TRANSLUCENT VINYL APPLIED FIRST SURFACE (GK LIMITED TRAVEL) AND (COMPLETE...) TEXT 230-49 BURGUNDY (GROUPS...) TEXT AND DOT BETWEEN (COMPLETE—AND DOMESTIC...) 270-126 EMERALD GREEN REPAINT EXISTING CARINE TIRE TAINER(S) AND SUPPORT POLE TO MATCH )3"t BURGUNDY PRODUCTION PRINT 2.27.01 TT tU TTV E S. I. rl A I IT"K-E C" rn Xevl.lont C x z . o o =+ � m c w l GMRAMS" ) r- `i D.te 111200 Client We Dmm 0111/. Auounl E.eutiv.. I., ,I. Dellgn I- RM. Approvals 09 (gT,ilM HIS. A.—F fila', I Iti.ilur..iwMm O.u..rY. r.J►iri.J p.prq J l..ut 1i1., W Mu blur u.y.r Wu W nMr.ub JiM .0 r.11grnJl.ur .rgrWwlJu Mn,. I Proposed hole Si6n, oo IIlab 6,y.. m(I.1 111ILII (100 QI TTSf low 211.6 Xevl.lont 09 (gT,ilM HIS. A.—F fila', I Iti.ilur..iwMm O.u..rY. r.J►iri.J p.prq J l..ut 1i1., W Mu blur u.y.r Wu W nMr.ub JiM .0 r.11grnJl.ur .rgrWwlJu Mn,. I Proposed hole Si6n, oo IIlab 6,y.. m(I.1 111ILII (100 QI TTSf low 211.6 p� r ., 'i Date 12 00- -14 IA L.1 Accou Appco Dl.sl 1 Ohm ►A Cr JA cli 1� 0 0 5 8 2 w " ti � ♦ .y .r Me 01200 Client w Account I I i 1 Design Affrovals Wftd ------------------ i 1 1 • 4 a., .. ..-f...- a T... .- .. M.-..- ....... `♦` � * � T o. 4 " .,>.#*....,,.,;.•: ,•.w•+•..•p..,agatp.ly��er4:ern'n*+�F1'S•Y$�V"!4A!'..'`e - ,,mow',,.-.. gyp. .. '.F.,.� n w�.!i�'' �y� e' ,�., .•".4^v S�R♦'N4M1^w♦ �ey��. N�y.�,1} M \ln�oR++.� ry'.Y' 1 iso 0 0 5 8 2 77 i! ► ,' 'ms s ' x • • .�► � 4Ll� • i ' � jai �, � ..�' ��.��' y •1� •i -w • ��• ! -ems �. ; •, is,; X41'1 ;l +�;��� t , t 'fib-- , • 1.. . • a / Staff Recommended Parking Lot Reconfiguration Shoring a Monument Sign (M) OWN is A LN' 4, All r Sample Signs Site Plan and Sample Sign Photos Al AI \ C� ', ti i �''a. , fV° `. .`'. •^+ rn, �'�^- t 10 93 + 09 IN 0 Goy 1b 0& C; 01 7V 011 13�1 0& ip 4F;t t EXHIBIT E.7 LU 01-0060 > "I# A ,s,.. 12,,`7,12041 VlrV op" IIS mw Al 4N1� r t6�i:�i i t i s. 2/7/zoai L,.' I T-r)Awl GAY � • r ` ,r k �7da pigm 12x'7;`2001 5. 16016 Boones Ferry Road - 32 sq. ft. monument sign 6. 16130 Boones Ferry Road - 32 sq. ft. monument sign + .� '4r_. ♦t ,' y NI, Be' 12;'7/2a01 wt* 4 ` 1►j+ .r r a 12/'7/2001 All. 12/7/2041 12/7/2001 . �l � � �w • LTJ � r$ 1 ` ;�u4 eno vow 1 +i��• �, � � Hyl ; ��.• _�.� ,�. s ti 12/12/2001 p0002036.jpg (1536x1024x24b jpeg) Looking Toward Boones Ferry Road ft•om the end of the Driveway next to the Lake Grove Post Office 12/12/2001 p0002035.jpg (1536x1024x24b jpeg) Looking East at Rear Parking Configuration 071 JZAMSAY SIGNS October 3, 2001 Narrative for Class II Variance Application For Ramsay Signs, Inc. Re: Leased sign at GK Travel, 15835 SW Boones Ferry Rd., Lake Oswego, OR We are requesting a variance to continue using an existing freestanding sign leased to GK Travel. Compliance would deny the applicant reasonable visibility of his business at the street. Changing to a "monument' style sign would severely impact visibility due to the small size of the lot. Anyone parking in front would also block a monument sign from view. The impact to the surrounding neighborhood would be insignificant. There are several pole signs in the immediate area, i.e. Giant Burger and Shan Tay Business Park. The degree of variance we are asking for is reasonably limited because we are not asking to make the sign any more non -conforming. We are asking only that it remain as is. Sincerely, Ramsay i , _e__A Darryl uls n, President DP/111 EXHIBIT F-1 LU 01-0060 013 ---- _ '4 T AVENUE PORTLAND, OREGON 97206 ( 503 777.4555 ( 800 613.455S (i 503 111.0220 SAY November 9, 2001 Narrative for Class II Variance Application for Ramsay Signs, Inc. Re: Leased sign at GK Travel, 15835 SW Boones Ferry Rd., Lake Oswego, OR We are requesting a variance to continue using an exiting freestanding sign leased to G.K. Travel. The first variance request we have is to be relieved of reducing our existing sign from forty (40) square feet to thirty two (32) square feet. The existing sign cannot be modified without removing the sign and manufacturing a new sign. This particular site is located on a curve with limited parking. The lot size is relatively small with neighboring trees blocking the approach from the northeast. Customer parking fills the front of the property and the post office driveway abuts the west. Reducing the sign size would require the manufacture and installation of a sign to comply not only with a reduced square footage, but a reduced height. A monument sign would not be visible at all when cars are parked in the lot, which there is quite frequently. Parking in the front of the building would have to be eliminated completely in order for the sign to be seen (see photos). Removing the parking in front of the business would be an additional hardship for this business. Allowing the additional eight (8) square feet sign size would not impact the surrounding neighborhood or other properties as there are similar size signs in the immediate vicinity. Strict application of the code would deny the applicant a reasonable opportunity to communicate by the use of this sign because of the unusual arrangement of lot size and driveway placement.. We are also asking for a variance to the type of sign allowed at this site for the same reasons. We cannot locate a monument sign on either end of the property without losing a parking space or creating an obstacle for vehicles entering or exiting the property. The use of a pole sign would be necessary in order to provide for vision clearance at the driveway on the west end because of the setbacks required for the "vision triangle" requirements, see plot plan. Our request for a pole sign would not be unreasonable given the setback and trees blocking the northeast end of the site therefore the variance we are asking for would meet the requirements of section 47.12.500 2-13 anyway. RECEIVED NOV 1 ;f 2001 CITY OF LAKE OSWEGO Dept. of Planning & Development 076 0 T W A V C M II r P D T I A AI R tt D r G!1 11 0 7 1 n 4 f C 0 7 7 77 A( c EXHIBIT F-2 LU 01-0060 ea es f onn II) e((( MfA7 777 077f1 In summary, there is nowhere on the lot a monument style sign will work without being in a vision triangle, sacrificing valuable parking spaces or sacrificing total visibility of the sign to the street by surrounding cars. Using the sign that's now in place does not impact the surrounding neighborhood or properties. A pole sign would be allowed under the current sign code given the circumstances and the eight (8) square feet variance would not be visibly discernable except to someone with a tape measure. Sincerely, Ramsay Signs, Inc. D aulsen, President Enclosed DP/Ill 076 9 16 0 SE 74 T AVENUE PORTLAND 0REGON 91106 t 503 777.45 SS f R 0 0 A 1 1 4 C S 5 to; 01 711 0720 SIGN PERMIT Permit No. PL Fee: /0?5 nRece� APPLICATION Date�p2�—`�' 1. Sign Location (Address) 156 35 S, VJ- SQt S FE r,,_V t�-G Business Name Giz, L m TEN VE L Bus. Lic. # 2.-4)00 4 1 to Business Owner's Name �' G t (� t So N Phone SU3 - (03 S --7-7 to (e Business Address Pf, A•Fi o u t"� 3. Property Owner 5,►.Mn E A -S A (-S oy Phone Address 4. Sign Company RP, ms;.q snns Bus. Lic. # _ Address 9lke. S.E. Phone 503 -7'i'7--4-555- A. Application for ❑ Permanent Sign ❑ New Sign ❑ Temporaiy Sign 23 Face Change 6. Type of sign Number Size Sq. Ft. Total Illumin. Letter Letter a) Monument (H) X (W) Height Type* Size Color C) Wall d) Complex _ e) Marquee/Awning — f) Overhanging/ Blade g) Banner h) Window (EC) i) Cornice (EC) j) Sign above Cornice (EC) - k) Other Pole - 7. oie-7. Note: Illuminated signs require electrical permits. Contact the Building Division. Is an electrical permit needed? YES NO Applied for: YES NO 8. Attach illustration of proposed sign. See reverse side for requirements. 9. Attach site plan showing location of proposed sign and all existing signs on site. See reverse side for requirements. I agree to erect said sign in accordance with the above description and approved plans, Ora `n _ee of the e ih -e-%fie-Oswe o (LOC Chapter 47). Tr,,ve7 -51C7,/ Applicant's Name (Priv 0-1 7e, L&C– Applicant's Signature - +- _ Phone. _�? _ q 5 S S Date Property Owner Signature (attach proof if agent) Date Business Owner Signature `J CC. R r C Revued1/19/0i0 7 EXHIBIT F-3 p/FornWApplc tns/Sipspp LU 01-0060 *CONTENVUED ON REVERSE* SITE PLAN and/or BUILDING ELEVATION PLANTS drawn to scale and dimensioned*, showing: Existing structures Driveways Street and right-of-way Existing signs Proposed sign Vision clearance All incidental signs PROPOSED SIGN drawn to scale and dimensioned*, showing (as applicable) : Total Height from ground Width- Square Footage Thickness. Size and style of letters Color Type of illumination Materials One copy of all materials needs to be submitted in 8'/s" X 11" format. STAFF USE ONLY Staff . bite Plan Included (5/N Approve nied D to _6 11,f Revocable Right-of-way Permit Required Y/N Sign Mustration (5N Electrical Permit Required YIN ^-IIJJ Zone (. S _ Inspection Date "-ision Clearance Notes COMMUNITY DEVELOPMENT DEPARTMENT August 30, 2001 Mr, Darryl Paulsen Ramsay Signs 9160 SE 74`s Ave. Portland OR 97206 Re., GK Travel Sign at 15835 Boones Ferry Rd, Lake Oswego Dear Mr. Paulsen; This letter is in response to your sign application for GK Limited Travel.The because it fails to meet the specific requirements of the Sign Code as discapplication is denied ussed below, You applied for a face change sign permit for an oversized existingnon-conf.rrnin 15835 Boones Ferry Road. The existing sign is considered non -conforming because it is a pole signan exceeds the maximum square footage allowed by Code. e existing sign g pose sign located at feet, while the Code establishes a maximum of 32 square feet limitation Thor pole and monum,ents siasures 50 squaregns, d it Pole signs are allowed in the General Commercial (GC) Zone only when necessary to provide vision clearance at driveways or intersections and where there is no alternative visible on building or monument sign location, LOC 47,10,410. This site does not appear to have a vision clearance problem; therefore monument or wall sign could be installed at this location. ,a As discussed in earlier correspondence dated June 19, 2001, your application must conform with the Si Code, because of change of ownership of the travel business. The existin si copy due to a change in business (Journey's to GK Limited). Accordin 1 , o iunderwent a change o compliance with the Sign Code, as required below: S y' gn must come into "Section 47,04, 900 Non -Conforming Signs in all zones, except in the EC Zones, I. A non -conforming sign in all zones other than the EC zone as described and established by the Lake Oswego Zoning Code may be maintained or undergo a change of copy without complying with the requirements of this Chapter, with the exception that any change for a new business or use or any changes in a wall sign which is painted on a structure will comply with this chapter at such time as change in copy or alteration occurs (emphasis added), 2. All non -conforming signs are required to meet the provisions of this chapter at such time as the sign is altered, as defined by LOC 47,03,095, 079 EXHIBIT F-4 Planning Division (503) 635-0290 O Building Division::: (503) 635-0390 . A Avenue 4 Post Office Box 369 a Lake sca, Oregon 97034 LU 0 o 060 g" EngineeringDivision: (503) 63 3 m es Your options for a new sign should be either a monument sign or a sign attached to the building, [This is based on the GC Zone. As you know, the current zoning is incorrectly shown on the zone map as R-7,5; however, there is a pending staff recommendation to the City Council to correct the mapping error to depict the zoning as GC.] The following section of Sign Code prescribes the requirements for the type, size and number of allowed signage that you may apply for. "Section 47.10.410 Permanent Signage Requiring Permit Allowed in Commercial Zones (GC, NC, OC/R-2.5, OC/NC, and R -2.51K9. In addition to the temporary and permanent signage allowed without permit in the following commercial zones: GC, NC, OC/R-2.5, OC/NC and R -2.5/W, the following signage is allowed subject to permit and fee. 1. Free Standing Signs. A. Allowable Area: Maximum 32 square feet. B. Number: One sign shall be allowed for the primary frontage. Another sign shall be allowed on any secondary frontage that is 300 feet or more in length. C. Height: Maximum 18 feet for pole signs and 8 feet for monument signs. D. Sin Types: Monument signs shall be allowed. Pole signs shall only be allowed when necessary to provide vision clearance at driveways or intersections and when there is no alternative, visible on -building or monument sign location (emphasized). No pole signs shall be allowed in the OC/R-2.5, OC/NC and R -2.5/W zones. 2. Sign Attached To Buildings, A. Allowable Area: The 32 square foot maximum allowed for freestanding signs may be transferred to allow signs attached to buildings as an alternative. Except in the OC/R-2.5, OC/NC and R -2.5/W zones, an n additional sign or signs shall be allowed within a two -foot high horizontal sign band. The sign band length signs may be 75 percent of the building or business frontage whichever is less. B. Number One 32 square foot sign shall be allowed on each street frontage. The maximum number of signs within the sign band on each street frontage shall equal the number of frontage businesses located on the ground floor. C. Height: The maximum 32 square foot sign shall not be placed higher than 18 feet on any structure. The sign band shall not exceed two feet in height and shall extend along one or more sides of a structure located between the windows and the parapet on a one story building with a flat roof and at or below the fascia on a one story building with a pitched roof. On a multi -story building it shall be located above the windows and below the second story line (retail cornice height). D. Sign Types: Wall signs and sign bands are allowed. 3. Additional Signs Allowed. A. Awning or canopy signs meeting the same size and number restrictions as sign bands may be substituted for the sign band signs allowed by LOC 47.10.410(2). The awning or canopy may extend over the right -of way, but shall come no closer than two feet from areas subject to vehicular travel. No such signs shall be allowed in the OC/R-2.5. OC/NC and R -2.5/W zones." I look forward to hearing fr you as to the disposition of the pole sign. ;ause the pole sign is not allowed it will have to be removed by September 28, 2001. Please be advised that if this violation is not resolved by the above deadline, a citation may be filed in the Lake Oswego Municipal Court, subject to a daily fine for each violation. I have enclosed a new sign permit application for your use. Please feel free to contact me with any questions about this letter at 503-635-0290. Sincerely, 6a,4 Sandy Ingalls Code Enforcement Specialist Encl: Signa Permit Application Copy to: GK Travel Enforcement File 081 Community Development Department Engineering Division Memorandum To: Sandy Ingalls, Code Enforcement Specialist From: Kathv J. Marcott, Traffic Engineering Technician Subject: Sight Distance at G.K. Travel, 15835 Boones Ferry Road Date: November 28, 2001 As you requested, I made a field visit to the site to determine the sight distance. City of Lake Oswego code, Chapter 48 Section 20.530, subsection 2b(4) states "at all intersection of a driveway and a street, the vision clearance distance along each traveled surface shall be 10 feet". Since the subject property has two driveway accesses onto Boones Ferry Road, it would be subject to three vision clearance triangular areas measuring 10 by 10 feet. 1 have delineated these on the sketch provided with the application. However, these are only conceptual since the drawing is not to scale; actual measurements would have to be made in the field. The code ftirther states in section 2 that "Within the vision clearance triangle, it shall be unlawful to install, set out or maintain, or allow the installation, setting out or maintenance of, any sign, fence, hedge, shrubbery, natural growth or other obstruction to the view, higher than 30". The current sign appears to be in the vision clearance triangle on the west side of the lot, however, it is exempted from the vision clearance code by section 3d which says "Signs mounted nine feet or more above the ground and supported by a single support with a maximum cross section of 12 feet. In Chapter 47, Section 47.10.410, subsection 1D, pole signs are only allowed when necessary to provide vision clearance at driveways or intersections and when there is no alternative, visible on -building or monument sign location. It would be possible to locate a sign in the front of the property that would not be in the vision clearance triangle. A monument sign should be visible and still meet the City's codes regarding vision clearance and sign types. Parking may have to be modified to allow more parking in the rear of the building leaving the front clear for better visibility of the sign. In the recently approved Boones Ferry Corridor Plan, an 82 -foot right of way was adopted as part of the plan. When this project is funded, possibly in the next 3-4 years, improvements will be made to this corridor changing it to a five -lane section with sidewalks and bike lanes. In considering placement of the sign, this should be taken into account so that it's not too close to the back of the existing sidewalk. Ultimate right of way can be determined by measuring 41 feet from the centerline of Boones Ferry Road. EXHIBIT F-5 LU 01-0060 083 aPAes kki EL -- > R�tCING, t3lL6.A \ TO D/f POLE QC�M 1 3+61, OFTM tRiv VCT CT VCT - lot l) ik t -W S4-),\ / GKD'TRAVEL Complete Travel Services, Domestic & international December 5, 2001 IR E C F F I " — _.- Capt. of Planniwj 3 t)avaiapment Sandy Ingalls, Code Enforcement Specialist Lake Oswego Planning Department Lake Oswego City Hall P.O. Box 369 380 "A" Avenin Lake Oswego, OR 97034 Dear Ms. Ingalls, We received the Notice of Minor Development Application dated November 29, 2001 relative to the variance request by Ramsay Sign Inc. to retain the pole sign in front of our building. We purchased this property in February. At that time we understood that the sign could remain for several more years under a moratorium granted by the city. We now understand that the city wants it taken down and replaced with a monument type sign. This is not an insignificant matter to us. If we had been here for some years and were better known in the community a smaller sign might not be such a problem but the existing sign is important to us now. Also, a monument sign would not be suitable for at least three reasons. Number one, it would impede the use of the parking spaces in front of the building. They are vital to 4J because there is no on -street parking. Number two, a monument sign would block the visibility of the entrance to the very busy Lake Grove Post Office which is right next door. Number three, I have seen the Boones Ferry Road Corridor Study, and with the proposed changes to the street the usage of one of our driveways would be inhibited and a monument sign would hinder the effective use of the other one. Small businesses such as ours are the commercial backbone of Lake Oswego. We purchased this property in good faith. We spent a lot of money renovating the building and grounds. Our improvements upgraded the quality of the neighborhood. We are trying to sustain a viable business at this location. It is extremely difficult in this economic climate. The loss of our sign would make it even more difficult. N 15835 S.W. Bpones Ferry Rd. • P.O. Box 1 169 • Lake Oswego, OR 9703 EXHIBIT F-6 (503) 635-7766 • FAX (503) 635-7781 • www.gktrivel.com I.0 (J1-0OGU 085 0 The message you send is very confusing. On the one hand you say that you need us, on the other hand you foster activities that constrain our ability to survive. We respectfully request that you evaluate the facts that we have presented in this letter and give favorable consideration to the variance request. Sincerely, L W. H. Gillison Co -Owner THE VALUE OF SIGNS A GUIDE FOR PROPERTY APPRAISERS, BROKERS, LEGAL PROFESSIONALS, SIGN USERS AND MUNICIPAL PLANNERS BY R. JAMES CLAUS, PND, SUSAN L. CLAUS THOMAS A. CLAUS + I rMnmcskiny the cbou! 0b�- Learning to Use Signage as a Planning Tool for Intelligent Community Development AI EXHIBIT F8 v.� M' AP 01-07 [LU 01-0060] ' � •. -mat' '••� L.___—_ ____-_.__._________ .,y,y r,r! '" F'w�,.�►+^•'.,:.�:�.'.uwAfAMMIMMWInIyp�+m'!+T'^r'1nrnN1 +tY+ 088 sa9.95 Signs represent the least expensive and most efficient way to send a message in our consumer-bosed market economy. The contributory value of the visibility component to commercial property is often underestimated. This book is the first attempt to provide extensive background information about signage in the context of valuation issues and techniques. It also delves into the legal decisions on government sign regulations. Many such regulations have come under recent court scrutiny regarding the First, Fifth and Fourteenth Amendments to the U.S. Constitution. This book makes clear how commercial signage has a cumulative economic value to all community stakeholders and how overly restrictive regulations unwittingly restrict economic potential. Finally, it guides the reader though principles of appraisal for both ort -premise and outdoor signage. The Value of Signs is indispensable in understanding the value of signage, its complexity, and impact of sign regulation. R. James Claus, Ph.D., Susan L. Claus and Thomas A. Claus have more than 50 years of combined experience in signage valuation. Dr. Claus, a certified real estate appraiser, has published many books and articles on the subject, and is often an expert witness at court trials regarding the value of signage to a community. Susan has spent the last 15 years in real estate acquisition, management, development and appraising. She is also a certified real estate appraiser, and received the SRA appraisal designation several years ago. Jim and Susan operate a real estate consulting service in Portland, Oregon, and are co -executive directors of the Signage Foundation for Communication Excellence, Inc. Thomas, nearing completion of law school, is specializing in land use and administrative law, and commercial speech issues. m r C m O n LI) 0 Z to THE VALUE OF SIGNS A GUIDE FOR PROPERI-Y APPRAISERS, BROKERS. LEGAL PROFESSIONALS, SIGN USERS AND MUNICIPAL PLANNERS BY R. JAMES CLAUS, PHD, SUSAN L. CLAUS tic THOMAS A. CLAUS EXHIBIT F7 AP 01-07 [LU 01-00601 American Society of Appraisers A 5 A 7'/re International .Society of Professional Values The Amcn.an Judet) of Appraisers (ASA) is committed to fostering professional excellence in Its membership through education, accreditation, publication and other services. Its prestige is intended to contribute to the growth of iLa membership and the appraisal profession. ASA has reviewed the appraisal sections of this book and believes that it should be very helpful to many appraisers encountering assignments involving signs. American Society of Appraisers 555 Herndon Parkway. Suite 125 Herndon, VA 20170 (703) 478-2228 PAX: (703) 742-8471 www.appr2isers.org THE VALUE OF SIGNS A GUIDE FOR PROPERTY APPRAISERS, BROKERS, LEGAL PROFESSIONALS, SIGN USERS AND MUNICIPAL PLANNERS R. James Claus, Ph.D. Susan L. Claus Thomas A. Claus C The Signage Foundation For Communication Excellence, Inc, Sherwood, OR ® Copyright 2002 by R. James Claus, Susan Claus and Thomas Claus All rights reserved. No part of this book may be reproduced in any Form without written permission of the publisher, except a reviewer, who may quote brio! passages in a review. Some of the illustrofions in this book previously appeared in Signs of the Imes magazine. They aro reprinted with permission of the publisher. Claus, R James the value of signs : a guide Far property appraisers, brokers, 6901 professionals, sign users and municipal planners by R James Claus, Susan L Claus, Thomas A. Claus p. an. Includes bibliographiool references and index 1. Signs and signboards — United States — Evaluation. 2. Advertising, Outdoor — United States — Evaluation. 3. Real properly — Wksotion — United States 1. Title II. Claus, Susan L ill. Claus, Thomas A. HFI387.C2 Published by: The Signoge Foundation for Communication Excellence. Inc. P.O. Box 128 Sherwood, OR 97140 U.S.A. Tel. 503.625.0592 Fox 303.625.6051 Email: susan®slgnagelaundation org Website: www.signageloundotion org Book and cover design by Jeff Russ Cover illustrations by Jaxon Cook Printed in Canada 10 9 8 7 6 5 4 3 2 1 Supported by: Intemational Sign Association 707 N, St. Asoph St. Alexandria, VA 22314.1911 U.S.A. Tel. 703.836.4012 Fox 703.836.8353 Website: www.signs.org FOREWORD This book represents the first attempt to concisely document the nature and value of commercial signage as an integral pact of a community's comprehensive plan and communication system. It also addresses the legal issues that may arise when a local government enacts or enforces sign regulation. Signs represent the least expensive and most efficient way to send a message — whether econom- ic, recreational, cultural, or political. These messages serve both the informational and directional needs of a mobile society. Further, the importance of commercial signage In a communication - dependent culture Is being increasingly recognized by the courts. More and more the validity of sign regulation is being scrutinized, and often found wanting, under the requirements of the First, Fifth and Fourteenth Amendments to the U.S. Constitution. The book considers the influences of many socio-economic factors unique to signage, and crosses over disciplinary lines as well as public and private Interests. Its subject matter is relevant to real property brokers and appraisers, land use planners, transportation engineers, public officials, city attorneys and their private -practice counterparts, sign manufacturers, and sign users. The intent of the book is to give readers an awareness of the cumulative economic value of com- mercial signage to all community stakeholders, and to acquaint them with the principles of law that affect both the use and regulation of signage. Finally this book offers a guide to appraising business signage in conformance with the federal standards set out in the Uniform Standards of Professional Appraisal Practices (USPAP) by assisting appraisers in understanding the nature and value of commercial signage. Various valuation tech- niques are also discussed, The knowledgeable signage appraiser can assist both private individuals and public entities in understanding the true value of signage, the complexity of the signage regu- latory task, and the economic impact of regulatory actions. ACKNOWLEDGEMENTS 7111s book would not have been possible without the encouragement and support of many individ- uals representing a full spectrum of legal, economic and social interests daily engaged in under- standing, using, and protecting the right to "speak freely" through commercial signage. And while we cannot expressly acknowledge here everyone who assisted the project, there are several per- sons and groups that provided invaluable aid and expertise In bringing the book to publication. In sincere appreciation of their contributions, we especially t4Knk the following: Walter G. Hardwick, P&D, Professor Emeritus, University of Vancouver British Columbia, Science and Tecbnology, member, Retired Dr. Hardwick recognized 30 years ago that business signage functions not only as an advertising and informational device, but also as an important wayfinding, or directional device. He also recognized the contributions of business signage In creating artrac- tive, convenient and comfortable urban environments. His signage theories can be viewed in pr tice in Vancouver, B.C., where private signage is an integral part of the pleasing aesthetic ambience of central business districts. Dr. Hardwick was a co-author of this book in Its beginning stages hand and innovative thought are evident throughout the book. — 5 years ago, but poor health forced his retirement before its completion. Nevertheless, his helping and collaborative efforts, the book would be incomplete. Without his learned contributions International Sign Association (7S4) The ISA contributed essential "no strings attached" funding and the personal time and expertise of its select Industry committee and its Executive Committee in furtherance of providing an objective guide to understanding the economic role of on -premise business signage in the modem marketplace, and the legal protections speech. Many [!tanks to Cal Lutz, Joe Rickman, that attach to this form of Steve Kieffer, Bob Wallace, Greg McCarter, Jerry Sussenguth, Tom Allen, Dan Kasper, Ebbie Phillips, Tom Cummings, Ili, Dave Seastrom, Stew Edinger, Kevin Stotmeister, and Dick Blommel, Kozell Boren, owner ofSigntrontt, formerly Clupndusmes, Torrance CA Mr. Borer's enthusiasm for a signage appraisal handbook has been on-going for many years. Although his compa tt ny s duces on -premise signs, over the last decade he has been personally commit to the support of pro - public -service projects that provide education and information concerning the varied and impor- tant roles played by business signs in the larger context of a highly mobile, environmentally aware consumer -oriented society with certain communication needs. Mr. Boren:s dedication to reaching and teaching the appraisal, planning, and legal professionals was instrumental to achieving final publication of this book. Jobn lamb, Retired, Former owner of Cincinnati Sign Supplies, Inc. Mr. Lamb has more than 50 years of business experience in the sign Industry. In addition to his successful career, Mr. Lamb has a long and distinguished record of public service. For years he las supported efforts to develop a manual that would explain what business signs are, what they do, and what constitutes a fair appraisal (or analysis) of their cumulative value. As both a respected member of the American Planning Association (APA) and the world of sign makers and sign users, Mr. Lamb's credentials as an objective reviewer and advisor are impeccable. His participation and gende guidance through- out compilation of the book assured an unbiased approach to the subject matter. Fran A. Ruppelt (former owner) and James R. Grob, (current owner), Brilliant Electric Sign Co. Ltd. ('Cleveland, Obio) During Mr. Ruppelt's life, his vision Inspired the Sign Display industry Promotion Fund which eventually provided critical seed monies to help educate municipal authorities, appraisers, real estate brokers, legal professionals, and sign users in the Ohio area about the benefits of commercial communication and signage. Upon Fran's passing in 1990, Mr. Grout's leadership ensured continued success and follow through of this strong public affairs program. Jim's leadership continues today — he provides time, talent, money and company resources to worthy industry projects. Elwin W. Md) Baker, Executive 17ce President, American Society of Appmisers Mr. Baker was one of the first appraisal -related individuals of national prominence and respect to recognize the con- tributory value of on -premise business signage to Its site. As the initial Executive Director of the federal Appraisal Subcommittee, created under the 1989 Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), he is uniquely positioned to provide expert review and critique of the signage appraisal guides offered in this book. His suggestions and revisions are Incorporated throughout the book, and his endorsement of the final product lends it much appreciated credibili- ty throughout the appraisal profession. James T. (7),avis) Brooks, Engineer; PE, U.S. L)epanment ofTmnsportatio t, Federal I.Nbuxty Administration, Retired Mr. Brooks Is nationally known and respected for his expertise in traffic and highway engineering, and highway safety and operations. His areas of proficiency include traf- fic control devices and accompanying standards and specifications. fie Is also recognized for his knowledge of federal aid highway rules, regulations and procedures. Travis' unusual insight and experience has provided valuable information for this book. Wad'* Swormstedt, Publisher, Signs of the Times (STMedia Group Iaternatronal) Mc Swormstedt has tirelessly supported efforts to bring public attention to the positive economic, social and environ- mental influences of well designed, produced and placed on -premise business signage. His gen- erosity in providing access to his magazine's photo archives and the services of editorial and design staff have enabled us to produce a publication that would not otherwise have been possible. The Sign Lhsplay and Allied Trades, Local 639 (Cleteland, Ohio) We also recognize and thank the Sign Display and Allied Trades, Local 639, a part of the International Brotherhood of Painters and International Brotherhood the AFL-CIO from Cleveland, Ohio. Special thanks also to Regional Representative Ralph Zahnke. Anne Marie Melmon, Attorney (retired) Long time friend and colleague, Anne's talent at writing is evident throughout this publication. We spent many spectacular rainy Oregon days in thought and lively conversation as this manuscript of this book evolved. Anne's commitment to commercial speech issues is unstoppable. We also give grateful thanks to our reviewers: Alan Weinstein, Prof. of Law, Cleveland -Marshall School of Law; Myron Laible, Outdoor Advertising Association of America; Lawrence Hennessy, Traffic Audit Bureau; Mark Ulmer, Attorney specializing (in part) in signage litigation, and Jeff Wright, American Society of Appraisers, The comments and revisions offered by these individuals helped assure the accuracy of information and data. Lastly, we thank the officers of The Signage Foundation for Communication Excellence, Inc. Noel Yarger, Chairman, and Jim Groh, Vice -Chairman. Their vision and comrttitment to the project never wavered, even though at times the undertaking appeared insurmountable. We also acknowledge the excellent editorial, design and production work of Jeff and JoEilen Russ, ABOUT THE AUTHORS R. JAMES CLAUS; BA, MA, PH. D. Dr. Claus received his doctorate in urban geography, urban land economics, and real estate finance from the University of California, Berkeley. He is a land use economist, who has spent more than 30 years researching the variables that affect land value, concentrating in the latter 20 years on commercial properties and their need for optimally visible on -premise signage. He W published numerous books and articles on the subject, and is credited with coining the terns 'signage" to describe the full spectrum of place -based communication and graphics devices. As a nationally recognized authority on signage valuation, Dr. Claus is often called to appear as an expert witness in legislative hearings and court trials regarding the cumulative socio-economic value of signage to a community and its businesses, and the impact of regulation on this value. Dr. Claus is a certified real estate appraiser. He is accredited to teach commercial real estate and appraisal professionals on the economic value of signs, particularly on -premise business signs, His seminars, workshops and lectures are designed to provide the tools necessary to properly appraise a sign's value as an integral economic component of its site. Throughout his career, Dr. Claus has been a leading proponent of signage as a land use plan- ning tool, pioneering a site selection and development model that is changing traditional thought regarding the communication needs of both the general public and private business sector in a highly mobile, consumer -oriented society. SUSAN L. CLAUS, B.S., SRA Susan received her bachelor's degree in financial and estate planning from Brigham Young University. She has spent the last 15 years in real estate acquisition, management, development, and appraising. She is a certified real estate appraiser in addition to receiving an SRA appraisal designation several years ago. She currently develops and assists in producing a variety of educa- tional materials relating to commercial communication. For the past several years Susan las also received appointments to local community planning and budget commissions. The Claus' own and operate an appraisal and real estate consulting service in the Portland, Oregon metro area. vi Jim and Susan Claus are co -executive directors of the Signage Foundation for Communication Excellence, Inc., a non-profit corporation organized to provide reliable education and research regarding signage to public officials, city attorneys, private legal counsel, planners, appraisers, transportation engineers, and related professional communities. They are working with the U.S. Small Business Administration to develop information on the important role of signage in commu- nicating with potential customers or clients, and effectively competing in the marketplace. A recent accomplishment has been. the launching of an extensive educational website on signage: bt1p:/I",tv.sba.goWstamngisignage. Additionally the Claus' have just completed a business market- ing aid for SBA: "Signs, Showcasing Your Business on the Street" that can be downloaded from SBA's online publications: btipIluuw.sba.gougtbrat)/pubsbtml*mt-12. THOMAS A. CLAUS, B.A. Thomas received an associates degree in civil engineering technology and a bachelor's degree in accounting at Portland State University with honors. He is currently in his third year of law school on academic scholarship at Northwestern School of Law at Lewis and Clark in Portland, Oregon. He was recently elected to the City Council in the town of Sherwood, Oregon. Mr. Claus has expe- rience in commercial and residential land acquisition, management, and development. His focus in the law includes land use, administrative law and commercial speech issues. vii TABLE OF CONTENTS Chapter 1 Introduction and Overview 2 Chapter 2 The U.S. Retail Economy: The Role of Signs 14 in a Dynamic Commercial Environment, and Site Selection and Development Factors Chapter 3 Marketing and Advertising: Derived Demand 30 Chapter 4 The Sign Industry: Sign Classifications and Functions SO Chapter 5 Signage and the Law 62 Chapter 6 Land -Use Zoning and Sign Codes: 86 Regulatory and Appraisal Factors Chapter 7 Appraising the Economic Value of 102 Off-Premise/Outdoor Advertising Signs Chapter 8 Appraising the Economic Value 130 of On -Premise Signs Appendix Table of Cases 161 Glossary of Signage Terms 166 References and Resources 188 Index 191 THE VALUE OF SIGNS e CHAPTER INTRODUCTION AND OVERVIEW The value of5igns is about the role signs play in the U.S. economy and how to place a value on this role. in contrast to many reference sources, the book does not treat signs as isolated phenome- na, but rather as a significant part of the total urban industrial and commercial environment, On a broad scale. signs are an integral part of a community's total communication and design system. When narrowly related to commercial activities, they are essential to achieving optimum visual communication with potential customers or clients. This is especially true for commercial activities conducted on site, and in many cases, the sign itself determines whether its host site is economically successful. While other visual site attributes, such as standardized building design, product displays, specialized lighting, or landscaping treatment. also function to enhance a com- mercial site's 'visibility component," in nearly every case an easily discernable and readable sign is the paramount artractocl In 98% of all U.S. retailing, the business sign is the basic link to customers — whether used to Prompt an impulse stop and shop or to help consumers develop a memory for the displayed g(x)d, product, service, or business name for future use. It is self-evident that poor communica- tion with customers results in poor business performance. For almost all businesses, the most cost-effective and efficient form of advertising to potential customers is via on -premise, or place - based, signage. The on -premise business sign is capable of performing many functions. From a purely business revenue standpoints its primary functions are fourfold: f The term — oeined —'I yfon apo b refer to the total corn un; o " so ne of commercial sit» ass best example of the term did Its o so e, _d a tile's v `6f y cemponeM is the typiml imt Foodrestaurant band iw By comb ni g save al cone we imtion and graphic dttplayt on site, +.d,.drq the stondadrxed ksga sign oat 'signature' buildin ,and earn "'111,Ass taW UtOkAJh~l is quieldy rwa irnzed. In such cares, the signnge beeanes IF y�b,def° components t6roupl, mope media ndwrfir rY mm{rorrenr en toto ©THE VALUE OF SIGNS To develop a viewer memory for a fixation and the products or services available on site. 2. To reinforce a memory, once It is there. 3• To prompt a purchase, especially an "impulse" purchase. 4. To change customary purchase decisions or habits. in addition to serving as commercial communication devices, on -premise signs many times func- tion as guideposts, directing motorists to their destinations. This is especially we if a street address is given on the sign. Further, an on -premise sign can be designed to reflect the character or archi- tecture of its surroundings without sacrificing its primary communication functions, as long as motorists can detect and read the sign with sufficient time to safely react to it. Gaining Perspective: Factors Influencing Today's Signage Appraisal The American economy is no longer dominated by industrial or manufacturing activities, but has shifted dramatically to retailing and technology.l This shift has elevated the role of commercial signage to one of paramount importance to every sector of the business community.3 In the last few years, several factors have converged to increase awareness of the importance of commercial signage in today's highly mobile, retail -oriented society. 1. Expansion of the First Amendment to Include Place -Based Commercial Expression The first of these factors is an increasing recognition by both state and federal courts that the "speech" properties inherent in commercial signage deserve substantial constitutional protections under the First Amendment. This trend Is especially important with respect to on -premise signs because they are so often the targets of unduly restrictive local sign codes. These codes usually seek to censor commercial messages through regulations that severely restrict the sign's height, type, placement, color, letter or graphic sire, sign face area, and sometimes, the message itself. T. Federal Loan Programs The sr„ ,nd intersecting element began during the Great Depression, when President Franklin D. Roosevelt took the then unprecedented step of Infusing the economy with federal money. Over the years, as federal investment grew in the form of both direct and guaranteed loans to the 2 For 6rerity, the tarm 'retailing' when used In this book will include roles of services, ns well as soles of goods and products 3 Of the $3 trillion generated in 1999 by the retail rector of the ecasomy, only $80 6,111 was produced by rotnbg and Insurer sales; the balance came hum ploce-bowd retailing activities INTRODUCTION AND OVERVIEW Private sector, so did the government's dependence on a reliable determination of the true value c assets serving as collateral. In the commercial milieu, the sign received greater respect as more people learned to appreciate its contribution to the economic success of a commercial site. Today, the administrators of federal loan programs, especially those funded by the Small Business Administration (SBA), deem signs an item of collateral and, in some cases, review both the borrower's signage program and the local sign code when considering a loan or grant, if exist- ing or proposed signage appears inadequate to its communication job, or the sign code severely restricts a proposed or replacement sign's ability to communicate with the passing public, funding may be denied. 3. Expansion of the Fh% Amendment to Require Compensation for Diminution in Value The third factor impacting the valuation of signage is the federal courts' increasing willingness to consider whether diminution (or decrease) in land value through zoning ordinances is constitutio ally permissible without payment of Just compensation. There is no argument that it has long been held constitutionally permissible for local govern- ments to divide Jurisdictions into zones, segregating one use from another, without compensation to landowners adversely impacted by the action! Also, historical zoning of a site or area limiting what an owner may do with the property is considered constitutional without requiring conal mpensa tion, even If the designation results in a severe financial loss to the owner.? However, case decisions supporting the constitutionality of zoning laws do not give municipali- ties carte blanche to substantially destroy all economically viable uses of the property. For exam- ple, in C ty ojMonterey u. Del Monte, 95'F Std 1422 (1999), the U.S. Court of Appeals for the Nind Circuit held that land -use decisions are not immune from Judicial scrutiny and that if the trier of fact determines either that the aggrieved patty has been denied all economically viable use of his property or that the government's action does not substantially advance a legi[imate public pur- pose, the government will be held liable for compensation. Therefore, while local governments may undertake zoning or regulatory actions that diminish 4 The seminal can is Vi11oge of Euclid v Ambler Reaky Co.. 272 U S. 365 (1926), which uph id a mmng code If urcludd mulliplo•d«nNirg houses from oras d ohough ih rnsalenen as a leg,rimoes eaerow of munk pol police power to prwraq cormwmty heolth, safety, mad, and g*serd'dime ewr od from the valw of Ihn land so rand n %,W hcmtly dimrnsished. In ,ts 1e. cInwrl, decision the Court opined tial apw~ horses could be aaehrdnd lean sirgirlomily m"dennd districts beaau,s d Iheir negohw effects mike anojoi iiiy of sunlight and open spore —a 9uai rntispnsce argument, 5 See Pero. Central tnaroportartm Co. v. Cy of Mow York, 439 U S 104 (19781, wham +4 owner of Grand Caned Terminol was prevw,ted From building a 55 -story building obove the Terminal by an avFnonc„ designating 4- vie as a -land nork.' THE VALUE OF SIGNS :re11:6YiiYYk .— -" ,i.=�.'•— _— `di.Y,+La,ts,iJws.1L#elLi„1'. =1 et �_.r-,j`js pit perty values without being initially required to compensate the property owners for the adverse Impact, if the government takes "too much," compensation must be paid. How much compensa- tion is a matter of degree, based on a weighing of the various factors and interests. As on -premise business signage becomes more important to business success, sign codes that severely limit a sign's ability to communicate to potential customers may also reduce the value of both the business and the business site to such an extent that compensation will be due the owner. Additionally, in condemnation cases based on eminent domain, the on -premise business sign, which accompanies the demise of the commercial building(s) on the subject site, increasingly may be con- sidered separately for purposes of assigning a value and paying compensation accordingly.e Compensation for regulatory downsizing, removal, or ban of a previously legal sign, or for condem- nation of a site and its accompanying signage, is relatively new to on -premise signage. Outdoor adver- tising (or off -premise signage), on the other hand, has been protected from removal without compensa- tion for many years by federal legislation. This legislation leads to the fourth converging factor bringing signage to the forefront of valuation issues encountered by today's commercial property appraiser. 4. Federal Congressional law To underscore appreciation of signage as a business asset, and to gain perspective regarding its contributory value to the business enterprise for which it "speaks," attention must be given briefly to -two signage appraisal settings In which the federal government has been the primary player: (1) the 1958, 1965, 1974 and 1978 "Highway" Acts; and (2) the 1989 Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). The Highway Acts In the 1958 National System of Interstate and Defense Highways Act (interstate Act), outdoor adver- tising through the medlum of what is commonly, but Inaccurately, referred to as "billboards" was singled out for special treatment under eminent domain laws.7 in significant part, the Interstate Act required strict regulation, and in some cases removal, of outdoor advertising structures within 660 feet of the rights-of-way of interstate highways. This legislation was essentially the first Incursion by 6. See Caddy's v Homikon County Ohio, a lower court case, not cited; di—ml in Chapter 5. Signage and Phe law 1 The ram '611board' stems from the early prochors of posting bilk' or 'postern on buildings, and loter an wooden structures, to announce or odoert"" events, or the sale of services or products. Today, most outdoor advertising structures am constructed of molal and display either a 30• she* poster (the moioriy) or a bulletin consisting of a vinyl trona bwring the advertising message. This canvas is str*ched awls the structure muds like a pointing m a from. See ole Chapter 7: Appraising Ase Economic Valor of Off Premise/Outdoor Adwnising Signs. INTRODUCTION AND OVERVIEW ® I the federal government into local land -use planning and zonings To encourage rapid compliance and protea the investment in the interstate system, Congress passed the 1958 Bonus Act. 'Mis act was designed to persuade the states to quickly enact com- prehensive legislation by paying a "bonus" of one-half of 1% in federal highway funds to states that complied. The national standards limited signs on the interstate system to four categories: (1) directional and official signs; (2) signs advertising the sale or lease of the property upon which they were located; (3) signs advertising activities within 12 miles; and (4) signs providing "informa- tion In the specific interest of the traveling public." All other signs, with the exception of signs in Incorporated municipalities and those in unincorporated Industrial and commercial areas, were considered nonconforming, even though erected legally pursuant to permit. Importantly, under the Bonus Act it was not mandatory that states remove existing nonconforming outdoor advertising signs; however, if a state did agree to comply with the national standards, it would receive federal funds for the purpose of paving compensation for the state's acquisition of the "right to advertise" within the controlled area. During the next few years, several states engaged In attempts to avoid paying just compensation for the removal Of previously legal outdoor signage, generally relying upon the proposition that the signs were merely personal Property, so the owners were not entitled to oompensation. These attempts were routinely rejected by many state courts, which generally held that existing signs, no matter their properly "category," represented a vested property interest and were removable only with payment of compensation measured as both the fair market value of the sign and the property rights taken. 10 In 1965, Congress passed the Highway Beautification Act.I I This act required all states to enact legislation controlling outdoor advertising on both interstate and federal -aid primary highways. The carrot used to induce conformity this time wasn't a bonus, but a threat that any state not in compli- ance would lose a portion of federal highway fund4, Not surprisingly, nearly all states were in compliance by the end of 1972; those not in compliance lost lo% od federal highway funding. 12 The 1965 act did not contemplate removal without compensttion to either the owner of the sign 8 Ss. ch. 462, secrim 108(a), 70 Sar 374, 378 (npsaW 19911. 9 Seo Pub. L. No. 85767, Marian 1, 72 Slat. 904 (1959) (00a6Fd w onranded d 23 U.S.C.. soAian 131). l0 Sas Cly oh, 222 o v. 770, 15 262 N.Y.S. 2d 441, ). ' 16 N.Y 2d 88 (N.Y. 1965) far an --,ab opinion, alio — Sara Highway D .0 fGA) v, &onrh, 222 Ga. 77[1, 152 S.E. 2d 372119661. 11 Sos Pub, L No. 89.285, Gdo I, Merlon 101, 79 Scot, 1028 (1965) (oodtrd m omandad .123 U S C.. Maim 1311 Dakota 1 South ��Iwas diiW-u ed b ba making only o holFhh Datta pr b can% and in a Mnwnoi !adoral can, was penalised fry losin3 highway hind" Sox Sr"@ 01 South Dakota v, Supp 335 ID. S. D 19731 y�HE VALUE OF SIGNS or the owner of the land upon which the sign was located, or both. The act went to some length to define which signs were entitled to compensation: those lawfully in existence on the date of enactment (October 22, 1965); those lawfully on any highway made a pan of the interstate or pri- mary system on or after the date of enactment and prior to January 1, 1968; and those lawfully erected on or after January 1, 1968. in the 1974 Highway Beautification Act Amendment, the "just compensation" language was changed to simply provide that "just compensation shall be paid upon the removal of any outdoor advertising sign, display, or device lawfully erected under State law."13 To avoid paying monetary compensation, many states labeled the subject signs "nuisance per se" (as opposed to "nuisance in fact"), and under the umbrella of "police power," decided that permit- ting a subject sign to remain for a certain period of time before demanding its removal was compen- sation enough. This arrangement is referred to as "amortization." in 1978, Congress reacted to the inequities of amortization by amending the fust sentence of sub- section (g) of the Highway Beautification Act to read, as it does today: Just compensation shall be paid upon the removal of any outdoor advertising sign, display, or device lawfully erected under State law and not permitted under subsection (c) of this section, wbetberor not removMpursuant to or because of tbissection. "(Emphasis added by author.)14 This amendment effectively put an end to both nuisance per se and amortization theories of compensation avoidance, although a state could opt for loss of a significant percentage of federal highway funds if it didn't want to comply with the amendment.t5 Today, all states are in compliance with respect to outdoor advertising; however, some still attempt to justify amonization in regulatory schemes controlling on -premise signage. The preceding history shows that the regulation of outdoor advertising adjacent to interstate and national highway systems has evolved to the point that "aesthetics" is now the driving force, although traditional, eminent -domain reasons for condemning outdoor advertising structures along highways remain much the same: for example, to complete improvements, such as road or lane widening. Whatever the reason behind required removal, however, compensation must he paid. The only issue is "how much," as determined by federal appraisal standards, and In accordance with federal compensation law.16 13 Sao Pub. L No. 93.643, radion 109, 86 Std. 2284 11975) 14 So. pub. L. No. 95599, Tills I, Maim 1221a). 92 Sar. 2700119781(wdlflad o+aMWW d at 23.US.C., rection 131 1g): w alta, rac8m 122(6) which arw.W.16—iton 23 U.S.C., radion 131 (k). 15 The federal gowrnmenl redmignoted Iadwol roods in 1991, vsdirig dM Nollanol Highway System The Highway 8oaulifie.6w Ad, at rn,w,ded, continuer to pply to the original highwoyr and any oaw highways now on the National Highway Syrtem. Sas title 1, whon 1046161, 105 Std 1995 (199 1) INTRODUCTION AND OVERVIEW 9— FfnmrcYa//nstlUuiuns Kcfornr, Kecou During the 30 years leadin � asd 8� ®ps A.8 MRRRA) g up to the savings and loan crisis of the mid-1980s, appraiser in gen al, and privately employed appraisers in particular, often expressed opinions about the value of real estate interests, even though they lacked formalized education Or training; essentially, they learned on the job. Soon after loan foreclosures and financial institution failures began to rock the economy, the federal government identified one of the primary causes of the crunch as flawed appraisals (or value determinations) of property interests serving as collateral. OvenWued collateral was of par- ticular concern to the federal government because many of its agencies (such as the Veterans' Administration, and SBA) were either primary lenders or underwritemiguarantors. As part of the federal effort to preclude a reoccurrence of the crisis, Congress passed the 1989 Financial Institutions Reform, Recovery and Enforcement Act (FIRRF_&,)_ 17 Title XI of EA Real Estate Appraisal Reform Amendments proposed to protect federal financial and public policy interests in real estate -related transactions by "requiring that real estate appraisals utilized in con- nection with federally related transactions are performed in writing, in accordance with uniform standards by individuals whose competency has been demonstrated and whose professional con• duct will be subject to effective supervision." Additionally, Title XI requires that real estate apprais- ers be licensed or certified (by the states), that state licensing laws meet, at a minimum, the criteria established by the Appraiser Qualification Board of the Appraisal Foundation, and that the states require that appraisals for federally related transactions be done In conformity Standards of Professional Appraisal Practice (USPAP). with the Uniform Title XI also created the Appraisal Subcommittee to overseethe work of the states and the Appraisal Foundation. s dwin w. ('red) Baker, who is now the executive vice president of the American Society of Appraisers (ASA), was the first executive director of the subcommittee. During his tenure, all of the states enacted appraiser regulatory schemes and now all require state licensed and certified real estate appraisers to conform to USPAP Personal property appraisers and business valuers who are accredited by ASA (and who also may be involved in the appraisal of signage), as well as ASA real property appraisers, are required to conform to USPAP In all of their appraisal work. 16 SM Uni(,xn, Rstomat ar, wwxW x142 U.S.C., Vim 4601, r 1.�y kWililion Policia Act d 1970, Pub. L No. 91.44 84 %, 1894 (197 11 Ioodi6od a1 17 Say Pub. 1. No. 101.71 103 Sw. 18311989) (radlRed in wriour 1i lq and fK am of U.S.C.I. I9 SM 12. U.S.C., Man 3330(91119941, `--- J THE VALUE OF SIGNS Although many appraisers believed they had taken an undeserved hit in the FIRREA legislative response to the savings and loan debacle, in this case the disease (flawed appraisals) was definitely worse than the cure (increased education and expertise). Certainly today's appraisers, particularly those who are certified, are now on par with land -use planners as experts in their field. As a result, they should increasingly find themselves consulted as peers by planners and other government officials to assist in analyzing the financial impacts of land -use planning on private property inter- ests, including those attached to commercial signage. The Role of the Appraiser The convergence of these many factors has brought appraisers to a crossroads, which makes it Incumbent upon them to understand the importance of signage as a business asset capable of valu- ation in keeping with USPAP. Many of today's appraisers are unaware of the Intrinsic value of business signs over and above their costs of manufacture and placement. The truth is that such costs represent nothing but the most elemental starting point. Numerous socioeconomic variables will direct, and ultimately decide, the final determination of value. One basic purpose of this book is to expand recognition and knowledge that business signage has value — and that this value can be "forensically" determined, with reasonable certainty — and in many cases. a sign's value can far exceed the construction cost of the sign itself. Appreciation of the power of signage is essential to the appraiser in every signage valuation assignment, be it for a mom-and-pop shop or McDonald's. The contributory or add-on value attribut- able to signage can often be substantial, both in terms of business revenues and underlying real property value. In most instances, the sign, or other place -based communication device or system, represents a significant business asset and is often viewed by business lenders as an Important item of collateral. Additionally, government agencies and public officials are increasingly dependent upon appralsers to explain what economic consequences might result from land -use decisions that will burden a business's ability to communicate with potential customers or clients through signage. In governmental regulatory actions requiring either the removal or severe downsizing of a legally permitted sign (known as 'regulatory takings"), challenges will arise—either to the value assigned to the sign by the governing authority, or to the code's enforcement against particular sign owners or users, or both. In such cases, the services of an appraisal professional are necessary to establish the worth of the lost or downsized asset for purposes of assessing actual consequential monetary damages or to obtain injunctive relief. In either scenario, determining the business revenues and portion of land value directly attributable to (or flowing from) the presence of the INTRODUCTION AND OVERVIEW e targeted signage is essential to the final administmtive or judicial decision. Placement of the evidentiary burden of proof is also a Factor. In most issues centered on "just compensation" (Fifth Amendment questions), the burden of proof is on the private parry; however, in issues arising from violations of a speaker's right to communicate a commercial message through on -premise signage, the burden shifts to the government. The professional private appraiser, an expert In valuing signage, will find his or her services In greater demand as signage regulation issues heat up across the country, The appraiser's employer may be a private party seeking either to retain a sign or to obtain a compensatory amount larger than the governing entity is offering. On the other hand, the employer may be the governing entity seeking to support the compensation figure arrived at by its assessor or to avoid an injunction against enforcement. Because of the complexity of even the most typical than practice and signage appraisal this book will offer more procedure discussion, It will also give an overview of the role of signage in today's very competitive economy, fueled by mobile consumers who rely greatly upon signs for information and guidance. To allow a preview of the scope of this book, we now offer a brief syn- opsis of the chapters to follow. Chopter Overviews Chapter 2 The U.S. Retail Economy: The Role of Signs in Commercial Dynamics, and Site Selection and Development Strategies Ui,cuss,on here will center on die force the present U.S, economy represents, and how business sign Mayan important role In fueling this powerhouse. The nobility, of the American consumer alone requires signage that is conspicuously visible and readable to the passingricamotorist. This chapter will provide an overview of our consumer -based, higttly mobile society and cial expression interacts with this and other economic factorshow commer- , The discussion will also define and compare site selection and development strategies, and the signiige needs for each choice. Specific comparisons will be made between the franchised or chain retailer and tide independent or locally owned retailer. Chapter 3 Marketing and Advertising "le separation of site selection and development from marketing and advertising strategies is somewhat arbitraryas they often overlap or interact. However, to facilitate definition and discus- --,ML-- they are treated as separate topics in this book. --,MTHE VALUE OF SIGNS Loral land -use zoning and sign regulations impact retail marketing and advertising strategies because these strategies include signage as an active participant in the fight for a competitive edge. This is particularly true with respect to franchises with Instantly recognizable corporate trademarks and logos. it is important to understand the role of signage in advertising and marketing strategies, which are always intended to develop and reinforce memory, prompt purchases, and ultimately, increase profits. Chapter 4 The Sign Industry: Sign Classifications and Functions This diapter describes the sign industry and identifies many of its customers. It also discusses the impact of regulation upon the various sign divisions: public sign, outdoor/off-premise sign, on - premise sign, and incidental/miscellaneous sign. Although these divisions relate differently to the activities, products, or services they reference, they are highly interactive and impact both con- sumer and land -use decisions on many levels. How these decisions affect market share, and ulti- mateiy, die profitability or value of a commercial enterprise will be fully explored. Chapter 5 Signage and the law As a form of speech with measurable value, signs enjoy certain constitutional protections and enti- tlements under the First, Fifth, and 14th Amendments. Under the First Amendment, courts are most concerned when sign regulations seek to restrict or regulate the actual content of signs. Such "content -based" codes are subject to the strictest judicial scrutiny and will be upheld only if a court finds that the regulation is justified by a compelling gov- ernmental Interest and is narrowly tailored to achieve that interest. Where a code is content -neutral, focusing only on the "time, place, or manner" In which a sign is displayed without reference to copy, courts will apply a less strict standard of review. The less strict standard requires government to show (1) the existence of a substantial government interest which justifies the regulation, (2) that the regulation directly advances that interest, and (3) that the regulation leaves "ample alternative avenues of communication" for those to whom it applies. 19 Discussion of the First Amendment's impact will emphasize the legal, social, and economic base for constitutional protection of commercial expression through signage. Recent federal and state cases focusing on the First Amendment will be cited and the holdings briefly summarized in the body of the chapters. 19 ��,, o sign wetted iNeyoliy a np wtely moinbineci, or dimlaying n mrnwye poposr+g on ilkgpl aclivily a inlyded ro inAorrre « �w,e .mm. nwu rid, reri tiLaty M rb w, ..ouk1 nd nxwve prdecNar, ,rnd Ilre go+wnmwd could Ixohh>,r ru.h -rK;,"rye^ at o wild wurciu nl m police I**`"" INTRODUCTION AND OVERVIEW M Under the Fifth Amendment, generally, just compensation is due whenever property is taken by government for a valid public purpose. It is well settled that signs possess a property Interest. The type of interest possessed, however, depends upon the type of sign at issue. Discussion of the Fifth Amendment's relation to signage will emphasize arguments asserting the right to monetary compensation for regulatory downsizing or actual removal of a previously con- forming sign ("regulatory taking"). Examples of differing compensatory treatment of off -premise an on -premise signage will be presented with additional information included In Chapters 7 and 8, the signage appraisal chapters. The 14th Amendment guarantees due process and equal treatment in the signage Process, including appeal of a permit denial. lifinimally, the Permitting con- cise, and capable of Objective interpretation Permit standards must be clear, tion on a s t application and administration. Further, both the initial determina- ign construction or placement application and a hearing on appeal of a denied must occur in a timely martrter.The 14th Amendment will be discussed in terms of a sign owner's right to fair notice and hearingPermit in the regulatory and @nforcement The appraisers role in this process will be explored, process, y that of reaching a final determi_ niques, based upon whether the su nation of value. Also, the section will include especiall a brief summary of the differing appraisal tech- bject sign is controlled by federal law or sta cases will be cited for each sign category.te law. Relevant the Lanham (Trademark) qct. Federal legislation will also be discussed, in particular Chapter 6 Le rid_Uss Zones and Sign Codes: Appraisal and Regulatory Factors This chapter addresses issues raised when a regulatory environment governmental " loss t taking" systems trestricts commercial communl- a governmental the extent that economic o the community's business sector may amount to a of property, an unacceptable attack upon free-speet•.h rights, or both, Several types of sign codes are described, as well as die likely impact of each type on the signage Chapter 7 Appraising the Economic Value of Off-Premise/Outdoor Advertising Signs This discussion begins with a brief re%iew of valuation and regulatory {slues presented by the fcd era) Highway Acts and the First, Fifth, and 14th Amendments as the Another section of the chapter will address the role of Outdoor advertis ng in the highly evote to outdoor ed advertising. advertising and marketing sector of the economy. Final chapter sections will outline appraisal methodologies and techniques, tion of the off -premise sign is a relatively straightforward in [Host cases, valua- procedure, primarily because dare is a -JTHE VALUE OF SIGNS discrete market for structures or space. Owners or lessees routinely determine value based on stan- dard advertising -effectiveness measures; these measures can be adapted fairly easily to the income and market approaches to valuation. Chapter 8 Appraising the Economic Value of On -Premia Signs We also begin this discussion by revisiting valuation and regulatory issues presented by the First, Fifth, and 14th Amendments. Additional discussion will focus on the property interests that may be assigned to different types of signage, and the likely negative effects of overly restrictive codes and amortization on property values and business revenues. The final sections of the chapter will out- line appraisal methodologies and techniques. In contrast to valuation of the outdoor structure, valuation of the on -premise sign presents a complex appraisal assignment because of the many and varied legal and property Interests which may attach, and the unique influence of the local code. However, because both- "s of signage appraisal involve highly descriptive and technical analysis and presentation, only certified apprais- ers should consider themselves qualified to undenake valuation of either type. INTRODUCTION AND OVERVIEW CHAPTER THE U.S. RETAIL ECONOMY: THE ROLE OF SIGNS IN A DYNAMIC COMMERCIAL ENVIRONMENT, AND SITE SELECTION AND DEVELOPMENT FACTORS The retail economies of North America, primarily the United States and l::utada, are sophisticans of retail dollars are exchanged. Ing, as producers adapt and innovate ted, highly mobile, and market-based, Consumer interests dominate. Trillio annually. Asa result, the variety and range of consumer products and services are constantly to meet demand expand- mtrnities depends to a significant degree on the success Further, the economic well-being of many d- om of their commercial districts. Retail and service businesses provide jobs and income for residents. Ct-M&rrial districts also contribute to property_ and sales tax bases, which make them important revenue -"Ives for local govemments. In 1999, the total U.S. retail economy generated nearly $3 trillion. Of this total, advertising and marketing revenues accounted for $250 billion. Generally, only new car/light truck sales at $350 billion produce significantly larger annual revenues -A) However, Wal-Mart sa to $200 billion by the end of 2000, surpassing General Motors les are poised to soar to occupy cite top slot in the recall economy — a slot GM has held for much of the past S years. 21 Additionally, two important trends have fostered significant changes in consumer behavior. (1) the continuing increase in automobile use, and (2) the increasing number of people who are moving to unfamiliar geographic areas for new lob opportunities, resulting in large shifts in popula- tion.22 These changes generate information needs that Placa-based businesses must recognize and 20 AM — rooindy published in Ins Noll Street c figure" are obtained Iron Robert Car,. N9—on rouran see"" and s soananuu d A1cConn-6ickson Adwtising A Jaumd, A ---.V Age• and .0. err h se; e W publko ., f>enry Cow's 21 Tdnl o"i retail spending in the United States, "dulling msenvbdin and 6cva n hsasl Year A+ot ended in larwary 200p vnre $ 142 billion, a 6 2'% of rl,a pW 1O19hIY $2.3 trillion, W 22 flad ORI, ed. Ociobs. 22. 2000, p A 1 urxhs zoulmon, Flew Y of is s S dam, win hr the ark Tmn tJews Service, rhe Oregan,on 22 The a`eraW new car In the United States travels 15,tar000 main a yeas, ,nth prod noel lion'"dies a nuIlly Mobfan Mobility is ner reflected in than all million people for 16.33% of the teal U S. I t' AcoWTImV p t p9A q6 U $ ��s CO�Bureauined p14ling 1 S W. mWy a% moved sither to a different mangy a �' of man A a 260 midon Peoadel. „b„ed during that period. d � . reptti' Aj y to the some ,tads a< p a diRersry stare tags otpny . _---' THE VALUE OF SIGNS address if they are to remain competitive. Nothing can meet those information needs as quickly, safely, and effectively as a well-designed and well-placed on -premise sign. In fact, the sign may be the key to a business's success. As starting points in the quest to understand the role of business signage in today's economy, consider our own personal observations, consumer behavior, and common sense, Most of us rec- ognize that business signs help us in many ways to make Informed buying decisions. They also help us to identify a place we want to be, and they guide us in getting there. Too, for most of us, it is equally clear that without signage to communicate easily visible commercial messages to passersby, businesses are substantially rendered invisible and are very likely to fail. We must move beyond personal experience, however, to fully comprehend and competently analyze the economic relationship between a specific sign and the commercial activity to which It refers. A minimal prerequisite is to have a basic underswnding of the larger retail and services economy and the essential role played by advertising — in all Its media forms — in that economy. Retailing and the On -Premise Sign Basically, on -premise business signs constitute the most ubiquitous and varied of all commercial communication systems, including television, radio, print, direct trail, and off -premise or outdoor advertising. They also serve to reinforce all other forms of media communication, and are capable of performing many communication functions simultaneously. It is impossible, therefore, to look at To compete against nation- ally recognized retailers with large budgets for communication and adver- tising, independent small businesses (especially in the start-up phase( gener- ally rely on their on - premise signage to attract the attention of potential customers and prompt a stop. In some cases, a sign may be the only visible cue that a business Is there. In these circum- stances, any site develop- ment or improvement must be "signcentric" because the site's econons- ic value is centrally depen- dent upon its signage - THE U.S. RETAIL ECONOMY Sheet frontage offers a business the opportunity to interact with eve rsot take advantage of this the by installing Dwell-dasi well-designed sign passerby' tial patronage of many newcomers or non Cal customers will be lost. These lossible to t sales sales nay ult naatn' ly represent the difference between business success and business failure. Poten- any one particular business site and say "this is how signage works," The complex morphology of American retailing prevents such a sweeping generalization. The many types of retail operations and sites (less than range from small independent freestanding stores 10,000 square feet) to mass merchandisers and complete category stores (greater than 150,000 square feet), and from central business districts (-Main" streets) to sui shopping centers, and retail "clusters" that arc p malls, regional nt neither shopping center nor strip mall Succors In includes not only loca this diverse environmerequires a comprehensive and sophisticated business strategy that tion and ownership variables, but also the signage requirements of bolt the business and its potential customers or clients. An effective signage Program 'nay be relatively simple — a freestanding sign, for example — or more complex, reflecting the full range of communication devices: traditional permanent and tem- porary signage. product dispensers and displays, a "signature" building, and other site Improve- ments reflecting logos trademarks, or other corporate identifiers. Clearly, ate signage needs of, THE VALUE OF SIGNS ,U "mom and pop" operation arc radically .rent from those of a national franchise, as McDonald's. Therefore, sign programs it take into account the particular message ds of both sender and receiver, as well as specific site variables of the individual loca- or facility. Need Variables For illustrative purposes, the signage needs of various businesses may be viewed on a continu- um. At one end, a local service-oriented busi- ness that has an established clientele and has been in the same location for many years may operate economically with only an identification sign on the door. Longstanding customers or For freeway -oriented businesses, as many as SO% clients can find their way to the location with- of their customers are non -locals, who neither live nor work nearby, or who may pass the business out the visual cues provided by a sign easily only once. Without the high-rise sign visible to the Stet and read from the street. However, if an freeway, these businesses would be essentially economic downturn occurs in the area, causing out of sight and would probably fail. residents to move away, the ability to attract out -of -area passersby may become essential to the busi- ness's survival. Conversely, even if the local economic environment remains stable or improves, many residents will move anyway, to be replaced by newcomers unfamiliar with local businesses. Although area newcomers might become aware of a business through alternate fors of adver- tising, such as the Yellow Pages or newspaper advertisements, substitute communication devices are much less likely to replenish or Increase the client pool than an optimally visible and readable ort -premise sign. And while word-of-mouth (or referral) remains a good way to attract and retain new business, its effectiveness is hampered by the mobility of American consumers, who frequent- ly change residences and are often unfamiliar with their neighbors. At the other end of the signage -needs continuum are businesses that rely entirely on thea to stay in business. The clearest examples are highway -oriented businesses, such as gasoGu, -•. tions, fast-food restaurants, and economy motels, whose customers are sometimes completely dependent on signs visible from the highway to indicate where to get desired goods or service, the automobile has come to dominate the urban landscape, the shift toward the "highway" rn l THt UAL ReTAIL [CONOMY In drawSpeciltyco stores mer located in close proximity to an anchor store, which is the primary draw consumers to their extended business area if their signage is visible and readable from the street frontingthe F Y destination, can destination store. the continuum has been dramatic, causing a material impact on retail locational theories. Let's for more closely at how- these retail strategies have evolved and changed as increasing numbers of American motorists have redefined the traditional trade area, Site Selection and Development St"ies Generally, two retail locational strategies dictate the direction of site selection and development schemes: (1) fixed points of origin, and (2) moble points of distribution. The .l vedpoints strategy is primarily trade -area oriented. The consumer moves from a fixed :Ind defined base within the area to a specific retail site. The origin of the trip may be the home, office, school, or possibly a local hotel or airport. Traditionally, a trade -area business enjoyed Lt high repeat customer percentage. Based on this percentage, the Uusin be reasonably established, ess's market size or share could The mobile points strategy is based on passing traffic. Point of origin is almost meaningless, 3 and signage — nearly always the total visibility component of the site — Ideally, the store will 1—ate next to a becomes all important. major transportation artery, where stmt (or storefront) 23 A --WV to do Urban tax;Ideal ls 6 a "imml• ooeers * of neighborhood d10t'p'^9 of Imdrarea d+dacMitlia, Nr o [octan in bcnNng a rebel ate mclede popublbn der, ono• 0°n 8on• war accns, and nwd antic nquirem c Sidw•ahw by mnwn,en 6om ttrh. bnd erpwun Ihol it, rhe ule n w.Lwwrs iULI 198 5) Olhar ovyide d+e i^urlediale bode octal, aperargnal �nre+4nae, 30191Y.and perking °dO�r" a o 1r.W « highway ,_jTHE VALUE O,r SIGNS isibl0ty is optimally available. Single -stop, non -repeat customers are the norm. Because con- umers' brand or product consumption habits usually travel with them, corporate or brand identifi- cation programs featuring logo signage enhance recognition of the premises and often prompt the stop. Any repeat business is primarily generated from daily commuters.2.3 The fixed points and mobile points strategies are compounded by two substrategies: (1) impulse stop, and (2) destination or shopping trip. The impulse stop strategy involves finding an oppomine retail location along the potential con- sumer's pathway. Clearly, the better the site communicates commercial messages to the passerby, the more competitive the site will be. The destination/shopping trip strategy presupposes that the consumer's intended destination is the site itself. Local mass merchandisers, "big box" retailers, and shopping centers or malls are examples. In fact, shopping centers and malls utilize Impulse and destination locational strategies — the anchor tenant may be the intended destination, but to reach it, the consumer must pass smaller, specialty stores that are designed, and signed, to capture the impulse trade. On a larger local scale, power centers (commercial districts that contain several mass merchandisers), Theme signage enhances both the specific site and the overall district. It is especially effective in creat- ing an aura of vitality and a sense of "place." THE U.S. RETAIL ECONOMi-12- Theme m regional shopping centers, entertainment dis- tricts, and feulval marketplaces all serve as pr, maty destinations. Once there, visitors or shop. Pers may travel to additional commercial desti- nations within the same center or nearby area. In effect, the primary destination operates with- in a large trade area, while "satellite" business- es serve as points of distribution, seeking to a"v"er, through on -premise slgnage, customers n -hose chief Purpose was to visit the primary destination. This same rape of spin-off business occurs in specific geographic locations that function as major tourist destinations (for example, Times "lie)• visitors not only consider the signage in and around these areas an important part of their total experience, they also respond to signage messages that invite purchases. In the same manner. destination cities such as Las Vegas or Santa Fe/Taos use signage throughout the city to bah entertal OPEN DAILY fl \\ DLUEUERRY R PIE A sign that provides more than name identity bring in customers who would not otherwise stc Thus, the addition of a changeoble-copy cabinet permits the advertising of specials or artillery si vices that may encourage an impulse purchase. n and invite commercial transactions. WMe destination districts or cities must strive to meet the signage expectations of the thousan who visit annually, they must also consider the signage requirements of the local community. Generally, all signage needs and expectations are met by emphasizing theme design in the con- trolling sign code. For example, all businesses In Las Vegas, casino or otherwise, must pass rigor_ ous design review tests before constructing or placing business signage. Also, New York City municipal authorities exercise strict dominion over Times Square signage, including Imposition of rigid sign size -to -site ratio standards, Some businesses have adopted it hybrid retail strategy — both destination and impulseorientec The gasoline Industry Provides one example. Because profit low margins from gasoline sales are often (lob less), many stations add other on-site retail services, with generally higher profit mar- e to stay in business. For example stations now offer on-site convenience shopping and/or car wash, auto repair, and maintenance services. The secondary (or "accessory") services interact synergistically with — —I TME VALUE OF SIGNS primary service to encourage crossover shopping; for example, a consumer will stop for s and then enter the on-site convenience store to huy a soft drink. The combination of a mary service generating predictable, but low profits, with a secondary service capable of ierating high, though less consistent profits, maximizes the site's economic value and rate return on investment. Traditional Trade Area irographically, a traditional trade area generally encompassed a five- to 10 -mile radius; demo- raphically, it contained a fairly immutable mix of residential, commercial, government, recreation - i, and manufacturing/industrial land uses. Site selection and development decisions by retailers rere based on the area's boundaries, population, consumer Income levels and spending patterns, nd numbers of competitors (Jones and immons 1990, 318). Retailers rarely relied on ustomers from outside the Immediate trade area, who might patronize a business only one time or infrequently, for revenue. Because retailers within the area generally relied upon repeat customers for business, the prudent retailer would first obtain in-depth studies concerning the area before locating a store there. Consumer points of origin and des- tination were plotted, and incomes and spend- ing patterns were researched, If the studies Indicated the retailer's projected share of the market was sufficient to operate ata better - than -breakeven margin, the store would open. The trade -area concept can be very useful t,, Fast-food or gasoline businesses. For example, someone interested in opening a McDonald's franchise will first establish the number, type, and class of households within a demographic Most point -of -distribution retailers are either fran- chised or part of n regional or national chain. Many consumer stops are made on impulse, prompted solely by the sign and how well it rein- forces what the consumer already knows about area; calculate the average consumption per the producer and product. Without a sign that is household; factor In total business volume gen- easily visible and readable in advance of a high- way exit, impulse stops would not occur, and the erated in the trade area; and then determine business could fail. THE U.S. RETAIL ECONOMY the share of business one might expect to obtain.2+ This base statistic, coupled with careful cons eratlon of the competition, enables the prospective franchisee to determine necessary to support a new store. the volume of busing $C Orolc base is frequently discussed in connection with trade -area site selection and develo ment decisions. If trade -area analysis focuses upon a fixed or static economic base within a define geographic area, the evaluation is relatively straightforward. In the short run, the total demand for an event, good, product, or service can be established using demographics that address and type of household income, With consumer spending the nature accounting for two-thirds of the present economy, demographic studies constantly gain new significance and sophistication. For example, Home Depot Inc., which relies upon such demographic studies, will initially ope, a store in a perimeter (suburban) area of about 100,000 households, which are 75% owner occu- pied and have a median income of $45,000 per household. The store will be expected to gross annually $50 million or $400 per square fool. If store sales fall below inflation rates, Home Delx it will open smaller stores within the trade area to offset costs of consumer resistance. Evolving Site Selection and Development Strategies: Trade -Area Dynamics Since World War 11, the combination of the interstate highwav system and the increasing mobility of consumers has significantly changed the notion of "trade area" for many types of businesses. Most notably, consumer mobility has rude trade areas much larger overall. Today, it is estimated that 35-50% of the consumer population shops outside the local area. In this scenario, large segments of the retail and service Industry now serve as *points of distribution where many customers at any given point on any given day visit the location for the first, and sometimes the only, time. Applying a point -of -distribution approach to the site selection process relies more on quantitative analysis of travel patterns within an area and less on traditional trade - area measures, such as population and household income. In terms of signage, retailers that function as points of distribution must capture consumers who are traveling between destinations in order to stay in business. As a result, these retailers generally alar visual contact. rely more on signage than do local merchants or service providers with whom consumers have reg Given today's commercial environment, however, even the local shopkeeper or sole proprietor requires legible, conspicuous on -premise signage visible to the street. If such signage Is lacking, local businesses will lose a large segment of tfte market consisting of non -local and newcomer 24 G*.,agr, McDonald's focafos one hrmchlse for every 30.000 Amenaans. _421 HE VALUE OF SIGNS c0onald's routinely utilizes the full spectrum of on -premise signage, Including logo prominence and signature building. consumers. The loss of these "unfamiliar" potential customers may be as high as 50% of the total mobile customer pool.25 Additionally, local potential consumers may be lost because many of them, possibly as many as 85%, daily travel outside the trade area and buy products and services elsewhere. if the local merchant's sign lacks visibility, the local consumer may forget the business is there or worse, never notice it in the first place.26 Because everyone who lives or works in a trade area routinely does not shop there, it is nearly impossible, statistically, to predict business volume for either a single site or the total trade area. The variables created by consumer mobility also have made on -premise signage Increasingly important to businesses across the board. Often, without adequate on -premise signage, a business will cease to be a factor in the marketplace — and ultimately, may fail. Simply stated, trade areas are no longer static. Instead, they are dynamic and fluid, with con- stantly changing borders and population. As a result, the task of drafting responsible signage 25 See Chnn, pg " 26 A retail sib's viwd expowre and access are particularly Importont in providing driven a ough time to rear quickly and mfely A sile wilh goad visi6ilily n aro shot a consumer con see with wfBdem lcod time so make appropriate driver decisions, should the driver with to wee, the premises. A site v,id, good oa sslbility is one with clearly marked entrances and exits that permit driven and pedestrians to move solely and ear iy into the parking Inc and into the store, Specifk sips that are considered pm6oble from an «ceu standpoint an far wrners an main roads and suss b which wntrances am not hampered by median ships. Sites that are considered less than ideal in forms of kswtian are those an the insider of curves, a odd -shaped mrsisedions, and same mid block pomels (Soloneschi 19961. THE U.S. RETAIL ECONOMY valuations requires a rethinking of historic perspectives of the cmunication nethe mc valuations and its business districts. In an automobile oeds of cdominated world, business signs playa dol rant role. The modem appraiser understand this, and always keeps both the present and pro ed course of recall dynamics in mind when juxtaposing economic reality and business goals in final appraisal analysis. The Role of On -Premise Signage in Business �nwrship and �na9�+ent Mod The American business system is not only highly competitive, but also extremely varied, particu ly In terms of types of ownership and operation. One cannot determine the value of on-premist business signage, and the effect of regulation upon certain businesses, without some backgroun knowledge of certain discrete segments of the retail marketplace. Franchising represents one sector that is often misunderstood. Since its advent, franchising ha increasingly diversified the American retail economy — and intensified the difficulty in compre- hending it. A comparison of two operations in the fast-food (or "quick -service food") segment serves to illustrate the variation and subtlety of the system. 1. Product Franchisers NIcDonald's and Subway are product franchisers. In this category, franchisers retain cons able power over their franchisees, particularly with respect to operational in and ider quality control. In the McDonald's franchise system, the parent company exercises nearly absolute proprietary control. The franchisee cannot own the underlying real estate (McDonald's owns 95% of the real Property of its sites) and must rigorously conform to certain standards and protocols that dictate not only the type of product and the manner in which it will be served, but also the type and manner of on-site improvements and signage, Conversely, Subway, while exercising control over product, allows its franchisees to control th type of building that will house the franchise and the store's "trade dress,- with the exception tha the corporate on -premise signage package must be used somewhere on site.n 27 Akponold's hog appro11"Wi, 12,000 nWa nsq +, A e United Slates; S�bvvy, I O,B00; awgar Kin Wendy s, 4,600 lof which goo or• camprny a,,,,ydf Wh,le ocapyma unfy 1$ enioys 7%"the -9menrl oral volume. 9a�d cervica rood 6,800, l'•<ivy Qr•e,,, S,a00, and •^, d d+• makes. MeD—id,, THE VALUE C, g Business -Format Franchisers diversity in the product franchise system Is not enough, the business -format franchiser Is entirely fifferent from either a Subway or McDonald's franchise, in most cases the business -format franchiser permits use of existing buildings and retention f real -property ownership, while providing national major media advertising and marketing Programs in exchange for 10-20% of gross revenues (the figure varies per franchiser). In this sense. the original small-business owner and his or her business are preserved (for example, a local motel or muffler shop), with the only changes ones of visual image and access to regional or national advertising. In the face of severe sign -size limitations and perhaps "mere survival" circumstances, these changes are especially beneficial. to such situations, the only drawback to franchising is that business revenues must Increase enough that the franchisee can afford the percentage of gross volume due to the franchiser. However, an effective on -premise signage program, in tandem with major media advertising, will usually bring in the necessary additional customers and dollars. Because ownership and management controls differ from franchisee to franchisee, one cannot generalize about how much commercial speech a particular franchisee needs to be successful, or how the franchise system will respond to restrictive regulation. In communities that strictly limit sign size or restrict sign content, or both, the franchise may forgo creative sign design in exchange for standardized corporate signage. Such signage enjoys near instant recognition by a majority of consumers, often without the business displaying anything other than a small corporate logo sign, perhaps reinforced by "signature/trademark" building site design. Impacts of Signage Regulation When using trade -area theory to determine sign size and placement parameters sufficient to satis- fy the communication needs of both the business owner and the consumer, many land -use plan- ners commonly argue that limiting sign size will not adversely impact local business. To such Planners, local businesses need only be "Indexed" because, they reason, local consumers are familiar with the products and services locally offered and how to access therm, and so do not need signage for guidance. What is unrecognized in the Index theory of sign regulation, however, is that even in the most demographically stable area, at least 30% of trade is likely to be generated by out -of -area consumers who are just passing through. These consumers will not stop unless signage can be seen and read in time to both (1) reach a decision, and (2) safely make any traffic maneuvers necessary to slop. THE U.S. RETAIL ECONOMY Because long-term demographic stability is so conjectural and the American co mobile, this book addresses thnsumer is so -area need to go beyond trade -area theory when assessing a subject site's visibility requirements. Certainly, when determining whether a commercial site is capable attaining retaining) highest and best use, missib)e sign appraisers are well advised to carefully research pe n size, lighting, placement, copy, and design under the controlling code A goad ger al rule to follow is this: ff the subject signage — in all or most of its components — is responsiv to trade -area dynamics and communication needs, highest and best use has been attained. Conversely, signage that merely provides an index for locals reflects static generally proves inadequate to fulfill its communication u ry, purpose. trade -area thea, and A Cass in point 171e importance of a single on -premise sign topoint-of-distribution retailers was the subject of a 382 Rptr. 2d 382 (19997). seminal case, Denny"v Art., et al. a City ojAROura Hills, 56 Cal. App. 4th 1312, 66 Cal. Agoura Hills is a picturesque suburban community situated in the foothills of western of 101, bisects a portion of the Los Angeles County. The the Freeway, a major, high-volume freeway that is part of U.S. Highway generally within city. The city desired to enhance its visual aesthetics — a purpose local police powers. As a part of Its enhancement program, the city enabled a sig ordinance that, among other things, prohibited all pole signs, with the exception o£ a few th were six feet, or less, In height. at The affected business proprietors identified by the city as being in violation of the ortiinance exhibited tradlUona) pole signs The signs announced the locationof the business by naand/o me logo and considerably exceeded the new height limit. Under the si Undgn ordinance, the pole signs became nonconforming on March 20, 1985, and Following an amortization period of eight years, were subject to removal on March 20, 1992. During the amortization period, the affected business- es repeatedly applied for zoning variattces or exceptions, and were repeatedly turned down. Litigation ensued. The businesses alleged that the city's sign ordinance violated Section 5499 of Business and Professional Code, which essentially ' Prohibitdee California on the basis of height or size if to ed the removal of any on -premise sign circumstances wouldOf a conforming sign or impair the sign 'ser',s ability o adequately and a elctivelyair contmue toility communicate with cite public through use of a sign conforming to the new code. if irnparrment of sign city or communication would result as a conssequence of enforcing the ordinance, the original sign could retrain and would be deemed conforming, as a matter of law, 12THE VALUE OF S"', ^ Section 5499 controlled all sign ordinances adopwil after March 12, 1983. The city's ordinance was enacted in 1985; thus, the affected business establishments and their signs all predated enactment.2H Based on Section 5499 and its preemption of local law, the businesses requested an injunction against city enforcement of the ordinance against them. 'the city concurred that the state code applied to its ordinance, but countered, as a defense, that other merchants in the area with conforming signs were enjoying vigorous business and healthy sales. The trial court rejected this argument.29 One of the businesses affected by the city's ordinance was a Burger King franchise located adja- cent to the Ventura Freeway. The subject's pole sign was highly visible to potential customers trav- eling north or south on the freeway. Traffic counts showed that 88% of those vehicles passing the restaurant did so via the freeway; the other 124 passed by on local frontage roads. Due to surrounding topographical circumstances (the business site was lower than the freeway), a sign of the type and height required by the ordinance could not be seen by either northbound or southbound motorists. Neither could the business premises be seen until It was too late to safely exit the freeway. Thus, forced removal Of the offending pole sign would render the site essentially invisible and incapable of attrtcung the freeway motorist impulse buyer. The Agoura Hills Burger King and its sign were specifically built to service Ventura Freeway motorists, and its profit structure was designed with that in mind. Corporate field studies found th,u 28 section 5499 al *.Code oars. ' ro tip a munry shall require the rernaval of any on•premisse adwrNJng display onto basis of its height or sin by requiring con6wanee with any ord,n ice w regulation introduced or adopted an r after March 12, 1963, if special topogrophic cn cun,rlonces would result ,,, a rresterial inspart+r,ery of —.unity, of the display err the owner's a users ability to odequandy and effe f-ely continue to communicate with the publ,c through the use of er display. Under dssss cirmintio ars, the owner or use may moinen she odsrnsing display at the business premises and a o lawtlon necessary for confirsued public visibility of dee height or use at which the display was pre:—sly arscMd and, in doing so, the ower, or user is ,n conknno,cet' 29Innsponr to the city d Agauro Klis argur-4 the trial court stated: 'lust how cornnwciolty .heti" signs may be at other bcohons is not drectly relwant hue +vonau, businen and Meabhy sales (of third party buarea-1 ..may be g—tally trvs iblut that Is net the statutory test' THE U.S. RETAIL ECONOMY m The signs of Agoura Hills' litigants provided impor- mportont tantInformation to drivers who, for example, might be getting low on gas or experiencing �enyts engine trouble, or might wish to get something to NC7fSIDTGt's,rrt - 0� A�IDL Lt Cit eat before continuing their journey. In response to questionnaires concerning how they first become aware of a business and why they stopped, many customers added comments noting their apprecia- r 4.-'sji ilon for the signs as "friendly beacons,- offering both a point of reference (to assist in wayfinding) and a point of distribution or purchase (to satisfy an immediate consumer need), Section 5499 controlled all sign ordinances adopwil after March 12, 1983. The city's ordinance was enacted in 1985; thus, the affected business establishments and their signs all predated enactment.2H Based on Section 5499 and its preemption of local law, the businesses requested an injunction against city enforcement of the ordinance against them. 'the city concurred that the state code applied to its ordinance, but countered, as a defense, that other merchants in the area with conforming signs were enjoying vigorous business and healthy sales. The trial court rejected this argument.29 One of the businesses affected by the city's ordinance was a Burger King franchise located adja- cent to the Ventura Freeway. The subject's pole sign was highly visible to potential customers trav- eling north or south on the freeway. Traffic counts showed that 88% of those vehicles passing the restaurant did so via the freeway; the other 124 passed by on local frontage roads. Due to surrounding topographical circumstances (the business site was lower than the freeway), a sign of the type and height required by the ordinance could not be seen by either northbound or southbound motorists. Neither could the business premises be seen until It was too late to safely exit the freeway. Thus, forced removal Of the offending pole sign would render the site essentially invisible and incapable of attrtcung the freeway motorist impulse buyer. The Agoura Hills Burger King and its sign were specifically built to service Ventura Freeway motorists, and its profit structure was designed with that in mind. Corporate field studies found th,u 28 section 5499 al *.Code oars. ' ro tip a munry shall require the rernaval of any on•premisse adwrNJng display onto basis of its height or sin by requiring con6wanee with any ord,n ice w regulation introduced or adopted an r after March 12, 1963, if special topogrophic cn cun,rlonces would result ,,, a rresterial inspart+r,ery of —.unity, of the display err the owner's a users ability to odequandy and effe f-ely continue to communicate with the publ,c through the use of er display. Under dssss cirmintio ars, the owner or use may moinen she odsrnsing display at the business premises and a o lawtlon necessary for confirsued public visibility of dee height or use at which the display was pre:—sly arscMd and, in doing so, the ower, or user is ,n conknno,cet' 29Innsponr to the city d Agauro Klis argur-4 the trial court stated: 'lust how cornnwciolty .heti" signs may be at other bcohons is not drectly relwant hue +vonau, businen and Meabhy sales (of third party buarea-1 ..may be g—tally trvs iblut that Is net the statutory test' THE U.S. RETAIL ECONOMY m nearly 60% of the store's business was attributes to its on -premise sign. Even after factoring down the potential loss In business attributable to loss of the sign from ( to 37 844 (a romp( that the franchisee thaw "averaging" of Burger King's data and that of the city's expert).corporate accountants foul would lose a profit of $2 million over a 15 -year period, the term left on the lease at the time of controversy. Using the higher 60% business loss calculation er a calculation corporation believed more accurate — the lost profit would equal $3 2 million. Due to the reon ably foreseeable near-fmmediate downturn in impulse trade upon removal of the sign, most aso I revenue sssl would occur in the first one to two years, almost certainly driving the franchisee of of business long before the lease expired. A comparison was also made between the Agoura Hills Burger King and another Burger King in Camarillo, a few miles farther down die freeway. As with the Agoura Hills site, the Camarillo premis were not visible from the freeway, and although the store had a as visible only w pole sign, the sign southbound traffic and could not be seen until the motorist had passed the appropriate we exit. Because of both lack of visibility and ready access `rom the freeway, relied much more on the local population and fora( tn,v7ta a the Camarillo Burger King and not surprisingly, its sales were onl g road traffic than die Agoura Hills store, ence in volume tended to su Y 48% of the saves achieved by the Agoura Hgls site. The edit%r Peon a Finding that up to 60% of the sales of the Agoura Hills Burger King flowed from its visibility to traffic (n both directions for distances great enough time for the unfamiliar driver or impulse purchaser to to Provide ample was considered trade- exit safely. Additionally, the Camarillo location area oriented, ed to the Agoura Hills franchise was strictly °point of distribution' or Freeway oriented, and thus expected to draw only a The sstrati percentage of the local consumer pool. idles and surveys provided by all other htlgants similarly found that extensive adverse impact to business revenues and profits would result if their pore signs, ithat to the freeway, were removed. Among these were McDonald's and Texaco,3o es Tine trial court concluded that enforcement of the mint of all plaintiffs' ability to communicate adequatee! vans ectivety w ih the material irnpalr- topographtcat conditions. These conditions included trees, hills concrete highway structures,to tither 30 %-hg Agoura aesksurante, dba name and logo to s, Th. s, is located odlacenf to a �1OY ate. ram how. and shot no signor Potential customers. The trial court found that the ng its retNm - a p and uses o 75�fao( pole sign di po-nt for rhe off- s'8^ or deploy conforming b die cilys ordinance would 6as'ilir dependent an h.eeway traffic for ,h ccu�tbmer rO1^P runhr, the hid court found that r vieis4 to*% nwbr,sh -or o sole and r rani d 35%, n umilor loss was farad h ntalian of Ate pole siva vy,Jd rtsssrN d an easanob4 decision sn Tesco's case. the Its tf 1° t°1Oc'o sailer uPon remanri el as, yA,r- ' gross nn*nue loss so the predicArd loss in "a amounted b $336, resrau- Yeay predicted loss ovaoged S I I million, based an a 35% �0 Ass Fri yssx d kAtdoesa, fp researcher rncard that the Fntyear lou would rise to S2r 3 m 11 8 % M`OD1ald's restaurant, the firn- nhad Such b+sn ,mould lanae dte restouront to dose. �i Oe $2.7 million n yea, Corporate -lied nsotarnr recoil of the site di-in. -___MTHE VALUE OF SIGNS utility poles and wires, vehicles traveling the freeway, and any other visual Impediment than the natural limits of human eyesight.31 The court then ruled that the attempted enforcement of the city's ordinance violated the usiness and Professions Code, It ruled that plaintiffs could keep, maintain, and exhibit the disput- d signs at their respective business premises; that such signs would be deemed in conformance; red that the city, because of its "wrongful and on-going conduct," was permattently enjoined rom enforcing the ordinance against the plaintiffs. On appeal by the city, the appellate court affirmed the trial court's decision, deciding the case n the narrow question of "material impairment of visibility," without reaching the issue of com- mercial impact by the city's ordinance. However, the trial court clearly paid attention to the eco- nomic research and data submitted not only by the affected businesses, but also by the city's o« r: expert, who agreed that significant losses in customer base and business revenues would result from the loss of signage.32 In die Agoura Hills Burger King case, lack of freeway visibility of the premises itself precluded the business from overcoming the sign height restriction by alternate form of signage. Had a sig- nature building, for example, been a viable alternative (if the site itself were effectively visible to the freeway, it may have Been), the Agoura Hills Burger King and other freeway merchants similar ly situated and adversely impacted by the city's height restrictions may not have litigated for 10 costly years...years that were costly to both the businesses and the city.33 In our consumer based market society, on -premise signage is a critical tool that must be available to retail merchants to effectively communicate with passersby. The Agoura Hills court case highlights the importance of on -premise signage to retailers who depend on die place based commercial communica- tion system along our roadways — and demonstrates that courts will provide judicial relief to prevent damage to such businesses based on unjustified, un supported, restrictive, municipal regulation. 31 The hid court determined Aat the state code's statutory language minimally required 'o circumstantial analysis of cwt only the simple visibility I the sign, bu dao wheAter the sign will 6s a2fiW Iemphosis in original(, and the message imparted to the viewer's brain... iTIM additional circumstoncn bearing on nobasobility or perceptibility would include the origin and nature of the customer base and buying mdiwtion. general visibgiy in the ora, the highspeed, high-rolums nature of the freeway, location of decision points far motorists along Are freeway, idoolication time and reuthon time, and hire to malte safe Ione changes.' 32 The had cow found • as to each of the plaintiffs. there would be a material i ,ponmesni d the commiscjpf efle iris (emphasis added( of a ea,bnning sign (becuuml each of ilea businesses relies an itsexisting sign a Weact eushrnen...su6stentialfy...hom the Ireeway.' Significantly, none d the trial courts findings, including (hose regarding plaintiffsresearch, were ovsrruld or otherwise excepted by Ase oppd- lote court 33 H is reported by Robert M. Aran, Esq , an attorney for se,aral plaintiffs, that when Agoura Hills moos incorporated, a primary reason for incvr- Porohoa moos a effect o removal of all pole signs in the community that more oyer six feet in height. Subsequent to the appellate cmes decision, and following lweeenwhon of the cost bill to Itis city tr %ire,, the mayor and city counsel more recalled by the town's durens THE U.S. RETAIL ECONOMY m I CHAPTER MARKETING AND ADVERTISING: DERIVED DEMAND s At leastro of the L'. S. gross retail volume is generated by national corporations, of which a porion are significant proprOduct- and business -format franchisers. (Large national or regional company-owned chains account for most of the balance.)s+ The national franchise markets recog ing and advertasx nine that a standardized Full-speamm on premise signage system, coupled with national ng Promarket- grams, Increases the franchisee's revenues enough Payment of gros`c income to a franchiser. to justify a significant Because of the symbiosis bem-een a local site's visibility component and national advertising an( marketing campaigns, the on -premise signage programs for local franchises are inextricably tied to the parent companl%s major media advertising and marketing mix. This mitt makes certain that m Pant trademarks and logos arc prominently featured, and that these company identifiers are ech oe on site, primarily by on -premise signage. In many cases, additional reinforcement of the company' image and Its prcutuct,,service is Provided by "signature" improvements to the building, further enhancing the sues total signage spectrum and ability to communicate with the consumer. Marketing Markets consist of basic size volumes or consumption numbers. Generally, the job of a market researcher is to identify the subject market, establish its volume, and then subdivide it into distinct comPonents or segments, Based upon expected short -run consµmption within the subject market or one of its components by a targeted population (predetermined through extensive consumer Profiling), the market researcher projects, or derives, the demand for the product or service. From this information, long-term marketing strategies and adaptations are developed,+s JI However by number d commercial M"N"mrd rtesw norwfFiliatad small businesws w conaaec m aha United Statsw. proprietary sntsrprises constitute d knit 60% of JS Pubhmtiom such os The suar,y,br J."'d or . f�^on+iiroro a<allent mwkM 1`i6,000ion iaurces. - —_v THE VALUE OF SIGNS 9110.1 AAAAA.., �Zero-Sum Game Theory (Generally, the demand for a product or service . nd the targeted consumer population for any given market remain relatively constant. And even if a shift occurs, a decline in revenues in one market quite often is accompanied by a comparable increase in another market, so that total avail- able gross revenues throughout the retail economy retrain the same. In other words, the total retail market is engaged in a "zero-sum game." However, as with most theories in American retailing, zero-sum game dynamics do not always hold true. Although advertising usually does not increase overall consumption, It may increase consumption within specific markets by introducing "Intervening opportunities" along main travel routes. This is especially true in highly discretionary market,-; such as quick -service food and econ- omy lodging. It is true, also, for entrepreneurial businesses or sole proprietorships offering more specialized products or services.36 Compounding the attempt to generalize zero-sum game and the overall market is the nature of the U.S. and Canadian retail systems, which constantly adjust to marketplace forces, especially recessionary or inflationary trends. Retail categories subject to consumption decreases or increases in response to economic factors are considered cyclical. Examples include automobiles and auto parts, toys, overnight lodging, designer apparel and accessories, and out -of -home dining and entertainment. Gods, products, and services that etre consumed regardless of overall business and economic conditions are considered noncyclical. Examples of noncyclical consumables are fool, 36 Certain prof i isionol services may Incwaw conssmtption within the eabgwy imply by a sign that advwtises a 'specloh f that Into canapes may not aped to be avoiloble at the sih. Fair uompk, as add-on services, a vowinary dime may provide pet groaning, or a general practice demon dlnic may provide tenth whitening. Also, the recent trend toward franchising of hmditionol service or prolessional banns", ads as dental practices, veterinary dinics, and real sitars ag-in, has made this standardized, on premia sign an esientiol contputsent of the (dal m ire ate media odvMising pockage. MARKETING AND ADVERTISING a �A milk and other beverages, cosmetics'personal hygiene products, and durable household goods appliances.sy Cyclical/noncyclical dynamics were easier to predict and adjust for when trade -area boundar and demographics were more or less immutable. At one time, manufacturing and industrial site; brought in jobs, which generated housing and predictable household incomes. Retail space was then constructed based on the predictable buying power of a generally stable population,Todal such stability and predictability are no longer the case, The rapidly expanding retail and high-tech U.S. economy has replaced heavy manufacturing c Industry as the force directing residence, employment, and spending patterns. As a result, Coda adult consumer, on average, is considerably more mobile, with more discretion y': spend on both planned and impulse purchases, than his or her forebears, discretionary income to Although U.S. consumers still tend to make purchases by habit (or loyalty to a particular prod uct or company), their increased mobility mean they routinely travel far beyond the bounds of i their local trade area. This mobility, in turn, increases the likelihood that they will make impuls purchases along the way, regardless of brand loyalty or familiarity with the retailer. As a result market share per retail category within any given trade area may fluctuate dramatically, especla ly in traditionally cyclical segments. However, even though consumer mobility and impulse -oriented purchasing make local market share very difficult to predetermine, an effective marketing and advertising program that includes on -premise signage will help many businesses to make a sustainable marketplace impact. And when optimally visible and readable on -Premise signage prompts a consumer stop that was neith Planned nor relevant to an immediate need, market share may increase,xr Given today's market variables, which are difficult to predict or 'Pattern.,, traditional trade -area analysis Is no longer valid for many urian communities. Neither can zero-sum game theory be applied with impunity. Clearly, signage programs based on zero-sum game theory are problemad at best, --and for many businesses, may lead to economically counterproductive decisions. 37 W.I.Mmr't ,uccex is sitin,Foor* selmd to a mor »orgy hn»d on a nwd+ardi» mu 1st- i, unollectx{ by gclical an aonsumd regubrly in pedktab6 Pasernt FunM. 6ec,-, less 66 in lm b hodilional sads•ono _ ►ods aeo uswYy esosrk 1r "anal• a, posohle ineo,ns sutler a downturn, Wd•Mort wdill n and cw­"an "ariab4� for r'o^+PI.. ii bed oroo by 2P-30 niW _ d h far 3t- G+rsrolly when can,snsr ro ovw busmses horn ih brger hods aaa, obi w� � n(requeM po�Nn�n and d� a moo mer[hardiser such a, WdMon earn o a«mm„niy, o1+er marchomh b» wls, by pain. rtavwver inhaduch" of 'specialty' irm, not oar ,,a or teals economics oan oleo maw nsa A Wd Marr nsay oIhw rho boor. in addition p ,—� proportional b Ny. Myf., =I Man ir»ai,tihls and ,Wad doau, iters » W."o- �'O1't its commIm�ry s retail , epainina Axmer solos wlurrrs, lional dollen at a shop that hs ar sir nss�s nay here alherwi» ,pent co,,—W For eaomple, a Soi', f-Stpner may And op olterirsg 'toll AMn' apparel - a �, Y. o Wal -Mon cunonrr nxsy wend addi. . W"c"'Y n J' uwa nal A by m mass nwchom.w _,___� THE VALUE OF SIGNS one must be careful in applying zero-sum game theory to valuation of an Individual signage needs without first conducting an in-depth market study and gaining a thorough Ling of relevant trade -area dynamics. Strategies to Increase Profits e retail industry operates on very small profit margins when compared to gross sales. Typically, retailer's gross profit margin is less than 5% of gross Rales receipts, about the same average as pent on media advertising. Should a retailer reach a higher profit margin, competitors, particularly adonal franchisers and chain operations, will rush to discover and duplicate the marketing strate- , generally resulting in a fallback to 5% for the upstart retailer. In the battle for customers, two tailing rules generally guide the contenders: Rale 1 Sale prices must be cut by at least 15% to overcome brand awareness. For example, to increase sales of a store -brand soft drink over those of a comparable national brand, the store brand must be offered at a price at least 15% less than that of the national brand, Merchants who carry a large selection of goods similar to the one reduced in price generally are able to maintain total sales volumes because of cross elasticity in the market — volume losses in one category segment will be made up by sales in another segment. However, as with all rules, there is the exception. Rade 2 is that Rule 1 doesn't always work, especially for small merchants. Because of consumer brand loyalty, major brand producers usually are able to counter sales inroads by cheaper In-store or generic brands. However, the small merchant lacks the volume that would permit buying at dis- count from major brand producers. This fact makes it very difficult for the small merchant to meet the price of a larger competitor's off -brand product. In most cases, the only counterstrategy avail- able to the small merchant is enhanced customer service and cost-effective advertising. Each retail outlet must operate at maximum capacity per location without suffering a loss of cus- tomers due to failure to provide expected services or products at competitive prices. Because the Canadian and U.S. retail markets are consumer based, they must constantly adapt to cost-consclous consumer preferences. In such a volatile and very competitive environment, it becomes more and more difficult to attract and keep customers. Therefore, flexibility and Innovation are crucial to suc- cessful marketing practices. For example, Wal -Man maintains its competitive advantage in part by utilizing computers and expanding computer technology. Early on, the company connected cash registers to warehouse master computer terminals so that Inventory could be quickly accessed and delivered. Because resupply is predictable and fast, a given Wal-Mart store keeps only enough inventory on hand to satisfy immediate consumer demand. By using such just -in -time Inventory techniques, Wal-Mart MARKETING AND ADVERTISING M reduces warehousing costs --- generally, the merchandise is either at truck (many of which are owned by Wal-Matt), or in the store.39 the manufacturers, in the Funkier, W311-Mart has enough Manufacturers will respond s Purchasing power to influence the site selection for its strpplie Positively to Wal-Mart's "suggestions" that new manufacturing and c uibution facilities be located certain places to more effettively service Wal-Mart's needs, In addition, bulk merchandising enables Wal-Mart to neutralize the effect of federal law Iimifl manufacturer discounts to the retailer. Because bulk sales reduce he manufacturing casts ens counts on to VtAal•Mart can successfully justify discounts. Wal-Mart, of course, manufact counts nn to the consumer. The typical specialty store or de Passes these dis- c discount, andproucts department store cannot co smaller merchant must pay for those products � by Wal-Mart are priced lower than whtttdthe e P wholesale, The Ouick-Service Food Business (QSF) QSF retailers are part of the largest and the fastest growing segment of the out-of=home dining retail category, and these businesses are entering companies concentrated marketing efforts to ing f new phase of marketing.W freestanding location here once these outlets at any traffic center that might generate sales, they now are establishing For example, McDonald's, with one-fourth of QSF business and near) 12, United States alone, is presently concentratingon s Y 000 locations in the pilaris, and general merchandise stn mailer outlets in sports stadiums, schools, hos - size and power to manipulate the market or local refs Immensely successful not because It uses i tal staategies that can adjust to almost an gulatory scheme, but because it develops Y market or regulatory circumstance. tela QSF Consurner Research In size, location, and marketin advertlsin t both "family" and 'atmosphere" g techniques, QSF retailers are distinctly different from about which P restaurants. Personal income Is a factor in consumers' decisions type of restaurant to patronize. Generally, low- to middle-income (amities patronize (fs to a greater extent Ihan upper-income ment. Also, while childrenlyalways families, who often seek out an atmosphere establish - the atmosphere diningexare nearly always included in QSF outings, they rarely are included ill experience. It is not surprising, then, that children in low- to middle-inconu• duo w a considered a eNhcient that moray recoil e.ecutives ecvrive o1 Kmorr omaunced in rhe su 2001) dal rah r (i b;p -0, - �4 b a I'°"'o0e rnr n.nmpk ..hon rhe rYaem+. he nvr dppinB hu ha a Wo6 mm� d 'le ahea pay lar direct 2000, p. A9 A'toH. ledie Kauhnon, New Yank Time Nes.i Service. Il,e �'erd S<60 m,lliorh b uPRrode miarmolwn ! Lbeyon,nn (Partond OR), ed. Octaber 22, VALUE OF SIGNS useholds often influence where the family will eat and, consequently, that nonfood items such toys and playgrounds are Important marketing tools for QSF retailers. QSF messages to consumers are both site specific and major -media oriented. Underlying the portance of signage to mobile consumers is the fact that many consumers are in a hurry. For ample, in consumer surveys conducted over several weeks by Burger King during the Agoura Its lawsuit (see Chapter 2), when customers were asked why they chose to stop at the subject uautant, 35% responded "lack of time'; 20% responded "convenience/location"; and 15% sponded out shopping/traveling." interestingly, of the. remaining "other" responses, only 1% ed 'inexpensive" as the reason for stopping. The Burger King researchers further found that the impulsive nature of the QSF consumer choice measurable. Surveys were conducted at QSF, family, and atmosphere restaurants. The participants ere asked how they first became aware of the restaurant. The results were as follows: QSF Family Saw the sign while passing 35% 26% 13% Always knew 29% 27% 19% Word-of-mouth 14% 30% 54% Advertising 1011, 6% 4% All other 6% 7% 7% Don't know 6% 4% 3% 100% 100% 100% The spontaneous nature of the QSF stop has critical implications Ior all business strategies, par- ticulady advertising in the form of on -premise signage that is optimally visible to passing motorists. Convenience is nearly equal to visibility in importance only for trade -area QSI's, where 76% of customers live or work within a short distance. For the point -of -distribution retailer located along a major highway, visibility is key to the success of the business. The trade -area QSP can rely upon repeat customers for success; the point -of -distribution QSF cannot.ie 40 According b 4466 morel audia, realty 60%o1 dnose, customers swing a pulnl4dislribution OSP trawled more than flue miles betae nsissot g, and appo.hmatdy 60% an aware a1 air OSF only beoouse of .0nope +bible koro the fest ay. 01 taw made oware by agape. 43%-e ne attracted by a high -6w on•premiw sign and 17% by an a stow advertising structure. Accaiibiliy (eo+y hesnow wit and re-enny) is >fa +egataht to the pant 4dimibutim retailer Although 62% of hghwoy novelists will pull off simply to eve. i1 trey happen logo past a QSF "`" ooPa�hmty becvwe d poor visibility a occasibiliy, in all probability they will no turn bock MARKETING AND ADVERTISING Adwrliiing Commercial communication or advertising is (or should be) a direct reflection of the d highly competitive supply/demand marketplace. Briefly, it may measurable commercial co Ynamr�, communication system designed to promote�d�d an organized .i cept, or Individual (as in a political campaign). Product, good, service, Advertising influences consumer choices by 1. developing viewer memory for the subject; 2. reinforcing a memory of the subject once it is there; 3' Improving an attitude about the subject; and 4. encouraging purchase, use, or acceptance of the subject. The comtnercW communicator must select a medium t reaches and consumer. One essential and readily available medium forabus businesses � Persuades the to tion and targeted more gmPhics device — the on-premise sign. And the Place-based s m er, if essential the signage becomes.41 more mobile the targeted consumer, tJi In markets with less than 200 Opp population, the on- premise sign may communicate to g046 of permanent residents, designed, and placed. Provided it is Properly sized, While signage is our primary concern in this book, it Is helpful to vies signage within text of overall media choices. con premise SignaFollowing is an overview, of media types buthe sinesses may use, and where Off and on-premise signage fit in this overall media spectrum. In-Home Media — the Major Media spectrum 7elevislon 'i'elevisrun rs the quintessential natlomrl .idvertising medium, u, merchandisers to advertise foods general purpose household mostl b cies, and c Y Y mass cosmetics. Television also helps to establish and Scrods, over-the-counrer drugs, veh Television has limited utility for 1 maintain brand or co tY local businesses — it is expensive and trovers corporate awareness than the local business it to reach potential consumers, more geography Radio Radio is primarily a local advertising medium, although it is also w7del advertisers to reach specific markets. Radio is more campetftive than tel y used by nation market may have 10 to IS major radio stations and another 10 to IS minor specialized A metropolitan Pecialized stations. n. c�po make up� Ior@e port n � a'Od'Yr`^b° �11or II a mpy, m�uu ac to cnnuderoha„ all vif�billy "dghtu for u ry, and r. nn e �Md conwmer erov� commaiaN phi, 0"j., limilunon. �0-PIS, 0WW _NC"64Y it 0.1w xen r VALUE OF SIGNS is proliferation tends to fragment individual listening audiences. In their programming, even the iior stations today are targeted at discrete age, income, and interest groups (for example, sports, k, easy listening, country, and classic rock). This is also true of magazines — witness the demise national general interest publications such as L(fe and Look in favor of niche publications. if a local business uses an occasional 30- or 60 -second announcement, the advertiser must dertake careful research to establish the probability that the targeted listener is tuned in when commercial is aired. Newspaper In •a market with a population of less than 200,000, the daily newspaper is often e dominant medium. However, if the targeted consurner does not read the newspaper, the medi- has limited basic utility. Magazines Magazine circulation (or readership) may be either national or local. When evaluat- g magazine advertising, the advertiser must relate the magazine's circulation to the targeted mar- t before we advertising costs can be determined. Direct Mail Direct mail Is a "specific" medium — its message can be specifically tailored and rected, and results (a return or an order) can be precisely and objectively measured. Yei9ow Pages The Yellow Pages provide a valuable reference; however, an advertisement's suc- ss is not measured by a neutral source. Internet In practical terms, the Internet functions more like a print catalog than a pure advertis- g medium, such as television or radio, And like catalog or direct-mail consumer contacts, bust sses can measure results by the number of orders generated. Ouhof-Homs Media Outdoor Advertising This is a major media player. In general terms, outdoor advertising Involves the use of a single panel or system of panels to communicate information regarding a spe- cific business, product, service, entertainment activity, or other commercial activity sold, offered, or conducted somewhere other than the site of the advertising display. Commonly in the United States, all outdoor advertising is called "billboard" advertising. The term comes from the early practice of posting bills or posters on buildings, and later on wooden struc- tures, to announce events or advertise products or services for sale. However, outdoor advertising is not limited to messages displayed on freestanding or self-supporting structures, but also includes such things as transit shelters, public conveyance signs, and painted wall murals. Because outdoor advertising comes in many forms, it should not be referred to collectively as "billboards." Most current outdoor structures are standardized by size. One generic type of outdoor advertis- ing is the "bulletin." These were originally constructed of wood and called "painted bulletins" MARKETING AND ADVERTISING because the design was painted on. However, a present-day structure is typically constructed , metal and has a preprinted vinyl canvas bearing the advertising message stretched across It — a painting on an easel. Generally, bulletin structures measure 10-14 feet x 36-48 feet. The other generic outdoor advertising type is the "poster." This term is used to describe preprinted pasters adhered to wood or metal sign structures. The poster actually consists of a series of sheets upon which the total message is produced. Once it was common to use 30 sh to cover the structure. Modern printing methods have reduced the number of sheets to 12 or fewer, although descriptive terms s as "30 -sheet" still remain to indicate size of the structure to be covered. I this vernacular, "30 -sheet poster" ref to an approximate size of 12.3 feet x 24.6 feet. Other structure sizes may referred to as "8 -sheet,' meaning a 7 aced upon carefully researched marketing data, and is designed to reach the "main road" traveler square -foot poster panel, or `24 -she ver a certain period of time.42 indicating posters measuring approx Poster showings generally appear throughout an SMSA and achieve market coverage of close to mately 8.8 feet x 19.6 feet. . The larger painted bulletins are placed adjacent to heavily traveled, urban arterial streets, and Todays outdoor advertising con long primary and secondary highways; bulletins can achieve a 75-80% coverage of the market. hies sell their structures as distinct The viewer of a message displayed on an outdoor structure may act Immediately upon the mes- sage units. Although a single structu age, as in the case of the weary driver observing the advertisement for a motel located two exits nay be stand-alone in that no other away. Other times, the message may function as a reinforcement device for a major media cam- Idvertising structures are similarly paign that also includes television, radio, and print advertising. Still other times, a message may leployed In a specific trade area, us provide public-service Information, such as road conditions, the location of a rest stop, time-and- lly it will be an Integral part of an temperature data, or gasoline availability and pricing information. verall marketing andadvertising s Two general rules govem outdoor sign location: V to convey a specific message to I. If the sign is more directional, the closer it Is placed to the advertised business, the better any people as possible within a fin (always keeping in mind safe traffic entry and exit). ne period. 2. If the sign is more influential, It must be optimally placed to permit the consumer sufficient For example, standardized outdoo time to detect and imprint its message for later recall when an opportunity arises to act as the mes- nels are often grouped as "showin sage suggests; in other words, the Influential sign is meant to be read and remembered, but not to thin a Standard Metropolltan Statics A sign can "brand" a site — developing viewer memory Any (BMSA). SMSA is a term used b of the location and products or services offered, and aid• y ing the consumer recall of the location when a need for major media advertisers to describe a the product or service arises. trade area. Placement of the panels is .a, ddoor advertising structures dramatically expand street communication for the retailer. They help develop a specific viewer memory about a business by offering convenient and useful information sno travel routes. Prompt an immediate or near -immediate stop. 42 the m1door panel odwrhing a local busImis is not a major media parriclpoM, but instead (unctions for the local business much like an on premise 1"0-614 sign, ewn #wvh somewhol disionl hem rir bteiress s bccrrion. NE VALUE OF SIGNS MARKETING AND ADVERTISING m lo@oi of higfi _e i - The Federal Signage Pro9ram: LOGOS and TODs Congress recognized that he Highway BeatniGcation Act of 1965 door advertising strutrIres that would previously remove many tit about facilities Offering , provided motorists with d A I roducts Or services that may be into rrecTuortat information this information defid important to theruL To ey,.the Act allows states to place "LOG make up bn, ness identification artd directional information�., — concerning essential me displaying busi- food, lodging, and ramping) along major interstate and federal -aid aloe --ices (gas, A the national highway system. in rural areas. Tourist -Oriente(' directions[ signspn��` highways, and Provide business ide (TODs) are located akmg rural, non-lreeu•a ntifiration ancfdirectional Information for cultural, h y routers and arional :ictivities..,and also commercial establishments.. tstur ta4 and rttrc- These signs, especi:ti 1y TODs, are very small and placed within the r, casts, they may pose a safety haianl Iht+:uisr. the Additionally, their., stze �-of_way. in some y arse difficult to read :u highcaay speeds. preclucles use by small businesses with no w identity or logq, ell-kncrtvn brand. The bottom line on LOGOS and Tops is that wl»le the Using efforts, he areertising y may complement — er- but motorists in safely exiting he ro a i v yltobtain essenn Informational dir s. dOor ad txsl directk�taa{ tools to cissi., —,-,________C TIE VALUE OF SIGNS On -Promise Sign This is not a major media player, but it is essential to the success of corporate ijor media advertising programs. The on -premise sign should be considered a full -function communication and design system. In y commercial seuing, the sign should be easily detectable, following these three basic guidelines: 1. it must be of sufficient size and height not to be masked or obstructed by intervening traffic other objects in the visual field. 2. It must display "content" (copy and/or graphics) that is legible. 3. It must stand out from its background. in other words, a sign should possess optimum visibility, readability, and conspicuity. When a sign meets optimum visibility and readability standards, it will become one of the most portant ingredients of an advertising campaign, especially if it displays a business trademark or ,o that is featured in other media advertising efforts. In addition, building design and colors, )duct displays and dispensers, landscaping, lighting, and layout may all be integrated into an vernsing program that utilizes corporate Identification systems and programs. All of these visibili- plu,cs add up to distinct market advantages for the subject business. commercial Speech Effectiveness Measures: Common Currency in the Trade A business sign's cumulative value is almost totally dependent upon its ability to effectively com- municate its message to the intended receiver. To competently quantify this ability, the researcher for appraiser) first must have a working knowledge of the terms used by advertisers to measure the effectiveness of an advertising campaign in relation to Its costs. A brief introductory discussion of these terms follows. Their application to an appraisal assign- or, nt will be discussed in detail in Chapters 7 and 8. Recall and Recognition I'- detcnnmc the etlectiveness of a particular communication device and its method of delivery, .0 ivertisers routinely use two tests — recall and recognition. Recaff tests disclose a commercial message's effectiveness by testing the viewers or listener's -collection of the message within a short Lime of seeing or hearing it. The responses are catego- 112ed as unaided, partially aided, or totally aided. Consensus dictates that if a message obtains hong unaided recall after 48 hours, it is considered very effective. Recognition is measured by testing identification memory before and after a particular advenis- ing/marketing campaign. Such testing is also extensively used in political campaigns, particularly to MARKETING AND ADVERTISING '® measure •face" recognition. Other factors, such as gross rating points complicate these measures. (These factors are dis-� cussed further in Chapters 7 and 8.) PARADIoo �' Outdoor -advertising industry studies show that an outdoor structure will increase business an average of 15%,43 t These studies also disclose that signs including time -and -temperature informs_ tion increase consumer attention and : +' enhance retention or recall of the comma dal message. (Research data is available from the Outdoor Advertising Association i of America Inc. (OAAA) 1859 M Street,` N.W., Suite 1040, Washington, D.C. 20036.) In some roses, an on -promise sign may e infor. motion relevant to an immediate needy while din ocher TOP -Of -Mind Awareness: An Ave cases' it may trigger an impulse stop. 1 rV1e1M ever, for those who frequently P• n all cases, hot A prune goal of advertisingsign is helping q Y Pass the structure, the is [n develop P 9 ro creole a viewer memory of the bu.i• topof-mind awareness, whvesich Hess it reflects — a memory that is ready both recall and recognitionuMost retailers o when pertinent, ady far recall equals share of market." For example, if a consumer is asked under the ung theory that "share of mind when you think of [hot dogsp- the answer is thou What Product first comes to mind sumer is believed to have top -of -mind awareness forthe a gWd indicator of market share. •rile cc companies base advertising strategies on the answer to Product 11 often purchased or used, M at When introducing new or improved rfter the II the "what first comes to mind" question. unaided recall in the products, the advertising campaign must achieve significaq ment, or the campaign �t� dg d toours abe of limited or no Success. uewer has been "posed to the advertise- stener or lent recall will not affect a consumer's bu In mss Sometimes' of course, even excel change someone's vote.4+ y g Patterns or, in the case of a political camPign r*oiaswr ROY Floc. V46, Un-niy, Villa,o a, pA. u 1n r6 od..es.: idol world, ad a,r; tv.r, ii adwrri_eu,g e Y rhih�eon^ wmpfion w;lh;n a ca%q ry ,n q,ry d;r.cr or memurable amount In reality, Chir, rare lor+gMm conwrnplip, Iwlcu rolagory s.gmenr b arw%rer, scare a no evaia�ce Ihor and ern .6r on irx.n bfad nr ,i txrcentoge d chs popdoeon) .n A,. ai arnr;n ws and corny adrertiring mmpogn• the entrenched C '9`r "" W„ 1, ,e t g will increr por�nm o{ an Wer b new or -;mpowe{• °kiOf' —'Per'ng product nary n, be overt' `S, ID THE VALUE OFSIGNS wsuring and Developing Top -of -Mind Awareness; Relevance to Market Share e outdoor advertising industry conducts the most sophisticated studies on recall/recognition fac- s. Not surprisingly, these studies establish that larger signs on high-density traffic routes are )re effective than smaller signs on less frequented roads. High traffic count and premier space sition are primary factors In the cost of outdoor advertising because they translate into greater :,dVrecognition (or top -of -mind awareness) and market share. For example, an outdoor painted bulletin typically enjoys higher traffic counts than a poster. its disparity is reflected in lease rates: A bulletin space of 720 square feet generally commands ,500 – $7,500 per month, whereas poster space of 320 square feet sells for $500 – $750 per )nth, and sometimes less. on -premise business signs (and also political campaign signs) perform the same function as the tdoor advertising structure — develop top -of -mind awareness in their targeted viewer, thereby :teasing the viewer's inclination to choose the product or service the displayed message suggests. An on -premise business sign will be passed many times by consumers who work or live in the al trade area served by the business it advertises. Even though its message may not be immedl- fy relevant, repetitive passing will imprint It in viewer memory for later recall should a need se for the product or service it advertises. OfecMwness Measures Canadian and U.S. advertising, marketing, and sign manufacturing communities rely on four measures (or valuations) to assess the effectiveness of an advertising medium: reach, readership, frequency, and cost per thousand exposures. 1. Ranch This measurement addresses the types of consumers who are being exposed to the advertiser's message. For example, newspaper advertisers obtain address lists of subscribers and from the demographics disclosed by the lists, determine fairly accurately where their messages are going. nth respect to on -premise signage, consumer Information is obtained from motor vehicle records, based on the license plate numbers on vehicles passing the sign. From this data, a dot map identifying the source of daily vehicular traffic is constructed, and reach can be determined. State I )epartment of Motor Vehicles (DMV) records also assist in defining a commercial trade area. 2. Readership 1111.5 Ille.I-�urcment addresses whether a message is effectively speaking to the Intended recipient. MARKETING AND ADVERTISING 12 Several research techniques are used to determine this factor. Two the recall and recognition tests discussed earlier in this chapter. of time most co and test results for all commonly us major -medlar advertisers; for P ting services Provide the tit rely on Nielsen Ratingsexample, television and newspaper Services. p per advert, Small-business owners not en to national-r2ting-service in franchised business operations usually do not have ac, ting -service readership tabulations, be such data is generall Suet information by the parent franchiser company. For such Inde Y Protected as frac business owners, the services of a lac l market researcher Pendent or nonaffiliated oma sures. Also, on -premise sign companies and trade may required to obtain readership In 1997-9g in conjunction with Si associations will often amist in cam pendent small basin gntronix (formerly Gulf Industries P ng data. businesses each surveyed 15 to 30 first- > pf Torrance, CA, 165 it Prompted their visit. The surve rime customers or clients to determine w all, the basin Ys were conducted 30 to 45 days after installation of a businesses surveyed 2,475 customers. One of the surveynew sign• learn about us?" The respondents answered as follows; questions was, "How did you Your sign: Word of m Wgo 50% (1234) NesysPoper advertisement: 33%(820) Yellow Pages: 9%(212) Rodin c am mercial: 6% (39) Television commerciol: 1%(38) 1%(32) These results clearly demonstrate two things: (1) the subject signs were effective) (or being read by) potential customers; (2) signs are the most effective f small Inde Y speaking Independent merchant.+s arm of adverising for I Frequency This measurement addresses how, many times a viewer, reader, or listener is exposed to the advertisers message. For example, a newspaper advertiser can accurately determine how ma People were exposed to an advertisement based on the number of nea Purchased from newsstands. ws P fors delivered or Frequency measures are more difficult to determine for sign advertisers and owners, particula u Sours smog 81111 Aai sorh.. 1998 W, II, W Indugrys, Survq. ' THE VALUE OF SIGNS ,se who are dependent upon on -premise signagr. Many drivers are just passing through and ty see the sign only once; other drivers live in or near the sign's trade area, and therefore see sign many times a month. While origin/ciestination studies and traffic counts provide accurate Information on the number vehicles daily passing a sign, this number must he factored down using tested formulas to =punt for infrequent passersby 46 Cost -per -Thousand Exposures his measurement addresses the cost of "exposures" (or gross impressions) of the advertiser's mes- age, and is the one common denominator among all commercial communication media, whether adlo, television, print, direct mail, outdoor advertising, or on -premise signage. Calculating comparable costs per 1,000 exposures for advertising media relies on frequency ensures, Once frequency data is assembled, the total out-of-pocket cost for the subject medium is divided by the number of exposures (per thousand) occurring during a defined time period. Costs per 1,000 exposures vary significantly among media. The advertiser must determine if the cost of the medium or media chosen Is generating desirable returns, both in terms of retaining past customers and obtaining new ones. Media Cost Comparisons North America is enjoying perhaps the most dynamic retail period In its history. Technological advances in data collection permit information gathering on consumer behavior and preferences that was never before possible. With this information, businesses can now craft media advertising to reach particular targets in varying degrees. In our highly competitive retail economy, profit margins are continually squeezed. Large corpo- rations like Best Buy, Wal-Mart, or K man work on such slim margins that just a small increase in advertising costs can have disastrous effects on the corporate bottom line. Because of narrow profit margins, large retail corporations have created a major media advertising mix that relies heavily on the on -premise sign for reinforcement of the messages and corporate logo identifiers conveyed by television and print advertising. Product franchisers like McDonald's have utilized on -premise signage with remarkable success. With business -format franchisers such as Meineke Mufflers, which do not sell a product but 46 Num6en and pmceniages nprVlGahng -1 win mar ssr tM sign, 6ui are not p000nsal consumers of ilw goods, products, or sere M odvm wd ora d.fina.l m 'vrtnss- lochs MARKETING AND ADVERTISING m instead corporate identification and a "way of dcsin corTscsrate major media advertising, is the R busine While essence ss'" the on -premise Large national co of the franchise 'fin backed b Hess este carp. understand Package. "chants and Proprietors unfonu nd the value of on- medtum for attractingnately da nor 8 Promise signage man rite attention of y utilizing tile on y small bus sign's image cx mesa Pacsershy, all other Premise s1 s Re, are effo Rt as the N enhanced all in 'significant rts, !f crafted to reinforce the e O�n>•ef M°t�emenf of the On p advenising budget savings. the Premise business . ►emise Sign best signs are an elemental c<mt Of all possible retail worlds, POnent of successful business strategies. speaks to Potential installation of an alto roue toe consumers and rff rdable cin -Premise Rtes. In the enable the ectively invites thetrPatronage, sign that attractively Yellow pa small-business Owner to affo Patro na S. Plus the rd additional $e' Will generate sufficient rev Table occasional new nal advertiving media, such 1 0 ers a profile of newspaper advertise as the and advertis' Amencan busine, s minor and radio spot. trsg basic• needs, ustn s. types and hr,cv the g traditional media Y address their va ' Table 1,j. options Hind marked Advertising, an SiPrivate Secrar Consnsercial Si rtising, and Ste Selection Strote 9n Users: typical pies Marketing, Profile of Private Sector Commercial Sign User Mom and Pop Operation Marketing and Advertising Strategies No corporate ID program Word of mouth -Referral *Direct moil co mpaigns Newspaper odvertising NO Paper advertisin Nosing adv,,icing - THE VALUE OF SIGNS Profile of Private ,ector Commercial Sign User 4"1'"'1. Region;, or Franc,-. Trade Area Site Selection tegies forvisual Communication -Local Temporary signage 'Permanent sign a Nation! L mired landscaping or Franck -Ingress and egress limited planting of vegetation 'Standardized lighting -Product dispensers 'Product display -Window sign No building design No off,premise I No corporate identification i Marketing and I Trade Area Advertising Strategies No corporate 10 program Word of mouth -Referral -Direct mail campaigns Newspaper advertising No magazine advertisim No TV/radio advertising -Corporate ID program -Word of mouth Referral Direct mail campaigns -Newspaper advertising -Magazine advertising -Local TV/radio advertising Corporate ID program Word of mouth Referral Direct mail campaigns Newspaper advertising Magazine advertising Local/notional TV/radio advertising Locul -Local Regional -Local -Regional -National Site Selection Strategies for Visual Communication Temporary signage -Permanent signoge .Landscaping Ingress and egress -Planting of vegetation lighting Product dispensers Product display -Window sign -Building design Limited off -premise -Limited corporate identification 'Temporary signage -Permanent signoge -landscaping -Ingress and egress -Planting of vegetation -Customized lighting -Product dispensers -Product display -Window signs Building design .Off•premise/private signage -Corporate identification -Temporary signage Permanent signage landscaping Ingress and egress Planting of vegetation Customized lighting Product dispensers Product display Window signs Building design Off premise/private signage Corporate identification j MARKETING AND ADVERTISING �. Profile of Private Sector Commercial Marketing and Trade Area Sign User Advertising Strategies Site Selection' Strategies Profile of Privofo Marketing and Trade Area Site Selection g for Visual Sector Commercial Advertising Strategies g ------__.__ Communication Sign User 9 Strategies 9 For Visual Communication Destination-OrentedPossible Super Store car Porte ID -Local - - - - - Program -Regional 'Temporary signage octo rY or -Crote ID � Local -Temporary signoge Word of mouth Natil ona 'Permanent signage tore program Regional -Permanent signage -Referral Landscaping -Word of mouth National -Landscaping -Direct mail campaigns Ingress and egress -Referral -ingress and egress -Newspaper advertising Planting of Direct mail campaigns Planting of -Possible m magazine vegetation -Newspaper advertising vegetation advertising -Customized lighting 'Magazine advertising -Lighting -Regional TV/radio -Product dispensers-TV/radio advertising Product dispensers advertising 'Product display -Product display -Window signs -Building design -Building design -Off-premise/private '-premise/private signage signage Destination-Or,e , -Corporate identificati q Mass Merchond, W COfPaate ID -Local Strip, Cto,; ,md -No corporate ID -Local -Temporary signage Program -Reg-onal -Temporary signage Indoor M. program -Regional Permanent signage Word of mouth Referral Notional Permanent signage -Word of mouth Landscaping -Landscaping -Referral Ingress and egress -Direct mail Campaigns -Ingress and egress -Direct mail campaigns Planting of Newspaper advertising 'Planting of -Newspaper advertising vegetation -Magazine advertising vegetation -Possible magazine lighting Local/notional TV/rod,„ Customized lighting advertising Product dispensers advertising 'Product dispensers -Possible TV/radio Product display -Product display advertising Building design -Window signs Off-premise/private -Building design signage -Off-promise/private sign {orporote identification; Source: Claus Consulting Services, 2000. __ `_ THE VALUE OF SIGNS MARKETING AND ADVERTISING m CHAPTER 13 THE SIGN INDUSTRY: SIGN CLASSIFICATIONS AND FUNCTIONS / The sign industry comprises P companies and individuals involved in sign design, construction, maintenance, and research. The industry is both Purposes,it ma manufacturing Y be divided generical) large and varied, but for analytical o� Premix sign, (3) incidental Y into four discrete segments: (1) public sign, defined b tat or temporary sign, and (4) on- e s (2) outdoor/ y the sign's characteristics and relationship to Premrse sr8°' These se the -host- P the activities segments are Property. The companies that Performed on or referenced I do the trade o Produce signsusers.,,tend to specialize b gory, rBaNrations serving the industry Y segment or care The Public, Noncommercial Sign Industry The puhli, sign Industry ry is involved in the Production O• noncommercial public sis ervice signs, represented by the signage program for the federal interstate highway three sign types are Involved: regulato gral an ry, directional, and warning. 8 ay system. Generally, Under the 1958 and 1965 pie The public service sin rnl Highway Acts, signage in this category 8 must conform to precise federal B ry is strictly contrIthe shape, color, and placement. In addition, it standards with respect to size, the locational background.+++ must easy to rrad and coheig Mucic research and conspicuously contras time have been spent to develop a compre United SMS *"PrwAi" Indutt7, it npre—W _ �" Cow" gnu t6 mid. 19201. � O ld w Ad fin. iy yy wiaow rid edwnling 1ecMr. �Opf Adwrtiling AMC'*— d +no. Mc. fQgggW ori b. � Icf aipol N161. blK nn"ounnnyes, and nlorma,«, of iu� traHiecmtrol dw•iM and tignl elks • n P b �tyidemdwal itiwNon, 1Wciol event gerwrvl interest M the Public (e. n e�tiO1. 8" ha""6r THE VALUE OF SIGNS d constructive federal interstate -highway public -sign program. Consequently, it is not surprising t most other sign programs developed by public entities are greatly influenced by federal pub - signage programs and policies. National directives, developed by the Federal I lighway Safety Division of the Federal Highway dministration (FHWA), are published in the Manual on 1111itorm Traffic Control Devices fUTCD).49 The MUIi;'D establishes the minimum guidelines and standards of care that state genies must exercise in constructing and regulating signs on primary and interstate highway sys- ems. 1t addresses such details as size, height, color, and type from the standpoint of safety. To omply with federal law, each state has adopted the MI=D or an equivalent code. A companion ublication provides the base for sign regulations developed In conjunction with the Americans ,ith Disabilities Act (ADA). While federal signage -control programs focus almost exclusively on safety factors, most munici- ai sign codes are more concerned with land -use regulations and zoning intended to enhance the ommunity as a whole. Since federal and local regulatory approaches to signage specifications ftentimes conflict, it is recommended that anyone concerned with readability and conspiculty Stan- ards contact the operations director of the Federal Highway Safety Division (FHWA, 400 701 Street, W., Room 3419, Washington D.C. 20590) to obtain information about the federal regulations. Outdoor/Off-promise Sign Industry The U.S. outdoor/off-premise sign industry is part of the private, commercial sign sector and com- prises approximately 1,200 companies. These sign businesses range from companies with national and international coverage to smaller regional and local shops. The production of large outdoor bulletins and 30 -sheet posters is usually concentrated in one operation (a plant). The Industry Is a major -media player, producing advertising messages that can be sold in various forms (for exam ple, billboard, transit shelter, or mail poster advertising). Outdoor advertising media efforts may be either competitive with or complementary to other forms of media advertising. Like radio or television advertising, outdoor advertising is sold based on gross rating points per thousand exposures. The Traffic Audit Bureau (TAB.) is the national authority on the circulation mea- surement of outdoor advertising. The TAB compiles data on the amount of traffic (the circulation) Passing painted bulletins, 30 -sheet posters, 8 -sheet posters, and bus shelter or bench advertising. In addition to performing a major -media advertising role, outdoor advertising may also he uti- lized by a particular business or service for specific Informational or directional purposes. For 4 9 U.S, tidl`a nh nt d Irmsp "on, Fed" Kale oy Admini4rotion, hbnud an U"/or"' ri`Ac C -h-1 0-4- 6 Skuh and H;gh,. ^ 1988.d SIGN CLASSIFICATIONS AND FUNCTIONS rfi L � s . v., if - Hot '��`� y t,, IGES SERV = IJq tit, t� l7, tY,eu II. INNJk•! R S ^T S . ..'- - w.tglyl I m 773.531.1 Outdoor advertising comes in many types and sixes, and can accommodate nearly every space. ® THE VALUE OF SIGNS NeTAIL•V /f2CR. aUTA'L ' ' SITE AVAILABLE UkAANHPACF (317) __.. _..,....- 423-1111 Temporary signs serve a multitude of purposes and range from those designed and produced by large companies to ones that are individually screen printed. czluuple. an advertising structure located on a transportation artery may direct the traveler to a 11,Wi, uhr business located just a few miles ahead. 'I'ht• ,utdoor advertising industry is divided into standardized and nonstandardized outdoor adver- n};. 'I'lie nonstandardized segment specializes in custom messages• which are intended, as a part ,'I 1- M-lial-based advertising efforts, to remain relatively unchanged for a long period of time, n 1111,1i ik , these structures appear on secondary and rural highways, and provide information and/or l„n ( for example, Joe's Restaurant Exit 25"), Customarily, nonstandardized suuctures or dis- Pl,vs ale not audited by the TAB. if TAB data is unavailable, traffic counts and circulation informa- I will have to be acquired from local sources such as state departments of transportation. l'hc standardized segment specializes in placement of outdoor adveltlsing structures and dis- ' On flmj ,r highways and thoroughfares in a defined marketplace or trade area. Sophisticated tl'cllniques and a high degree of organization distinguish this industry segment. Standardized are by far the most controlled of the outdoor signage systems, regardless of die actual "1'al Parameters of the structure. As a result, sign copy or graphics, or both, generally possess a 1i401 design standard. (See Chapter 7.) SIGN CLASSIFICATIONS AND FUNCTIONS The Incidental and/or Temporary Sign Industry 7"hr "incident'!* sign industry, also part of the private, commercial or temporary signs which have a limited Signs of this Physical and �Of' Produces miscellanr type include economic life and are seldom illuminalr nants and political and real estate signs, credit_c2rd symbol signs, and also °IIe� Generally, these signs are considered designated incidental pen deal n nor (not accessory), Many signs in this categorym Property' and their land use g screen Printing shops, are mass produced, often b}• The On•Prernise Sign Industry The on -premise sr h^ industry also falls into the Private, commercial sign sector, The based communication and graphic systems^ may better describe the commercial co phrtse •'pia mmunication than the term 'si na romPlexiry of on_ Municate m g SI because toda , Premise mmercial messages than by traditional on -premise signage re are more ways to cot and can effectival _..r,-131ve and innovandative, vital communication fun tiro talonePe�combi- nation with .,her advertising media, including ^e" IY emerging venues such as the Internet. THE VALUE OF SIGNS ,4' I.CIHEMA 10 98, CLEARANCE I Wall or Fascia, and roof `.. A1�f1 Freestanding SIGN CLASSIFICATIONS AND FUNCTIONS Types of On -Premise Signage "Traditional" on -premise signage generally refers to freestanding signs, projecting signs, wap (fa signs, roof signs, and canopy""Mirtg (or ^face lift") signs. For example, product franchise corp( ions such as McDonald's and gasoline chain retailers such as BP Oil have developed very ef}'ec alternate forms signage — the piesesmost obvious being signature buildings. Other neontraditional include product displays and dispensers, or special site lighting and landscaping. All altemz forms of place -based systems and devices are used interchangeably by market -wise, wen -capital "ad— to offset sign regulations that limit size or placement of the more traditional sign. In most sign codes, the on -premise sign is treated as an "accessory" land use, even though mately associated with the primary use Many local taxing authorities consider that on -premise signs constitute a taxable real estate interest. On -Premise Sign Manufocturen Since European settlement of the North American continent, signs have played a valved and imp tant role in the so-called -built" environment — they have accompanied, guided, and informed c our economy moved from a primarily agricultural base to a primarily industr rinanufactuting Ma and today are an essential component of an economy centered on the sale of goods and service: Signs have been used as w•ayfmding devices for thousands of years, since individuals in ear civilizations began venturing beyond their immediate neighborhoods. Their consistent use a5 o. Premise advertising devices is believed to have begun in European societies in the early 18th o tury, when shops and inns attached colorful sign boards and posters to their places of business compete for the trade of passersby, Over the next 300 years, on -premise signs evolved to the sophisticated and greatly varied visual expression systems we see today. The Production of ort -premise signs also evolved over hundreds of years — from scattered st shops in which signs were typically handcrafted, printed, or painted by a few local artisans and apprentices, to the present industry, which in the United States alone consists of 40,000 firms, gi crating $8.5-39 billion a year, and employing several hundred thousand people.so The largest segment of the industry, generating approximately $5.1 billion in annual sales, is electric sign manufacturers. These companies produce both custom or one -at -a -time signs, and � � . woo � tl��y �u of#* roma maaaiin., hdy 1000 ad. Accwdi g to swormstsd and )�, large fro,d,;» a< dwin•,fa,.aaouM,,a„r.,aydalid b0mM sgrs manuiactu, specially chase p -during *wx6dd„r;r.d iryr, sake nePa" uVn a�ainermnca and innollahon poynyn„ aro +arvice a�n SIF -110 Wada dray h"rine" aro done, and rhW +* moray ssacB dW h ague Ihd (mnchise/chain cbidard 6Wdi 1'acl wf w 000nd I revenue figura,. Payable °r1OC'atid +"'� wd+ i^pravernenh should be included — 6uff an kwftand THE VALUE OF SIGNS frm I rd, mass-produced signs. The latter group largely consists of signs made for national Fran - and major chain -store clients that require uniform signage for their outlets. Firms that special - nonelectric signs (for example, handcarved orsandblasted wood or masonry signs, awnings nopies, and others that are not internally Illuminated), sign maintenance contractors, and stallation contractors make up the other large groups within the industry. Designers and manufacturers of architectural sign systems for major institutions (such as campus - hospitals, and museums), for regional shopping centers or malls, and for destination cities or istricts (such as las Vegas and Times Square) are yet other subsets within the industry. companies that manufacture on -premise signs run the gamut in terms of size. They range from rge corporations grossing nearly $200 million per year and employing thousands of people, to hzable corporations grossing more than $5 million per year with hundreds of employees, and from idsize firms grossing several hundred thousand dollars per year and employing five to 20 or more 7ple, to small shops that gross less than $100,000 per year and employ only one to four people SW,Sworrnstedl 2000). Generally speaking, sign company products fall Into four major categories — freestanding, roof, wall, and projecting — plus a nuhre specialized category generically referred to as temporary-mis- .elianeous/incidental. This latter category includes, for example, window signs, "for sale/lease" signs, pennants, flags, banners, credit-card emblems, and public informational or directional signs ;for example, "restrooms" and "exit"). Large to midsize companies are capable of manufacturing many different types of signs — both custom and standard — in all four major categories. These manufacturers use a full complement of materials to produce a myriad of electric signs, which may be made of luminous tubes, vinyl, plas- tic, plexiglas.5o, aluminum, stainless steel, or various combinations thereof. Some companies also produce electronic message centers, such as time -and -temperature signs, and other variable -text message systems that can be changed regularly. Some large to midsize companies also produce temporary signs, either assigning the task to a division In their own company, or subcontracting the work to other companies. Small firms have more narrow production capabilities and, consequently, tend to specialize. Another subgroup of the industry, sometimes generically defined as "letterheads," produces small, one -of -a -kind signs, including vehicle graphics and painted windows, using special materials and techniques such as wood, metals, hand painting, and alrbtushing. Other firms primarily produce fakr{c signs such as awnings and canopies. A relatively new segment of the field comprises fran- cMftd retail signshops that produce banners, paper signs, and other temporary signs on a quick - turnaround basis. SIGN CLASSIFICATIONS AND FUNCTIONS Until recently, American sign companies generally operated either close to o scale. Small and midsize funis worked and sold product primarily within thr on a nauor e region home o which they located, while the larger cont Nes, pa country and often had with national corporate clients, delivered product tuoughewt production facilities or divisions in several regions Today computer teclux has made It possible for smaller firms to cut production costs, Improve design and engineering ,k,; diversify to both custom and standard products, and Compete at the national level. The result is th becoming more and more difficult to label sign companies as either "small and local* or `large and national," or as "custom" or 'standard," or to define their customer base or market share. 51 On -Premise Sign Technology Electric signs came into being with Thomas Edison's invention of the first commercially practical Incandescent lamp in 1879. By 1900, Edison had perfected his equipment sufficiently to light the front face of New York's Flatiron Building intucing America to the lighted outdoor advertising rods Between 1900 and 1923, incandescent signage enjoyed increasing use and public a The next leap forward in electric sign technology was made b acceptance. tist, who discovered that when neonaced Y Georges Claude, a French charged, it produced remarkably bright lights In 1923, CI ulde'sotechnolo yated glass thing and eled t America when a Los Angeles car dealer ordered two identical blue -bordered signs �h the s word "Packard" spelled out in orange neon letters. Because of its superior Illumination and endless design possibilities, Claude's "neon" replaced the Incandescent bulb as a sign compo within a decade of its appearance. Neon went into decline as old-fashioned after World War 11, with the advent of fluorescent Ing as an Intemal illumination source and the rapid expansion of plastic technologies. By the 1950s, refinement of fluorescent lighting and development of paints that would adhere to a pi sign face essentially revolutionized the industry. Following this revolution in static sign fares was the development In the 1970's of the variable. sage renter, which could electronkylly change copy or graphics. At first determined suitable for 51 Fa "omPle, the electric sign industry. 52 The federal Highway Acts of the 1950s M � 6s d,.9.1ed •.P_bilify far coatroll, sig"age fang interstots, and dy F•ds-I Highway Adniniaafion Ear semination of general inf•reu intarnaE.'f a 'c7 concluded Cha ds• tegisfalive bon of 'Raj, pnmary highw Ings, in78 the agency Changed its mind r•gydin1 ,h� sign trT "arb4'^�sage center Folk�w,ng i t•nsiva"sro aor � n�sons. _,epi i privateseely In 6d, stale and fed" h. h ans d1e twice is pericecal mo n ch and c ngre,sronal cheat; ironical 'tn'^�' deportmnnh ince i ere "y' communication Funehons kv bWF, the ly. the intent of such uhli,.han ,s b nf�eOsing utilizing d+e ,device to alert motarnh of napnc fsre•enf ottrdenh. catdrtions ,— -.THE VA�F sIGN3 rin anti-temperature or other similar "notices of general public interest," variable -message signs have increasingly and successfully used for commercial communication since about 1978.51 the mid-1980s, the onset of wide -format digital printing allowed sign producers to expand ics technology even further — to the pont that photographic images could be printed directly vinyl, canvas, or photopaper. Today, inkjet, electrostatic, and thermal -transfer printers are the Cee primary equipment types used for wide -format Images. State -of -the -an equipment is able to ccommodate vinyl (or Mylar®) sheets that are 15 Inches wide and up to 50 feet in length. The inyl strips can be "tiled" to create a very large image. Though more commonly associated with outdoor advertising signage, the technology is quickly being adapted to, and adopted by, on - premise sign manufacturers. As with digital printing, computer-aided sign production was introduced in the mid-1980s, and since then has been routinely used by midsize to large companies for design, engineering, and production. In these larger companies, standard equipment today includes not only large -format scanners and digital printers, but also digitized vinyl cutters, plastic and metal molding equipment, and routers for carving aluminum and stainless steel. Laser technology is also being adapted for cutting and routing tasks. This will increase produc- tivity and accuracy beyond what is capable with digitized equipment. Additionally, light -emitting diode (LED) technology is becoming more and more sophisticated, producing even light and we color, with minimal maintenance. As this technology advances, the electronic message center will be increasingly adaptable to all weather, traffic, and topography conditions. Fiberoptic technology may soon be available to sign companies. And research in reflective light sources and materials is an ongoing activity. The technology used in the sign -making process evolves rapidly, making capital Investment an ongoing and sometimes costly necessity for sign companies. However, because technology builds on what has worked before, the costs of new innovations are lessened, and the savings are passed on to purchasers. Therefore, what was once affordable only to large corporations is Increasingly accessible to midsize corporations — and probably In the near future, accessible to small compa- nies as well. For example, digitized routers entered the market at a cost of approximately $500,000; today, it is possible to buy a product superior in nearly every way to those first machines for approximately $100,000 or one-fifth of the original cosL53 33 One acegenf eta of this a IM ^'r* Phenaaerron • provided by personal cakukrtor. Marry reactors naY recoil tial when Hevleff-Pockard lieu ^traded the -Packer calculator in the mid-1970s, the deice weighed obauf a pound, couldn't po sibly fit in ones pocket, and retailed at SA50 1•vs# PI-ey el•ctra tier stores. Today, Casio, for uampis, Produces a small cnkubtM Ihat Perform, mor• function than th» aiti—I He len Packard model. "Vhs a few ounces, nicely fits in a pocket, asi wN, tar $4 98 at roost sup• snorkel checkout counters. SIGN CLASSIFICATIONS AND FUNCTIONS Astechnology comes within the economic reach of more and more sign companies, expan; and diversification will follow, making it more and more difficult to neatly categorize compani by product or sales region based u terminate di Pon size. Additionally, some smaller companies have opted rest sales ri end users and have become full-time subcontractors, manufacturing si di sign components strictly for sale to other companies. Companies choosing this option may t distributing large quantities of product on a national scale, while appearing to the casual may I to be small, local producers with limited sales and distribution horizons.Obser Art, Science, and Graphic Design I Geerally speaking, the earliest professional sign designers were talented printers, painters, engravers, woodworkers, and carpenters, but generally not professionally trained. Today, howel university -educated graphic designers compose and direct sign -face design, while structural and electronic components are the province of degreed engineers and highly skilled technicians. Ant some of the very large companies have their own research and development departments. In most respects, sign4ace designers, both Independent contractors and those employed in sign companies, do their work very much like all other graphic designers. For example, the designer works with a client to create an object that conveys a desired image or message to Urd targeted viewer, drawing on training, prior experience, and personal aesthetic sensibilities to hi ate a mix of images, colors, letters, and materials that are both visually compatible and likely r be favorably noticed, Unlike his or her counterparts In otter media, designers of sign faces must assure that the design in its final form meets minimum highway safety standards for readability and cons icui In other words, sign design must accommodate what is necessary ble and legible to P ty permit it to be seen, to d make the sign sufficiently vi read, and understood by a driver In time to safety respon Thus, the ,sign -face designer must sometimes sacrifice art for the science of the transportation an traffic safety engineeo4 Often, sign designers are asked to develop a new logo or trademark, or to reproduce an exist one. To prevent a new design or concept from possible "appropriation' by a wpuld-be client who may choose to have his or her sign Produced by a competitor, designers will copyright their produ s. sageowhwbF'�ohht du obwvar b di�6rgu,J� a 4Mer, num!»r. rym6d, a a,aphic hom in w words, raa�an Z" or "IW Ingiul ralataroh,c«r� C6n u imam .01 aonl«y .i- 5T WWicorio 'frac Gncimon. Oh,o. 197 Clan � w, aha Manuel , f hof O1gh Signops; r p"a'd+ad by aha Fxlerol Highway Admini roliic Canlrol tkn'au, --al—HE VALUE�NS Io f course, the corporate logos and trademarks with which we are all familiar are protected under e federal Lanham (or Trademark) Act, and cannot be reproduced or forcibly altered by a sign de without permission or acquiescence by the owner. Sign companies that produce large numbers of Identical signs for national or regional franchises d chains rely less heavily on in-house designers than those that customize signs to fit a site or uild ing's specific setting and characteristics. This is so because the high-volume manufacturers are eroducing signs for which design, colors, shapes, sizes, and internal engineering mechanisms have previously determined and standardized. However, even though less reliance is placed on in-house designers by franchise and chain operations, customer preference often plays a key role in sign design selection. For example, sev- eral eneral years ago Burger King Inc, spent more than $300,000 on consumer surveys to determine th, impact of a slight change in Its corporate logo, which Is prominently featured on the on -premise signage of its franchisee sites. The company had a logo it preferred, but this preference was not shared by the consumers surveyed. When the logo change was made, the consumer choice pre nailed. The reason for deference to consumers is Utat if a potential customer does not respond favorably to a particular sign, that sign has failed its primary communication function — to invite a commercial transaction by prompting a stop. Sign Clossification by Function: An Impossible Task Certainly signs are functional and, at least in theory, amenable to general categorization, such as "informational" or "directional" or "advertising" (commercial speech). However, signage serves the full communication spectrum — it Informs, directs, Invites, creates an image, reinforces other media advertising and marketing programs, and enhances brand identification and loyalty. It also builds goodwill — a measurable business asset. One sign alone may actually perform all communication functions, particularly if it is part of an Integrated media advertising program. For example, the typical fast-food franchise's un -premise sign perforans information, direction, and advertising functions concurrently. The communication functions become intertwined because of the multiple communication needs and processes present within the sign's vicinity. Therefore, classification of such a sign as "directional" or "Informational" or "advertising- would not only be inaccurate, it would ignore the fundamental nature of signagc's relationship to the built environment. SIGN CLASSIFICATIONS AND FUNCTIONS m CHAPTER SIGNAGE AND THE LAW L921 issues arising from signage regulation generally focus on the First, Fifth, or 14th Amendments to the U.S. Constitution, and sometimes more than one Amendment is involved. Table 2 summarizes these issues as they relate to the three Amendments, Table 2. First, Fifth, and 14th Amendments Constitutional Amendment First Amendment • Freedom of Expression Fifth Amendment • lust Compensation 14th Amendment Due Process • Equal Treatment J'•- - THE VALUE OF SIGNS Related Signage Issues -Restraints on commercial and noncommercial communications -Content control -Censorship -Amortization Abatement Takings Discriminatory code administration, interpretation, and application Although many questions regarding commercial communication and how it differs from other rms of communication are still not settled, for the commercial property appraiser, general knowl- ge regarding current judicial trends is very helpful. Several landmark rases should be noted for rposes of understanding basic legal principles and providing a conceptual framework upon rich to base analyses and decisions. First Amendment e First Amendment prohibits Congress from establishing any law that curtails the right to speak: ongress shall make no law abridging the freedom of speech...." Subsequently, the U.S. Supreme ,urt ruled that this prohibition was also applicable to state and local governments through the th Amendment. Although this command appears to be straightforward enough, the founding fathers neglected clarify how to go about preventing abuses of the right to free speech or, for that matter, which ids of speech were deserving of protection and which were not. Consequently, the U.S. preme Court over the years has produced a shopping list of balancing tests and speech cate- ries. However, written or pictorial advertising on signs was not foremost in either mind or law til 1942, when the "commercial speech doctrine" made its appearance. To understand what hap - tied then, and where it has led today, some background is in order. Background Prior to 1942, it did not occur to litigants to characterize their advertisements as "cornmereial speech" because advertising was thought of as an occupation, not a form of expression. Then in 1940, a New York City entrepreneur distributed a leaflet, which on one side advertised the exhibit of a scrapped navy, submarine he owned, and on the other side protested the city's denial of wharfage facllitles. He divided his leaflet in this way to avoid the city's sanitary code, which disallowed distribution of advertising handbills in the streets, but did permit distribution of political messages, The police put a stop to his promotional efforts, and he sued the city, charging that its sanitary regulation violated the due process clause of the 14th Amendment (notthe First Amendment), The U.S. Supreme Court found that his printed protest amounted to an attempt to dodge the sanitary code and held that his usage of the streets for advertising purposes was unlawful.ss In its °1111mli, the Court did not address commercial speech or the First Amendment, but only the issue v„I"„rrm v. chruunwo, 916 U.S. 54119421. SIGNAGM AND THU LAW of whether commercial conduct could be regulated by legislatures. However, its holding that commercial advertising receives no constitutional protection originated the distinction betwec commercial and noncommercial speech. This holding held sway until 1976, when the Court ed Virginia Stare Board ojPbarmacy u. Virginia Cittrtms Consumer Council, In In Virginia State Board a state regulation prohibited pharmacists from advertising the prig drugs. Consumers of prescription drugs brought suit against the state, charging that the advert ban violated the First Amendment, and denied them the benefit of learning the prices of drug from advertisements. The core question was whether an advertisement, unaccompanied by ar Political expression, receives protection under the First Amendment. The Court responded tha did. Justice Harry Blackmun, writing for the majority, explained why. First, Justice Blackmun noted that the profit motivation of a speaker did not remove speecl from the protection of the First Amendment. Second, he stated that the public needed comme information as mach as, if not more than, it needed political information. Third, sited th he po the success of a democracy and a free economy required that commerdal information be free disseminated and readily available. Fourth, he concluded that the First Amendment prohibited decision.57 government from preventing the flow of commercial information in order to affect the public': The opinion further observed that "time, place, and manner" restrictions on commercial since are permissible if die restrictions I. are justified without reference to the content of the speech; 2. serve a significant government interest; and 3. leave open ample alternative channels for communication of the information.5 In the context of this three -pronged test for constitutionality, ^time" refe may be displayed,rs to when a messag "place" refers to where the message may be displayed, and "manner" refe how the message may be displayed The phrase "vrlthout reference to the content of the speech" means that the government cannot put time,,placeimanner limits on the message ba upon what the message says or who is saying it, unless the message contains false or misleadin Sri 425 U.S. 748 p 976). 57 .Q„ phormacial doer not with b edit mho on any wblrtct...phi or vhY foot, a b mob gwr oh:d obw ,-.. wan obouf wrrrrnerdof � pd h. F,S dost nd with b upon anY porricu1. rte Pmcriplion dntg at Y price'.' luvio 8lodunun. vu1"iv Slals molMt rFt Idea he wither b comm9nimw a rim* vhit '1 wA .0 8oad, 423 U.S. a 771. 58 Virginio SA_ Soord, 425 U.S. M 771. 1 r::- THE VALUE OF SIGNS ,kuiei�l �tirry matron, or otherwise proposes, an imminent threat to public health, safety, or welfare. The Supreme Court has ruled that those latter forms of expresssion are without First Amendment while the case granted First Amendment protection to commercial speech, the protection was weakened because the Court observed in a footnote that "commonsense differences" between commercial and noncommercial speech made commercial speech more regulable.S9 As a result of this judicial aside, in several cases following Virginia State Board, the Court drew on the "com- monsense differences" footnote to afford commercial speech something less than full First Amendment protection -60 in 1980, a four -pronged balancing test was devised to determine whether a state regulation ban- ning advertising violated the First Amendment. The case, Central Hudson Cas fv Electric Corp u. Pubic Service Commission, 447 U.S. 557 (1980), arose from a challenge of a New York state law that totally prohibited public -utility advertising, The state asserted that such advertising would increase consumer demand, thereby leading to increased energy consumption, which directly con- tradicted the state's interest In energy conservation. The balancing test used to decide the Issue is as follows: 1. The court must first ask if the commercial speech at Issue concerns "lawful activity" and is not "misleading." (If the answer here is negative, then no protection Is afforded, and the inquiry is ended.) 2. The court must ask if the government interest served by the regulation is substantial. (If the answer here is negative, then the First Amendment will be seen as invalidating the regulation, because speech should not be limited for insubstantial reasons.) If the answer to both of the first two questions is affirmative, the court must then determine the following: 3. Does the regulation directly advance the government's Interest? 4. Is the regulation no more extensive than necessary to serve that interest? 59 VG�^fu Sbw Bead, 423 U.S. t 771-772 n.24. 60 Sw, for warp)•, Ohrvlik v. Ohio 5bw Bar AuoeWon, 436 U S. W (1976). the Co„rl opined 4.0 i1 romm•ronl q—f, wer• gnu,wi lull f Inv atindn•rn prowdm, the pruwction gronwd to ovlrr )arms of 4m6 would be Mood and Ili• Finr Amendm«e 'rle.,0rr.4' 11 1, p u9 SIGNAGE AND THE LAW In applying this rest to the facts of the public -utility case, the Court found that the ban failed fourth requirement because the state could achieve its goal by requiring that the utility include its advertisements information regarding energy conservation. And while still paying deference the "commonsense differences" between commercial and noncommercial speech, the Court cle; articulated more scrutiny of restrictions on commercial speech than the deferential standards of "reasonable" or •rational." or "not arbitrary and capricious," which normally had been applied u test the validity of government regulation of purely economic interests. First Applicationof Central Hud son: ashse and Off -Premise nguishing Between On -Premise At its first opportunity to apply the Central HurLson test Signs and analysis, the Supreme Court ezpe enced some difficulty. The case was ,Metromedia Inc. V. andCY1Y of San Diego, 453 U.S. 490 t expo. n There were many issues, and the resolution produced five separate opinions. The crux of the case was the constitutionality of the city's sign ordinance, which Premise signs while banning off -Premise signs, or outdoor advenlsin permitted on advanced by the city for its ban on outdoor advertising structures were The perry reasons degraded the attractiveness of the co (1) they significantly Included both co mmunity, and (2) they compromised traffic safety. The ban mmercial and noncommercial speech. While none of the five opinions garnered agree unanimously that a majority of the Court's members, the justices tout It was constitutionally permissible for a community to allow on -premise commercial signs but Prot» bit off premise commercial signs. Such discriminatory treatment agai off -Premise commercial s' r8na8e was viewed by the Court as a legitimate exercise of police pow to reduce sign clutter (or improve "aesthetics") and to promote tra Court ruled 6-3 that the city's sign ordinance was uncoliic safety.61 Nevertheless, the nstitutional overall, although the six justices the majority couldn't agree why. Two justices simply found that the ordinance failed the Central Hetdson test because the city. had not conclusively shown that the city's interest in aesthetics and traffic safety was to justify a prohibition of signs in commercial substantial enough plurality opinion that noted two flaws: and Industrial areas. The other four justices joined in speech (1) The ordinance favored commercial over noncommercial because commercial speech could be displayed by on -premise signs while noncommercial speech could not: and (2) the ordinance discriminated among various noncommercial messages by 61 Whls the spin— stat, Awl p�' w a IsBi6^kft ererciN of beta.» all chs I,sgonh oared �a't � luatice Whip did oddrsss a reh. is"d W polio 1' i1 was t,1 a canholhny toUa. ei ^adequab to dww arced d se the City round naihc ncnde"h. ffiC , Just" Abe bon did rid dint �.1� 6adi"e iwr des ,.cd wa. , u rn ay _ dY afh'an4 it, dly 14/tih ", wotfic q(Ny ..U...,"waw, 453 U S.aat 510 'biilbOarti, and 1, p{rl. �� THE VgLUE OF $IGNg exceptions for some, but not all, such messages. Justice Byron White summed up his by stating: It is apparent... that the ordinance distinguishes in several ways between permissible and impermissible signs at a particular location by reference to their content. Whether or not these distinctions are themselves consti• rational. they take the regulation out of the domain of [content neutrall time, place, and manner resuictions.62 Guidance from the Court cases following Metromedia provided additional guidance on parts three and four of the al Hudson test. In Board of Dws'tees of State University of New York v. Pox, 492 U.S. 469 (1989), the Court speci- led a more precise standard required by the third pan of the test: Regulation of commercial peech must be "no more extensive than necessary to achieve the substantial governmental Inter- st," and the "means (must bel narrowly tailored to achieve the desired objective."63 While the Court did not go so far as to require the least restrictive means of regulation, it is Implicit In the holding that more than mere reasonableness will be required. In City of Cincinnati v. Discovery Nettvork, 507 U.S. 410 (1993), the Supreme Court rejected a claim that the chy's ban on commercial news racks was justified by the city s legitimate interests in the safety and attractive appearance of its streets and sidewalks, particularly since the ban would remove only 62 commercial news racks while leaving 1,500-2,000 noncommercial news racks (those dispensing only newspapers-) in place. The Court found that the benefits to be derived from the ban were "minute" and "paltry," given the citys supposed goal of achieving a reduction in the total number of news tacks. The Court also rejected the city's claim that its ban was justified because of the "low value" of commercial speech, finding as follows: In the absence of some basis for distinguishing between "newspapers" and "commercial handbills" that is relevant to an interest asserted by the city, we are unwilling to recognize (Ynelnnati's burr assertions that the "low value' of commercial speech Is sufficient justification for Its selective and categoncal tun on news ricks dLspensing "commercial handbills." 64 62A'.—,. W U.S. d 516-517. 63 Board of Fu0W 192 U.S. d 190. 61 D" --r N-. k 507 U.5. 110 d 1211. SIGNAGE AND THE LAW M The Court also discussed the "reasonable fit" test: (The) regulation need not be absolutely the least severe that win achieve the desired end, but if there numerous and obvious less -burdensome alternatives to the restriction ve commercial speech, that is , Willy a relevant consideration in determining whether the "fit" between ends and means Is reasonable Finally, the Court determined that the ban could not be considered a valid content -neutral reg tion of "time, place, and manner" because the very basis for the regulation was the difference content between commercial and noncommercial news racks. Where the low Stands Today: Central Hudson Altered; Virginia Slate Boord Strengthened In 19%. the Supreme Court delivered its most significant pronouncement on the status of conn tial speech since its Virginta State Boprd decision 20 years earlier. The Court established that it First Amendment does protect cornmerclalI speech. In 44 Liquor'man Inc. v. Rbode Island, 517 U.S. 484 (1996), the Court unanimously struck du. a state law that prohibited the advertising of retail liquor prices except at the place of sale. The state argued that the ban was a necessary extension of its Interest in reducing alcohol consumpt among all drinkers. The justices found it difficult to agree on the reason to strike down the law — the decision consists of an eight -part plurapty opinion. Nevertheless, taking all the opinions together, the rely expresses a significant change in how the Court views the First Amendment status of commercla speech, together with a wilBngness either to apply a more stringent test than Central Hudson ori apply Central Hudson with "special care." 66 Justice John Paul Stevens wrote: in recent years this Court has not approved a blanket ban on commercial speech unless the expression itself was Flawed in some way. either Because it was deceptive or related to uniawful activity..,.ltlhe First Amendment directs is to be especially skeptical of regulations that seek to keep people in die dark for what the government perceives to be their own good.67 65 Id. of 417, n. 13 66 'N9 rens.. 44 rpyrad ren iagukaiont Iha -'r* r�pp" commercial We" in order b pwr„e a ^onrpexh�rehred policy Csmai rfud'on, W U 5 a 557, 566, 67 u rl"arn,n," "u SW -6, 517 U.s. 01500-503 ___Z THE VALUE --,...IS In ustice Clarence Thomas argued that when a government regulation works to keep Information m the public in order to control the public's choices or conduct, the Central Hudson test is pplicable. Adhering to the principles of Virginia State Board, Justice Thomas stated that (1) a mocracy and free -enterprise economy require well-informed citizens free to make Independent cisions, (2) the First Amendment protects the circulation of commercial speech, and (3) regula- s which suppress information are not permissible, even if they pass a balancing test. Additionally, Justice Thomas predicted that given the fourth prong of the Central Hudson test, ere would almost always be a speech -neutral alternative available to advance a state's interest, nd for that reason alone, restrictions on commercial speech would rarely, If ever, pass constitu- onal scrutiny -6" Before 44 Llquormari, the Central Hudson balancing test arguably sanctioned the suppression f truthful commercial speech. After 44 Lfquormari, it seems clear that the government may no onger manipulate the marketplace by suppressing truthful speech about a legal product when less- estrictive, or speech -neutral, alternatives are available to further die government's goal. Ibis point is illustrated in the Court's latest decision on commercial speech regulation, Lorillard Tobacco Co., t al, u. Reilly, 121 S. Ct. 2404 (2001). in. Lorillard, the Court struck down a Massachusetts law that imposed severe location restrictions on signs advertising tobacco products In an effort to discourage tobacco use by minors. Applying the Central Hudson test, the Court acknowledged that Massachusetts had a substantial, and even Compelling, interest in preventing chfldren from using tobacco. Notwithstanding this interest, how- ever, the Court found that the regulations failed to meet Central Hudson's "reasonable fit" require- ment because die state's effort to discourage underage tobacco use unduly impinged on advertis- ers' "ability to propose a commercial transaction and the adult listener's opportunity to obtain infor- mation about products." (Id. at 2427.) The Court further noted that "IIln some geographical areas, these regulations would constitute nearly a total ban on the communication of truthful information About smokeless tobacco and cigars to adult consumers". (Id. at 2425.) Although the Court's rulings in 44 Ltquormarl and Lorfilard are not specifically attributed to the application of strict scrutiny, they come very close. Thus, for the present, it appears reasonably safe 10 assume that when judging the validity of content -based bans on commercial speech, the Court will apply Central Hudson with sufficient "special care" as to be the practicrl equivalent of strict scrutiny, thereby effectively equating the First Amendment status of commercial speech with that of noncommercial speech in such instances. 6811 Liq-nnnrl, 517 U.S .1506-3 13. SIGNAGE AND THE LAW The Fifth Amendment The Fifth Amendment contains two separate guarantees for property and the takings clause. rights: the due process cl The due process clause due — 'No person shall...be deprived of life, process of law" _ prote�s citizens liberty, or property, witho from government action that arbitrarily deprives them fundamental right and applies to both the act itself and the procedures incidental to the act. The public taking clause — nor shall private property be taken for public use, without It compensation" -- Is designed to prevent the government from forcing Individuals alone to bez public burdens that more fairly should be home by the citizenry at large. Although these prowl cions were first intended to apply to the federal government only, for more than loo years, th Supreme Court has interpreted the due process clause to make them applicable to the actions' state and local governments. The Supreme Court has long held it permissible for local governments to divide a jurisdlcU into zones, segregating one use from another, even if the zoning resulted in adverse econo consequences for attested (and owners.69 However the regulation of land use through zon' may at times diminish value to the point that a 'taking- has occurred, Compensation Is most to be required for zoning or other land -use regulations, when the government action results i total or near total destruction of land value, or when the governmental regulation serves no v; public purpo.9e,>o When signage Is affected by a "taking," it is generally the result of a change in a law or r Iation, which makes a previously legal and conforming sign suddenly illegal. Often the econ Ic harm is substantial, yet manv times this harm is not willingly recognized by governmental authorities. On -premise signage has suffered more from this lack of recognition than off-prei signage, largely due to federal legislation mandating lust compensation for those property o ers and Interests most directly affected by the Highway Beautification Acts of the 19509, ]9(i and 1970s. 69 Ti.. nnvnc, mels is V'Rage ofEudid r Amisler R 70 ea6Y supra, Chops 1 DM'M �, b6 muN�may sr sod , i�ro fid° taf° „ y b Ranh Ca v son tui, OWPO, 841 F 2d 872, aVwu esat o taking has oaurnd; and Dolan v Ciy ofry � 512 S 374 (i 994 o rspulaNan denies an owner s occvs d thdrs uisrs no rarghs Propalianpli a ty bween the reguhption as Y ( 1 which hold that a mn4ensa6 71 r, ,d Adwrh Y rrMsaes des ksrsdowrser and tics tia'elnrrNnt's msutsd ung Co. v City of 0--, 912 F 2d 409 (91h Cir. 19901, sphaldin6 a city ban limited to oli pno iw mnsntack THE VALUE OR SIGNS Premise Signs/Outdoor Advertising discussed in Chaptrr 1, it is C01IStipuionaliy permissible for either the federal government or a Mate or local government to require the removal of an outdoor advertising structureJl The First u amendment does not come into play unless the removal (or severe restriction) violates content neutrailty requirements 72 The government's reason for removal may be related to the Highway Beautification Acts or pur- s.tant to a state or local government exercising Its police powers to promote public health, safety, .End welfare — generally perceived In signage regulation as related to aesthetics or traffic safety, or Nx r. It follows, of course, that if a government can completely ban off -premise or outdoor adver- tising signs, It can also severely restrict Elie signs it allows to remain. Generally, such restrictions limit sign size, height, numbers, and placement73 What is not permissible under federal statutes is the failure to pay just compensation for the removal of off -premise signage as part of compliance with the Highway Beautification Acts or pursuant to any other acquisition involving federal funding. The relevant federal legislation is the "Uniform Relocation Assistance and Real Property Acquisition Policies Act" of 1970 (com- monly called the 1970 Removal and Rehabilitation Act).74 In pertinent part, Subchapter 111, the "Uniform Real Property Acquisition Policy," 42 U.S.C. Section 4652, provides as follows: (2) Notwithstanding any other provision of law, If the head of a Federal agency acquires any Interest in real Property in any State, he 911211 acquire at least an equal Interest In all buildings, structures, or Other improve - mem localed upon the real property so acquired and which he requires to be removed from such real prop- erty or which he determines will be adversely affected by the use to which such real property will be put. 72 Mdrev slip, Inc. w. City of Sm Dispo, uPv Cour" haw fdlowdd Metromedia by striking dawn df prism. sign nBuhtions slot mob dor s ia^m onprseorn �a�pwch a shot allow enoeptions (or chain eotnmerdd m aag", but not a grwd weapd{on 6 ndwxnm• Mercia Med F tom, A&whjing Co. v. rawri of tat ir^Fsnn;ssibly dlsnimmotdd against rsonommercid 8ai't'IO"� 900 f 2d 331 12d Cie 19901, rh. Coad *udi down on ordinarsce grage a that do not l 69nch. In mnhast, ewempt oil norsmnrsw,dial W"ch lam a ""n"i ban an shot np y , regulotims that Aw Saudsna v Gy d Rale gh, 792 F2d 21 dq 4madd19eawnnd City nit on d JB oge have low upheld. Fa �^'Pb, dee Mops Medo of 1 N ottoge Crow a ON, 395 N. W, 2d 111 )Minn G, App. 19a61. be{,N'^ Adwni"ng CO. a Ciy of Ralsgh, 947 E 2d 115814th Cic 1991 , B ", Fere ma action of sits d I hddin that an ordinance ena,:Md b tQ��or'rsots aath-k. and outdoor ig Crum b a Idgl (D dnerciw of poln Pa'^'ers, even it the d isidt d IM orainarne is b prohibit all Emits h"^a Sde also National h. City off Co. v , D.0ADV o/Lbwnen Crows, 561 N.E. 2d 13001111. App, 19901, upholding do and hviot Emits trldi 6+lboords m certain disc r City of 5unrin w D.C.A. Hama In , 421 So. 2d 1084 (Flo, 4th DCA [ 9621, upholding an adi__ n6 oR`Prdrnna signs b one f>er wbdiwsion; Ouhloor Systwns, In. v. City of Mao, 997 F 2d 604 (9sh Cir, 19931. Upholding on ordinance I-011, iw signs b certain designated locations; Mader v. city of Douglas4s, GA, 973E 2d 1503 I l l ds Cir. 19921, ng an'PhalOrdinance an ^6 so -nd ds m historic districh; and RzadLowdski v. Village dlf tales Orion, 845 F. 2d 65316th (jr, 1988), upholding marKt,o,s 'M signs b indvurial zona. 91 646, 84 Stot. 1894 (1971(, 1Cad1lied os amended -1 42 US.0 , sedin 4601, et seq.) SIGNAGE AND THE LAW (b) (1) for the purpose of determining the just compensation to be paid for any building, structure, or Other improvement required to be acquired by subsection (a) of this section, such building, structure,, other Improvement shall be deemed to be a part of the real property to be acquired notwithstanding d right of obligation of a tenant, as against the owner of any other interest in the real property, to remov such building, stmcture, or improvement at the expiration of his term. Many states have enacted statutes implementing the language of the above provision.7s On the other hand, some states have simply refused to acquire billboards in federally funded acquish or condemnation projects, asserting either that the sign Is not a "structure' or that the sign own not a "tenant" as defined by Subchapter III of the Uniform Act. These states restrict compensati4 to relocation expenses, per Subchapter 11 of the Uniform Act which provides for payment of cel tain minimum relocation costs and related expenses of a 'displaced person." 76 Federal courts that have addressed these issues say that the phrase "swctu 1 ments located upon teal property" is broad enough to generical) �' or other imp lawful occupancy (including a leasehold interest) qualifies a -sign elude billboards, and that In state cases that distinguish be gn inset � a `tenant."" 8 between real property and personal property, when determin;n compensation, classification of a particular outdoor advertising structure depends upon the fac each individual case. Therefore, no absolute rule can be articulated for any state that outdoor advertising structures are either real property or personal property, or a trade ftznure that is rea1 Property while in place, but personal property upon removal by the tenant.78 75 0, _ Alabama., A66. AnIarb, Delo s. and Hbmwil c wohous imlmitalionn Pow the 16 -IJY with regard s. Fedwoay funded acquisinors 7d The Iolbwing costs haw Mid that 16e lean 'stn,clurss' rn tM Unitwm Ad don not i� 6,libonrdf: In Minnesota, State r. Card, Al No s77 (M nn P 1998871 W; thm the 'sign a entitled to r ae" ralamFon ven but tlab not nWrnd a North Carolina, rg Ca. v NorlA Can" the owner i, a8orwd b Lhpan0ne sl of Trantporsahan, O8 S E. 2d 248 (N C. O. candernn etpru"1 satin a -a d. but the castf a of any...Permbnant imWawnrn a iixWrat ham the prgrerh, Av .due droreoF Janos bAi�i . 19%) meld renwrol eholl be is mn+id-md w an "r en, b M oompanaNd.' ncluded in IM 000 77S. United 0 F .. 4.'I050� -fLand1 in) Ca. 427 r. Supp. 434, 440, 441 M o Mo. 1976); and M'hrsmon S,aie K Commission, 400 F Supe. 1050 (W 0. Mo. 19731. c a Conoco don nw offer the any legal probrNans b "sive m the United Stater. For ,while tM ConadK gowrnmenl taHone h'r 'Public along of pn.al. pgro "a,,,a11 man 116.1 than ryowded by U.S. cwnpen.anon tcMdulm I.9* squired Instead. Canada do the United Snobs don not alien ocr for simifor reasons. Sul c'ampensolion as o goodw,i gown or Alcal Mill be paid per "r.1 mandate. s2 -111s s of whether It's tth�e spit thing b do, in the oobl�gotian. Th., is rat ta nibd Stays, ca . THE VALUE OF SIGNS Premise Signs ompensation for regulatory downsizing, removal, or ban of a previously legal sign, or for con- emnation of a site and its accompanying signage, Is relatively new to on -premise signage. iowever, as it becomes more and more apparent that on -premise business signs contribute Sig- nificantly to business success, it may also become more and more apparent — at least to the courts — that municipalities seeking to retroactively render a sign nonconforming or "take" a sign in a condemnation proceeding may owe compensation to the owner for provable conse- quential loss of business revenues and diminution of real property value. Many community officials and administrators either fall or refuse to take into account the contributory value of a sign to Its site when considering the economic impact of downsizing or outright loss of a sign. The following case offers one example. Condennradorr frroceedingsr Caddy's v. Hamilton County, Ohio (a lower court case, no •West Law cited) in the more traditional condemnation case under eminont domain theory, where an on -premise business sign accompanies the demise of a commercial building or other improvement on the subject site, it is Increasingly likely that the sign may be considered separately for purposes of assigning a value and paying compensation accordingly. The case of Caddy's u. Hamilton County, Obio, is one such example. This case was decided by jury trial in a lower court in liamilton County, Ohio — a state that recognizes the visibility component of a commercial site as a partial real-estate interest. In Caddy's, the business's building was to be taken under exercise of eminent domain to make way for a municipal stadium. The county tax assessor placed a value of $1.3 million on the land and building and no value on the business's signage, which had been "grandfathered" In and was highly visible to adjacent streets and highways. ")Because Caddy's very distinctive, 3,000 -square -foot wall murals and roof sign were nonconform- brider present codes, they could not be duplicated on the replacement buildings used by the as comparable relocation sites. Neither did the comparable relocation sites have equal orex 'posures to the freeway. Therefore, If income levels were to be maintained aper reloca- Iternate forms of commercial communication, such as outdoor advertising or television and )commercials, would have to substitute for the lost on -premise signage visibility to potential y 1mets. trial on the issue of just compensation for lost visibility, expert testimony established that 7 visibility replacemenian the form of outdoor advertising was $ 180,000 per year. This SIGNAGE AND THE LAW number was based on how much the subject signs would have rented for, had they been outd advertising instead of on -premise signage. 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 (or outdoor advertising) exposures for a new location lacking on -premise signage visibility, The jury also awarded $1,3 million for the real property and building. Thus the combined a* gave the owner sufficient money to not only replace land and building, but also protect the fo ) Income stream with funds, which, if prudently invested, would annually cover replacement ad . using expenses without adversely affecting sales volume. Amorftation in Regulatory Takings* context Under a retroactively applied sign code, in order to avoid paying compensation for the remo , a previously conforming sign, many communities have resorted to amortltlzstlon — a term wi multiple meanings. To effectively address its impact in signage regulatory terms, one must VA understand what is meant by the term, and what is not. History Under old English common law, the word "amortize" was used to describe alienation of prop held by a fictitious entity (or in mortmain). In general usage today, the term refers to the pay - of a debt or other liability through use of installment payments. For debts incurred to purchas asset, at the end of time amortization or payback period, the asset is owned free and clear, and not be legally taken away without payment of compensation, unless by voluntary consent of I owner (a gift). Further, in the case of an appreciable asset (at least in theory), the owner will recapture his or her initial investment, plus any appreciation that may have accrued during oa Ship, upon a sale or a government taking of the asset. As an accounting procedure, amortization also means writing off an ex ase b a over a certain period. Tlmis occurs generally In the case of a deset Y Prorating a car for business purposes). Under tax codes, the cost of the asset may depreciable ebrecoaveered o(suver its theo life through downward adjustments in reportable income. At the end of the depredation peri the asset may or may not be worth more than its original cost; however, whatever the orlgi during the assets depreciable life, again theoretically, it has been fully recovered. Further, o asset's economic life is over, it is usually replaced by a similar asset, which is then depreciat tax Purposes all over again. Anyone acquiring the asset during its depreciable life may Conti ' THE VALUE OF SIGNS e depreciation schedule. The cycle of savings continues until the taxpayer/owner voluntarily erminates his or her business need for depreciable assets. In the land -use (or zoning) and regulatory context, the term amortization carries none of the more common associations. One succinct definition in this regard was provided by a Delaware court in 1984: "...simpljyj... the amortization of a nonconforming use contemplates the compulsory !termination of the nonconformity at the expiration of a specified period of time — the time period, in theory, being equal to the useful economic life of the nonconformity."79 Thus, because legal, political, or "fairness" concerns make it impractical for previously conform- ing signage to be summarily terminated, the governing body attempts an intermediate approach. The offending sign (or land use) is allowed to continue for a reasonable time, supposedly mirror - Ing the sign's remaining life, during which time it is assumed the sign owner (portrayed as an investor) will recoup initial capital expenditures (costs to obtain and place the sign), and that such recoupment is sufficient compensation for not only the loss of a previously conforming sign, but also the cost to remove (or downsize) it. Iblice FbWer Issues:Abatement vis a vis Amortization Generally, actions undertaken on an emergency basis to protect public health or safety are deemed "abatement" actions, and are predicated upon a perceived ltnminent threat to the public; that is, the list, Is dangerous (or a nuisance) per se. In abatement proceedings, a use may be immediately terml- mUecl without preliminary hearing and, in some cases, without subsequent compensation.80 011 the other hand, signage regulation that takes away a previously conforming sign Is seldom predicated upon a dangerous situation or nuisance per se, although restrictive sign regulation Is sonualmeS defended as necessary to promote public safety (usually traffic safety). In the context of signage regulation, amortization is the end product of an extraordinary exercise lit lu,lice power. It begins with the Initial permit, followed by a period of conformity to the existing anle, .lnd ends with what is essentially a unilateral avoidance of a permit agreement by a public lu>dy, without recourse for the affected sign owner or user. The owner is even required to absorb le'"st of removal. If the sign remains after becoming illegally nonconforming, the sign owner caill Ira subjected to a Penalty, which is sometimes severe. The possibility of large fines and/or '(:`q- (:`q .. Rollfm Ck1A- AdrtrU$kp, i,c. • 459 A. 2d54 I (Del. Ch. 19831, Wd. 475 A. 2d 355 (DW. Sup, 1984) hlufli� r. Kona,, 123 1.11623 11887) SIGNAGE AND THE LAW incarceration for failure to comply in a timely manner with a sign code is particularly harsh wh the code is retroactively applied to a previously legal activity.el Compensation for Lars Due to Exercise of ibttce /bwer• slaters+[ Law v* a vis State Law Outside of signage -regulatory or zoning contexts, amortization theory is utilized to stimulate investment, not to calculate compensation for confiscation of property or Infringementof a Property right. Despite this dichotomy, many public officials and land -use planners hold strc ly to their conviction that the theory makes sense. Additionally, many of these individuals believe the concept is legally defensible at both state and federal court levels, despite the far that the Highway Beautification Acts and the 1970 Removal and Rehabilitation Act do not pei mit amortization as part Of compensation for a loss of signage due to a federal program or receipt of federal funding.82 Several states (such as Arizona, Colorado, Georgia, New Hampshire, and Minnesota) specitseai reject amortization of signs that become nonconforming following a change in the code. In the states, when a governmental body wishes to restrict or remove a presently conforming sign, th owner must be monetarily compensated. In other states, specific statutes or case law make the Of amortization problematic, at least in specific circumstances ss Other states (such is Arkansas, Connecticut, Florida, Maryland, and New York) apparently approve Of amortization as a form of compensation for lost signage. However, the legislative:, trend in states that have thoroughly investigated the issue is to restrict amortization as approp ate compensation for sign downsizing, displacement, or removal by means of retroactive enforcement. Thus, before undertaking any legal analysis of an amortization statute or is sir. one must first determine which law is applicable — state, federal, or both. (Amortization revisited in Chapter 6.) 81 � � �� Cameesicyo„s dAbssachuwb Inc. r. Cry olCanbidge, 80 f Jd J311 u Cir. 1996 ronmr,forming afFofF�.miw�i,8nr , i0 ini^8 naKnmrrwrcid mrkrBsr b remain ryndi,�, rrequiring irw �;�� sages: sas h.ld in vidarion of the Finn AmendrrTer,F, A4erane/ia, supra. Blederol-aid Primarynhiphways * rrTendm *� � Mir 8ewnfrcation A<t put an ud b amortitolion of bdllxx,rds on all inMnoe and oukioor odswtisi rO OVI nation, noT because n preeniped stole law, buT 6ecaur eery sMe was required to stated d t,0 reguloaans iy b robin full feted tund;ng Ire U S.C. section 1311811 Vblonons of The Migfnwy Beoutificarian A sarK/iorssd by der'YI^a federd h' aonstruNian and rromtersonce hinds b 6r offertdirsg jurisdiction. 83sovarrio, Forced renovol d si will occur because Balt rail, the an grope nay ineol , ed in msec where subssa, ham Business and oFsogrophscd conshoinh or olhe factan „hilt impair the ocrivity, including loss of odequae WN primary activity a;l f'rofesfwns Cade 5 4 9 9; dso fes, pennyi Inc rd. r Ciyo/Agoura H;Ib, 66 Col gnage. See jCdifanio Rpt,. 2d 382 (Cal. App 1997). THE VALUE OF SIGNS Accessory -Use Doctrine and On -Premise Signs: A Corollary to the Fifth Amendment Most land -use zoning seeks to place limitations upon the uses of real property, either by specific delineation or exclusion, elimination, or revocation, The end result is the creation of a zone in which clearly defined primary or principal uses, together with lesser or accessory uses, may lawfully occur. Accessory uses are almost always necessary to the success and full enjoyment of designated primary uses. Burdensome limitation or restriction of an accessory use may result in failure of a site as a whole. Off -premise signs often are widely viewed as significantly degrading the attractiveness of com- munities, particularly in the case of large outdoor structures. Thus, communities often seek to ban off -premise signs In all zones, and generally succeed without running afoul of the First Amendment.84 By contrast, on -premise signs, although regulated, are never completely banned, because it Is evident to most that they are a practical and commercial necessity for the business or business site to which they are attached. In all incorporated American towns and cities, businesses and their on - premise signs are located in zones or districts that generally are designated as commercial and pro- vide for supporting or accessory uses, of which sign use is one. The separation of uses into "principal" and "accessory" is grounded in the accessory -use doctrine — a well-established legal precedent premised upon recognition that it is not possible to plan for every use that may occur on a given site. Therefore, the local government will first estab- lish a primary -use zone, and secondarily, and in general terns, address incidental or accessory uses that commonly accompany the primary use. Customarily, the accessory -use provisions will permit .11I uses that are necessary to, or commonly appear with, the designated primary use, and that are not specifically prohibited elsewhere in the regulatory scheme. The landmark case establishing the application of the accessory -use doctrine to on -premise ,*1139e Is United Adaentsing Corp. u. Borough of Rar ian.85 The opinion was written by Justice William P. Brennan before tris appointment to the U.S. Supreme Court. Although this case dealt with a New Jersey statute regulating billboards, Justice Brennan's opin- ion established an Important point regarding on -premise signs. The on -premise sign (referred to by 84 4ltha,9h regulations bond an tM distinction between on -premie signs and 4premise signs are content -based, courts aaepl as rational a heal dowmin cion clot on -premie signs ore on inseparable pan of The business use of a piens of property, while off-premle odwehung is o `*pause use unto itself Thol may be healed dll(em6y from an prem;e signage Therefore. ef6ts so ban df -tuna signs or generally accept, aide under First Amendmeol content onalyses, as o wlid uwie of polio, power in the protection of community aeuhehcs, 8.5 11 N.1 144, 93 A. 2d 36211952). SIGNAGE AND THE LAW m Justice Brennan as a "business" sign) is part of the business, or, in other words, an accessory Brennan wrote: The business sign is in actuality a part of the business Itself, just as the strucnrrc housing the business is, Part of ir, and the authority to conduct the business in a districi carries with it the right to maintain a bus nes" sign on the premises subject to reasonable regulations in that regard s6 In arguments over whether compensation should be paid for the retroactive downsizing or removal of a formerly legal sign, the accessory -use doctrine may be invoked as a legal tool to assist in the establishment and recovery of monetary damages. The 14th Amendment In regard to on -premise signage regulation, the 14th Amendment commonly. enters the picture at the Permit counter. To pass constitutional muster, the permitting or licensing conditional -use or variance -request procedure) must, at a minimum, procedure (or structured to understanding of objectively based be requirements, In addition, the assure easy reasonable application fees, a speedy decision on the addition, application by t�he�g Process must provid recourse to automatic and swift appeal of any denial. A failure to Permuting authority, ant Procedural requirements can give rise to a claim that the r Provide any of these minimum the 14th Amendment. process violates the due process clause Because a sign is essential to communicating a business's presence and effective coin in the marketplace. In some circumstances a failure to provide minimum due petitioi merits can give rise to a "prior restraint" issue. Prior restraint process require- nicate is subject to the prior discretions a omits when the right to commit uY app of a government official that may be exer- cised to censor speech. A prior restraint issue may arise under both the First and 14th Amendments. To the degree that decisions about sign regulation criteria, the prior restraint question are not based solely on objective quantitative This potential mikes It Incumbent is always potentially present in the sign -permitting process, upon the official to act pursuant to clearly defined standards that (1) strictly limit the official's discretion, and (2) guarantee in a short period of time. resolution of application issues wilt 86 td as 3". _ THE VALUE OF SIGNS in Freedman v. Maryland, 380 U.S. 51, 59 (1965), the Supreme Court ruled that an ordinance establishing a prior restraint had to provide the following procedural safeguards: I. The decision whether to issue a permit must be made within a specific brief period, 2. The scheme must also assure a prompt final judicial decision, to minimize the deterrent effect of an interim and possibly erroneous denial of a license. 3. A censorship scheme must place the burden of instituting judicial proceedings and proving that the expression is unprotected on the censortl7 Although the Supreme Court has not yet applied the prior restraint doctrine to a specific sign application or perttut issue, several lower courts have applied the doctrine in the context of sign regulation. For example, in Desert Outdoor Advertising, Inc. v. City of Moreno Valk -y, 103 F. 3d 814 (9th Cir. 1996), the Court struck down an ordinance where the permitting official was given unbri- dled discretion to approve or deny a sign permit, In that case, the only standards for granting a sign permit were, ")the sign) will not have a harmful effect upon the health or welfare of the gener- al public ... [and] will not be detrimental to the aesthetic quality of the community." in Nortb Olmsted Chamber of Commerce, et al. v. City of North Olmsted, 86 F. Supp. 2d 755 (N.D. Ohio 2000), the Court determined that the city's ordinance lacked sufficiently narrow, objective, and definitive standards. Therefore, the ordinance gave government decision -makers unfettered discretion in issuing a permit, and further, did not provide any of the procedural safeguards required by the US. Supreme Court when a prior restraint is found. (See Freedman, supra.) In summary, the Court found that "a system of prior restraint that fails to provide procedural safeguards does not comport with the Constitution." (Id. at 778.) For this, and also violations of content -neutrality and equal - protection requirements, the Court found the ordinance unconstitutional in its entirety. Federal Trademark Law: Equal Protection for All (The 1958 Lanham Act) The federal Lanham Trademark Act (15 11.: (:., section 1051, et seq.) protects fedc•i.rlly registered names, marks, emblems, slogans, and colors, if included in the registration. The first clause of Section 1121 (b) of the Lanham Act reads as follows: 87 See also Slwnls wormh r. ltinningha , 394 U.S. 147119691, "ing,teal'lol low subjecting the right of bee e.prewan in publicly mored Placa to die prig narawa al a liceme, withwe narrow, objective, and definite standards, is uncoasl soft 1, and o pwwn laced with such a law may ignore n and -sorow his First Amendrrwe right.' Pages 150-151, SIGNAGE AND THE LAW m �.AS; No state or other luriscilcuon of the United States or any regPolitical subdivision or any agency thereof require of a registered mark, or require that additional trademarks service rarer trade namj m corporate names that may be associated with or incorporated into the mark in a manner differing from the display of such additional registered mark be displayed in corporate names contemplated b mss• service marks, trade names y the registered mark u exhibited in the certlflcate of registration iuw by the United States patent and Trademark Office. While it is well accepted that a governing entity may regulate signs (subject to constitutiona I Protections), the plain language of the Lanham Act prohibits federal. state, and local from requiring alteration of a registered trademark or co governmei An oft -cited case addressin PYriBirted slogan, as registered. (N.D. Ohio 1979). Sambas on is Sanrbo's of Obio v. Ctty Council of Toleldo, 466 F. Supp. 177 minor zone the plaintiff enterprise initially sought and received a change to operate a newly constructed restaurant; it then requesred a si that restaurant. The city would only issue a permit if Samba's a name; this decision was based on pemvt fo Breed to change its registered tra, Ion. The Court determined the city's assertion that the name represented racial discrimina that the city's effort to require an alteration of a federal)Y registered trade name on alleged racial grounds was unwarranted, over) b First Amendment guaranteed rights and the Lanham Act.y ted' and in violation of both In finding against the city, the Court noted that if the registered name had to be changed on tit sign, it would also prevent the plaintiff from advertising or using the naTe in oilier m ing or even inside the restaurant. The Court further declared edla adverb utterances a speech if only Innocuous that one cannot have freedom of re permitted. (Id. at 1t30.)es A more recent case involving Section 1121 of the Lanham Act is Blockbuster Video Inc 6 Video Update v. City of Tempe (AZ), 141 F. 3d 1295 (9th Cir. that mail signage conform to 1998), In thGs case, the certain color schemes as set out ci in a cromprehensive sign plan ty required) approved d the city in concert with shopping center owners. One of the plaintiffs, Video Update, had trademark u colors that did not comply with the city's color scheme, and the city ;I denied a sign permit unless the business agreed to change.1 plaintiff, Blockbuster Video, its red letters to white. The other received permission to display its torn -ticket logo as registered, but mw °ba �' •. bhrnon, 491 US. 397, 414 (19891, stating that -lama badr,ock °' P,oA,bit azpnsslon of an Idao simply bKowa wciaty find, fit) afFz "a d "gprMe6h"dwlyir� Yr I-' n„,."` -__G THE VALUEOF S,GN3 did not receive approval to install its other registered mark •— a blue awning. In a majority opinion, the Court held that a municipality may not enforce zoning regulations if those regulations require the alteration of a registered mark. In reaching this decision, the Court reasoned that if the law recognizes that the function of a trademark is to convey, via a symbol, recognition of a commodity by potential customers, then it must have a uniform appearance, not only in design, but also in color.89 Further, the Court stated, if customers were to see a store with a pink and white sign instead of the nationally recognized blue and yellow torn theater ticket, they might think that the store was not a real Blockbuster store. (Id. at 1300.) with respect to Blockbuster's request to construct Its blue awning, the Court did not extend protection under the Lanham Act to the request, finding that "Lal zoning ordinance may, however, prechrde the display of a mark ... [plrecluding display of a mark for zoning purposes is permissible; requiring alternation of a mark is not." (Ld. at 1300; emphasis added.) Although the Ninth Circuit Court deferred to what it believed was the "plain meaning” of the Lanham Act in the Blockbuster case, a correct interpretation of the Act is not yet settled, as evi- denced by a case arising in the Western District of New York — Lisa :s Party City, Inc. v. Torun of Henrietta, 185 F. 3d 12 (2d Cir. 1999)• In this case, the Second Circuit Court relied extensively on legislative history and determined that Congress never intended that section 1121(b) should interfere with uniform aesthetic zoning require- ments, so long as the subject ordinance did not require actual alteration of the trademark. Therefore, the Court held that an ordinance Waiting sign -color typefaces and decorative elements for aesthetic reasons was not in violation of the Lanham Act. In so ruling, the Court found that the subject regulations "simply limit color typefaces and decorative elements to certain prescribed styles [and thus]... have no effect on businesses' trademarks....limidingl only the choice of an exterior sign at a particular location. As such, though entirely disallowing the use of a registered trademark In careful - Iv delimited instances, these regulations do not require 'alteration' at all." (Ld. at M) While the two cases above differ on interpretation of the Lanham Act, they do agree on one point: Regulations that totally ban the display of registered trademarks or logos do not violate the Lanham Act. This is not to say, however, that such a prohibition could withstand judicial scrutiny under First Amendment content -neutrality requirements, particularly if the only articulated reason 89 Fa Wrampla, cv,brmn recognize a particular brand of Inwkstion by iii pink cobr; wa h n Owam•Cani,sg ff6rplas Cap., 774 F. 2d 1116, 1 127 (red Cir 19851, SIGNAGE AND THE LAW m for the prohibition was based on aesthetics, Unfortunately, neither B/ocirbtr [er nor Lisa's Party or discussed First Amendment issues. 90 Tempora, Signa: A Class by Themselves A common definition For a temporary or rental of Sig` is '-1 sign announcing Property' Political positions, or other matters, and int ded for use for sales,pecial events or limited P1 d of time." Temporary signs may window sign. y be portable, such as a sandwich board or attached, Local governments often enacts such as on the a special restrictions and prohibitions on such Sig-, argument that the haphazard use of these signs is der g generally basE mental interests, including aesthetics, and runental to several legitimate govern. struck down if a coup traffic and Pedestrian safety. Although regulations �ds they are irrational or overs may Permit restrictions if (1) they are reasonable on the y restrictive, the present judicial trend is w (2) they do not overly censor the bunds of safety and aesthetic oh' the expression of Flow of marketplace info lectives, and ' Political opinion or belief rrruaation or, even more importantly. Regulation of Reol Estate Signs In Linrnar*,4zo;la1es lnc. u. that a i Tomrtsbip of Willingboro, 431 U.S. 85 (1977), the Su Debi government may not prohibit the use of temporary Preme Court heiA because such a prohibition unduly restricts the flowinformation, rein estate si that a local of signs in residential areas government may not place reasonable restrictions This is not to say, real estate signs In furtherance of a legitimate interest (such as aesthetics) However, the govern- or �' she, number, and location "lent must convince the as w that its regulations are necessary to achieve a legitimate governmerr til interest or Its regulations were not aimed at curtailing. information. For example in Soulb,Suburban HowY 2d %8 (7dt Cit. 1991), y8 Cent¢ru. Greater,%)" Suburban Island � denied sub norn. Greater south Srhl Board VRtaaltors, 935 1; 502 U.S. 1074 (1992) the Seventh U.S, n &1rrr1YofRenitors u. a placement, and nut Circuit Cour of App�ais u <) of 81r, Tuber of realty signs to protect tile aesthetic interests rid restrictions on size, Conversely, in Ctttzivrcr UnwedjorFree Speoc% u. Lo wcxxied septi-rural village•. Supp, 1223 (b.Nj. 1992), the fed ng Beach Brw11 VCbM wSSiouers real trial court held that an ordinance e' F. Permitting "for sale' signs, MKA O ipisWok "YO la bhp d0 10 Wq,{d ._ �n O �MMKIppIi1)• . n01 ViOIOh Ih� iry 6" by OH*"*d bu"— C__' o ..do � q,��buwJ W nl ldb. j ' �i' b .' d 60w 4d ,�i. rma �i.� I�golto ai. dm« 1 ar _,_" dy VM6 w h circ"00 Kir I F._,.____.mTHE VALUE OF SIGNS but prohibiting "for rent" signs during certain periods was Invalid because the government present- ed no convincing evidence that the differing (or discriminatory) regulatory treatment achieved its claimed interest in aesthetics. A similar aesthetic argument was raised by the city of Euclid, Ohio, to justify a city ordinance restricting real estare signs to window display only. Tile Sixth U.S. Circuit Court of Appeals struck down the ordinance based on its findings that the ordinance was neither narrowly tailored to achieve its claimed interest in aesthetics, nor did it provide an adequate alternative channel of communication. The decision distinguished the Soutb-Suburban case by observing that Euclid's decision to restrict lawn signs was not motivated by a desire to improve the physical appearance of residential neighborhoods, but instead, was principally intended to stem the proliferation of real estate signs in some neighborhoods — a proliferation the city deemed as conveying "negative" messages about the city and its residents.91 While local government may not prohibit temporary real estate signs on private property, it may totally prohibit the posting of private signs on public property — either in the public right-of-way or attached to public property.93 However, the prohibition should extend to all private sighs, or the ordinance may run afoul of content -neutrality requirements and be subject to strict scrutiny. Regulation of Poli Signs Local governments argue that since they can neither prohibit nor allow all signs, a sign ordinance needs to make distinctions among various categories in order to promote traffic safety, achieve aes- thetic objectives, or reach other legitimate goals. The courts have yet to articulate a firm rule or standard that will apply in all cases concerning ordinances that characterize signs by their content or ideas. But in the area of politically based noncommercial speech, the Supreme Court offers Sub- stantial guidance in CrtvofLaduev. GtAeo, 512 U.S. 43 (1994). In Ladue, the plaintiff, Gilleo, was prohibited from displaying an antiwar sign on her lawn by a city ordinance that banned all residential signs except those. within 10 exempted categories; her sign did not Rt into one of these categories. The Court ruled that the ordinance violated the First Amendment rights of homeowners because (1) it totally foreclosed their opportunity to display Political, religious, or personal messages on their own property via an important and distinct I 91 0016'd Ana 8ovd d R-ian r, 01y o/ fm d, 88 F 3d 382 (6Th Cir. 1996E alw —, Sondh,Ri Auo i hwr o/ Re k) , Mc, v. V Ibgs of A--Iwnr, 1999WL 1129624IMX4C 1999). 92 S. Mvnb. d C+y Cwrc t. r °YM lar VbW". 466 U S. 769 (1984). SIGNAGE AND THE LAW medium of expression — suchmedium an Important lawn signs, and (2) the city had failed to Portant medium. provide adequatebstitut Although the Court accepted su Place, and the city's contention that the ordinance manner regulation and was only intended to was acontent-neutral 1 a prohibition on noncommercial prevent "visual clutter," the Court held minimal level of speech at one's own home could not scrutiny, and expressed the opinion that the city be sustained under ever sures" to satisfy its regulatory goals. could find 'more temperate n For example, the Court to display noted that •Id)If Brent considerations billboards might apply, if residents attempt Ladue does not disturb [herr Property....,ly (512 U.S, at 50.) Therefore, the rule articulated previously in Metromediathe holding In hibit off premise billboards, but permit on- that communities restricted only to comma premise signs, asigs may t commercial m Sns, s° long as on -premise signs are not With regard generaliv [o messages. unconstitutional, and political or election signs, an ordinance residential and other courttshgave struck down prohibitions on Prohibiting such signs is de political signs that applied in bo Courts have also struck down example, sign Ordinances that discriminated among different P in City ojLa4MyJ ood u. Copolitical ret the Colorado Supreme Court invalidated v. 'ax UnitmitedAssociation, 6 to the candidates and Issues ordinance that restricted the content of 52 (Colo. 198t" violated being considered In an upcoming election, finding that the ord tical si the principle that •[g)ovemment y There is some disc May not set the agenda for public de t 62.)n P011tical signs that may be displayed courts regarding die placing of limits either on 1 umbers of S' to P Yed or the time period they can be displayed. However, there be consensus that reasonable t' prehensive" prom to serious) reasonable time and number limits may be imposed Coups Y dress aesthetic Issues. Posed as Part of a -cone have also upheld content -neutral time limits placed on all tem no v. MarArham Epp N P 2d 1320 (111, q tempora signs. For example, ordinance limiting temporary signs to 90 App. 1992)[ a state a restricted n Y against claims Ppellate court upheld .a1 Political s s a that the ordi peach and favored commercial over noncommercial ranee unnecessarily While there is no definitive directive nuiirrcial speech one clear conclusion can be drawniegardtng time/place/manner regulation of temporary signs, Temporary on -premise signs containing both commercial and noncommercial messages must be allowed In residential areas, barring sub- stantial proof by the government that the offending signs are detrimental to public health, safety, or welfare.95 Beyond Questions of Legality Despite the seemingly numerous cases involving legal rights and on -premise signs, this area has not been significantly litigated at the Supreme Court level. This is so because most legal controver- sies surrounding on -premise signage are grounded In state law, as opposed to outdoor advertising cases, which most often arise under federal law. While it Is very important for a commercial property appraiser to be aware of the legal frame- work in which he or she must work both on the state and federal level, it is more Important that the appraiser become very familiar with sign regulation at the local level. it is here that the full spectrum of regulatory effects upon different sign categories first comes to light and must be addressed if one Is to understand and account for the possible financial detrimental impact of the regulatory scheme on the client. 93 Sas &d_ r C'y ofC"bee 425 S E. 1d 194 tW tete 19921. V51n this First Adri—t —no, this overn ging emit peeking to uphold o challenged re,indion an commercial speech has the hurden of pr nq 94 ma CoR;er r Cly of rac'avno, 854 P 2d I shot this rertnOw odwncer the go ornnwn't interest in a direct and martial orh i mal, and rouher v lover, off tion will no, wAstand conuitutional f it on way, ato Furth«, Ih t e g 04 harm, sine b eidst are real A risgula °i^9aModow, 695 F tcrvhaY Ir Ixwidn on Indiectiio or remote wpport of the government purpou, or don riot alienate Supp 1 J,58 to Marr 1 ggal (tnonchral Norm a o material degrr. f"1ere fpacuiotion « <anjecNn by the government does not wridy the bumlert. See Rubin v Cmrt Brewing „Y ,_._._�� THE V , 514 U S 476, 487 (199.51. and Amentia v. McClure, 168 F Jd 893. 998 99 f 6th Ci,. 1999). ALOE or $tGN$ SIGNAGE AND THE LAW C H A P T E R • LAND -USE ZONING AND SIGN CODES: REGULATORY AND APPRAISAL FACTORS Business signage is the- —� most regulated speech medium in the United States. codes that censor commercial speech are receiving t many state courts. Leadin however, sign g 'rtcreasing scrutiny by federal cot g court cases that deal with these censorshi to as well out this book, and appraisers should get to know these P issues are detailed th appraisers in ro how cases well. Such knowledge can guide best to counsel a client who is dealing with a restrictive sign code. A second source for analyzing the impact of a local sign code on a is the relevant state's zoning enabling act. In states that do to local governments, Particular site and its sign these acts set general standardsnot grant extensive home -rule valuing signage in these states, a that local governments Powers PP. I f it should g rnments must follow. When from the state's zoning enabling determine whether the local sl At all times, the appraiser should k it does, the trial a gra code deviates analysis should point this out. local, state, or federal regulation — keep in mind that the controlling sign code _ affects the haat glue whether it be a ton that the subject site is situated in the co of a co mmercial site. While a determine in the appraisal rrect cotttmerclal zone or district is an IM Press, it's also crucial to remember that if a site can Portant factotj to the street, it cannot function successfully as zo nor effectively caution the client, and adjust ale value do' In such circumstances, y communicate downward. the aPPmiser must Because a thorough understanding of alae controlling sign code and its impact ry component of an , on at type codes and code objectives fe necessa Y signage aPPmisal, a general overview of r7 as a starting Point. proto THE VALUS� p� trNa Sign Codes: Specification and Design Review/performance Typically, sign codes are drafted as either one ul Iwo (yl)es: specification or performance. At pre- sent, most sign codes are specification codes. A specification code Is based on allowable physical parameters and regulates in accordance with specific land uses in designated zones or districts. 'Transportation conditions may also be taken into account. For example, a general rule for retail -oriented districts is that the faster the speed of passing vehicular traffic, or the more lanes on the roadway, the larger (or sometimes, taller) on -premise signs may be. The design review or performance code regulates in accordance with broad-based communi- ty goals. Under this code, applicants are afforded some Flexibility in utilizing materials, technology, and design, so long as the signage does not interfere with or significantly vary from general com- munity standards. Commonly, within both codes, three distinct concerns are addressed: traffic safety, land use (zoning), and design review. Traffic Safety Regulation Traffic safety is always identified as an objective in regulatory sign codes. In those municipalities that take this goal seriously, the regulations are designed not only to control signs, but also promote safe wayfrnding, including direction enhancement. 'This goal is achieved, especially in specification codes, by setting physical parameters In accordance with strictly controlled databases generated primarily from federal studies. Sign type, sire, and placement, as well as time, place, and manner regulatory factors, are extensively addressed in these government studies. Standard mandates in this category are based on n2h9mum rather than maximum, size and height mea- surements. In other words, the standards specify that a sign roust be at least a certain size or height if It is to be safely seen and reacted to by passing motorists.96 Unfortunately, many municipalities, while touting traffic safety as a goal, instead craft regula- tions that compromise this goal. Such regulations are based on maxi»twn parameters, which restrict signs to sizes or heights or content display that may render them all but invisible to Passing traffic. For example, a code may state that an on -premise sign cannot exceed six feet In height. In many circumstances, parked cars or curb -lane traffic will hide a sign of this height from the view Of drivers who are in the left lane or on the opposite side of the street. When this occurs, not only 96 For emmFIN NO the Mmxxd w Uniform rmffic Con6ol De ka, Americom with Dimbllities Acl, od iy of Combined Cnmmunimtiom v C D-• ,, 186 Cob. 443, 528 P. 2d 249 (19741, ofPd 542 P 2d 79119751. LAND -USE ZONING AND SIGN CODES ---r• JJJMKV4 L, does the sign fail its communication function, it encourages u may be looking for it. (Trafficnsafe traffic maneuvers by those Land -Use (or Zone) Regulation safety issues are discussed in more detail later In this chapter.) The land -use, or zone -based, sign code is designed to integrare commercial signage into broa land -use plans and policies. It generally employs a d specification sign type, size, height, placement, and illumination format. which concentrates on source. If properly drafted, the code will allow signage that fulfills colts the zone its communication function ;tad p r succeed as designated. Its three general principles will govem the increase or decrease In specification regulation: I. the physical needs of the average driver, as conditioned by visual acuity and reaction ahi 2. the as and topographical conditions within the signs vicinity; 3. the degree of oven commercial selling or district, considered to be inherent in the subject land -use When analyzing specification regulations in these circumstances take great care in determining whether the regulations operate to enhance signage appraiser must ance e visibility within the e zone, or instead render the zone economically dysfunction l by Prohibitingeasily detectable and permit sale reaction. readable signs that can effectively "speak" ato potential customers with sufficient lead time to Aesthetics Regulation Sign codes often include a special section that addresses aesthetic concerns. This sign °revicty and appraisers code generally controls the time, place, manner, and content factors of signage Often businesses rely on this design -review section when seeking an "exception" for a sign that varies from the code. However, some localities have separate municipal code sections that specifl- tally outline variance/exception procedures.97 Although a axle's design -review standards provide an excellent way to maintain the visual envimn. merit desired by a community, it is incumbent upon die regulator or revaewer to apply the code t n r 97 Ac -de _ land u . orad ;.ion lur deign rev,ew h ld cwt 6e con6,d , .hmdard. w ganerolfy will be W—W only ii .paciAed cardinon. r„H yry„ p'o"',-, A r „o deviation from a ry Irom locale b bcude le Aord.hi de.gn„r,, p' °°rn'^a"n oro d 4w» conditwn., eiy,bl� -__• THE VALUE OF SIGNS and consistently. Further, regulators must take care when drafting the code to assure that the standards they set are neither too vague nor too restrictive to pass constitutional muster.98 The U.S. Supreme Court has long held that land -use regulation must provide an exception (or variance) process, and the controlling section must contain standards that are sufficiently precise to permit a trier of fad, in the event of litigation, to determine whether the standards have been correctly applied.99 While a "variance” technically operates as an exception to a designated land use and the con- trolling code, it also reflects how reasonable the designated land use and the sign code really are. Therefore, the number of applications for sign code variances or exceptions provides a reasonable test for the code. The appraiser determining site and signage value should routinely review vari- ance requests, using them as a code barometer. If exceptions are constantly requested and granted (because the permitted sign is too small or can't be seen from the road, for example), the code probably requires modification. Certainly, If one cannot achieve optimum signage visibility under the existing code without violating the code, then the appraiser should deduct value for both the site and signage. Private on -premise signage is the only local advertising medium or communication system that is nearly exclusively subject to municipal control.100 In a broad sense, the local code can manipu- late the town "landscape" in such a way that it raises public awareness of the community's goods, products, services, and often, culture. Conversely, a sign code can also be used to discourage non - local trade or traffic. If the community consensus is that nonlocal trade or traffic is undesirable, as may be the case in upper-income communities, it may be futile to attempt a variance, because the code is meant not to limit signs, but to limit outsiders. in such cases, litigation may be costly, and the prudent appraiser may advise the client to consider Investment or location of his or her business elsewhere. The Effect of a Restrictive Sign Code on Market Share Many planners influenced by design and aesthetics alone rely on the slogan "less is more" to justify severe sign restrictions, Such restrictions usually limit the sign's type, size, and placement. Sometimes there is an attempt to restrict content or copy — an effort nearly always constitutionally suspect. 98 WA ,..peri b e.e.bL.hment of land .» gaol. Ova nlow b oaubeks, m Sbte v. MiAw, I I d A. 2d 821 (NJ. 198% and V,4We of Hudwn .. AL—ht. Inc , 458 N E 2d 852 IOh,o 19841 Alw w Chopfw 5. "See NW— v. City d Combndge, 277 U S 187 (1928) A. m ChopM 5 100 O#F prem;» ign. w outdoor odvW,s,ng may be regulated 6y local muni r lilier, but 4» pnmmy regulalon of .uric .ign.W are led -1 ,IM a,h bg.,l tu, . and ogee LAND -USE ZONING AND SIGN CODES m Of special concern to independent small businesses is a cod Premise sign to a e restricting or confining an on. limited size or space. Such codes favor those companies with national recogn tion, and whether or not such a favor is intended, the result is the same: the smaller, nonfranchi or nonchain merchant is economically disadvantaged, often so muchso that the business fails, assert either implicitly or explicitly that limiting a sign's size does not place the local small busi- brand or identiness on unequal footing with large corporations is to misunderstand both the power of corporal fication systems and the competitive edge provided by national media advertising programs, marketing and Sometimes regulators will seek to limit on -premise signage to messages relating only to the sit Primary activity." The interrelationship between the various activities on a retail site and their jo Although s and individual ability to attract consumers is complex. An example is the gasoline station. the primary activity of the station is gasoline sales, the site may also feature an ancillary car wash or convenience store, or both. The regulator may wish to restrict on-site signage to advertising gasoline sales only. While this action might appear logically aimed at discouraging t unnecessary proliferation of signage, it can be a hardship on the retailer. it is quite possible that the presence of the car wash or the store is a substantial reason why customers stop. Typically, tli Profit margin in gasoline sales Is low; very probably the profit margin generated by car wash or +. grocery sales will be high, ensuring economic viability for the station. Signage and related advertising media function to divide existing markets among commercial , competitors. Consumer demand in the short tun is relarively fixed — only a certain number of goods. products, and services will or can be purchased. If one retailer increases market share in a given market, usually another retailer loses. For some retailers, a restrictive sign code will quickly result in reduced market share and lower sales. On the other hand, a restrictive code doesn't often seriously affect retailers backed by nationally recognized logos. Trademarks and logos are easily transferable to a small sign, and major media advertising reinforces the corporate message without need for additional sign coin Thus, when a sign code restricts size, placement, and copy, it Is providing the large franchise, ..;..I mass merchandiser a substantial marketing advantage over the smaller enterprise lacking a writ known corporate logo or affordable alternate media advertising. Appraisers should always consider this factor when valuing a retail site and its signage. Sometimes a code is specifically Intended to limit commercialism through severe restriction of street or place -based advertising. The result is a form of censorship, which in some cases m:, rise to the level of restraint of trade because it hinders a small business;s ability to compete. Th local, nonfranchised or nonchain business, lacking the benefit of national advertising media an,I r THEVALUE OR SIGNS corporate recognition, not to mention corporate dollars, cannot compete for market share in this environment. Under such circumstances, the small business will either Flee the community or avoid it in the fust place — quitting the playing field altogether and surrendering it to the franchiser, the mass merchandiser, and the big -box retailer. An exception to the chilling effect of restrictive sign regulation on small businesses can be found in certain upscale communities. Even with exclusionary zoning and restrictive sign codes, these communities do hart successful small-business retail districts. In such municipalities, the sign code does not create the retail environment; rather, the retail environment creates the sign code. Palm Reach, Florida, and Carmel, California, are well-known examples of cities that have success- fully discouraged nonresedent shoppers, using, among other tools, restrictive sign codes. To do business in these corrununities requires substantial capital expenditure, and generally only those businesses with significant financial resources will, or can, succeed. Most communities cannot economically survive restrictive or exclusive axles, and such codes are routinely ignored by sign owners. For this reason, no appraiser should automatically assume that an existing sign is in conformance with the sign code. The cautious commercial appraiser always researches the rekevant sign code and permit process before valuing the commercial site and its signage. The Effect of Restrict" Regulation on Real Property Values The visual communicative, component of a real estate site is one of the most significant contributo- ry factors to its value. For some retailers, the visual component alone will determine the success or failure of the business. Always, signage size and placement affect property value. Clearly, if a sign cannot be read by poteniW customers, the site cannot attain its highest and best use, and the value of the property decreases accordingly. For example, the sign for a stand-alone, or complete -category retail store Is a critical factor in market success. A site wsually will not he chosen for development if it lacks visibility from main customer entryways. The same is true for a freeway -oriented business. The Agoura HUis litiga- tion described in Chapter 2 is a prime example, dramatically illustrating the Impact of optimum signage (or visibility) on sales revenues, which in turn increase the real estate value of the property as a whole. Sensible Commercial Sign Code Principles Whrn a retail zone or is created, derivative communication needs are also created. Adequate signage is necessary if the zone or district is to he both economically successful and safe. LAND -USE ZONING AND SIGN CODES For example, signage regulations applicable to a fast-food franchise with access to stands corporate signage should be different from those controlling a nonfranchised merchant tells upon customized signage to effectively advertise product. Ideally, from an appraisal stancipc every zone will be controlled by a regulatory format in which targeted viewers can see and read relevant signage under typical viewing conditions. In such cases, highest and best use c retail sites within the zone usually can be achieved, as can safe entry by motorists wanting cc stop and shop. At a minimum, if the commercial site and its accessory signage are to function optimally, the 1 eaant sign code should reflect several principles; I. it should reasonably relate CO normal business activities and communication needs so that legal conformity is the rule and not the exception. 2. it should be clear, concise, and objective so that discriminatory interpretation is prevented. 3. It should be based on constitutionally prescribed time, requirements, which (a) protect certain fun place, manner, and content -neutral that can be easily detected and ity fundamental rights of the merchant, and (b) permit sign read by the potential customer. In cher words, a code that has minimum adverse impact on a commercial site will not arbitrarily or capriciously circumvent conforming business activities, restrain trade, or be so II wit with respect to sign size, height, and placement, that it operates as a de facto ban. '4n"orfization Revisited Sign code regulations significantly impact and interact with the commercial environment. These netts will determine what types of local nesses businesses operate in a community and how these husl- Sign uhteract with local government, as well as local and nonlocal consumers. codes with regulatoryr red fin to a Provisions that increase the cost of doing g appraisers, Amortization is one such provision. If a code endorses amortization eas the form of compensation for the regulatory taking of a previously legal sign, the appraiser is on notice that signs are degraded in the community, both as a neas loan) and as a contributor collateral asset (to secure a busi- provisions is a to property value. The usual cumulative result of amortization municipality with poorly designed signs and, therefore, poo term business vitality, r prospects for long - Always, a signage appraisal should account for any devaluation caused by an amortizatit,,, clause in the local sign code. TME VALUE OF SIGN8 Signage as "Public Nuisance" Many times a state or local government will arbitrarily label an activity a public nuisance, and subsequently prohibit it.lol An argument frequently used to restrict signs concerns traffic safety, even though, as a rule, signs do not contribute to traffic accidents. in fact, substantial arguments and evidence exist to indi- cate just the opposite — that signage enhances and promotes traffic safety. For example, a 1985 Pennsylvania Department of Transportation tort -claim study found that 22% of the lawsuits arising from highway accidents (on both interstate and intrastate systems) alleged signage deficiency as either a contributory or primary cause of the accident. Further, signage defi- ciency has been determined by the Federal Highway Administration to be the second leading cause of serious accidents on primary and interstate highway systems. This is precisely why the agency does not allow highway signage below certain sizes.102 Based on the best available research, if signage is restricted to the extent it is unreadable or indistinguishable from its background — in other words, if it is Illegible — the mobile consumer to whom the "message' is directed cannot safely respond. Basically, such restricted signage compro- mises traffic safety. A sign's legibility is generally a function of visual acuity — the distance at which the sign's message can be seen and read. As traffic volumes increase, the mobile consumer increasingly requires more Information to move safely. Concurrently, as retail locations become more impulse - oriented, both sign size and letter size should be increased to meet the visual acuity standards required to safely attract the attention of the freeway traveler. Normal visual acuity for a highway sign is one inch letter height to 25 feet viewing distance. However, given the rapidly increasing age of the highway motorist population, there is now some question whether one inch to 25 feet is large enough, even with optimum letter spacing, color con- trast, and placement103 Traffic Salify: w Continuing Signage Issue Local governments have regulated signs for more than a century, and for an almost equal span of 101 So Mppbr ¢ K. 123 U.S. 623 (1887) 102 U.S. Deparhmrr at iwrporWNon, Fedval HVway Administration, Manual on Uniform rmffk Connal Devices (or Sw ws and Highways. 1988 d. The Momrulconown Mardardr and guides for traHk control deuces for nasi and highway ccnimnxhar, ma,mmnoace, uslity, aKi Incldent•manogsttrM opt dam 103 See also'Commieee lar Mr Study ar Improving Mobility and Safs,y for gids Porton,,' Aging 5o soy, hanw-tahon Research Board, National Rreoreh Council 11988). LAND -USE ZONING AND SIGN CODES m time, courts have held stich regulation to be a legitimate exercise of a local government's pohcq� Power to protect the health, safety, and welfare of its citizens. While no reasonable person would argue that traffic safety is outside the scopei many do argue that traffic safety concerns cannot alone j °f police powei that the concerns are valid. This is p justify restrictive regulation without proof Particularly true since the courts have well established that cods regulating private signs must reflect time pare and manner regulations that are content-neutral, if this context, it is important for appraisers to enhance their knowledge of the interface between tit• Place and manner components of sign codes to help establish readable and conspicuous signs. Over the last four decades, regulators cial signs compromise trahave advanced two hypotheses proposing that commer- ffic safer}•: (1) commercial signs distract drivers, resultinin more acci- g dents; (2) commercial signs mask the visibility of highway signs, resulting in more accident While these hypotheses have been put forth over the years as reasons to severely restrict com- Highway Administration and Congremercial signage, they are unproven. They were rejected time and time again by the Federal ss d as sation for the removal of outdoor advertising structures as mandated when they were b asoma to deny just compen- They continue to be rejected by federal hi Y the federal Highway Acts. highway Also, after reviewing evidence and the t Y authorities and legislative bodies today stipulations of the parties involved, courts routinely have without discarded these hypotheses when asked to approve removal of signs for "public safety" reasons, compensation or without deference to the First Amendment or both. A case In point is Metromedia Inc. u. City of San In MetInc. �a 453 U.S. 490 (19131), supra discussed in deta11 in Chapter 5. the city initially attempted to justify its severe restriction of private signage by Presenting the signs-cause-trafTc-accidents argument. After thorough review of available evidence by the litigants and the U.S. Supreme Court all litigants and the Court accepted that there was no Positive correlation between private signs and traffic accidents — and traffic safety was removed from the case as a reason to regulate signage, Another rase in point is Combined Communk-aHons Corporation dbrr g v, City of Denver, 542 P.2d 79 (Colo. 1975). In this r Eller OrudoorAdverttslrr city's traffic safety justificse, transportation engineers reviewed thations for sign removal and found them to have no basis in facte A preferable hypothesis, and one that has not been contradicted by any evidence, is predic.ur u the Proposition that atNnmmctal signs have a positive effect on traffic safety, provided they ,, sufficiently legible, readable, contrastable with their background, and in good states of repair. !f thew attributes are missing, a sign is likely to be deficient. When •signage deficiency, is created, tite probable result is an increase in unsafe driver behavior and, in turn, more traffic accidents. Many traffic engineers believe that the deficiency, hypothesis serves the public interest better s. i THE VALUE OF SIGNS .1 hypothesis proposing that commercial signs, by their very existence, cause accidents. This view is further supported In a recent study by Richard N. Schwah, a former Federal Highway Administration program manager for research on highway visibility and night driving safety. He wrote: Traffic safety is not Jeopardized by the sign Itself or some sort of stimulus overload; Instead the culprit is inadequate sign size or lighting, or Inappropriate placement, or it combination of these factorsJa Because the deficiency hypothesis is based on optimum visibility standards, it follows that signs deficient in these standards, or which provide too much, too little, or confusing information, or are missing altogether, may result in driver disorientation and inappropriate or dangerous driving deci- sions. Drivers look for, and expect to find, signs alerting them to dose -at -hand products or ser- vices, as well as signs providing wayfmding or risk -avoidance messages, An informational or dirrr tional sign that is too small, badly placed, poorly illuminated, lacking conspicuity in that it cannot be discerned from its background, or in disrepair, is frustrating to the mobile consumer and may cause that consumer to make unsafe traffic maneuvers. A Driver's Decision -Making Process Driving involves two immediate decision-making tasks: monitoring anti wayflnding. Monitoring involves speed control and lateral land positioning, and is dependent upon visual perception of the roadway and the vehicle Itself. Wayfinding involves determining and following a route to a particular destination, and is dependent upon visual information gathered from the environment surrounding the road, which may include, in addition to roadway signs, other road users and fixed -r random obstacles. Often, drivers engage in these tasks at the same time. While rational driving would demand that the safety, or position -monitoring task, take priority, a driver's traffic behavior often demonstrates die contrary, and accidents occur. Fatigue, aging, or an improperly displayed message (part of the signage deficiency spectrum) may also decrease a driver's ability to move safely through traffic. Enhancing the On -Promise Sign's Traffic Safety Role If it is properly designed and placed, the on -premise sign can effectively perform Its communica tion functions and simultaneously promote traffic safety. To maximize its full potential, the on - 10' Err 0 prom a 0 dy by Rrchad N. Schwab -0116d Soley anti Harron Factor, D—ga Con,id—lion, (or On-Pnemi,e C—nm .oi 5iga, ro,poawnd and pt"hhed by The Sigtage foundation for Communication Excellence Inc, and ihn International Sign Aunciation (1998) LAND -USE ZONING AND SIGN CODES m Premise sign must meet two essential requirements; (1) it must be capable Of being seen, and (, once seen, it must be capable of being read and understood. Drivers process the messages they receive from signs and, depending upon a particular drive needs or expectations, these messages become the basis for decisions. The correctness of any given decision, and the degree of success the driver has in completing the driving task, depend upon the sign's ability to communicate its intended message quickly and adequately. For on -premise signage, the most important messages are usually information about the prod uct, good, or service available at the site and information about how to get to the site's location messages clearly: The following factors should be considered in optimizing a sign's ability to communicate these;, " Cornpnsbension The message should be unambiguous. A symbol can offer significantly' greater legibility for a given sign area, but it may not always immediately understood by all viewers. Lack of recognition is a strong reason for use of standardized signage protocols such as, standardized corporate signage. However, ifa retailer is not part of a national corporate identlfica� tion program, copy or content should receive careful attention and consideration. 2 CO-Ocufty The sign must be distinguishable from its surroundings; that is, it must ciently conspicuous to attract the driver's attention. be sufl7. Such "conspicuity^ is a particular problem for: Private signs when in darkness. Often, vehicular headlights do not reflect onto the sign, and if the' sign is not illuminated at night or during inclement weather, it can simply fail to munication device. function as a com; A Legibftfy The sign must be readable to the extent that its copy or symbols are discernai i enough to permit near instant comprehension by the observer. tyOn a two-lanereet with a 25 street mph speed limit, characteristic of many business districts, the pical o o-lanessign appears to require a legibility distance of 300 feet, This distance allows the sign to be read from the nearest intersection, approximately one block away. For signs In rural areas or on high-speed roads, a greater distance is required, and larger legends are needed. For example, the San Diego, California, sign code allows signs to be 75 feet high and 300 square feet in size along the city:, high-speed Interstates. 4• B.xpactartey The sign's legend (message) and location should reasonably conform to the driver's expectations. In many cases, travelers will plan to stop en route for food, gas, or lodging, but will not know In advance where to find them. ft is Ulogical, and perhaps even irrational, to zone a commercial land use next to a primary It Interstate highway system and not allow for adequate placement and size of signs to attract and direct motorists. Even travel- ers who have planned their stops will expect to find adequate signs at or near the intended e • THE VALUE O,r SIGNS destination — to assure them they are on target, s, Empbasis Information most important to the driver should be emphasized by size, loca- tion, letter type, color, or other means. The information may be conveyed by copy or by a logo. A sign displaying a nationally recognized logo, such as McDonald's Golden Arches, does not need much, if any, copy because the logo alone communicates more information than any amount of copy could. 6 credibility Credibility reflects whether drivers believe that a sign's message (a) is we, and/or (b) pertains to them. Proper maintenance Is a critical factor in assuring consumer confi- dence in private signage. On -premise signs that are in poor condition, badly out-of-date, or lack a communication system consumers understand, exemplify less -than -credible signage and may be disregarded.105 The Distraction Factor The information conveyed by an on -premise sign simultaneously may be specific to one driver's immediate needs and largely irrelevant to another's. However, most drivers can seek and process vast amounts of information — and Mier out all but what Is needed, In very rapid succession. Although highly distracting, irrelevant information on advertising signs can produce a statistically significant decrease in tracking or detection tasks, research on the distraction factor discloses that the decrease is so small, it has no practical impact on driving functions. More specifically, test results have disclosed the following: 1. Drivers look directly at the messages displayed and, usually within milliseconds, are able to collect the information sought or needed, provided the signs are easy to read and understand. This is so, even in the presence of competing messages nearby. 2. The more complex the driving situation, the more easily the sign should be seen and read. This is particularly true for freeway Interchanges, where the driver is often required or needs to make split- second decisions. 3• Proper sign lighting or illumination enhances a sign's readability and, thus, a driver's safe - reaction times. A positive side effect of legible, well-placed, and illuminated signs is the decrease in time that the driver is looking away from the mad.106 105 Sd_.b. 1b;d 106 Sctwvb, Ibd LAND -USE ZONING AND SIGN CODES m I The Two Most Important Sign Legibility variables: Letter Height and Sign Size If a sign is to be effective, it must be legible at a distance sufficient to permit the driver to safell respond. The letter height required to ensure legibility can be determined based upon traffic sp and the average viewers visual acuity. The space required to safely see, read, and respond to a+ sign is referenced as the rninirnum sight distance. This distance will vary according to the spe Of approaching vehicles and the sign's placement in relation to the roadway. Table 3 sets out recommended letter heights based upon traffic speed and the minimum sight distance, assuining a visual acuity of 20/40 for the viewer — the standard required by most state, to obtain a driver's license — and a Legibility Index of 30 feet per inch. Table 3 further assumes, that the sign is mounted perpendicular to the vehicular path and at the nearest edge of the Dubh right-of.way.lo7 Table 3. Letter Height Guidelines for On -Premise Signs Speed Limit Minimum Sight (Miles/Hour) g Recommended Distance (Feet) Letter Height (Inches) 25 200 35 7 280 10 4S 360 55 12 445 IS The minimum standards generally employed to determine sign size and height are found in the Manual on uniform 7h;(jic Cor:fro! De signs often exceed the Mfl7CD minimum vices (Alfl/rD)and companion Ilterature.los Destination of 20 square feet, and freeway signs often span 150 square feet, or more, with letters up to 20 Inches high. Because the on -premise sign will be hirther from the travel lane than the roadway destination sign, it mus[ be larger than the freeway sign to attain the same visibility level. As a general rule, the sign size guidelines in Table 4 are adequate. Table 4 assumes that th I' at the edge of the right -of --way, with Its base r sign at least eight feet above ground level. Type I refers 10711 u sign is eollmount�d porolbl b Iha k„ge, IeNen aMl aljuelmm,h in hsi hero- `O° Y. liN bums wd1 Mnsmsr Iweehwbnmi Thee eHW H drh mh" Sch-6, -b�A can 1be overcome b wme e,rnnl by ase �>t 08 M-'-1 m U,,k— I -X, Canhol LYvica. wpro. THE VALUE OF SIGNS Yril�li�+iltii�sidbir�:�i'- •-� as....,Lre 10 double-faced parallel signs, and projecting, freestanding, and roof signs, Type 11 refers to wall signs and any other sign not perpendicular to the roadway. Please note that sign size requirements increase as speed and distance increase. Further, both sign size and letter height need to be increased if the sign is offset from the right-of-way. And dec- orative sign design and/or letter styles usually will require Increasing copy size, all other visibility rambles being equal,109 Table 4. Sign Size Guidelines for On -Premise Signs pec if Lanes ILs -rl 2 4 2 Type I Type 1 Type II Type II Sign Size Height (Sq. Ft) (Feel( Sign Size Height (Sq. Ft) (Feet) 25 12 50 12 32 12 70 12 36 20 75 20 Safe waytinding is not only Important on major highways and thoroughfares, but also within a community itself. A municipality that relegates business activities to certain areas but won't permit adequate informational and directional signage is creating a hazard for the public. Furthermore, as the present motorist population ages, and driver visual acuity concurrently decreases, the need for better signage conspicuity and legibility will also increase. The Bottom Line for all Community Stakeholders On-prenuse signs play a major role in the success of retailers and local economies, perfonnitg imp<snant identification, advertising, and wayfinding services, often simultaneously. As an advertising 100 sd,. tad LAND -USE ZONING AND SIGN CODES 4 42 20 90 20 2 75 35 100 a0 41 4 90 35 120 40 51 2 150 50 250 90 UrLm ceway 300 74 450 90 Safe waytinding is not only Important on major highways and thoroughfares, but also within a community itself. A municipality that relegates business activities to certain areas but won't permit adequate informational and directional signage is creating a hazard for the public. Furthermore, as the present motorist population ages, and driver visual acuity concurrently decreases, the need for better signage conspicuity and legibility will also increase. The Bottom Line for all Community Stakeholders On-prenuse signs play a major role in the success of retailers and local economies, perfonnitg imp<snant identification, advertising, and wayfinding services, often simultaneously. As an advertising 100 sd,. tad LAND -USE ZONING AND SIGN CODES medium, signage can make or break a business's ability to compete. For very small businesses, on -premise signage may be the only affordable mea over the long term, ns of Communicating with potential custom In those districts zoned commercial, communities should strive to help businesses that ch locate there succeed. While sign regulations in these districts are necessary and useful, if they d not carefully address the complexity and competitiveness of the U.S. marketplace, they can exe, seriously adverse financial impact on a community. Generally a restrictive sign code has one or more of the following consequences: I. Restriction of size and/or amount of copy favors manipulation of the marketplace that gives chain or franchise operations, resulting 1n. Preference to one retailer over another — even if' intended. Such preference may ultimately exclude Independent, small businesses by limiting their ability to compete with national corporations that can afford intensive major media adve rising in substitution (or replacement) of reduced on -premise signage. 2. Regional distinctiveness and diversity may blur with standardized and homogenized storefro design and signage, causing loss of tourist trade in historic districts. 3. Traffic safety may be compromised due to driver unfamiliarity. Nonlocals seeking gasoline, food, overnight facllitfes, or other products and services may not be able to iden their destination in time to safely exit the freeway�Y or locate 4. The municipaltax base or busy commercial street, may decline as small businesses move or fail because commercial Property values depend in great part upon lease revenues, which In tum depend upon total v(,l- ume of business in the community. If potential customers are not attracted, business dies and the tax base shrinks. This consequence may bring upon a communitythe very blight that the sign code was supposed to prevent. Cities and towns are rapidly becoming Interconnected pans of an intricate and interdependent net- work of national and international economies. As interdependence increases, those cities and towns that can create distinctive and economically viable communities will have the best chance for long- term fiscal health. One of the perry ways to meet the challenge is to create a commercial commune cation and design system that integrates consumer Information needs and business signage. The heart of many communities Is Main Street — a central business district providing a venue for many and varied commercial, cultural, and civic uses. Those engaging retail activities in these districts rely heavily on signage to attract customers. For many cities and urban areas, the destination mail is a principal venue for retailing goods and THE VALUE opr S NS services. Generally, mall signage is well designed anti provides an excellent example for those who wish to develop signage for on -street pedestrian areas in towns and cities. 'Retail ribbons" or strip malls along major arterial streets present a different set of problems. in blocks with high pedestrian traffic, signage might well follow destination mall standards. However, for those areas where businesses cater to vehicular traffic, signs easily discernable and readable by motorists are required. Although the majority of potential customers or clients in these areas may be local and well-acquainted with the businesses located along the strip, at any given time approximate- ly one-third are in transit, and will be lost as customers if the signage is inadequate. Therefore, sign standards for high vehicular -traffic arteries should differ from those with high pedestrian traffic. The freeway system has encouraged development of retail points of distribution, where business is drawn more from the transit traveler than from the local population. To attract the transit cus- tomer, businesses In these areas are almost completely dependent upon signs optimally visible to passing traffic. In considering the economic context of signs and their regulation, the job of all community stakeholders, including those who appraise a community's commercial properties, is twofold. These stakeholders should know what types, sizes, and numbers of signs work best for each busi- ness in each business district, and should cooperate in maximizing economic potential, while keep- ing in mind community character and ambience. And although residential aesthetics should never be applied to commercial zones, well -crafted signs that meet all legibility, readability, and con- spicuity standards for safe viewing and response certainly can be used to create a sense of place anywhere people do business. From central business districts to neighborhood commercial blocks, and from urban commercial corridors to entertainment centers and tourist destinations, signs play a key role in the success of all these sites and their businesses. LAND -USE ZONING AND SIGN CODES CHAPTER APPRAISING THE ECONOMIC VALUE OF OFF-PREMISE/OUTDOOR ADVERTISING SIGNS Outdoor advertising represents multiple forts of commercial expression, and its use has ince ,rse as municipalities have discovered Its revenue potential and "street fumittare" role. Additionally, because of the decreasing number of outdoor advertising strictures, many forms are becoming num•, expensive to the advertiser, especially painted bulletins and illuminated "spectaculars." Generally, outdoor advertising structures possess a real estate interest with predictable or vend able expense/income ratios. Appraisal of outdoor advertising utilizes the three traditional aPProaches — market comparison, income stream, and cost of replacement. However, appraisers Of outdoor advertising will also find that the Effective Gross Income Multiplier (EGIM) is as useful In reaching a final determination of value as the other three methods.rlo This is so because it is usually not possible to find single signs that can be used for comparison purposes in appmising the value of an off -premise sign. Taws, an EGIM lend s itself nicely to appraisal of a sign that is merely one of a number of signs owned by the client — all strategically located to ensure broad coverage of a particular market. I� of .,.i °LpApjn ,°1d lepdrher+d n tlw eanmu y, and rhe cot y^na xoromy, the markee-compa:rwn oppooch mrohas mratul requinn,e„of a teuclure may be eahw is g l0 �mposuble or operm,an If,, ,mPnm c lr tnc s IY carp !`ate coslY PrO —salimi�nusss m lnOxcrei,., ....r -_Z TME VALUE OF SIGNS Basically, when using the EGIM for appraisal purposes, the appraiser will locate a number of pl.,nt sales, take the price, divide it by the annual income, and apply the resulting number to ln:ome capitalization formulas. Preliminary Valuation Considerations: An Overview Defining the Problem lbluation of the Outdoor Structure as an Improvement to the Leasebold the Land or Both As discussed in previous chapters of this book, the owner of an interest in a lawfully erected and maintained outdoor advertising structure is, in most instances, entitled to be compensated for the air market value of the property taken from him by a governing entity. Generally, his Interest in the property will be a leasehold, as improved by the structure. Also, as in most regulatory removal or eminent domain cases, fair market value ordinarily Is measured as the price that the aggregate .Inset — the lease, construction permit, and sign — would bring in the marketplace in a voluntary ,,ale to a knowledgeable buyer, considering all relevant factors."" On occasion, however, the appraiser may be called upon to assess the value of either the lease or the sign, Independent of Tach other. Valuation of the Lease as a Separate Interest In determining the value of a bare leasehold Interest, the general rule is to make the determination by calculating the difference between what the sign would rent for in the market and the rent the tenant is required by the lease to pay over the remaining tern, including renewal options. Theoretically, the present value of the differential calculation reflects the benefit of the bargain made between the ten- v,anulessee and the landlorclAessor, and is typically referred to as the "bonus lue," 112 The present value of the differential (or bonus), however, does not always accurately reflect the market value of the leasehold. This is especially we under the cost -of -replacement approach. Also, in some jurisdictions In which die matter may be litigated, the trier of fact Is told to deter- mine the fair market value of the leasehold by taking into account all factors that might affect :due. Such factors include, for example, potential net income to be earned over the remaining III See 9wssrOltt,, Almota Farmer Elsn alor and warohowe Co. Y. United Solve, 409 U.S. 470119731; Nichols on Eminent D-emn, —t- 11 03, echs+11.03, and tlapser 23, wrinw+ by Mork S Ulmer, Esq. of Miami, Florida, who speciolim in emlresm domain law IMuttho Bender b Co , Inc 1 112 For enunoohon of this rule, tee Oenesully, United Stabs v. Party Motor Co., 327 U.S. 372119461 APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS term of the lease, as well as the potentia[ for the lease to be extended or prematurely temdnaI on the happening of some event. As cautioned throughout this book, the appraiser always should check the prevailing rule oft jurisdiction in which the subject sign is located before beginning the appraisal assignment.li3 Valuation of the Slgn Inde Pe'+vd�rt of the Land Assun-drig no interest in the underlying land accompanies sign ownership or tenancy, some states may consider the sign to be personal property. As such, in cases involving a government taking a sign, compensation may be limited to replacement (or reconstruction) casts, The reasonine behind this compensatory position is based on the presumption that since the sign derives :t, legitimate value from its location, it is merely the personal property of the owner or holder, and therefore, is deserving of only limited compensatory protection. This rule does not apply under the federal. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (Uniform Act), and many state statutory equivalents. Briefly, the Uniform Act provides that for the purpose of determirting just compensation for government acquisi- tion of any building, structure, or other improvement... "such building, structure, or other Improve- ment shall be deemed to be a part of the real property to be acquired...." (Emphasis added) t buil The Uniform Act further provides that the fair market value determination of the subjecd- ing, structure, or other improvement shall be based either on that portion of the value of the underlying land traceable to the improvement or the value of the improvement Independent of the land... "whichever is the greater." (Emphasis added.)' 14 Therefore, when the Uniform Act applies, valuation of the sign does not take place In some "personal property" vacuum, but instead in the context of the sign as part of the realty upon which it is located, with its value to be considered in light of that location. Additionally, the value determination is to be based on the greater of (a) that portion of value the sign contributes to the land, or (b) the fair market value of the sign itself. This first valuation option (a) reflects what Is commonly milled the "Undivided Fee Rule,' some- times referred to as the "Unit Rule." The rule imposes the legal fiction that property is to be valued 113 Sw os ewmpiss, Missouri Don Saw" A sons B Nodosa' Ad -Wiling Co., 635 A. 2d 1092 (1995)' Ohio . v �4"' 923 1 W 2d 489, 494 119961, New Hompshiro: Stas. v. 3M 252 N.E. 2d 872 (19691— on n"'s 6 d v Zimnsemgn, 253 N.E 2d 327, 330 (1969), d Inkewood v. Rogahky, > d lauiuono: stare ooP meat mw hdd rq / of �o"i 0� hod q bona rak s wives mntrpd rat was higher than morkes rerN; Qryx�rmy;v o! rronsporhslion v. �. 571 So. 2d 1306 (19911 — o mss limi M+g rscos+ry b bonus valve. I 14 S" 12 U.S.C., secha1165216)111 o11M UN(arm At THE VALUE OF SIGNS nithout regard to the varying interests therein. in other words, one should ignore the fact that leased property Is, in fact, leased. Several commentators have criticized the rule for focusing on providing protection to the property itself, instead of protection to the property owner. These com- mentators argue that the Fifth Amendment's directive "just compensation shall be paid" is intended to protect the property owner, not the propert.115 with respect to the taking of outdoor advertising structures, the Undivided Fee or Unit Rule appears have been discarded, as unnecessary, by section 4652 (b) (1) of the Uniform Act. This section man- dates a contrary and controlling option: Determination of value must be based on the value of the sign as a separate item of property, if such valuation results in a greater award of compensation and regardless of the fact that an award will be to a tenant/Im4ee and not a landownedlessor.116 The second valuation option (b) currently remains somewhat open to Interpretation. The Federal Highway Administration has interpreted the phrase, "fair market value" to mean "salvage value," or the probable sale price of the sign structure after It Is removed. Federal courts that have ruled on the issue, however, take a contrary interpretive view, finding that Congress meant "fair - market value" to be "the value of the sign struct4e prior to removal." (Emphasis added.) For example, in United States u. 40 Acres of Land in Henry Co., 427 F. Supp. 434 (W.D. Mo. 1976), the Court reasoned: To limit compensation to die 'salvage value" [after] It has been removed from the subject property would render useless the provisions of Section 302 [of the Uniform Act], for where, as here, the... 'salvage value"..,would be nominal or nonexistent, neither the constitutional mandate... nor the over- riding Intent of (die Actl to afford full and fair compensation would be met. pd. at 442.) Generally, given the rulings of federal courts visiting the Issue, it is not unreasonable to expect that the fair market value of the subject sign is to be based on its value prior to removal, and as if owned by the landowner — anti that all recognized appraisal approaches are permissible. Again, however, the appraiser is cautioned to research controlling law or precedent in the jurisdiction in which the subject sign is located. This is necessary for understanding the appraisal assignment and for assuring oneself that the assignment has been correctly defined by the client. 115 Sas NKWs on Eminent Domoin, elwpsen I I ord 23, written by Mork S. Ulmer, Esq. (MoAh Bender & Co., Incl 116 See tomor Corp. v. Cay of Rkhmond, 402 S . 2d 31 (vo 19911. In this ma, in order to ovoid a tide t66o associated wit, non -joinder of IF* t—i. the court hold that a sonont hod 'en ssporom, condemnable Interest' APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS AVAILAOL F- tCC,R BETHESP" oAK b;�innad HosPIT 300 ccmrn�rcid, (s��) 241 The nonstandardiz ed outdoor advertising structure is sized and constructed differently dardixed structure. Also, its display area is customarily loused on o long-term agent to a local advertiser. Its standardized counterpart ed on Y from the (30-60 d.,sl art is g basis through q f" Y 1 through a major advertising agency to o large regional orsnationalor hcorporation,ort periods of Gaining Insight Nature of the Industry Theoretically, the outdoor advertising industry produces a product — a sig device — for a typical seller/buyer market. Ln practice, however, the industry does not sell pros n structure and displ uct; rather, it leases (or rents) it. Thus, In the context of this industry, the term "buyer" generall) refers to a lessee, who is an advertiser. Often, the advertiser is a national corporation, possessin national product or brand recognition; sometimes, however, the advertiser is amore localiz individual small business ed that is targeting consumers from the local trade area only. Traditional outdoor advertising structures are of two types: standardized and nonstandardin Briefly, the nonstandardtzed display specializes in custom messages, which are intended, as a Of local advertising effort, to remain relatively unchanged for a long period of time Ordinarih these structures provide information or direction concerning a local business not too far rem„, from the sign, and are of varying sizes and designs. The manufacturers of nonstandardized sigms are generally small companies with a localized market. Often the sign is owned outright by the advertiser. Because of the National Highway Acts, and many equivalent state regulations, these , signs are generally relegated to secondary and rural highways.tt7 The standardized display system consists shape, of signs produced in strict conformance with size, and Of parameters set and agreed upon by the standardized segment of the industry — large corporations that produce, sell or lease, and maintain structures on a national an International scale. These signs are usually seen in urban areas, on the interstates, and on other 117 Sr Grapier 1: Ineoduction and Overview i 4iie1r . 7HE VALUE OF SIGNS 06m, well -traveled roads. Uniformity in the system is overseen by the standardized segment's principal trade organization and legislative representative, the Outdoor Advertising Association of p,.,cnca (OAAA). While the standardized formats are not mandatory requirements of the OAAA, q0lsy are reflected in the OAAA Plant Operations Guidelftwv Manual.lrx :vature of the Market I:i order for the standardized outdoor display system to compete with other major media — televi- 0?a, radio, and print — the outdoor panels must be strategically placed within and around a tar- geted market area. These market areas are individually defined as a Statistical Metropolitan Survey \[,.i (,SMSA).119 Standardized outdoor advertisers concentrate on the top 50 SMSAs for their large poster and painted bulletin "showings," or groupings of signs, in the targeted area. 120 A typical showing may consist of a combination of 30 sheets or bulletins, eight sheets or posters, and bus -shelter posters or panels. The advertiser will purchase the showing at a cost based on guarantees by the lessor that a certain percentage of the consumer public will be reached. The cost, or price, is set per a rate card, which discloses the price for each display, based on the guaranteed coverage per dis- play. Rate cards are an essential component of every outdoor advertising appraisal. As with any property with a cost or price structure based on expected benefits to be derived in the future, outdoor advertising is sold, or leased, based on expected returns in the fonn of increased rev- enues for the advertiser. The higher the rate of expected return for the advertiser/lessee, the more valuable the outdoor display is to the owner/lemor. In most stases, leasing contracts are handled by advertising agencies. As with other real estate transactions, an agency commission structure is in place. Customary commissions are 16%%, which is a 15% general commission, plus 135% to cover costs to verify that the subject display has been promptly placed and meets all contract specifications. Although advertising agencies based in New York, Chicago, and Los Angeles dominate the nation- al market, local agencies may also specialize in the sale or lease of outdoor advertising. In fact, in some instances, an owner will lease directly to a local agency, either at a set rate or an income - 1 IB T!ro ,kv,&rdnd system ~throughoullitioUnbed SsoAs iodoy was first dsvetaped in Maswchu%oh by Donnelly Oudoa Advertising Company. basad on standards .ggmd by General Outdoor Advertising of New Yak The Donnelly system vros —6 ntondn" in Mossochuseth, and then quickly become A% rra,on's stondord system. 19 The W. ag,nord in the U.S. Cenws Deportment os a population unit of meo—e 1 p Rural onus ore largely ignored by Ase sta dordrtd outdoor oakwh er, primonly because the potential conwmer viewer population is trnall. And the areas ore nor included in moth TAB audit. APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS Percentage basis. The use of a percentage lease, as opposed to a set -tate lease, is increasing in I quency. This trend is due mainly to the decreasing availability of outdoor advertising space — a decrease that drives up the rental income that can be realized from the space that remains. Industry and Market Tkends The outdoor advertising industry is in a constant state of "becoming,- especially as construcdoi and design technology advance, and the medium adjusts to market forces and new players, A present trends: • More and more media mixes are appearing in SMSA showings — especially combinations utilize public transportation conveyances and shelters or terminals, and regional mall or sho ping center "postcard" advertisements. • Compensation levels for regulatory takings are escalating and will continue to do so, prima' as a result of the dawning recognition by governing entities that the income approach to valua tion is the most truly reflective of fair market value. • Multifaced signs (tri -vision) are expanding in use, as are variable -message centers. In fact, vari able -message -center technology is rapidly developing to the point that the unit may soon reach effectiveness measures that are nearly equivalent to those enjoyed by television advertising. • The land -use planning and development professionalcommunity will continue to revise for- mer anti -sign biases and develop ways to utilize signage as both a municipal revenue -generating; device and a positive planning too( capable of enhancing traffic safety and community aesther ics without sacrificing economic utility for the sign owner. It is important for appraisers who are unfamiliar with signage terminology as used in the trade to become conversant in the language before undertaking appraisal of any form or type of signage. A glossary of basic terms appears at the end of this book. The Appraisal Process for Outdoor Advertising The Assignment Today, an assignment to assess the value of an outdoor advertising interest will most Itkcly ar„c From a governmental action that requires the compensable removal or relocation of an existing structure or stnictures. In the private sector, sales of companies, plants, or individual structures Mill ^_ THE VALUE OF SIGNS conducted by very knowledgeable owners and their agents. And the price (or value), while otiable, is generally well-known in the trade without the need to call for a professional With respect to government or public involvement in sign valuation, the initiating act generally p I spring from either one of two sources: the federal Highway Beautification Acts and accompa- jM1ying state compliance agreements, or an exercise of eminent domain power, usually for highway street improvements -121 g A third source of valuation inquiry may arise from investigation by federal, and sometimes state, Ngencies into municipal requests for urban renewal financial aid or "block grants,” For example, :;the U.S. Department of Housing and Urban Development would requtre valuation of all interests, .including business signage, that would be materially affected by the activity and funding. In the private sector, the U.S. Small Business Administration may require valuation of a business sign for inclusion in the asset package put together as collateral for a small-business loan. Increasingly, municipal governments are creating opportunities for appraisers by enacting new sign codes with retroactive application requiring removal or relocation of previously conforming outdoor advertising signage. (As discussed in other chapters, on -premise signage also often falls victim to new sign codes.) Although many municipalities attempt to sidestep the regulatory takings compensation Issue by providing grace periods during which eventual nonconforming signs may remain in place (amortization), these attempts in many rases are being intensively resisted by both local business communities and national corporations and their advertising agencies. Such resis- tance requires, among other things, expert evidence concerning the value of the affected signage. (Remember: When federal acts or funds are involved, amortization Is not an acceptable method of compensation.) Defining the Scope of the Assignment Although the .appraisal letter of employment (or assignment) should clarify the scope of the inquiry and the type of interest involved, this may not always be the case. Therefore, before deciding the direction to take and the methods to be employed In the appraisal, the appraiser must first define what constitutes the property and its ownership interests. In other words, the appraiser must deter- mino if the client's interest is 121 S_ Opti, I Introduction/0w i" APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS M I. an interest in the land (normally aa fee -simple interest); -1 leasehold, but sometimes 2. an intein the sign (nearly always considered' a full ownership interest); 9. an interest in the permit or "tag" that allowed the sign to be placed (generally con< personal property interest); 4. Of a combination of all three (for example, a leasehold improved by an outdoor ad structure legally erected pursuant to permit)_ Next, the locations and numbers of signs enter into die definition. If more than one sign is involve~ the assignment, as may be the case If the client is a national corporation, the direction and method ogy will be different from what it would be if only one sign were involved. And if ion Only one sign is involved, it may be one of many in the area owned by the client, and its remove! may adversely Impact Ute value of those remaining sign-, circumstane will also require a different valuation analysis than in the case of a single sign, owned by a single entity that owns no other signs. Another preliminary determination is the tanking of the subject SMSA. Signs located in the toF 100 markets are not worth the same value as ones located in the top 50 markets. This is because signs in the top 50 markets receive premium value. If an appraiser is asked to value an entire outdoor advertising plant, the assignment will markedly Increase in complication, involving both a real estate interest and business incorne/expense analysis. I addition to real-pt9pe,ty valuation, a total inventory of the plant would be stock, the bill -posting and painting facilities, required the rolling the leases, the office facilities, and all appurtenances. Susi a complex assignment would alert Ute prudent appraiser to seek beyond the scope of this introductory book. However, because valuation of artside expertise; certainly it i-, rarely requested, mast appraisers will an entire plant is very be valuing either single sign-, or relatively small numbers of sigma Effects of Federol Law Upon And for this purpose, the assigrtntent may be treated generally as a valuation of a real estate interest.123 the interest to be Appraised Federal Zones q f /q/)rrence As discussed previously, the driving firrce behind Ure present utdoor averting signage is the federal government, in conjunction with sta ecomplian a agreementstlunder the Highway Beautification Acts. p6, —1uor p of b, bus +haN wry $ a oPWo wr it odnd b oa a du wine +pe wl opprexxhet and methodoloay 6or rt1° � PK 1' wdoor IhIp"M an pate ehalle,y, nPproirnl qW s Mir"^9 For exon• applleo,b,le ur,d teem be odooreeJ b rhe a,sgnmenr *a 1,,,.— a THE VAWE OF SIGNS To reiterate, federal law and equivalent state agreements control compensatory determinations 'sign structures or devices located within 660 feet of the right-of-way of the federal highway sys- a, as well as structures or devices that are to be removed or relocated as the result of any high - y or road project involving federal funds. The federal government does not recognize the desig- ion 'legal (but] nonconforming," if It is used in eminent domain or police power cases to justify ortization in lieu of compensation. In such cases, a sign and/or structure is either legal or die- . Thus, if the sign was originally constructed or placed pursuant to permit, and met all material, ctrical, and structural codes at the Lime, it is a legal sign — and compensation is required for Its luisition or taking. Conversely, if a sign was not legally constructed or placed in accordance It then -prevailing permit and code requirements, it Is — and always was — an illegal sign, and compensation of any kind is due. 1W UxUbm Act While the Uniform Act (officially the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970)123 contemplates at least a minimum recovery of cost of removal and reloca- tion of an outdoor structure taken under condemnation or regulatory enforcement proceedings, it is increasingly difficult for an appraiser to determine what constitutes reasonable compensation for relocation. Not only must the costs of relocation and reconstruction of the structure be calculated accurately, It must be assured that proposed new locatlon(s) have equivalent visibility to passing traffic, in order to generate equivalent income. The latter determination will require an intensive highest -and -best -use analysis in terms of optimum readability and conspicuity factors affecting the proposed new location(s), and the replacement structure's ability to optimally display the copy. For this reason, before one can begin the appraisal process, one must know the exact locations of the proposed replacement sites. Further complicating the matter is the likely fact that the state or local jurisdiction may not per- mit relocation within areas under its control. If a comparable relocation site is either legally impossible to locate (because controlling land - use and sign codes do not permit construction of new structures) or economically unfeasible to locate (because the costs of meeting current building codes make it financially iresixmsible to reassemble Ute original structure or erect a new one), the appraiser will be faced with determining the sign's salvage value. As mentioned earlier, there is some disagreement among governmental entities and their respective agencies concerning whether salvage value is predicated on the 123 So *;M nlerrad b o,16.1970 RA.W.mhon and R-1 M * APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS subject sign's fair market value prior to or subsequent to removal. Given the federal courts' tion on the issue, however, it is probable that compensation for an "irreplaceable" structure based on its value prior to removal.124 Highestond-Best-Use Question If the controlling law, including all relevant material, electrical, and structural codes, permits rel tion and reconstruction of a structure either condemned under eminent domain proceedings or be removed per a statute or code provision, a highest -and -best -use analysis of the proposed ne- location is mandatory.ln The highest -and -best -use inquiry focuses on three primary questions: 1. Does the new location provide visibility equal to that of the old? 2. is the flow of traffic passing the new location equal to that of the olcp 3• Are the traffic (or viewer) profiles substantially comparable between the old and new These variables are readily adaptable to die traditional highest -and -best -use tests of: 1. Physically pouibie (Will the site accommodate the necessary sign?) 2. Legally permissible (Will the controlling law permit the necessary sign?) 3. Financially feasible (Can the company afford the necessary sign, including add-on costs to satisfy stringent material, electrical, and structural codes?) 4. Maximally productive (Will the sign financially complement the company's business plan in Elie area of its proposed new location?) Visi6ility Factors The legibility, readability, and conspicuity factors discussed in Chapter 6 regarding on -premise signage have the same applicability to outdoor advertising structures and displays. Of particular Importance to the efficacy of the proposed new location of an outdoor advertising sign is that it be within the driver's "cone of vision." This is the area in which a driver has a generally clear view ttf 124 See unitid Sates v 40 Apr d Land m He," Co. 427 F Supp. 434 (w.D. Ab. 19761, wpra. 121 A. port d a reiow i OdsMNeirla has lnrt a Modeod000prsa, t the posses and points used on the Nps toast mor ori.. today, and ser s011le hne. wtdoor ettompie, when poWrtO ts mtwory, it d is Pok env, d vera 10 % Isiodie proal m in An cl an and daploy y enveon posh used is Pdokrbosed — o I OOX btoetrpodabb eteditrrn. AM po,nn used ora -d fr. and -its �—.�� THE VALUE OF SIGNS objects in and around the roadway. It is also essential that the permissible sign be of sufficient size to accommodate letters, graphics, or symbols that are optimally legible, readable, and contrasted widT the surrounds. For example, a legibility ratio of one inch per letter for every 25-27 feet of viewing distance from the display is a common measurement. Speed of passing traffic is another cmrssideration. A good rule of thumb is that the faster the speed of traffic, the larger the sign and sign display area need to be. Although assessing the visibility attributes of the proposed relocation site is a difficult assign- ment, the Traffic Audit Bureau (TAB) is one source that can offer valuable assistance. However, access to TAB database information is limited to Its membership, which primarily consists of the large, standardized outdoor advertising segment of die Industry, Thus, if the appraiser's client is not a TAB member, to properly complete the appraisal assignment, it is advisable for the appraiser to apply for associate membership. At time of publication of this book, the annual membership fee for TAB was $300. Biweekly cir- adation reports and database -sort capabilities available on the TAB website (tabonlbte.com) enable media buyers (and sellers) to compare plants within a given market or markets. Also avail- able is the ability to look at Individual location data by using various sorts. Aside from its website information, the only officially published reports Issued by the TAB are the Plant Operator Statement and the Summary of Audited Markets. Although the TAB does not deal with visibility or valuation per se, its system of circulation mea- surements will provide useful analytical insight into the fair market value of any outdoor structure. For example, revised minimum -approach (or viewing) distance guidelines for the auditing of out- door structures were recently developed by the TAB. These new guidelines provide minimum unobstructed approach distances for pedestrians, slow-moving vehicles, and fast-moving vehicles, for eight -sheet billboards, posters, and bulletins, with more stringent guidelines for the assigning of secondary exposure. (As of publication of this book, separate advertising guidelines for shelters were still under consideration.) The new system applies to all approaches: primary, secondary, and tertiary. The primary approach receives the highest circulation credit. Any structure not meeting every one of the new guidelines will not receive any credit for circulation, although it will be listed and included In the TAB audit. In other words, any outdoor structure failing the TAB's minimum requirements will be considered to have failed Its communication function, compromising its value. 126 1261nlvr fion provided fry t WWW Hww* iy, Yke President and General Ma Uw, Trafhc Audi) Bursnu for Medio Msowrenertt, Inc. (TAB), 420 to ,fyor, Avenue, SuiN 2320, New Yak, NY 10170. APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS The new TAB guidelines are as follows: PedestrianVehicular (For all media Slow Speed Fast Speed 55mph and below 55mph and above Minimum Unobstructed Approach Distance (feet) 25' 50' 100' 150' 50' 100' 300' Approoch to be credited only within the lost (feet): 500' 300' 500' 500' 300' 500' 1000' Traffic Flow and Driver Profile Data Traffic counts are generally derived from government transportation department data and are used to compile the Daily Effective Circulation (DEC) data that permits reviewers and investigators to analyze traffic patterns and consumer profiles of motorists passing a subject site. Basically, for any given point, DEC Is determined by the numbers of cars passing daily, multiplied by the numbers 0 persons in the vehicle, as determined by statistical averages. For example, in U.S. urban areas, the: number of persons per vehicle Is averaged at 1.38. Driver profiles are obtained from origin/destination studies, which also are prepared by state departments of transportation and motor vehicles, and private transportation engineers and traffic analysts. The primary purpose of the DEC is to verify to the display owner and advertiser that the subject device is capable of effectively "speaking to" targeted viewers, and that the cost to acquire the tar- geted viewer as a customer or client is a justifiable expense in terns of gross revenues traceable to that consumer. This information is also important to the appraiser, even though not normally con- sidered a pan of his or her research and valuation tasks. As discussed in earlier chapters, visibility and traffic flow are necessary components to analyz- Ing the four basic advertising measures of reach, readership, frequency, and cost -per -thousand exposures. Even then, true effectiveness cannot be measured without reliable data on legibility .�� THE VALUE OF SIGNS `t,W"yW6' ;/6.iw ak +t.filai+tl'a,�es Y:�,s=.y __ ——.ij{sli►�G�.a�tY..Ldf,.lUi.Y and the visual acuity of average drivers in the targeted consumer class. Again, studies by ment or private transportation engineers are the best sources for reliable research in this -a of inquiry. To review, the four basic media effectiveness measures are as follows: Reacb The audience "zone" into which the message is sent — e.g., television, radio, print, and highway signage (both off -premise and on -premise). Readerabip The size of the audience exposed to the message. Frequency How many times the audience is exposed to the message. Cost Of Exposures How much it casts to send the message, calculated in terms of "cost per thousand exposures." The primary job of outdoor advertising is to facilitate consumer recall and top -of -mind awareness of the communication displayed, with the hope of achieving maximum return on investment in the structure or panel itself, the cost of the medium to the advertiser, or both. To accomplish this job, the outdoor panels produced and controlled by the standardized seg- ment of the outdoor advertising industry are deployed as "showings" throughout a defined market, usually an entire SMSA. intensive research by the industry discloses that, on average, poster showings achieve market coverage close to 90%, The larger painted bulletins, generally placed adjacent to heavily traveled, urban arterial streets, and along primary and secondary highways, can achieve 75-80% coverage of the rtt2rket.137 The numbers of times that people living in, working in, or passing through the SMSA are exposed to the outdoor advertising message is tabulated from traffic counts, and expressed as a percentage of the total population included in the SMSA. The percentage is referred to as a Gross Rating Point (GRP). The period of time covered by the audit or valuation/evaluation varies, according to the medium. For print, radio, or television advertising, the GRP is usually calculated for a single insertion. In outdoor advertising and on -premise sign calculations, the .one insertion" is presumed to cover a 24-hour period. Generally, the number of periods mea- sured Is 30 — or one month. Following is a sample gross exposure and GRP calculation. 127 Indus" Fpun, pro idad h'/ am) a ik"* o1 tM Outdoor A&4whs V Anociohoa of Amaim (OAAAI, 1059 M $"W, Suite 1040, wa,hin0lon D C 20036, APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS Calculating Gross Exposures To establish gross exposures, the appraiser takes the following steps: 1. Begin with the average 24-hour (dally) traffic count (ADT). 2. Multiply the ADT by 30 to establish monthly count. 3. Multiply the monthly count by load factors (adjusted for rural, incorporated, or unincorporated location of subject sign). 4. Adjust the calculation in step 3 (monthly count by load factors) using origin/destination trip, to determine those viewers who may actually be considered potential customers. 5. Adjust the calculation again for hours of operation of the business. 6. Adjust the calculation again for seasonal ADT shifts, Sample Calculation for Gross Exposures of One Display Assumptions: I. Traffic volume (ADT): 30,000 vehicles per day 2. Monthly traffic volume: 900,000 vehicles 30,000 x 30 days - 9oo,000 3. Adjusted for load factor: Using the load factor for an incorporated area 1,242'000 exposures (1.38 people per car), calculation of gross exposures in a 30 -day period is as follows: 900,000 x 1.38 - 1,242,000 4. Adjusted for origin/destination trip data: (assuming 75% potential customers) 75% x 1,242,000 - 931,500 5. Adjusted for expected loss of potential customers due to business hours of operation: (assuming 15% "waste" factor) 85% x 931,500 - 791,775 6. Adjusted for seasonal traffic variations: 752,186 exposures (assuming 5% seasonal variation) 95% x 791,775 - 752,186 Gross Exposures to Potential Customers after All Adjustments: 752,186 In a 30 -day period. Sample Calculation of Gross Rating Points (GRP) fbr One Display .Assumptions: 1. Current traffic flow for 24-hour period: 30,000 vehicles 2. Total exposures in a 24-hour period: 41,400 exposures Traffic x load factor (30,000 x 1.38) - 41,400 3. Total population in subject SMSA: 400,000 residents 4. Gross rating points (GRP) formula: GRP - Load factor divided by market population x 100 41,400 x 100- 10.35 400,000 Gross Rating Points: 10.35 for a 24-hour period The outdoor structure in the above example reached a number of exposures equal to 10.35% of 931,500 exposures the total market population during one 24-hour period. Over a 30 -day period, the display would have received a total of 1,242,000 exposures, of which 752,186 would have reached or "spoken to" potential consumers. The cost of these exposures is reflected in the owner/lessor's note card for the subject structure, based on guaranteed exposures for a 30 -day period. Although the GRP is a reliable measurement in average, nondestination urban centers and 791,775 exposures greater metropolitan areas, It is not particularly effective in areas considered destination -oriented. Cities and districts such as [As Vegas and Times Square would be included in this category. The non -local, visitor trade and In -trans!, vehicular traffic is so significant in such areas that outdoor showings or plants concentrate on informational and directional signage that advertises local ___ZTHE VALUE OF SIGNS -��--'-'- APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS attractions and businesses, rather than on broad-based or generic intluential signage that for example, soft-drink products. The Valuation Process The discussion here will proceed as if the assignment were to appraise the value of a single lure possessing a real estate interest_r s Although the appraiser will use all three traditional approaches — market comparison, inc stream, and cost of replacement — these approaches vary in primacy and applicability. For e ple, the cost -of -replacement approach is becoming increasingly problematic in valuation dete nations, principally because relocation of a structure is increasingly difficult. Conversely, beta the scarcity of space for outdoor str uiures, supply -demand dynamics take over, and the into approach most nearly reflects the true value of any given structure or display. As the approaches are discussed, cautions will appear regarding the weight each approach should be given in the final analysis and opinion of value. Cost -of -Replacement Approach Prior to the mid-1970s and the concerted implementation of the Highway Beautification Acts, thel cost approach was based on the proposition that the subject outdoor display could be replaced every aspect. Thus, unlike the cost approach for on -premise signage, which must be based on th� principle of substitution, the traditional cost approach In outdoor advertising appraisal envisioned an actual duplicate replacement structure. The structure would be a duplicate in terms of size and construction specifications, and would be in a new location that provided highway visibility, traf i patterns, and driver profiles mirroring those of the former site. ' The present state of decreasing space for outdoor advertising, however, makes it ext{emely ha, '? ardous for an appraiser to place much reliance on the cost approach, without the availability of a . replacement location that % ries the original in every way. Therefore, before proceeding under the`§ costa he pp ch, the apps » ust first determine whether a comparable replacement site is available Usually, the" cheMvill ha Q khis lnibnmatinn If the client's information is that no replacement site exists or that no replace rat site is possible under the law of the relevant Jurisdiction, the appraised must then V d :u the pty seeking removal of die structure has reached the same conclusion. If,' `5 128 Reminder Ina sso s, ou slrtKtuna me cons -,red P,rsawl Properly ord not a pars of the only upon which 1hy ore Ia'abd In such srosos, shoo whe she goner ,r,0 aushonry nqurres -w—" or .ro"- of on Wdoor *h Nre vndw earcise of e.n�nent —I d or police Power, on l j elocas n -P- dre rpuired in <omcw+nnon THE VALUE OF RIC rat alis is the rase, then the cost approach loses most of Its significance to a final valuation. on the other hand, if the entity seeking removal of the structure believes an appropriate replacement site exits — whether the client agrees or not — the appraiser will have to under- take analysis under the cost approach. The analysis may become especially important If it appears the belief that an appropriate replacement site exists is in error, and persuasive rebuttal evidence must be compiled. For several reasons outlined below, the appraiser will run into some difficulties in applying the approach: Increase in construction costs Today, the old wooden structure has been replaced by steel poles and cross beams, increasing the original construction costs multiple times. Additionally, illumination (or electrical) technology, especially regarding electronic variable messaging, has made remarkable advances In providing visibility and conspicuity; to remain competitive, outdoor advertising companies must utilize this technology, which, for the present, is costly. Current construction, malerla4 and electrical codes Even if a proposed new site is zoned for outdoor advertising, new building codes that were not in effect when the original structure was built may increase the costs of construction considerably, perhaps enough to seriously call into question the feasibility of new construction. Additionally, state jurisdiction may overlay municipal control, and state codes are often more stringent than local codes. Where jurisdictions overlap, the appraiser must check the state requirements thoroughly, especially if a state "tag" is required to construct a structure. Increase to land costs In nearly every locality, land available for a new structure is at a premium, with concurrent high purchase prices for that land. Always, the cost of acquiring the site itself must be factored into the cost -approach equation. Depredation anomalies It is difficult to adjust for depreciation when appraising outdoor structures. This is so because sign companies routinely maintain and upgrade structures, so physical depreciation is difficult to calcu- late, as are economic obsolescence factors. Age -life tables for outdoor advertising structures are also more conjectural than for other types of property interests. APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS The replacement site is not comparable to the original in meeting TAB negtuinemI As discussed earlier in this chapter, it is very Important for an outdoor display to meet all ria if it is to command optimum lease rates. Since the TAB credit system is essentially a pa system, a structure that fails is considerably less valuable to its owner/lessor. Without TAB advertisers willing.to lease the space will want a substantial discount. Therefore, the apprashould make every effort to contact the TAB for a rating of both the proposed new site antype of structure that will be permitted on the site before completing the cost analysis. In that no matter how much money is paid to the sign owner to relocate the sign, it will not be enough to compensate for the loss of circulation and rents commanded by the original. The market does not View replacement cost as an indicator of value The cost approach is very difficult to reconcile with the market and income approaches because sellersAessors and buyersAessees seldom, if ever, consider replacement cost, less depreciation. in' reaching price agreements, 129 In summary, it is often difficult to apply the cost approach to outdoor advertising, and the aPPrOach is especially problematic when no permissible replacement sites exist. However, even circumstances where no relocation or replacement sites are available, the approach retains some validity with respect to supporting the result of other approaches. The actual cost of replacement can be estimated from contractor estimates and land prices, and this information can be factored. at some appropriate level. Market Approach The market/sales-comparlson approach to outdoor advertising determinations of value is the ni : 1 comparable to appraisal of other real estate Interests. This is so because there is a market, and r ;.I! . concerning the market is available. The approach also provides, in tandem with the income approach, an accurate reflection of value. The problems an appraiser will encounter under this approach arise from the fact that one may be 1<,gned to appraise the value of a structure that is a component of a showing or plant, rather than a ,i acture functioning alone, without any "neighbors" or "showing partners" similarly deployed. The market data on a single structure can be easily compiled from its sales or lease history; this ;iformation will certainly disclose what the market thinks the current value of the sublec[ sign is. ,o find signs and data for comparable structures is not quite so easy. It is, however, possible. A r,nef checklist for locating comparable structures follows: I. Locate and list similar sites within the subject sign's trade area or zone of influence. These sites must demonstrate visibility, traffic flow, and driver profiles closely comparable to the sub- ject structure. The comparable sites may include those that are one of a group in a showing, as well as single -unit sites. 2. Describe the type of sign on each comparable site (elght-sheet poster, painted bulletin, etc.). 3. Define the real -property interests represented at each site (for example, the owner of land or building upon which the display is attached and ad leasehold interests). 4. List the transaction history of each site, from date of first sale or lease to the present. Carefully review all sales or lease agreements, and verify their terms and conditions. The lessor generally will always renew short-term leases (usually 30 days), but the lease rate may increase with every renewal, as demand continues to outstrip supply. Consistent increases in lease rates offer substantive evidence of the high value the market places on existing stnu'- tures and displays. 5. List other property that may have been Included In the transactions and that contributed to the sales price (for example, if the underlying land was part of a purchase, did anything go with the purchase, such as rolling stock, trucks, or other vehicles). 129 in iw early 19701 , the Federal Highway Admm,s►oeon (FHWA) encowoged ..ores so use poyme„f scheds,lu bo.ed � depredated cosi,n 6. List any property that was Included in the transaction and contributed to the sales price, but o `t"n"d � 0the by FHWA,d Poli d � appraiwb and d.w,",.,,ceson of s i,rmo lihsatlan n,i, policy poo, which does not contribute to the lease of the subject sign (for example, a sale or lease of the lahons adaPW in 1974, 29 C.FR., section 750 �p,eP TM Manual, PPM g45 2. puelitlied in 1972, and by ffIWA'e implernsnlatim, d raga. departnsents olthe various .kites; however 1M PaIK1' ,,,ae not y ""os P"n"'t°a 4s-4 agfeen1eny hen.�en The FHWA and the hip _W structure included other property that has a use unrelated to outdoor advertising, such as a resi- wmpensahon For low-incomrpraducing signs in nnol oreos, ori s def could be 6y nic s"B^ owner While k,*dq-sialed cast ii 'revere Ifbf world be bet Iron the rnmovol of k � "'1oc01d• it 6J dra.ecoty .loci of win night ' lir dentia! rental unit or office building). If this is the case, downward adjustments reflecting the 'gtr'^comrpraducing signs m urhm areas pensahrsg Fx *w value of the other property interest must be made In the sales price. 7. Examine and account for the underlying land lease, if any. Generally, a long-term land lease'' lends more value to the subject interest than a short-term lease. Also, check the cancellation clause, especially for those events that trigger early cancellation, such as a transfer of the lease:: hold to a third party or acquisition under exercise of government police powers of eminent domain. (A "quick trigger" will reduce the value of the leasehold.) 8. Investigate and account for goodwill and noncompete agreements. Goodwill is sometimes reflected in a sign sale or lease transaction, and a specific dollar amount allocated to it. A compete agreement may restrict deployment of similar signage within a proscribed area. Generally, a noncompete clause will reduce the value of the leasehold, as it may prevent Ti subject structure from participation in a showing. Inmost markets in which standardized outdoor advertising is sold, local sales and maintenance, are available to assist in gathering market -comparison data. If the local staff is reluctant to pro%., Information, the appraiser may look to the OAAA for assistance. With regard to nonstandardizcrl structures, the client, or client's agent, should have or be able to obtain the requisite information: Income Approach The general rule regarding the valuation of income-producing property in condemnation proceed- ings is that the Income approach is a valid and acceptable appraisal method, provided -that the anticipated net Income to be derived Is adjusted to present value — a process normally referred to as "capitalization" of the income.13U It is self-evident that outdoor advertising panels produce income, for both the owner/lessor and for the purchaserAessee. And in the aftermath of the federal Highway Acts, owners of interests in outdoor advertising have asserted that the value of the varying interests in outdoor advertising structures is best defined by the income the structures produce or are capable of producing, as i, the case with all other income -generating real -property interests. While states, In the early years of compliance with the federal Highway Acts, often argued that income from the rental of billboard faces was noncompensable business income, thereby rendering the income approach to valuation unacceptable, many courts confronted with the issue have found to cine contrary, In other words, the trier of fact has been allowed to consider the income generated 13OS"Worally, 4 Nichola a, Emirrenl Clxnoin, sections 12 $ 08, 10 hlo"6w ( tr.rncler a Co., Ina.). ® THE V AL_UE OF SIGNS ,e rental of the sign face to the advertisers when assessing just compensation. 131 Additionally, courts considering the use of the "capitalized" Income approach have permitted it.132 aairfly, the concept that the income approach is a very reliable way to determine value is not ,un to those who appraise income-producing property. Apparently, neither is it foreign to the that have visited the issue. And finally, it has been accepted by the Federal Highway ii stration — an acceptance prompted in large part by the decreasing availability of truly compa- ,,t! az relocation sites, and concurrent decreasing applicability of the cost -of -replacement approach. Following is an excerpt from the latest Federal Highway Adminstration decision regarding valua- methods: ,ffective January 20, 2000. the Federal Highway Administration's property acquisition regulations were revised to reduce Federal mandates on State practice. (.See 23 CFR 710.) Eliminated in these regulations was the requirement that Federal participation in compensation to a sign owner for the full fau-market value of the aggregate asset taken be limited to Items 'generally compensable in emi- nent domain.' Federal funds may now participate in any right-of-way expenditures a State incurs In accordance with State law and court precedent. This means that so long as the guarantees of the Utriform Relocation Assistance and Real Property Acquisition Policies Act are met, Compensation based on any method of property valuation that is ,:msistem with Sate law will be eligible for Federal participation. The PIMA's 1993 policy guidance 131 See City of Cleveland v. Zinaror nam, 253 N.E 2d 327, 330 tohio Prob. Ct. 1969) — an apportionment proceeding in `^'hid' the cant marded,i+e a,,mcipoled imccome from rental of the advertising faces for Ane term remaining on the Ice", tat anticipated GxPwm far ground cert, marroervo ce, and monogement. See also. Arkansas Stab H4nvoy Commission v. Cash, 590 S W. 2d 676 (Arte. Ct. App. 1979) — in refecting the tai s orpiment nat incase train the odrer6ter constimed moans from a business, the court said, 'Here vve an dealing wilh net income from the property, wmmhkrg that would be the prim consideration of any prospodive purchaser of income-producing land. The evidence does rat rppori she Istate'sl conhnlion that the Incotrne in this rase is of the Miss derived from a business located on Aro land' (a 678). In Eller Qrtiow Advertising Co. of Anmrta v, City of Scolsdals, 579 P. 2d 590 (Ariz. Ct. App. 19781, the Court concluded Asst the imcane approach v the best method of voluofion when a billboard cannot be relocated In a given morkst ora because 'blllbuardlocations sou u'IgAw uie and a is virta/�j impossible a separate location from Ars structure, even though IM billboard is deemn ed peonol property Umidse 596 -evil For a bre case. see Notional Advertising Co. v. Stale Oeposrrremr of rrnspabaan, 611 So, 2d 566,570 (Fla Cs App. 19931, in which the cams held 'y,e mncome approach may now be used Iwhers o billboard's location is unique and is cannot be relocated); thereby reversing a prior 1984 damson aha the income approach cardd nes moans was be used bec new Aro nnes generobd from the land itself, but instead, Iran the bud mss cveresed an Aro land. See also, National Advertising Co v. Slab of Nevada, 993 P 2d 62 INer, Supreme Cs. 2000), to which the court held Aar vi_ evidence clearly aabfrhes aha the billboards or ,n valuable, unique locations. and cannot be rdocalad on comparable sites within the merrier aro. 'Aro incase nroAnolology should he used in order to foirly compensate 16 Advernung Companies.' (Of 66 ) 132 For eamVie. ye Arka,sas v. Cash, wpra; Aro court approved use of capitesliernion of incnmr. as well as its rriprml—a met income =_se also Nohool Ach,".ing Co. v. Slob of Nevoda, wpra. APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS �_ _ lmemoranduml... has been polity guidance largely outdated by the l)anuary 20, 20001 regulatory changes.. and the l hw3 no longer limits the amount of Federal participation for the acquisition of billboards 133 In the income approach, the appraiser must arrive at estimates of both contract rent and market rent. Because of the scarcity of billboards, Occupancy factors are essentially tion; unlike other income-producing Irrelevant to the aqua distance and circulation criteria properties, an outdoor structure that meets TAB approach - is seldom vacant. Outdoor advertising structures are nmecommonly erected on leased land, and when they sen, they are transferred by assignment of lease or bill of sale, rather than by a deed that later appears as public record. Therefore, it is sometimes difficult for the appraiser to obtain comparable sales W, matron for a sign or group of signs (a plant or showing), as the outdoor advertising industry tends to be reluctant to share sales information. However, the task is not impossible, especially if the client is one of the larger outdoor advertising companies, and presumably interested in obtaining maximum compensation. Such companies will provide all data necessary to the income approach, In the event the client is a satin, possibly one -structure interest holder, the appraiser will have t, rely on client records (for contract or lease rental history) and outside assistance for comparable suuctures/sites in the market. Local Outdoor advertising salespeople will generally provide current rate cards for signs in the relevant area, and local commercial real -property brokers also should . The OAAA may also provide Information, as have Information pertinent to market sales and rents well as financial publications such as 75e WaU StreetJourna! and Adue»xsing Age.There is an important consideration that appraisers should keep in mind. An Individual board's current rate card, while very important to the income approach, should not be taken as the sole indicator of value without investigating all variables that affect die current rental rate. For example, a structure that is part of a showing and enjoys prime visibility may lease for a rate lower tha„ other boards in the showing because its presence increases the Income potential of all the othh boards, In other words, It is the carrot that induces advertisers to pay more for the remaining boards. On the otter hand, signs that are 250-300 square feet are often sold or leased as a sin unit and not as part of a showing, because as single units they generate more Income. In chest• cases, the larger size provides a lot of space for copy, giving a one-shot advertiser, for examplt maximum visibility (or return) on the dollar. 13J -n.1h R. Wylde, Administra,tor, U.S Dapareastar re` o in9 b inquiry by U.S. Represeatmny Bud a� �1Oµan f frees Highway Administrationiand iFHWAI, in o knr dosed 0a/ 17/00, 9"W"" policiro limiting valuation o) outdoor hrrrgn, Committee an Transporolion and Infra, regarding FlAYA's wLloyd odrw^ung sxuc7ures and Iso +Nn >ehold interosh o rhe -roti approach," .1v THE VALUE OF SIGNS •,iW,Y.wt�L&J,'.ara other variables affecting rental rates of individual strictures include the purpose of the display, Which is usually either (1) to communicate InfomiationaVdirectional messages that may have immediate or near immediate pertinence, or (2) to influence a later choice or decision by reinforc- memory. Also, one board may be standardized and another nonstandardized. nemographics in the SMSA will affect choice of comparable structures and sign -face rental rates (for trample, potential growth or decline in population, household income, or the employment base). Determination of the highest -and -best use of the underlying real -property site is a factor, especially if s-nl land -use laws are changing to accommodate residential development or district renovation. n further variable may be Introduced when the rate card does not reflect the fair market value (,)i income potential) for the owner of both the underlying real property and the sign. An example of this variable, taken from a real case, occurs when the "ground" owner is receiving rents from the outdoor advertising company that are nominal compared to the rents the advertising company is realizing from its sub -lessee advenisers.ls+ Always, in the income approach, as with other approaches, it is very important to research an variables across the market. Applying the Wame Approach MetbodolW Because most outdoor advertising structures today are standardized and deployed by large com- panies, applying price -per -sign -face and/or price -per -structure data to the problem is not truly reflective of value under the income approach. Instead, the appraiser must look at numerous trans- actions across the board, and review and compare sales data and rate cards on a national scale. This is necessary whether the appraisal assignment is for a single board or a group of boards. f4stabllsbtng Operating Income In general terms, operating income is the income that remains after all expenses are paid — main- tenance, posting, painting, installation, and land lease. The standardized outdoor advertising indus- try has very consistent data on expenses, and is generally willing to share this information. For 134 II at the lime of entering into a lents, the ktwr/ladawn m, is nor knowledgeob4 regarding rhe value of an outdoor structure an his property, the ground leave may not retied the price a willing, knowledgeable buyer god a willil knowledgeable seller agreed upon. In such cares, an approisw will find use of o rate mrd probleawtic, portkvIody it the diens is the less/lombwne. APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS example, electricity costs for illuminated signs can be easily ascertained, based on illuminatie types or units per sign. The appraiser stabilizes the income statement for the subject outdoor advertising structure: Arutuallzed Income Statement (Stabilized) Potential Gross income Less Vacancy / Credit Loss Effective Grass Income Less Stabilized Expenses: Leasing Expenses at 16.67% Ground Lease (646) Sales Taxes: State Sales Tax 8 5.0 % City/County Taxes ,g 1.0% Business Occupational Tax (state) 0 0.00470 Business Occupational Tax (local) ® 0.00125 Property Taxes (Sign Only): Consolidated Property Tax County/i'ownship Tax Municipal Tax Electrical Maintenance Administration Fee (3%) Miscellaneous Total Estimated Expenses Net Operating Income (NOI) __Z THE VALUE OF SIGNS $30,000 0 $30,000 5001 1800 1500 300 141 38 25 5 5 240 1200 720 900 .11,875 $18,125 No production costs for the advertising messages are. Included; typically these costs are ;ed through to the leasee. in the current market, vacancies are almost nonexistent. New copy be installed on the signs in a matter of a few hours. After an analysis for capitalization rates appropriate for investments similar to the subject property, the appraiser reconciles to an overall rate of 9% to apply to the Stabilized NOL Using the basic overall rate calculation: NOI _ Value Rate $18,125 _ $201,389 Rounded $201,000 0.900 Selecting the 4 ective Gross Income Multiplier (EGIM) in the outdoor advertising trade, the EGtM is the calculation of choice to determine sales or lease prices. If the entity seeking sale, lease, or just compensation is a small, local company, the EGIM for a few boards, and maybe just one, will reflect less income generation than that commonly enjoyed by the boards of the national companies. Sometimes, the local company will generate only 5096 of the income earned by the larger corporations, and this differential may be increased if the larger cor- poration's presence in the subject SMSA is employing a media mix that includes, for example, pub - tic transportation and facility advertising panels or displays, or mail signage. In the income approach, the EGIM has been developed to reflect the market. Take the following example. Ten outdoor advertising structures generating $2500 monthly each or $300,000 effective gross sold for $2,460,000 three months ago. The EGIM Is 8.2. The second sale of 20 outdoor struc- tures generating $480,000 effective gross sold for $3,456,000 12 months ago for an EGIM of 7.2, The third sale of 15 outdoor advertising stntcnlres with effective gross income of $504,000 annually r ('I sold six months ago for $3,780,000 for an EGIM of 7.5. / Boards Effective Gross Sale Price Sold EGIM 10 $ 300,000 $2,460,000 3 mos ago 8.2 20 $ 480,000 $3,456,000 12 mos ago 7.2 15 $ 504,000 $3,780,000 6 mos ago 7.5 Totals $1,284,000 $9,690.000 Average- 7.55 APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS ® J Applying the FGl y factor To continue the simplified example, the three groups of outdoor advertising were in similar ShfSA's and after lnvestil;astructure sales at tion and confirmation, the sales were considered ma transactions. The sales represent only the price of the structures themselves. The outdoor stru, were in good locations and the market has been stable. The EGIMs show a range of value between 7.2 _ 8.2. The multipliers are reconciled to a sin number based on the appraiser's judgment of the sales and how those sales compare to the a door advertising structure under consideration for a value estimate. The subject outdoor advertising structure has been generating $2,500 monthly or 530 000 annually. A rent analysis demonstrates that the rents are market based. The Mange of value e mated for this board based on the other EGIMs Is reconciled by the appraiser applying a weighted average to the sales: Subject's Sale ]Effective Comp Gross IncomeWeighted BGLW'° $30,000 Average z $30,000 x 8.2 7.2 50% - $ 123,000 $30,000 x 7.5 15% $ 32,400 35% - $ 78,750 TOTAL 1100% ---- $234,158 TOTAL Rounded $234,000 Summary and Reconcliiatlon [n sum for this example, two income methods show a range of value for the su Analyzing with the effecttve gross income multiplier, the value Is estimated at $2000. A Pr pert) the .stabilized net operating income, and applying an overall rate of 9%, the value is estimated at $201,000. The appraiser reconciles both approaches. In this example 75% of the weight is given t' the NOI analysis, and 25% is given to the EGIM: THE VALUE OF SIGNS $201,000 0.75 - $150,750 1: $234,000 0.25 - 58,500 $209,250 Rounded $209,000 al value estimate for this example is reconciled and estimated at $209,000. The preceding analy- is for demonstration purposes only. Both the income approach and use of reconciled market- ed EGI multipliers are Important in signage valuation assignments. APPRAISING OFF-PREMISE/OUTDOOR ADVERTISING SIGNS CHAPTER APPRAISING THE ECONOMIC VALUE OF ON -PREMISE SIGNS With the exception of temporary signs, all on -premise signs are part of the real property n which they are affixed. Because of this, valuation disputes involving signage usually cannot h, resolved equitably without the assistance of certified real -property appraisers. in addition, calculating the potential economic impact of a proposed regulation or "public i, pose' taking of property affecting signage requires an expert assessment of value by a qualifie,I appraiser. It is in this context that the Fifth Amendment question of compensation arises (see Chapter 5). Statutory mandates concerning appraisals and appraisers such as USPAP have provided a wa% ETHE VALUE OF SIGNS establish real estate value that can stand up to administralive or judicial scrutiny. The increased ability to establish realistic value is particularly significant in litigation involving governmental tak- ings and compensation. Additionally, the federal government, both as a direct lender and a loan guarantor, is becoming more involved in investigating and, when necessary, preventing or punishing local land -use actions that would diminish the value of assets securing a federally backed loan. A restrictive sign code that has retroactive application is increasingly likely to be one of those actions that federal lenders will punish, usually by denying federal loans or grants to the offending municipality. At present, there is no single U.S. Supreme Court precedent that covers all signage -related cases. Each case is reviewed on its own facts and merits. Thus, governing bodies do not have a clear picture regarding the legal consequences of regulatory takings or of compensation choices or calculations. However, it Is obviously sound public policy to understand the economic Impact of a government action. Certainly, there is a significant "need to know" regarding the impact any proposed regulation will have on the value of a real -property interest, because a private citizen or entity cannot be unduly burdened for a public purpose without just compensation. Additionally, local public offi- cials increasingly are concerned that the negative economic impact of a regulatory taking of previ- ously legal business signage may lead to loss of federal funding or underwriting and, therefore, loss of local commercial loans. Expensive litigation between governmental entities (usually municipal) and private parties over diminution in real estate values dile to a government decision might be avoided if the resulting economic impact on both public and private interests could be specifically determined. With the advent of USPAP, this is now possible. Choosing Between Appraisal (or Valuation) and Consulting (or Evaluation) to Resolve Regulatory Issues A signage regulation dispute will usually trigger a valuation question. The appraisal (or valuation) process provides a way to answer the question and thereby assist in resolving the dispute. However, an appraisal has some limitations because it is grounded In the unbiased opinion of the value of a spedAc real estate interest on a specific data Further, the appraisal Is undertaken and completed at a time when similar uses of real estate exist locally and can be used as comparisons in support of the final value determination. Obviously, any change of use or 'activity" occurring after the date of the appraisal can substantially alter the value of tite real estate interest. Establishing value is (or should be) essential to a governing body attempting to estimate the APPRAISING ON -PREMISE SIGNS ® t, IFs impact of its signage policies or regulatory decisions. Litigation ma . be {; lic authority or the affected sign Y prevented if either the ' gn owner, or both. Fust explore the issue through an evaluation consulting process, which Is not regulated or formalized to the degree of the apprahW or ation process Also, while many appraisal techniques are applied in an evaluation or consultin'' assignment, the evaluator is not required to reach a final determination of value. Nor is he or sh Prohibited from advocating a particular point of view (as opposed to an appraisal, where opinio of value is required to be a neutral expression). Examples of evaluatlon/consulting assignments include the following: Marketing Study At the most basic level, establish the size (or dollar volume) within a defined population of a market &'nefit/t ost Aealys/s Juxtapose costs and expected gains. Absorption -Rate Shady Determine the period of time it will take for a market to absorb certain. f goods, products, or services then available or potentially available. >a Feasibility Study Ascertain consumer preferences and whether a market exists. Risk Mamageseew Determine the probability of an event happening, offset by management control variables; establish value based on one changing variable. Higbest and Best Use Determine the most productive use pf a real estate parcel. penO8its/Des �ioStudy Research driver travel patterns in a particular locale during a flnit, studyod Of time. on trip categories (such as to/from work, to/from shops, or non-locai Passerby) and �adjust for daily commuting rig and seasonal traffic, Simulation Model Create a set of variablesthat will predict performance. µrf Signage -related consultations or evaluation studiesare effective only at the prospective level r (before enactment of the regulation or litigation due to the regulation). For example, if an evalm, i, for arrives at a conclusion different from that advocated by any contendin a tv Bary• step is a formal appraisal adhering to USPAP standards, g part the next neces- Overview of the Valuation Process llte Appraisal institute (formerly the American Institute of Real rate A lishes a manual of appraisal standards and practices entitled Tb Es PPrauers) periodically Pub - 73 of the 10th Edition Appears PPraiW of Real Fatate. On paitc PPe' an outline of the basic appraisal process. The Outlined procedure applies equally to standard appraisal of real property and improvements, and the specialized appraisal of a site's visibility component, which for commercial properties includes signage. Table S charts the process for appraising real estate. THU VALUR OF SIGNS AAAA A Table S. The Valuation Process Definition of the Problem fication k6tificatian Date of Volue use of Definition Other of die Estimate the Appraisal of Value Limiting :stale Property Rights Conditions to Be Valued I 1 Preliminary Analysis and Daft Selection and Collection Gen" Specific (Subject and Comparables) Social Site and Improvements Economic Sales and listings Government Cost and Depreciation Environment Income / Expense and Capitalization Rate Highest -and -best Use Analysis Land As Though Vocant Property As Improved Land Vahw Estimate Application of Mie Three Approaches Sales Income Cost Comparison Reconciliation of Value Indications and Final Value Estimate Report of Defined Value APPRAISING ON -PREMISE SIGNS M rwiGiino r :� An overview of the appraisal process as it relates to signage provides additional insight I - Definition of the Problem In valuation, the first step is to determine and define the appraisal problem. For example, the appraiser must identify property, property rights, type of value to be analyzed, and final use ,Irl + Purposes of the appraisal. On premise signage valuation and evaluation assignments can vary significantly. Almost ur formly however, they are classified as "complex assignments." Beginning licensed appraiser> are not state certified for complex assignments should not undertake signage valuation assign- ments. Via direct supervision, a certified appraiser may allow the interested licensee the opporturiL ty to assist with complex assignments. When considering an appraisal assignment that calls for valuing signage, several questions need to he answeredt35 to focus and define the assignment and its scope; 1. Identify the client and other intended users 2. Identify the intended use of the appraiser's opinions and conclusions 3. Identify the Purpose of the assignment including the type and definition of value to be' developed 4. Identify the effective date of the appraiser's opinions and conclusions 5. identify relevant Property characteristics a. Its location and physical, legal, and economic attributes b. The real property interest to be valued c. Any personal property, trade fixtures, or intangible items that are not real Property but are included in the appraisal d. Any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations ordinances, or other items of similar nature e. Whether the subject property is a fractional Interest, physical segment, or 6. Identify the scope of work necessary to complete the assignment partial h i 7- identify any extraordinary assumptions necessary in the assignment 8. Identify any hypothetical conditions necessary in the assignment 133 Many of qaeled(wUSPAP 200k1 EdditiopndeIvlutdxOfUSPAP, b.,mUSPgP trordt.a.d tgu1 * 16 liroter aal randavaNoall , ti>d arrgnmenh ecu.,,, c v,de n>Icrrstde 'prestos,- ortnres..cy b opuorsrs bn4su7, and ,o4,avn,, yam_ THE VALUE of SIGNS also requires appraisers to identify and analyze the effect on both use and value of the land use regulations, reasonably probable modifications of such land use regulations, eco - demand, the physical adaptability of the real estate, and the market trends. types and Property rntervsts sign industry and judicial or administrative tribunals recognize three sign categories: 1. Off -premise (or third party/outdoor advertising) 2. On -premise 3. Miscellaneous (temporary and incidental) CAL11 category represents a property Interest, although it is sometimes difficult to identify what specifically that interest Is — real property or personal property. r nerally speaking, a permanent on -premise business sign Is considered an accessory use of its representing a partial real estate interest. On the other hand, in most jurisdictions an outdoor advertising structure is deemed a primary use of its location, carrying with it the full bundle of rights iated with most fee -simple interests. Therefore, depending on type, ownership, or location (or ,',I ,hree), a sign in the generic sense may possess one or more traditional property interests. For example, a sign may possess nothing more than a present contractual interest; in most rases, however, it possesses a license, an easement, a leasehold, or a Fee -simple interest. Funher, a ,1Glc sign may be subject to more than one legal interpretation regarding the legal rights of its ,wncr or lessee. State Lau, and Property Interests/Legal Rlgbts State law may play a significant role in defining the legal interest represented by an on -premise sign. For example, a freestanding sign may be part of a leasehold interest because it is on site, or, if it projects over public space, it may possess only a license interest. Because of differing legal treatment, It is imperative for an appraiser to carefully check local and state law regarding the legal standing of a site's sign or visibility component before completing the appraisal. The following example of differing state laws clearly illustrates this point, in Indiana, a sign anchored on private property is accorded a leasehold or fee -simple legal interest, whether or not it projects over public property. in California, the opposite Is sue — a sign that projects over public property is entitled to nothing more than license protection, regardless of where it is anchored. Thus, in Indiana, any rezoning that would result in the taking of a projecting sign APPRAISING ON -PREMISE SIGNS requires compensation to the owner. However, in California, this same takingof the publl ii Projecting, but privately anchored sign would be considered a loss of "mere license" and, noncompensable. There is one important caveat to this local/state rule: If federal funds are involved in any compensation for the taking of any on -premise sign should be considered obligatory. 2. Preliminary Analysis, and Data Selection and Collection Comprehensive data selection and collection are critical to every appraisal, but especially to si nage appraisal. Certainly, preliminary analysis, and data selection and collection methodology i nificantly impact the quality of the valuation ass' little benefit to anyone, and in many instances, may gnmeeA completed but flawed assignment 1 Y create additional problems. Appraisers must gather both general and specific data. General data includes trending infomra ttil on the four forces that influence value. In appraisal and real estate theory these are also humoro referred to as the GEES forces; G -governmental, E -economic, E -environmental, and S -social. of, course, specific data on the subject property and comparable properties must be collected as well, A critical factor in evaluating the contributory value of a site's visibility cora understanding of the general public's need for a communication system, as well a the specific communication need of the individual site. To that end, the appraiser visa must analyze the relevant sign code(s), which may regulate nearly every element of a site's visibility component. In any appraisal of on -premise signage, the appraiser should keep in mind that he or she is n6 establishing the physical value of the sign itself, but rather the value Of the sign as part of the siti Visibility component While the appraisal technique and primary approach used may differ in the valuation of oil premise and off -premise signage, some crossover generalizations are possible. For example, anappraisal of a high-rise on -premise sign is more manageable when the appraiser understands nearly identically to both sign tthat such signs function similarly to outdoor advertising structures. Potential customers react ypes. Additionally, customer profiles and capitalization rates developed for the outdoor advertising user can be equally relevant to valuation of the high-rise on -premise sign. The $(feet of,Sign Regulatirns ore the Valuation Process A de facto on-premtse sign ban occurs when a sign code sets size, height, illumination, or place- ment specifications or limitations that render the sign no longer rte. le w discernable by the average viewer under typical usage conditions. _ I �� • THE VALUE OF SIGNS A sign needs to be both conspicuous and readable to serve its intended purpose — that is, to nvey its message. Thus, for example, when the practical effect of a sign code is to downsize gigns to the point where they cannot communicate to their intended targets, these signs become �leutralized, and the result is comparable to removal. €" Recently the city of Euclid, Ohio, demanded that real estate signs be reduced in size and dis- olayed from the window only. The city lost the resulting court battle and was ordered to pay near- ly $309,000 in attorney fees and costs to the plaintiff. 136 t in ruling against the city, the court pointed out that time, place, and manner regulation must 'minimally guarantee that an affected sign remains readable to a typical user — in this case, the res- idential real estate buyer. 3. Highest -and -Best -Use Question: Is the Subject Sign Readablo? re the value of any real -property interest can be established, an appraiser must first determine the profitable use of the property, both as it exists currently and as it would exist if it were vaunt ready to develop. This process involves a four -pronged analysis. The proposed use must be 1. Physically possible 2. Legally permissible 3. Financially feasible 4. Maximally productive To address the contributory value of the subject property's on -premise signage, the highest -and - best -use analysis must demonstrate that sufficient signage exists (or can exist) to allow the business In question to operate normally compared with similarly zoned and regulated sites. The issue turns on whether the existing or proposed sign can he detected as Intended and whether the sign's can - I,, it , opy, graphics, or both) is able to co►nmunicate as intended. if the sign Is capable of detec- tion and communication as intended, then highest and best use has been attained. on the other hand, if the appraiser determines that the existing or proposed sign does not meet the visibility and readability (or legibility) requirements for effective communication, the appraiser must first determine U the necessary signage can be erected given the location, layout, and sur- rounding topography of the subject site. (Per Test 1, is it physically passible) 136 eland Area Board of RMlun r. City o✓ Euclid, 965 F Supp 1017 IND Ohio 19971, stow. 1n sum, IM Court awards CABOR 1308,825 70 in ottorneyi is s and cons pursuant to 42 U.S.C., wolon 1988,28 U.S.C.,.00n 1920, Ord Fed. R. Cir, P. said).•• APPRAISING ON -PREMISE SIGNS If the answer to Test I is yes, and the necessary signage can be, or already is, erected, the appraiser must then determine if the subject signage, under the controlling sign code, is legally Permissible (Test 2). (Note: If the appraiser discovers that the existing sign code does not permi adequate sign placement, size, or both, the appraiser should consider a code exception, or vari ance, as a possible solution to apparent prohibition.) ;; If the necessary signage passes Tests 1 and 2 — it is physicaliv and legally possible — then th. appraiser must consider the cost of construction and whether it Lc affordable or economically f"' ble for the owner (Test 3). If these fust three tests are answered affirmatively, the appraiser must finally determine die most ^oily productive use of the subject property — the maximally Productive issue raised by Test � With respect to the signage -valuation part of the appraisal, Test 4 involves questions of sign size legibility or readability, and conspicuity (a sign's ability to stand out from its background). Clean if the subject sign cannot be detected and read in time to permit a motorist to brake or change lanes and safely enter the site, then the site cannot reach its maximum productivity. The reason ' obscured or limited visibility may be due either to restrictive sign ordinances or topographical con- straints. Notwithstanding the reason, however, the site cannot perform fully at highest-and-best-u4l'` levels, making it less valuable, as a whole, than a site with average or better visibility. Before making a determination regarding maximum possible productivity, the appraiser must separate marketing needs from signage needs, and thoroughly understand a site's visibility compo-.`. nent — the "whole" and its "parts." And always, the local sign code will impact the analysis, parties ularly sign size, placement, and illumination regulations.l» 4. lond-Volue Esfimate Estimated land value must directly correlate to any reconciled highest -and -best -use determinati,,„ For instance, if a real estate site is zoned commercial, and the appraiser determines that the site,, highest and best use is residential, the land -value estimate is based upon the residential use an,I must accordingly reflect residential -use values. When signage valuation is part of the equation, the general rule of thumb for commercial zone, districts is as follows: The more signage permitted on the property by the municipal sign code, du more valuable the property. Conversely, If the zone is denied optimaliv visible and readable signag; under the controlling code, the property Is less valuable. Dearly, if an area is zoned commercial, k 177 Por rIM110Mtr/likiii guidelines, see the Federal Highway Admmistrosion% Asonuul on ,A*.iam TMIg, Conal devices, wpro, compmeon tewah. ThiE VALUE OF SIGNS tyle businesses located there are prohibited effective cornmunication to the street, the zone cannot uncdon properly. and both the improvements and underlying land must be devalued accordingly. If outdoor advertising is involved in the appraisal assignment, because such signage generally represents 'one use among many" of the subject property, a difficult question may be posed for the appraiser Will the presence of the outdoor structure negatively impact the total value or other uses of the property? The answer is, "it depends." (See Chapter 7.) 5, The Three Vakration Approaches and Applications in the absence of unusual or mitigating circumstances, an appraisal requires using three different approaches to arrive at a realistic value determination: (1) market comparison (comparable closed sales or executed leases), (2) anticipated income, and (3) cost of replacement... and many times, sub- stitution. (We will examine these three approaches more closely in the next section of this chapter.) 6. Reconciliafion of Value Indications and final Value Esfimafe Oil three valuation approaches arrive at value indications using different market data. After each approach is completed and analyzed, the reconciliation process begins. ideally, throughout the process, the appraiser applies tests of reasonableness and reliability to the Information gathered, and then adds to the mix his or her own expertise and experience, ultimately arriving at a recon- ciled final and defensible value determination. The determination of value, in general terms, establishes the most probable price that a proper- ty will sell for in an open market, given typical market exposure and a willing buyer and a willing seller. While this language appears to lend itself mostly to the sales approach, which may not appear at rust glance to be applicable to on -premise signage, the sales approach can be employed to establish the value of a high -visibility site as compared to one of low visibility. This Ls so because signage is an integral part of a site's visibility component) -is 7. Report of Defined Value once die appraiser arrives al a lint estimated value, the last step in completing the valuation assign- ment is to report the results as appropriate to the information and assignment. The USPAP guidelines v provide minimum criteria for reporting valuation assignments. The valuation process outlined above has been accepted as professionally competent in both administrative and judicial forums. 1381n addition, add 'signogs' elemenn such as building design, lighting, window signs, product displays and dispensers, and landscaping rontribuh to the enhancement of the vnibility component of the retail 6W H., m Ir lint asolysis, a is the on -premise sign that best —ounces the awe .W,, of goods, pralucn, or service to Imo public. APPRAISING ON -PREMISE SIGNS Valuation Techniques Signage valuation and evaluation problems cover a wide spectrum. The problem can be simple premise sign from mom and pop's store. Signage assignments can also quickly become complex such as calculating (for insurance purposes) the replacement value of the hurricane damaged on: such as an assignment to ascertain the likely financial impacts upon local businesses if a contem plated restrictive signage regulation attempts to implement "amortization" provisions for existing high-rise freeway -oriented on -premise business signage. A governmental force such as that described can have significant negative impacts to on businesses and in tum create a ripple through a community's economic infrastructure For the purposes of this chapter, important signage valuations Issues and some examples will lu, discussed. The discussion is not intended to be a definitive treatise on all valuation issues and, „i all analytical techniques associated with signage. Generally, appraisal of commercial real property addresses three locational factors — visibility, accessibility, and parking. Since a sign's contributory value to its site Is the concern of signage appraisal, determination of that value will concentrate on the visibility factor. In this book, the visibility factor is broken into two components: (1) the site's overall visibility, and (2) how useful the sign Ls c passing motorists; that is, ]tow easily it can be seen, understood, and safely reacted to from the roa,l, For any business, the on sign provides s a great number of message exposures to pore tial customers driving by, usually at a fraction of the cost of other advertising media. As pan of i valuation, the appraiser eventually must address questions: 1. What percentage of tite sign's target market is exposed to the message? 2. How tetany repetitions of the message does the viewer receive? 3. How much does it cost to reach a given number of people? (Or how much does it cost to acquire a customer?) When the appraiser has answered these questions, he or she generally can determine a sign's cost-effectiveness compared with other media ... and establish its value based on net revenues attributable to its presence. To determine a sign's value, the appraiser utilizes the three traditional approaches to valuation — market comparison, anticipated Income, and cost -of -replacement (or substitution). MorkeKomporimn Approach For a businessperson or professional dealing with the realities of the marketplace, the value ___ THE VALUR OIr SIGNS of something is a direct reflection of what a consumer or client is willing to pay for it. However, judges and administrative -hearings officers do not often look favorably upon the use of sales price u the sole determiner of market value. While repeated market sales may provide a basis for determining damages, adjudicative tribunals almost always refuse to accept that evidence of price derived from isolated or distinguishable sales Is controlling In the matter.'M Even though more evidence than price or "the going rate" is generally required to establish mar- ket value, no appraisal can be accurate if it does not have some market data to support the final estimate of value. And the market comparison or sales approach can be used, with some modifica- tion, in signage appraisal. While outdoor advertising structures or plants enjoy an active sales market, on -premise signs do not; the visibility/communication function performed by the on -premise sign is not separately Iwught and sold. But despite this absence of traditional market sales data, other appropriate market data do exist for on -premise signs. Finding this data is just a matter of broadening one's definition of market data to Include how much the market is willing to pay for a high -visibility site. The direct approach is to first locate sites with various levels of visual-c:ommunicauon exposures to the street, obtain square -foot rental figures for each site, and then determine the square -foot rental differences per month (or annually) among the sites. Tire value of a commercial site's visibility component is typically reflected in the rental or lease rates it axturwnds, as well as the fair market value of the property as a whole. Location, parking, and acces- iibility also are dominant appraisal factors, but visibility considerations can be extracted from other val- uation indicators. Current lease and rental rates should be researched and compared. Rate information should be obtained from a variety of commercial centers. It is also Important to obtain site traps of the ach of the shopping centers and commercial suite layouts If possible. The market information is.ns- lyzed from several cx)mmerclal shopping centers, compared and reconciled. As a simplified example, tate information for a six tenant 9,000 sf shopping center in Suburban, USA is summarized and the L:ommercial suites with and without visibility to the street arc arrayed. In this example, the difference between the commercial suites with visibility and non-vLsibility to the busy commercial street is noted at $5/ ft annually. As a percentage, the non visible commercial units are receiving a 23% (rounded) discount. The accompanying plot plan the suburban shopping center depict% the physical placement of cacti of the suites in relation to the adjacent street. Suites E and F do not have direct access to the commer- 179 Seg N ft—I Ovki— Ad "hip v Cly of Mo *.y, AMP M 33 ICuI. 3d 19701. APPRAISING ON -PREMISE SIGNS'® Summary Grid of Market leases tial street. Typical commercial candidates for the suites without visibility are destination oriented businesses that are less dependent upon impulse -oriented traffic to be drawn in from the street. The gathered data from each shopping center is arrayed and their accompanying plot plans reviewed. The appraiser then reconciles the analyzed market data from the commercial rates with and without the street visibility and/or the ability to communicate with the street. Comparison of street exposure and rent per square foot for each comparable site will disclos, nearly every time that locations with optimum frontage visibility command far higher rents than sites lacking such visibility. Market data research, analysis, and reconciliation provide a range of value Indications that help an appraiser arrive at a reconciled value estimate for the contributory value of the visibility component of commercial sites. Income Approach In brief, the income approach involves anticipating the revenues a property interest can conceiv ably generate, and relating this income stream to value. In the context of signage appraisal, the focus of the approach is on establishing the percentage of business revenues traceable to cus- tomers or clients who entered the premises solely because they saw the sign. THE VALUE OF SIGNS plot Plan: Suburban Shopping Center --------- -- --- - - - -- — A B C D EF --_---- Alien using this approach, the appraiser must first correctly categorize the subject business or su,•, because the income attributable to on -premise signage varies by business category. The .tp praiser must also know if the business intends to rely more on customers within the local trade ziw:i, or on non -local or in -transit consumers. For example, in most cases, the point -of -distribution retailer, dependent upon impulse stops, has greater need for signage than does the trade -area -oriented retailer, with whom consumers have regular visual contact. Signage is somewhat less significant in destination retailing because the cus- tomer is bound for that particular commercial destination anyway. However, the destination retailer still requires identification and directional signage optimally visible to the street. Gathering the Information necessary to the Income analysis Is intensive work because it is dependent in pan upon consumer research. One research tool Is the point -source survey designed to determine what prompted the stop of a first-time customer or client — word-of-mouth, the Yellow Pages, a radio or television spot, or the on -premise signage. Another source is the typical chain store or franchise, which generally has access to comprehen- sive marketing data showing revenues attributable to a site's signage. However, many of these businesses or their parent companies consider such information to be a "trade secret' and are often reluctant to share It. While most nonchain or nonfranchised businesses have some verifiable knowledge of the sign's Impact on business revenues, when working with a true mom-and-pop business, the appraiser may need to commission a separate market survey to obtain necessary data. In the latter Instance, trade asso- ciations for such Independent, small-business enterprises may be able to provide or verify information. In any event, reliable information documenting the Interaction and interdependence of signage, customer behavior, and revenue is critical to the valuation. The careful signage appraiser always APPRAISING ON -PREMISE SIGNS Six Tenant 9,000 sf Shopping Center, Suburban, USA Suite A I Suite B Suite C Suite D Suite E Suite F Descripfion See Plot See Plot See Plot Sae Plot See Plot -- See Plot Annual Lease $55,000 $27,500 _ $22,000 $55,000T $17,000 !i 512,750 Store Sq. Ft. 2500 sf 1250 sf 1000 sf 2500 sf 1000 sf 750 sf Price/Sq. Ft. $22/ sf $22/ sf S22/ sf $22/ sf $17/ sF -- $17/ Location Some - Some Same some Same sf ---Some Shopping Shopping Shopping Shopping Shopping Shopping Center Center Center Center Conter Center Parking Common Common Common Common Common Common Visibility Yes Yes Yes Yes No No tial street. Typical commercial candidates for the suites without visibility are destination oriented businesses that are less dependent upon impulse -oriented traffic to be drawn in from the street. The gathered data from each shopping center is arrayed and their accompanying plot plans reviewed. The appraiser then reconciles the analyzed market data from the commercial rates with and without the street visibility and/or the ability to communicate with the street. Comparison of street exposure and rent per square foot for each comparable site will disclos, nearly every time that locations with optimum frontage visibility command far higher rents than sites lacking such visibility. Market data research, analysis, and reconciliation provide a range of value Indications that help an appraiser arrive at a reconciled value estimate for the contributory value of the visibility component of commercial sites. Income Approach In brief, the income approach involves anticipating the revenues a property interest can conceiv ably generate, and relating this income stream to value. In the context of signage appraisal, the focus of the approach is on establishing the percentage of business revenues traceable to cus- tomers or clients who entered the premises solely because they saw the sign. THE VALUE OF SIGNS plot Plan: Suburban Shopping Center --------- -- --- - - - -- — A B C D EF --_---- Alien using this approach, the appraiser must first correctly categorize the subject business or su,•, because the income attributable to on -premise signage varies by business category. The .tp praiser must also know if the business intends to rely more on customers within the local trade ziw:i, or on non -local or in -transit consumers. For example, in most cases, the point -of -distribution retailer, dependent upon impulse stops, has greater need for signage than does the trade -area -oriented retailer, with whom consumers have regular visual contact. Signage is somewhat less significant in destination retailing because the cus- tomer is bound for that particular commercial destination anyway. However, the destination retailer still requires identification and directional signage optimally visible to the street. Gathering the Information necessary to the Income analysis Is intensive work because it is dependent in pan upon consumer research. One research tool Is the point -source survey designed to determine what prompted the stop of a first-time customer or client — word-of-mouth, the Yellow Pages, a radio or television spot, or the on -premise signage. Another source is the typical chain store or franchise, which generally has access to comprehen- sive marketing data showing revenues attributable to a site's signage. However, many of these businesses or their parent companies consider such information to be a "trade secret' and are often reluctant to share It. While most nonchain or nonfranchised businesses have some verifiable knowledge of the sign's Impact on business revenues, when working with a true mom-and-pop business, the appraiser may need to commission a separate market survey to obtain necessary data. In the latter Instance, trade asso- ciations for such Independent, small-business enterprises may be able to provide or verify information. In any event, reliable information documenting the Interaction and interdependence of signage, customer behavior, and revenue is critical to the valuation. The careful signage appraiser always APPRAISING ON -PREMISE SIGNS obtains the services of a marketing expert or outside consultant if data cannot be reasonably dist' covered, or if data in hand may be suspect or Insufficient. In the event of litigation, the tribunal will insist upon such care and attention 10 properly decide the matter. Generally, the income approach has many valuation techniques and methods due to the varlet of income streams and circumstances surrounding income producing business or real property. Signage assignments involving income valuation and evaluation also vary. t By way of example, a fast food restaurant chain offering standardized breakfast, lunch and dins net menus and has normal hours of operation between 5:00 am to 11:00 pm. They have several hundred stores in the United States and Canada with aggressive plans to expand. The rampant' uses extensive national and regional newspaper and advertising to attract new customers. The i company's marketing and research department conducts and maintains extensive demographic, survey and trending information on their locations and their customer base. Before locating in a new area, the company completes a demographic profile to ensure that they can match their customer base. Their business operating data is established both locally and nationally. They conduct site surveys and decide on the best -suited location in an area of a town that also relies heavily upon tourism. They speciRcapy locate ona commercial street that is also located next to a freeway. Municipal site approvals for the store include that of a Freeway -oriented high-rise sign that depicts the chain's recognized logo. The company also owns the underlying building and real estate. Other businesses in this commercial district also have freeway-orlented signs and cater to highway users. The local municipality is proposing a restrictive sign code that would require the removal of th, company's freeway -oriented sign within 90 days of the ordinance's enactment. The company hires the appraiser to analyze the likely adverse impacts to its business from the loss of the freeway -ori- ented signage. Any value impact to the underlying real estate due to the proposed restrictive sign code would require a separate analysis (not included in this example). A complex assignment such as this requires a variety of appraisal techniques and analysis. The appraiser requests, receives, and analyzes historical and current income data not only for the suh lec t store, but also from its other stores. The appraiser also has access to the company's marketing and demographic information as well as company site selection data and criteria. Additionally, the appraiser must address the Proposed governmental action to repon the and tribunal. Findings to the municipality staff With three years of the store's operating income and history, the appraiser produces a stabilized operating Income and expense sutement for the store. Two representative customer surveys are conducted 0n site, with results indicaticustomer that 26% to 30% of the typical purchasing customers sur THE VALUE OR SIGNS asiMii6.iA�AA.h_s.6a Veyed came to the store because of the sign that they saw front the freeway. The appraiser reason- ably reconciles the surveys giving them equal weight and estimates that approximately 28% of the ?store's customers came because of the sign. The freeway -oriented sign cannot be relocated on the esice. Other forms of media cannot compensate for the loss of the place based sign that communi- cates with passersby along the freeway. For purposes of the illustration, the company's gross income is $500,000 annually, Applying the 28% loss to the gross revenues reduces the gross potential income by $140,000. From the stabilized operating statement, 40% of the gross income is absorbed in expenses to leave a net operating loss of income of $84,000 for one year. The appraiser gathers and reviews various capitalization rates to match the profile of the business. For purposes of the analysis, a rate of 11% is used. The appraiser can directly capitalize that lost income stream by utilizing the overall capitalization rate: Loss of Net Operating Income Overall Capitalization Rate $84,000 0.11 - Value - $763,636 Rounded $ 764,000 In other words, the $84,000 annual damage to the business can be purchased for $764,000 at a : rite of 11%. An investment vehicle of similar risk as the business assumes which in turn provides :n 11% return can minimize the negative impact that the loss of the freeway -oriented sign would `uve on the business. It would be designed to provide the replacement income to the business to keep that business functioning at similar levels. The business must notify the municipality that the business will sustain significant damages if the restric- :,%e code is passed. The business should also remain an active participant in the administrative process to exhaust ad remedies available at each administrative or ludic -W step in the process. It is likely when municipal and tribunal authorities understand the type and extent of financial Kann bring Inflicted upon this and other similar businesses in town that the proposed regulations will be reassessed. Again, signage assignments will vary. Most signage assignments utilize some form of income analysis. A variety of techniques and analyses are available for the appraiser to apply based Upon the valuation and evaluation issues at hand. APPRAISING ON -PREMISE SIGNS Cost -of -Replacement land Substitution) Approach 'flus approach estimates the cast of replacing or substituting an existing property interest with another of equal value. In signage appraisal, the appraiser is not considering the cost to reph: the sign itself with another sign, but rather to replace the sign's communication abilities by Mf medic. In signage appraisals, the cost of alternate media is what appraisers would consider, in legal terms, to be the "gravamen" of the case — the most significant pan of the sign owner's griev. ante. This is especially true in cases of regulatory takings. Thus, the term cost of substitution more accurately reflects this approach. To rind substitutes for lost visual communication via signage and determine comparable other advertising media — television, radio, newspapers, Yellow Pages, and direct mail — it,, appraiser will primarily rely on frequency measures. Frequency data addresses how many times viewer, reader, or listener is exposed to an advertisers message. Exposure frequency is calculated in increments of 1,000. A newspaper advertiser, for example, can accurately determine how many people were exposed to an advertisement, based on the number of newspapers sold. It is harder to determine exposure frequency for on -premise signage because there is no finite period during which it is on displ.n a sign is communicating its message 24 hours a day, 365 days a year. Further, many drivers are jus( passing through and may see the sign only once; other drivers, who live or work close by ;ire exposed to the sign many times. The value of the exposures (or impressions) provided by the subject medium is calculated a„ ing to formulas involving "gross exposures" (or impressions), and "cost -per -thousand exposures impressions). The following example offers a comparison of the exposure values of major media First, assume the advertiser has scheduled the following major media exposures over a four-week period: Outdoor Advertising: 050 Showing 30 -Sheet Posters 02 illuminated, six non -illuminated paneh Estimated Cost: $33,630. Radio- Total scatter plan (Monday -Friday, 6 a.m.-midnight). Estimated Cost: $33,681 140 Satires. Ma1,a Ma,61 Guide rolran G.— Ra&o Plonw, Pont Planr,a 6 Market Maestro Syusmr; Gdlup Math Mndsl. Ar < k,4.tro , ars round«I THE V AIUE OF SIGNS %ievision: Five day parts (early fringe, early news, prime time, late news, and late fringe). Estimated Cost: $33,571 hyewspaper: 21 quarter -page insertions in a major regional newspaper (e.g., 7beSan Diego fhrforrT ibune or 7be Las Angeles Times). Estimated Cost: $32,950 Nem assume that gross exposures for each medium are as follows: Gross Exposures (or Impressions) Outdoor Advertising: 201 million Radio: 6.0 million TV: 2.8 million Newspaper: 8.9 trillion Based on these gross exposures and the costs of the various media as noted in the schedule, cost - per -thousand exposures may be calculated for each medium. Cost Per Thousand Exposures (or Impressions) Outdoor Advertising: $ 1.70 Radio: $ 5.60 vlevision: $12.00 newspaper. $ 3.70 T1w cost information on these alternative media sources can be used for determining the cost of substituting any or all of these other media for the lost sign. To make this comparison, these same frequency measures must be determined for the on -premise sign. 7rafflc-Flow Data The starting point for calculating viewer exposures to an on -premise sign, and the cost per thou- sand of such exposures, is to measure the traffic Flow on the street or highway from which the sign is visible. Because the Flow may vary daily, monthly, and seasonally, traffic -flow data is prepared showing average annual 24-hour traffic volume. In addition, the measurement accounts for the APPRAISING ON -PREMISE SIGNS' 0 number of passengers per vehicle. Stated in terns of load factor, typical numbers of viewer, vehicle are as follows: Incorporated areas 1.38-1.6 persons Unincorporated areas 1.7-2.9 persons Vacation travel 3.0-3.5 persons Traffic -flow maps for interstate and primary highways can be obtained from most state de ments of transportation. In addition, cities and counties often publish street -system traffic counts. And most municipal transportation engineers can provide not only last -published tr.. counts, but also updates, which may disclose an increase or decrease in traffic Flow. (Other information sources are the Traffic Audit Bureau (TAB) and the Outdoor Advertising Associ:i* of America (OAAA)). Gross traffic counts alone will not indicate the number of potential customers. several other : factors must be considered. For example, a truck driver is not likely to stop at a fast-food restar: rant if the facility does not provide parking space sufficient to accommodate the truck; neither the commuter likely to stop at a home -improvement store during early-moming commute hour One of the biggest mistakes made in anal) -Ling cost -per -thousand exposures for signage is N,: failure to match customer profiles with traffic flow. Therefore, before calculating a sign's cast -1 , thousand exposures, the appraiser must obtain reliable information on driver profiles in addiuhl!, traffic volume. Origin/destination studies offer reliable data in these circumstances. To assist the appraiser in understanding the variables at work and the traffic -count information provided by other sources, a sample calculation to determine trade -area coverage is needed. Sample Calculation to Determine Trade -Arra Coverage 1. Obtain the average 24-hour dally traffic count (ADT) for the street fronting the site. This information should be readily available from a local traffic engineer, a city traffic engineer, or a county or state highway transportation department. The information source should also provide (a) the year that the last survey was done, and if more than 12 months has elapsed, the engineer's current estitnate (b) the engineer's estimate of transient traffic as a percentage of the total, if an interstate or primary highway is involved, VALUE OF SIGNS The Impulse Trade While typical trip -generation rates are derived from counts taken at the driveways of various kind uses, not all trips generated at the driveway represent new trips made for the express pure, ��C of entering the site. Instead some stops are trade by motorists who did not set out for -tin but who enter it as an intermediate stop on the way to or from another destination. i h, titute of Transportation Engineers (ITE) refers to flits type of stop as a 'pass -by trip." I- a lxhses of this book, it is defined as an "impulse stop." i percentage of pass -by trips or impulse stops varies by land use. Table 6 sets out 1TF. estimates regarding the percentage of stops attributable to motorists for whom the site is not the primary destination. It is clear from the table that impulse trade is very important to many businesses. And because the stops are not planned, it Is unlikely such stops would be made with,uit optimum communirationto the street by the businesses. Table 6. Impulse -Stop Percentages Land Use Impulse -Stop Percentages --- - Shopping Center larger than 400,000 sq.h. Gross Area 20 -100,000 to 400,000 sq.h. Gross Area 25 -Smaller than 100,000 sq.h. Gross Area 35 Convenience Market 40 Discount Club/Warehouse Store 20 fast -Food Restaurant 40 Sit -Down Restaurant 15 Service Station 45 Supermarket 20 2. Assume the engineer provides a current esumate of 28,000 vehicles per day passing the subject location; further assume that the engineer estimates 9046 of the traffic represents local residents and 109b of the traffic is from non -local or transient consumers. Calculation: 0.90 x 28,000 - 25,200 local ADT per 24-hour period APPRAISING ON -PREMISE SIGNS , I Multiply the ADT for local traffic by 30 to get the monthly total. 25,200 x 30 - 756,000/month. 4. Assume that the sign is located in a trade area with a population of approximately 200,000 people (or 62,500 households). 5. Assume 10 vehicle trips per month per resident (for work commutes, shopping trips, recreation, etc.). Ten trips per month are the standard for trade areas containing 62,500 households. (For areas of fewer than 62,500 households, the standard factor would increase, because residents of smaller communities or trade areas have fewer consumer choices; conversely, for areas larger than 62,500 households, the factor would decrease.) Multiply the monthly count by load tactors [adjusted for rural, incotporated, or unincorporated location of subject sign). 11 4. Adjust the calculation in step 3 (monthly count by load factors) using origin/destination trips to determine those viewers who may actually be considered potential customers. 5. Adjust the calculation again for hours of operation of the business. o Adjust the calculation again for seasonal ADT shifts. sample Calculation fbr Gross Exposures of One SignAsrumptionS: s[ 1. Traffic volume (ADT): 30,000 vehicles per day Monthly traffic volume: 900,000 vehicle 30,000 x 30 days . 900,000 3. Ad'usted For load factor: 1,'242,000 exposures 6. Relate the monthly ADT to area household trips by dividing 756,000 by 10: I Using the load factor for an incorporated area (1.38 people per car), calculation of gross 756,000 exposures in a 30 -day period is as follows: 900,000 x 1.38 - 1,242,000 10 75,600/month 4. Adjusted for origin/destination trip data: 931,500 exposures From this sample calculation, we can conclude that on average, 75,600 trips by Individuals in .ora (assuming 75% potential customers) households are made past the sign's location every month. 75% x 1,242,000 - 931,500 To ensure as completely as possible that signage exposure costs are realistically stated, the apprais- Adjusted for expected loss of potential customers er should always enlist the assistance of a transportation engineer when undertaking the traffic- file to business hours of operation: 791,775 expxssures flow analysis. (assuming 15% "waste' factor) 85% x 931,500 - 791,775 Comparing Media Coverages and Costs The following examples compare media coverages and related costs, based on traffic -count infor- 6. Adjusted for seasonal traffic variations: 752,186 exposures [nation, plus adjustments as necessary, (assuming 5% seasonal variation) 95% x 791,775 - 752,186 Calculating Gross Exposures of an On -Premise Sign Gross Exposures to Potential Customers after To establish gross exposures, the appraiser raAll Adustruentst 752,186 In a 30 -day period.kes the Following steps: i 1. Begin with the average 24-hour traffic count (ADT). sample Calculation of Gross Rating Points ((;RP) for One Sign 2. Multiply the ADT by 30 to establish monthly count. Assumptions: 0 THE VALUE OF SIGNS -----.v„r,s.i..u.awJ��+ta�.+s�.ac.►s.r..l.+,1i.J. APPRAISING ON -PREMISE SIGNS `4- war.;�.M.:,a 1. Current traffic flow for 24-hour1 i�od: 30,000 vehicles t 2. Total exposures in a 24-hour period: 41,400 exposures Traffic x load factor (30,000 x 1.38) - 41,400 3. Total population in subject SMSA: 400,000 residents 4. Gross ratings points (GRP) formula: GRP - Load factor divided by market population x 100 41,400 x 100- 10.35 400,00 Gross Rating Points:' 10.35 for a 24-hour period The on -premise sign in the preceding examples reached a number of exposures equal to 10.350" of the total market population during. one 24-hour period. Over a 30 -day period, the sign woc' have received a total of 1,242,000 exposures, of which 752,186 would have reached or "spok, potential consumers. Calculating Cost -per -Thousand Exposures for Impressions) Following are sample calculations for determining the differences between major media advri. ing. The general assumptions are that the advertising occurred over a four-week period, with .1 equal amount (approximately $33,000) spent on each medium. Cosi por.Tbousand Exposures — Teler-kion Assumptiory: 1. Gross impressions (exposures): 2, Gross impressions in thousands: 3. Total media cost: 4. Cost -per -thousand exposures formula. Cost per thousand - total media cost gross impressions ® TH[ VALUE OF SKINS 2.5 million 2.500 $33,000 Cost per thousand - $33,000 - $13,20 2,500 cost -per -Thousand Exposures—Television $13.20 c ost-per-Tbousand Exposures — Radio 1. Gross impressions (exposures): 2. Gross impressions in thousands: 3. Total media cost: 6 4. Cost -per -thousand exposures formula: Cost per thousand - total media cost gross impressions Cost per thousand - $33,000 - $6.47 5.100 Cost -per -Thousand Exposures — Radio: $6.47 cost -per -Thousand Exposures — Newspaper t" I rrtpu'ons.• I Gross Impressions (exposures): ' Gross impressions in thousands: j. Total media cost: 4. Cost -per -thousand exposures formula: Cost per thousand - total media cost gross impressions Cost per thousand - $33,000 -$3.47 9,500 Cost -per -Thousand Exposures—Newspaper $3:47 S.I million 5,100 $33,000 9.5 million 9,500 $33,000 APPRAISING ON -PREMISE SIGNS Cost Pet`Tbousawd Bxposursrs --- Outdoor Adverlibiag Assumptions: 1. Gross impressions (exposures): 2. Gross impressions in thousands: 3. Total media cost: 4. Cost -per -thousand exposures formula: Cost per thousand - total media cost gross impressions Cost per thousand - $33.000 20,000 - $1.65 20 rniWon (adjusted traffic count) 20,000 $33,000 Cost -per -Thousand Exposures—Outdoor Advertising: $1.65 Cost per-y'bousand Exposures — On-p,wmtse Sign The on -premise sign is a permanent asset that is usually owned, not leased, by the business It 1;,'•` advertises. 'Therefore, its cost -per -thousand -exposures evaluation is more complicated than that'of' the other media because it is not based on a finite period of broadcast/display time. Instead, Its::'" evaluation Is based on the original cost of the sign (design/production and construction placement' costs), plus maintenance expenses and depreciation, as well as factors relating to trade -area demo- graphics and traffic counts (or readership), To illustrate, we will again use $33,000 as the cost the sign, and calculate the cost -per -thousand exposures as follows: Assumptions: 1. Initial cost of sign design, production, and installation: $33,000 (for two faces) 2. Amortization period; 7 years 3. Cost of sign per month: $393 ($33,000 divided by 7 years or 84 months - $393 per month) 4. Estimated traffic count (after all adjustments); 60,000 cars per day 5. Estimated monthly traffic counts 00 (60,0 x 30 days - 1.8 million) 1.8 mil lain cars PM month 6. Monthly gross impressions in thousands: 1,800 (1.8 million divided by 1000 - 1800) 7. Cost -per -thousand exposures formula: THE VALUE OF SIGNS Cost per thousand - monthly media cost monthly exposures Cost per thousand - $393 - $0.40 1,800 (:ost-per-Thousand Exposures — On-Prernise Signs 90.40 e preceding media cost comparisons clearly show that the on -premise sign provides message osure to a large pool of potential customers, at a fraction of the cost of other media. if for any son a business lost an optimally visible and readable on -premise sign, the cost to replace the is exposures for any length of time with other media would be prohibitive for many business - particularly small businesses. Matched -Pair Analysis (technique) Matched -pair analysis is a valuable tool. to appraisers seeking to establish or understand what the market will pay for a retail site's visibility component. In residential property appraisal, matched - pair analysis i5 routinely used to bolster value determinations reached via other methods. For example, to arrive at a reasonable value for a tract home, the appraiser will look at recent market sales data concerning two nearby tract homes, similar in every way except location. One ..ine, which sold for $100,000, is located on a busy collector street, and the other, which sold for $110,000. is located on a quiet residential side street. The appraiser may reasonably assume and report that the 510,000 difference between the two otherwise comparable homes is due to location. Matched -pair analysis also can effectively identify the differences in value of comparable commer- cial locations that are traceable to the visibility component An excellent example of such analysis is provided by the experience of a small, four -store independent chain of home -improvement centers located in southern California. In this case, Home Depen moved Into the small chain's trade areas.141 The owner decided to go head-to-head with Home Depot and Initiated a total remodel of his old and obsolete stores... "old" with respect to structure and "obsolete" with respect to on-site marketing techniques, including signage. The chain's stores were located in Crescenta Valley, Valencia, Simi Valley, and Thousand Oaks. 141 Flay Decd, o big -box, eingk-calgory, notional reia,ler, it 6-n in dw Mow -improv wl butlnsu as a'comilory till. — in O*W v.ord.. if oiio. our ,xnolbr, lowl hx-imprwmrw l roft1wi our of bueinw. APPRAISING ON -PREMISE SIGNS All of the stores, before and after remodeling, equaled approximately 44,000 square feet of retail' space. Prior to the remodeling, signage for all four stores was similar, and gross sales per store 1 were within 15% of each other. Because the stores were located in different trade areas, with different municipal sign codes, the owner had to tailor each store to Fit the relevant code. Although he was able to somewhat start dardij his building storefronts with respect to corporate logo and colors, the owner could not standardize the balance of his on -premise signage --specifically wall or fascia signs and freestanding signs. Crescenta Valley has a progressive, liberal sign code that permitted the chain owner to place a large storefront wall sign over the main entrance of the building and border wall signs listing p ro ucts (for example, housewares, paint, electrical, and plumbing) along the sides of the building. A large, double -pole freestanding sign displaying corporate colors and logo is also placed adjacent the street. The sign is not shared with any other retailer and has a variable -message board that mics the owner to advertise special sales. Valencia has a code similar to Crescents Valley, and the owner was allowed to place large wail signs over the main entrance and along the sides. In contrast to the Crescenta Valley location, howet er, the visibility of the freestanding sign is somewhat hampered by a landscape median between thea street and sign, and a parking barrier in front of the sign. The sign is also shorter in height. 1 Simi Valley has a much more restrictive sign code than either Crescenta Valley or Valencia, and { consequently, the site's storefront signage is considerably less prominent, limited to narrow border' wall signage. Although the on -premise sign is tall and located close to the street, the store must share the sign with others, because the code does not permit individual freestanding signs for retailers located in a retail "ribbon." Thousand Oaks' sign code is very restrictive, and the site's storefront signage is limited to a small entrance sign and two small hanging signs at either end of the building, 'rhe freestanding, on -premise sign is located on a landscaped strip next to the road. Because the code limits sign size to 6 x 6 feet, the sign's visibility is severely compromised by surrounding foliage. Following the remodeling of the stores, and despite Home Depot's presence, the indepen- dent owner's Crescents Valley store increased Its sales by 45% and the Valencia store by 38%. On the other hand, the Simi Valley store's increase was only 20%, and in Thousand Oaks, the store increased sales only 10%. Further, the difference in sales volumes between the Thousand Oaks store and the Crescenta Valley store, which prior to the remodeling was only 15%, increased to 35.596?42 The storeowner did not increase local media advertising subsequent to the remodel. Therefore, the disparate increase in sales volumes can only be attributed to the availability, or lack thereof, of yet THE VALUE OF SIGNS on -premise signage easily visible and readable to street traffic. Matched -pair analysis is especially useful to both the market -comparison and income valuation approaches. However, great care must be taken to assure that the comparable sites are indeed dosely similar. In the earlier residential example of the two tract homes, the homes were identical except for location. Thus, the difference in value between the two reasonably could be traced to location. In the retail example, the store sizes, products and services, and pre -remodeling sales and sig- nage were fundamentally identical for comparative purposes. The post -remodeling differences in sales volumes, with all other things remaining equal, then reasonably could be traced to the visibility afforded each site by the controlling sign code. Because the only variable — street vis- ibility — had a marked affect on sales volumes, this matched -pair analysis could be effectively used to support a value estimate of the visibility component of the respective stores based on the income approach. Other factors controlling the selection of subjects for the analysis include store type or category, location, parking, topographical conditions, adjacent uses and tenant mix, and local demographics. Clearly, if more than one indiscrete variable between compared sites exists, the sites cannot be used in a matched -pair analysis. A matched -pair analysis published in 1994 by the American Planning Association (APA) demon- strates the need for caution when choosing a "pair' for comparative purposes. Notwithstanding that the controlling sign code played a part in the analysis, as it did in the retail example above, the APA analysis was later determined to be flawed precisely because the researcher compared two commercial buildings that possessed many distinct and differing factors that affect value such as location, commercial tenant uses and profiles, demographics, effective ages of the buildings, and permitted commercial zoning allowancesJ43 in the APA report, although the two subject buildings were located on commercial blocks less than a mile apart and were reportedly similar in chronological ages, many other significant value considerations existed such the building being located in different towns with different local and tenant demographics. Additionally, the building with the higher tax -assessment had recently been renovated as well as other areas on the block and along the frontage sidewalk. A transit mall was 142 This info otion was ",ned from a pnesemamon and hoodoo .Is by Jess Rul, chairman of Dolt Center, Inc., Von Nuys, Catilamio, at a meeting of sign industry and Ammu an Planning Aswcrohon repnisenbrives in Cleveland, Ohio, in February 1996. 143 See 5assng Fes: How Corporate Franchise Design Can Help Protect Community ldenNty, Planned Advisory Savin No. 452 tClsfmga. APA, Jure 1994. 11-121. APPRAISING ON -PREMISE SIGNS also located near the higher assessed building. The lower tax -assessed building had not been recently renovated, had a variety of different locational characteristics, and had differences in commercial tenant/uses and profiles. A few months prior to the analysis, the community where the higher tax assessed building located had enacted a design -review sign code, which was reflected in the boutique. Fascia sl of the reno+ated building. The other community did not have a design -review sign code. The:_t =' lower tax -assessed building displayed a variety of signage — projecting, wall, window, and ra? In a variety of sizes and shapes, with varying levels of copy legibility. The 1994 assessed value of the building located in the municipality with a design review sign > , code was $4 5 mdiion (or approximately $15o per square foot); the 1994 assessed value of the other building that did not have a design review sign code was $1,5 milllon (or approximately per square [Dot). The resewdier attributed the $3 million difference in assessed value solely to the difference in sign codes — a difference, of course, reflected in the signage. However, this conclusion was in E? error. Many more variables than sign code were at issue, the most significant of which were those associated with respective locations in neighborhoods of substantially differing population mixe,, income levels, and consumer profiles. Because of the myriad variables between the two buildirn� they were ncat comparable for purposes of attributing either add-on or take -off value to the inilu ence of a sign code. A Final Nord about On -Promise Signage Valuation We have established that the on -premise business sign constitutes an accessory land use, working with and complementing the primary land use, in many cases, this accessory use is not merely complementary, but essential to the primary use and the economic success of the site. Therefore, strong evidence Of the cost to replace it by other commercial communication media is imperatic<, to the valuatson of a site's visibility component(s). Sometimes place -based commercial communication systems cannot be replaced, either direolc or by substitumm. For example, on major freeway systems, exits are restricted. In such rases, it .t retail site is not adequately communicating via on -premise signage, the traveling consumer may miss the exit and be host forever as a customer. The cast-off'-replacmtent or substitution approach to signage appraisal is sophisticated and requires expert nrdgment. Any appraiser researching and compiling replacement -cost data should have independent basic knowledge with respect to transportation engineering, traffic: counts and patterns, driver profiles, and all commercial communication major media. IM THE VALUE OF SIGNS �...y.s.,e.is±.a��-'.,���s da...6�.a_.-&.-r.a... r." it is reasonably safe to say that the consumer -oriented economies of the United States and (.inada are inextricably linked to the effectiveness of commercial speech media. Commercial ,ignage is very much a player in the media mix. Understanding its importance, and knowing how to determine Its fair market value, should be considered essential to every commercial real estate appraiser, and certainly to every government body attempting to estimate the impact of its signage policies and regulatory decisions. APPRAISING ON -PREMISE SIGNS IM SIMON APPENDIX TABLE OF CASES ' 44 Liquormarr Inc. v. Rhode Island, 517 U.S. 484 (1996) Ackerly Communications of Massachusetts Inc. v. City of Cambridge, 88 R 3d 33 (1st Cir. 1996) t Almota Farmers Elevator and Warehouse Co. v. United States, 409 U.S. 470 (1973) Amelhin v. McClure, 168 F. 3d 893 (6th Cir. 1999) Arkansas State Highway Commission v. Cash, 590 S.W. 2d 676 (Ark. Ct. App, 1979) Bkxkbuster Video Inc. 6 Video Update V. City of Tempe (AZ), 141 F. 3d 1295 (9th Cir. 1998) Board of Trustees of State University of New Yon* v. Favi 492 U.S. 469 (1989) Caddy's v. Hamilton County, Ohio; a lower court case; no West Ww cite Central Hudson Cas 6 Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980) Cincinnati, City of v. Discovery Network, 507 U.S. 410 (1993) Citizens United for Free Speech v. Long Beach Board of Commissioners, 802 R Supp. 1223 n NJ. 1992) • r THE VALUE OF SIGNti TABLE OF CASES _ T 7917,r iei=;:. _,= d••`.AA�i. Worm -6 ;, Cleveland, City ojv. Zimmerman, 253 N.E. 2d 327 (Ohio Prob. Ct. 1969) A 3t ; Clef eland Area Board of Realtors v. City of Euclid, 88 F. 3d 382 (6th Cir. 1996) Collier v. City of Tacoma, 854 P. 2d 1046 (Wash. 1993) Combined Communications v. City of Denver, 186 Colo. 443, 528 P. 2d 249 (1974), affiliated 2d 79 (1975) Cottage Grove, City of V. Ott, 395 N.W. 2d 111 (Minn. CL App. 1980 Dan B. Savage 6 Sons Advertising Inc. V. Ballew, 923 S.W. 2d 489 (1996) Denny's Inc., of al. A City ofA80ura Hills, 56 Cal. App. 4th 1312, 66 Cil. Rptr. 2d 382 (Cal. App. 1997) Desert Advertising, Inc. V. City of Moreno Valley, 103 F. 3d 814 (9th Cir. 1996) Dolan v. City of Tigard, 512 U.S. 374 (1994) Eller Outdoor Advertising Co. v. City of Denver, 542 P. 2d 79 (Colo. 1915) Eller Outdoor Advertising Co. ofArlxona v. Cityofscotcwdale, 579 P. 2d 590 (Ariz. CL App. 1978 Fisher v. City of Charleston, 425 S. B, 2d 194 (W.Va. 1992) Freedman v. Maryland, 380 U,S. 51 (1965) La&je, Cityoft. GiUeo, 512 U.S. 43 (1994) Lake Nacimiento Ranch Co. P. San Luis Obispo, 841 F. 2d 872 (9th Cir. 1967) Lakewnod, City ojv. Cojfax Unlimited Association, 634 R2d 52 (Colo. 1981) THE VALUE OF SIGNS jo raved, City of v. Rogolsky, 252 N.E. 2d 872 (1969) ,nar Corp. v, City of Richmond, 402 S.E. 2d 31 (Va. 199 1) Linmark Associates, Inc. v. Township of Willingboro, 431 U.S. 85 (1977) Lisa s Party City, Inc. v. Town ofHenrierta, 185 F. 3d 12 (2d Cir. 1999) �MEarol Tobacco Co., et al. v. Reilly, 121 S,Ct. 2404 (2001) wistana State Dept. of Transportation v. Chacbere, 574 So. 2d 1306 (1991) ?Jajbr of the Southeast v. City of Raleigh, 792 F. 2d 1269 (4th Cir, 1986) P trembers of City Council v. Taxpayers for Vincent, 466 U.S. 789 (1984) .Messer v. City of Douglasville GA, 975 F. 2d 1505 (11th Cir. 1992) Metromedia Inc. v. City of San Diego, 453 U.S. 490 (1981) ": ,rnesota, State of u. Card, 413 N.W. 2d 577 (Minn. Ct. App. 1987) Monterey, City ojv. Del Monte Dunes, 526 U.S. 687 (1999) Muglerv. Kansas, 123 U,S. 623 (1887) National Advertising Co. v, Town of Babylon, 900 F. 2d 551 (2d Cir. 1990) National Advertising Co. v, City of Denver, 912 F. 2d 405 (9t) Cir. 1990) National Advertising Co. v. City of Monterey, 464 P. 2d 33 (Cal. 3d 1970) National Adtwrtising Co. v. City of Raleigh, 947 F. 2d 1158 (4th Cir. 199 1) TABLE OR CASES National Advertising Co. v. State Dept, of 7)ansportatton, 611 So. 2d 566 (Fla. Dist. CL App, I NationalAdr,Krtising Co. Y. State Dept. of7Yansporation, 478 S.E. 2d 248 (N.C. Ct. App. 1996) National Advertising Co. v. State of Nevada, 993 P. 2d 62 (Nev. Supreme Q. 2000) National Advertising Co. v. Village of Downers Grove, 561 N.E. 2d 1300 (Ill. App.1990) Atectow V. Ciry of Cambridge, 277 L.S. 183 (1928) New Castle V. Rollins Outdoor Advertising, Inc., 459 A. 2d 541 (Del. Ch. 1983), rev'd 475 A. 2d (Del. Sup. 1984) Nero Hampsbire, State of v. 3M National Advertising Co., 365 A. 2d 1092 (1995) Nortb Olmsted Chamber of Commerce, et al. V. City ofNortb Olmsted, 86 F. Supp, 2d 755 (N.D. Ohio 2000) Obralik v. Ohio State BarAssoclation, 436 U.S. 447 (1978) Outdoor Systems, Inc. v. City of Mesa, 997 F. 2d 604 (9th Cir. 1993) "'ve"s-Corning Rberglas Corp., In re, 774 F. 2d 1116 (Fed. Cit. 1985) Pennsylvania Central Transportation Co. v. Ciry of New lock 438 U.S. 104 (1978) Rubin v. Coors Brewing Co., 514 U.S. 476 (1995) IZ.adkourolski v. Village of Lake Orion, 845 F. 2d 653 (6th Cir. 1988) Sambo's of Obio v. City Council of 7bleda 466 F. Supp 177 (N.D. Ohio 1979) Sandbiils Association ofReabon., Inc. v. tll*e ofPineburst, 1999 W.L. 1129624 (MDNC 1999) VALUE OF SIGNS v. Birmingbam, 394 U.S. 147 (1969) Dakota, State of v. Volpe, 353 F. Supp 335, (D.S.D, 1973) �outb Suburban Housing Center v. Greater South Suburban Board of Realtors, 935 F. 2d 868 (7th ir. 1991), cert. denied sub nom, Greater South Suburban Board ofReakors v. City of Bluelsland, 902 U.S. 1074 (1992) State v. Miller, 416 A. 2d 821 (NJ. 1980) Sunrise, City of v. D.C.A. Homes Inc., 421 So. 2d 1084 (Fla. 4th D.C.A. 1982) Tauber v. 7bum of Longmeadow, 695 F Supp. 1358 (D. Mass. 1988) Texas, State of v. Jobnson, 491 U.S. 397 (1989) United Advertising Corp. v. Borougb of Raritan, 11 N.J. 144, 93 A. 2d 362 (1952) United Statec v. Petty Motor Co., 327 U.S. 372 (1946) United Slates v. 40 Acres of Land in Henry Co., 427 F. Supp. 434 (W.D. Mo. 1976) Valentine v. Cbrestensen, 316 U.S. 52 (1942) 411ageof8uclid v. Ambler Realty, 272 U.S. 365 (1926) tillage offludson v. Albrecbr, Inc., 458N.E. 2d 852 (Ohio 1984) UP-Rinia State Board of Pbarmacy v. Mfrginia Citizens Consumer Council, 425 U.S. 748 (1976) Waterloo, City of v. Markbam, 600 N.E. 2d 1320 (ill. App. 1992) Whitman v. State Higbtuay Commission, 400 P. Supp. 1050 (W.D. Mo. 1975) TABLE OF CASES G7SIGNAGE Advertising Media: The means by which an advertising message is carried to potential cus= comers; includes Internet, magazine, newspaper, radio, television, and signage. Advertising Structure; A term indigenous to outdoor advertising referring to the physical cure constructed by a media company to display advertising. The structures are built to stai specifications; die advertising messages are applied using many different techniques. Aesthetics: A term dealing with form, design, and/or quality of construction of a particular sign, building, site, or structure that presents a judgmental statement concerning the level of beauty or artistic value. Alternate Outdoor Advertising Medlat Alternative or out -of -home media include, but are not limited to, stadiunr/arena/speedway signage; airbome/airship displays; marine vessel displays; beach panels; ski resort panels; golf course panels; rest area panels; bicycle racks; gas pumps; parking meters; and "postcards' — small panels located in public areas in malls, airports, and transportation stations. Atnortiimdom (1) In accounting terms, this refer, to the method in which an Intangible asset is depreciated over a specified period of time. (2) In terms relevant to signage and urban planning, it conveys the "grace period" beginning on the date a sign owner is notified that removal of a previ- ously conforming sign has been ordered, and ending on the date removal is required. This process [Hakes a sign structure, which was legally erected or placed pursuant to permit, legally noncon- forming for a period of time — the amortization period. After the amortization period expires, the sign becomes illegally nonconforming and must be removed. ,ort -removal often invokes severe penalty- Amortization is a form of regulatory taking. Its legality depends on state law and numer- ous other conditions, and it is frequently unenforceable. THE VALUE OF SIGNS tared Signs A sign depicting action, motion, light, or color changes through electrical or anic-al means. Although technologically similar to flashing signs, the animated sign empha- graphics and artistic display. ual Average Daily Traffic (Annual ADT): Measurement representing the total number of vehi- passing a given location, based upon 24-hour counts taken over one year. Counts are adjusted to nate annual average daily traffic, taking Into account seasonal variances, weekly changes, and T variables. These counts are most often obtained from state highway departments. Approach Distance: The distance measured along the line of travel from the point where the sign first becomes visible to a passerby to the point where copy Is no longer readable (having passed out of sight). Awning Signs A building -mounted sign that provides additional functionality as shelter. Backlighted Letters An illuminated reverse channel letter with an open or translucent back so that light from the letter is directed against the surface behind the letter, producing a halo lighting effect around the letter; also referred to as silhouette- or halo -lighted. Ballast: An electrical device required for operating fluorescent lamps. Banners A temporary sign of lightweight fabric or similar material that Is mounted to a pole or a building. Promotional banners include those used to announce open houses or grand openings, or to advertise special events. Ornamental banners use images or colors of a decorative nature. Bench Signs A sign located on the seat or back of a bench or seat placed on or adjacent to a pub- lic right-of-way; a type of street furniture. Billboard (Outdoor Advertising Structure): A large, standardized third-parry/off-premise struc- ture displaying advertising intended for viewing from extended distances, generally more than 50 feet. Billboard/outdoor advertising displays include, but are not limited to, bulletins, wall murals, wrapped posters, 30 -sheet pasters, and eight -sheet posters. GLOSSARY OF SIGNAGE TERMS Brand Equity (Branding)r The intangible but real value of words, graphics, or associated with the products or services offered by a business. Development of sisymbols e branding t includes the presentation of signage and architecture to create a unique awareness and mem: the potential customer of the products or services offered at that site. Brand equity for a parti business is similar to the goodwill of an enterprise. Building Fascias That portion of any elevation of a building extending vertically from the grade the top parapet wall or eaves, and horizontally across the entire width of the building elevation, Including slanted wall surfaces sometimes referred to as a mansard, Building -Mounted Sign, A sign that is applied or attached to a building. coated Tubing: Clear glass tubing, coated on the interior surface with phosphorus powder. coated tubing produces a variety of different light colors, depending on the specific mixture of phosphorus powders used. Cold Cathode: (1) An elecuic-discharge lighting system that uses an electrode with a large metal mass to emit electrons. Neon tubing is a cold -cathode type of lighting system. (2) A genetic term employed to specify custom interior lighting produced through the use of large -diameter cold - cathode tubing. Colored Tubing: Transparent glass tubing manufactured with colored pigments. Typical color examples include ruby red, canary yellow, green, and midnight blue. BuUedn: The largest standard format of the outdoor advertising media. The most common size is Conforming Sign: A sign that is legally installed in accordance with federal, state, and local per - 14 feet high x 48 feet wide, plus extensions, if any, Design copy is most commonly reproduced on unit requirements and laws. vinyl and then wrapped around the surface of a bulletin structure. Design copy may also be painted log -term displays or in directly onto the surface or printed on paper and applied to the surface. Bulletins are sold either as Conspicuity: Those characteristics of the sign that enable an observer to differentiate the sign rotary packages. Most bulletins are situated in high-density traffic locations, from its surrounding environment. Cabinet Signs K structure consisting A sign of the frame and face(s), not includin the internal com- w y Content -Neutral Sign Code (Time, Place, or Mtutner): ConaLstendy applicable, reasonable and g ponents, embellishments, or support structure. g nondiscriminatory sign regulations that specify when, where, and how a sign can be installed, the message ysical parameters that are sed Cann til n: (1) A building -mounted sin functionin as a marquee. (2) A signmounted on a in time, reference lace, and manner regul tion Include, but are not limited ted o, height, size, and location. d PY K g g g marquee or attached to or printed on the Fascia or valence of a canopy,g p awning, or marquee, or The regulations should minimally ensure that the sign will be easily dlacemabie and readable to hanging from the soffit (underside) of such structure. (See awning sign; marquee sign.) targeted viewers. Changeable -Copy Signs A sign or portion thereof on which the copy or symbols change either :uuomatically through electrical or electronic means (for example, time and temperature units), or manually through placement of letters or symbols on a panel mounted In or on a track system. Channel Letter, A fabricated or formed three-dimensional letter that may accommodate a light source. THK VALUE Or g1GNS ,�.%` _".►.es.a,.rY�r,r+u�..:.v.a..rdaa�teY-� L ' i 'Wa:rtJ4ib �'�" �'.�s. •ri.4 w. Contrast: The difference or degree of difference between things having similar or comparable natures, such as light and dark areas, colors, or typefaces. Copy: I1te words or message displayed on a sign. Copy Area: That arra which encloses the actual copy on a sign. GLOSSARY OF SIGNAGE TERMS Cost (Of Replacement) Approach: An approach to estimating the value of real property wh1 by the appraiser determines the production cost of the property, minus any accrued depreciatl This approach does not merely include the hard costs of construction, but includes all soft cos such as interest, permits, and fees. In sign appraisal this concept includes the cost of replacing message delivered to viewers via other advertising media. a; Cost Per Thousand (CPM): Refers to the cost for an advertiser to send a message to 1000 receivers. The measure is calculated by dividing the amount of money spent for a given ad ment by the number of people exposed to it. (Based on this measure, signs are usually cos to be the least expensive form of advertising.) Coverages A marketing term that refers to the percentage of the total market population reached by an advertising message displayed or broadcast within a defined geographic area by a Riven medium; measured at least once a month. Cross -Read: An advertising display that is visible across traffic lanes on the opposite side of the roadway. Customer Acquisition Costs: Basic value calculation used to measure the cost versus return of signage in order to help determine the overall costs of acquiring a customer (or client). Custom Signs A sign designed, manufactured, and installed to meet the requirements of a specific location. Daily Effective Circulation (DEC)t The average number of daily potential exposures to a display or group of signs. DEC Is determined by counting only those vehicles traveling toward the face of the sign and then multiplying that number by the average number of people per car during the hours the sign Is visible. Pedestrian and mass -transit circulations are not included. This is the basic measure in establishing cost -per -thousand exposures on signs, The basic traffic numbers can usual- ly be obtained from state departments of transportation. Day -tilos A trade name for certain inks or lacquers that become fluorescent when activated by the ultraviolet rays of sunlight of special Illumination. �'' � THE VALUE OF SIGNS Cabinet: Similar in detail and use as a raceway except larger in cross-section to provide a round area. Profiles: Audience breakdowns based on various characteristics such as age, sex, education, and ethnic composition. Letter A cut-out, cast, fabricated, or molded material such as metal or plastic, in the of a letter, logo, or symbol. Directional Sign: Signs designed to provide direction to pedestrian and vehicular traffic Directory Sign: A sign that identifies the names and locations of tenants in a multi -tenant building or in a development made up of a group of buildings. Double -Faced Sign: A sign with two parallel faces. Downsizing: A change in law or regulation that requires alteration in size or height of any exist- ing sign. Downsizing of an outdoor advertising structure (or "billboard") requires compensation as a regulatory taking. Effective Gross Income (EGI)s The anticipated income from the operation of income -generating property, adjusted for vacancy and expenses. Efficiency: The degree of value delivered by the sign (in terms of exposures to potential cus- tomers) relative to its cost; usually expressed as either CPM (cost per thousand) or CPP (cost per gross rating point). This measurement is common to all media. Eight -Sheet: A 73 -square -foot poster panel generally placed for exposure to pedestrian and vehic- ular traffic along city streets. Electric Signs Any sign containing or using electrical wiring. GLOSSARY OF SIGNAGE TERMS n_ I .r. Electronic Message Centen A variable -message sign that utilizes computer-generated messy or some other electronic means of changing copy. These signs include displays using incandesiesit lamps, LEDs, LCDs, or a flipper matrix. `" Embellislunents: Letters, graphics.. mechanical devices, fiberoptics, lighting, cutouts, extensics structure coverings, vicinity landscaping, or any other special -effect addition to a sign that will enhance its appearance and ability to effectively communicate its message. Erninent Domain: The power of the state to take private property for public use. Extensions: The area of design made as a cutout that extends beyond the basic rectangular space of a sign face or message. Exterior Illuminated Sign: A sign that is illuminated by a light source that is directed towani, and shines on the face of a sign; also called direct illumination. Face: The surface area of a sign on which the advertising message is displayed. A sign may hal e more than one face. Fascia Sign: A building -mounted sign. Federal -Aid primary: A highway designated by the state and approved by the U.S. Secrecin- of Transportation, as of June 1991, for the control of outdoor advertising under provisions of the Highway Beautification Act of 1965, as amended. Fiberoptic Display: An innovative use of electronic light -transmitting fibers to create changeable - copy displays. Flashing Signs A sign with an interrtuttent or flashing light source. Generally, the sign's message is constantly repeated, and the sign is most often used as a primary attention -getting device. Government highway departments frequently use flashing signs to improve highway safety. Flat cut-out Letten A dimettsional letter cut from sheet or plate stock. THE VALUE OF SIGNS trent lamp or Tube: An electric -discharge lighting system, utilizing glass tubing and a hot cathode. Unlike neon tubing, it is manufactured to standard lengths and can be mass pro - (See neon sign; incandescent bulb.) Font: A set of letters, numerals, and shapes that conform to a specific set of design criteria. Freestanding Sign: A sign that is not attached to a building. Frequency: The average number of times an individual has the opportunity to see an advertising message during a defined period of time. Frequency — and reach — are typically measured over a four-week period. Front -Lighted Letter? An Illuminated channel letter with a translucent face. Full -Service Sign Companies: Sign companies that complete the entire signage project, including site survey and sign design, engineering, manufacture, permitting, installation, and maintenance. Gross Rating point (GRP or TRP): A method common to all media for measuring an audience with duplicated circulation over a period of time. GRP levels for an -premise and outdoor advertis- ing signage refer to daily circulation expressed over a week or a month (30 days). One rating point represents the circulation equal to 1% of a market population. Ground Sign: A freestanding sign with no visible support structure. H channel Letter: A dimensional letter with baffles at the center of the cross-sectional shape for support of neon tubing and mounting of transformers. High -Rise Sign: A tall freestanding sign, usually of pole design and construction. #A- a. ` -;r.W..x„e,i:,4Y.twwaaw�:.�►J.G,i.ahY..it+4` -4a '°,�W :w= - �i�6yw4i�. ��'� :rti �,is'�:. :ti i�`.. GLOSSARY OF SIGNAGE TERMS ® + Highway 13ezutliication Act (iI110 Federal legislation enacted in 1965 — commonly called "lady Bird Johnson Act." This act, as amended from time to time, controls outdoor advertising along 306,000 miles of federal-aid primary, interstate, and National Highway system (NHS) roa The HBA allows the location of outdoor advertising structures in commercial and industrial are mandates a state compliance program and development of state standards; promotes the expec tious removal of illegal signs; and requires the payment of lust compensation (that is, cash) for acquisition and removal of legally constructed and located outdoor advertising structures. Illegal Sign A sign unlawfully erected or maintained. Impulse Buying: An unplanned or shifted purchase. Incandescent Bulb; A lamp that produces light through the application of electrical energy to a wire filament, which glows as it is heated. Its application is limited because it is a point source light; not easily diffused. it generates considerable heat, and its life span is limited by tite filament degra- dation factor. Unlike neon tubing, It can be mass produced. (See fluorescent lamp; neon sign.) Income Approach: A valuation approach based on analyzing the amount of net income a proper- ty will produce over its remaining economic life. Interior Signs: Signs that are located inside a building or other facility. Illuminated Sign: A sign with electrical equipment installed for illumination at night or in early morning darkness, either internally Illuminated through its sign face by a light source contained inside the sign or externally illuminated by reflection of a light source aimed at its surface. ISA: International sign Association. Just Compensatiotu The full monetary value to be paid for property taken by the government in accordance with the Fifth Amendment of the U.S. Constitution. Just compensation is generally determined by obtaining an appraisal. THE VALUE OF SIGNS i a„r - _ — "�".`••'i✓8i,t:.A L.i '6i= �i,sl►ic.IM�kJ4yRi.l�Ylas..1.1.+�.i.JCJ„ai..ki..�.w.rw. Legibility: The characteristics of letters, numbers, graphics, or symbols that make it possible to dif- ferentiate one from the other. (See conspicuity.) Light -Emitting Diode/Display (LED) and liquid Crystal Display (LCD), Electronic devices that channel light through tubes to create patterns that can ptcxiuce changing video displays. Listed Sigm A sign labeled to indicate that the manufacturer of the sign is identified on a list pub- lished by a nationally recognized testing laboratory as producing signs in conformance with the applicable American national standard. Load Factor (Vehicle Load Faetor)t The average number of persons riding in each vehicle; deter- mined through national, syndicated, and government research reports. Logo: A design or symbol that represents a product, identity, or service. Logo Program (Federal): A program of national sign standards to provide travelers along rural roads with business identification and directional information for four essential motorist services: gas, food, lodging, and camping. The Manual on Uniform Traffic Control Devices (MUTCD) limits the number of establishments that may participate at any one interchange to six. (Also known as "Specific Service Signs.") Manual On Uniform Traffic Control Devices (MUTCD)t A manual produced by the Federal Highway Administration that establishes, among other things, minimum size, height, and place- ment standards to which a sign must conform to achieve readability and conspicuity — and pre- � ent traffic accidents. The manual specifically addresses three types of signs: guide, warning, and directional. Although intended for public transportation authorities, the manual Is directly relevant to private signage as well. Market Approach: one of three valuation approaches referring to the highest price at which a property could be sold given a reasonable exposure period in the market. The final determination of value assumes that amount to which a willing seller and a willing buyer of equal knowledge would agree, neither being or acting under duress. GLOSSARY OF SIGNAGE TERMS ® �. Marquee: A permanent canopy often of metal and glass projecting over an entrance. Marquee Sign: (1) A sign mounted on a permanent canopy. (2) A traditional industry term for variable -message section of a canopy sign. (3) An integral sign and permanent canopy. Media Mix: The combination of different media forms into a single advertising program to meet tk overall objectives of the advertiser. Signage can enhance the overall effectiveness of a media mix,'4 particularly by increasing reach and frequency, and by establishing brand continuity over time. Menu Board: A variable -message sign that allows a retailer to list products and prices (for exam-' pie, the bill of fare for a fast-food restaurant). Message Area: The area within the sign panel describing the limits of the message. Message Center An electronically or mechanically variable -message sign enabling changes to be made from locations other than at the sign. (See variable -message sign.) Mobile Sign A portable sign mounted on a trailer. Monument sign; A ground sign with low overall height. (See freestanding sign.) Nonconforming Sign: A sign that was legally erected and maintained but does not comply with subsequently enacted sign restrictions. Under the Highway Beautiffcarlon Act (HSA), removal or acquisition of legal nonconforming outdoor advertising structures requires the payment of just com- pensation (that is, cash). Amortization is not a permissible form of compensation under the HBA. Neon Sign or Tube: A sign utilizing a cold -cathode -gas discharge tube produced in straight or formed configuration; generally referred to as a neon -gas discharge tube, whether filled with neon or a mixture of two or more other Inert gases (argon, helium, krypton, or xenon). Neon -tube light- ing is a custom designed, optimally visible lighting system that may be shaped to form letters, pans of letters, skeleton tubing, outline lighting, and other decorative elements or art forms, in various colors and diameters. The cold -cathode tube can operate for many years, while the hot -cathode fluorescent lamp is limited to a relatively short life, as is the incandescent bulb. (See Fluorescent lamp; incandescent bulb.) THE VALUE OF SIGNS Outdoor Advertising Association of America. Og:premise Signr A sign directing attention to a specific business, product, service, entertain- ment event or activity, or other commercial activity that Is not sold, produced, manufactured, fur- nished, urnished, or conducted at the property upon which the sign is located. Also known as a third -party sign or outdoor advertising, and considered out -of -home media. on -Premise Sign: A sign whose message and design relates to a business, profession, product, service, event, or other commercial activity sold, offered, or conducted on the same property where the sign is located. Signs in the on -premise category are not considered out -of -home media. open Cluannel Letter: A dimensional letter that has no face anti, if illuminated, has a visible light source. A clear face for physical protection of Internal components may be used. outdoor Medlar Advertising that is displayed outside of the home and on sign structures that are owned by a media company or other third -party entity. Out -of -Home Media: Generally, advertising that is intended to reach individuals outside the home. All forms of outdoor advertising are considered out -of -home media, while on -premise signage is not. Outside Panel: An advertising panel located closest to the edge of the street, where two or more panels are positioned side by side, Overlay (Snipe): A paper strip or price designation, such as a dealer imprint for a promotion, which is pasted on the face of an existing advertising panel. Painted Wall Sign: A sign painted directly on a building surface. If the sign is a third-party/out- door advertising display, it may be several stories high and designed for high -impact visibility, (See building -mounted sign.) Pan Channel Letten A dimensional letter that is constructed with side walls, a back, and a face, making the letter a solid integral unit with the side walls and back having a pan - shaped cross-section. GLOSSARY OF SIGNAGE TERMS Z IV Pan Facet A plastic sign face molded into a three-dimensional shape. Also tailed molded face,," molded and embossed face, or molded and debossed face. Panels An outdoor advertising display with a standardized size dimension. Panels Per Facing (PPF)t The number of panels — one, two, or more — that face due same direcuon on a given advertising structure. Parapet Signs A sign mounted on top of the parapet of a building. (See building -mounted sign Permanent Signs A sign attached to a building, structure, or the ground in a manner that enahlcs the sign to resist environmental loads, such as wind, and that precludes ready removal or move ment of the sign. Plants Generally, the term reefers to an outdoor advertising company in a geographical location, it may also refer to all the advertising structures operated by such a company in a discrete market. Plant Operaton A company or individual that operates and maintains outdoor/out-of-home advertising structures, Plant Operator Statements Independent verification of the circulation numbers of TAB -member outdoor plants based on field audits conducted by TAB, presently available for bulletins, 30 -sheet posters, eight -sheet posters, transit shelters, and truckside advertising. Plant Rep (Bepresentative)s An agent who represents morethan one plant operator in different markets. The agent works to place advertising campaigns for each plain market in return for it fee or commission. Pole or Pylon Cover: An enclosure for concealing and,'or decorating poles or other structural supports of a ground sign. Pole Sign: A freestanding sign with visible support structure. THE VALUE OF SIGNS ble Signs A sign not permanently attached to the ground or a building, and easily removable ordinary hand tools. post and Panel Signs An unlighted sign fabricated by using one or more visible posts to support the sign body. poster. Paper or vinyl advertising sheets that are hung by hand onto outdoor advertising structures. Poster Panel: An outdoor advertising structure generally measuring 12 x 25 feet. Poster panels represent the largest number of outdoor advertising signs, poster— Bleed: A poster panel advertisement with no blanking paper used — copy extends to the molding on each side as well as from top to bottom. Poster— 30 -sheet: An outdoor advertising panel with copy area measuring approximately 12 feet 3 inches high x 24 feet 5 inches wide. Poster panels are widely distributed throughout a market on primary and secondary arterials to provide complete coverage to vehicular residents and inbound and outbound commuters. Poster—Eight-Sheet: An outdoor advertising panel with copy area measuring 6 feet high x 12 feet wide, and concentrated in urban areas along mixed-use streets and corridors. These panels reach the pedestrian as well as vehicular traffic, and are sometimes placed at or near a point of purchase. Premiere Panel (Vinyl -Wrapped Posters A standard display forsnat created by stretching a vinyl substrate over a standard 30 -sheet paster panel and molding. Premiere square (square Vinyl -Wrapped Poster): A standard display format created by stretch- ing a vinyl substrate over two stacked standard 30 -sheet poster panels and molding. Projecting Sign: A building -mounted sign with the faces of the sign projecting from and perpen- dicular to the building fascia, GLOSSARY OF SIGNAGE TERMS Push-Throught A letter or logo that is cut out of a backing material as thick or thicker than the sign face material, and then mounted on the Inside of the sign face so that the backing material's thickness extends Flush with or through and beyond the front plane of the sign face. Pylon Signs A freestanding sign with a visible support structure, which may or may not be enclosed by a pole cover. Public service (PSA) Copy. Advertising of a civic or philanthropic nature pled in the interest „t community welfare; not counted in audited circulation by TAB. Raceway: An electrical enclosure that may also serve as a mounting structure for the sign. Rate: The quoted or printed cost of outdoor advertising, usually stated for a total program gross - rating -points (GRP) level on a per week or month basis. Rating [,()III(: t hie rating point equals 1% of a market's population. Reach: That percenuige of the total target audience who will be potentially exposed to an adver- tising message one or more times during the advertising program. Reach measurements are com- mon to all advertising media. Readability: The quality that enables the observer to correctly perceive the message. (See conspicuity.) Recailr The ability of a viewer or listener to remember an advertising message. The recollection stimulus may be verbal or visual. Recognitions The ability of a viewer or a listener to Identify a message and connect it with the advertiser. Regulatory Signs A sign having die primary purpose of conveying information concerning rules, „nlu:ant c,. ,,r laws. THE SIGNAGE APPRAISAL MANUAL ketstinan A framing member mounted around the perimeter of a sign face and attached to the Sign cabinet structure, it is designed to attach the face to the cabinet and/or intended to provide a decorative trim piece. Rentrrr: The sides of a channel letter. Revealt An indented detail on a sign. Reverse Channel letter. A fabricated dimensional letter with opaque face and side walls. Right of Way (ROW)% The land on which a public thoroughfare is located and certain lands adja- cent thereto. Permanent commercial signs are generally located on private land adjacent to the public right of way. Roof Sign. A building -mounted sign erected upon and completely over the roof of the building. Rotating/Rotary Bulletins The movement at stated intervals of an advertiser's message from one bulletin location to another within a market to achieve greater reach within that market. Showing: The number of outdoor advertising panels In a given market required to reach a fixed percentage of its population on a daily basis. Showing is generally represented as 25, 50, 74, and 100, figures which refer to the degree of "Intensity" of the showing and not to actual numbers of panels in the showing. indigenous to the outdoor advertising industry, the term is being phased out in favor of more accurate gross -rating -points (GRP) levels. sidewalk/Sandwich Stgtu A moveable sign not secured or attached to the ground or surface upon which it is located, but supported by its own frame and most often forming the cross-sec- tional shape of an A. Signs Any device, structure, fixturr, painting, or visual image using words, graphics, symbols, num- bers, or letters designed for the purpose of conveying information or attracting attention. Sign Pace: The area of a sign on which copy is intended to be placed. GLOSSARY OF SIGNAGE TERMS flMl, r. Signage: A system of place -based communication devices and graphics intended to impart infor- mation or attract attention, that includes signature buildings and product displays and dispensers, as well as traditional projecting, wall, roof, and freestanding signs. (See signature building.) Signature Building: A building architecturally designed and/or painted or decorated to reinforce a traditional sign's message or display; it also reinforces major media advertising programs. Sign'centric Design: Building or site design that makes the on -premise signage the prominent visual feature of the building or site. Single -Face Sign: A sign with only one face plane. Snipe (Overlay): Refers to a small, added strip along a paster design to announce special or revised messages. Spectacular. An outdoor advertising structure built to the specifications of one advertiser for long- term use. The message copy, design, or display is presented in an outsized (or spectacular) fashion through a variety of devices such as embellishments, special lighting effects, and 3D features. Street Furniturei Advertising displays, many which provide a public amenity such as bus bench- es, positioned at close proximity to pedestrians for eye -level viewing or at a curbside to reach vehicular traffic. Target Audiencet The most desired consumer prospects for a product or service, profiled by char- acteristics such as demography, lifestyle, brand or media consumption, and purchasing behavior. Identifying a target audience is cornmon to all advertising media. Temporary Slgru Any sign not intended for permanent installation. Generally, these signs are intended to be used for a limited period of time for purposes such as announcing special events or sales, announcing the sale or rental of property, supporting political positions, or presenting other miscellaneous or incidental information or instructions. 7Yme-and-TemPeratur'e Dlsplayl A variable -message sign that displays current time and tempera- rure in a stationary or alternating manner. Some also display simple messages. THE SIGNAGE APPRAISAL MANUAL Tourist -Oriented Directional Signs (TODs)t A federal sign program that provides for small busi- ness identification and directional information for businesses, .services, and activities where incomes and/or visits are derived from tourists or travelers. This program is intended only for use on rural conventional roads. Sign content is limited to the Identification of the business, service or activity, and directional information. TODS do not include promotional advertising. Trade Area: Most retail businesses have a relatively fixed area from which business is derived. in general, the trade area is either the residence or work locale of the potential customer or client. The trade area for most small businesses is three to five miles; however, the high mobility of the consumer population makes it difficult to establish all sources of business or clearly define trade - arca demographics and boundaries. Trulemark (Also Service Mark)t Used by a business to distinguish itself and its products from the competition. A trademark may include a name, symbol, word or any combination thereof. Trademarks are protected by the federal government and considered to have financial value. The circled "R" or "Reg. T.M." printed with the mark indicates that it is a registered mark. See United States Trademark Act 15 U.S.C. Section 1127 (1988). Traffic Audit: The authentication of circulation as applied to on -premise and outdoor advertising (out -of -home media), Data is collected either by official (government) count or by hand count. For the outdoor advertising industry, the Traffic Audit Bureau (TAB) verifies the data. Traffic Audit Bureau (TAB)[ Founded in 1934, the TAB is a [hirci -party, independent organization supported by advertisers, advertising agencies, and outdoor advertising media owners, The TAB applies statistically reliable counting procedures, and is the official national authority for circulation authentication of outdoor advertising displays. Traffic Coutitt The recording of the vehicles and pedestrians passing a given point, usually in a day. Traffic counts are provided by a government or other reliable counting agency. The outdoor advertising industry relies on the Traffic Audit Bureau (TAB) to authenticate the potential exposure of Its outdoor advertising displays. GLOSSARY OF SIGNAGE TERMS li iYf+rFs�s�e9rrwoa.aars�wr.r,.swrr,.ew -,.. •:gMA Traffic Flows A graphic presentation of the traffic volume along any system of streets, arteries, highways, indicated by width of lanes, which vary with the amount of traffic carried. Traffic Origin Studies: Research that provides sign owners and advertisers with information y ,, about audiences passing their signage. Collected license -plate data or toll -booth research is correiy , lated with residence data and demographics to pinpoint the origin and destination of persons hav'-'' ing potential exposure to the signage. Transformer: Electrical equipment that converts input voltage and current to a different output r voltage and current. Transit Advertiaing; Outdoor advertising displays affixed to moving vehicles or In the common areas of transit stations, terminals, and airports, including, but not limited to, Interior and exterior bus panels, subway and nil panels, airport panels, taxi panels, and truckside panels. M Underwriters Laboratories, Inc., a nationally recognized testing laboratory Under -Canopy Sign: A sign mounted underneath a canopy. variable -Message Sigru A sign that includes provisions for message changes. Also called change- able -copy panel, changeable -copy sign, time -and -temperature sign, electronic message center, or menu board, Variancet Special administrative procedure by which one may obtain an exception to zoning rules such as height, setback, and type of use. Vinyl (Flexible Face): A substrate upon which an advertising message is rendered, either by com- puter production or hand painting. Visibilityt The quality of a letter, number, graphic, or symbol that enables the observer to distin- guish it from Its surroundings or background. THE SIGNAGE APPRAISAL MANUAL `u1W./Ci1eU�It;Yp moil'=1'�.i,Li,i.�..�,.#.j:,�1f.JA+Iluh4i.i�di,Arrvi.iJLtlYaYf�dl.r4�11,�ii,WC�R'/IL+WiY.Av6,B1du� Wall Mumb An advertising display applied directly onto the exterior surface of a building. Painting directly onto the surface is the most common application method; however, a painted or printed vinyl substrate can also be applied to a wall surface, depending on the location. Wall Sign: A building -mounted sign either attached to or displayed or painted on an exterior wall in a manner parallel with the wall surface, and not projecting more than 16 inches from such sur- face. (See fascia sign.) Wave Posting: A concentration of poster showings in a succession of areas within the market, usually coinciding with special promotions in the designated areas. Wayfinding: A term used to describe the task of finding one's way to a given location using infor- mation found along the travel path. Window Sign: A sign that is painted on, attached to, or suspended directly behind or in front of a window or the glass portion of a door. GLOSSARY OF SIGNAGE TERMS I A P P E N D I X III REFERENCES & RESOURCES American Association of Advertising Agencies, 666 Third Ave., New York, NY 10017, American Society of Appraisers, 555 Herdon Park Way, Suite 125, Herdon, VA 20170. American Planning Association, 122 S. Michigan Ave., Suite 1600, Chicago, IL 60603. Anderson, Raymond T. 1983. The Economic Value of On -Premise Signs. International Sign Association (formerly National Electric Sign Association), Alexandria, VA. Aran, Robert M., J.D. Scottsdale, Arizona. Arthur, Paul and Romedi Passini. 1992. Wayfinding: People, Signs, and Architecture. McGraw-Hill Book Co., New York, NY. Bass, Richard W., MAI/AICP/EAC. Sarasota, Florida. The Economic Value of On -Premise Signage. 1997. California Electric Sign Association (CESA) and the International Sign Association (ISA). Claus, R. James and Karen E. 1974. Visual Communication Through Signage, Volume 1, Perception of the Message. ST Publications Inc., Cincinnati, OH. Claus, R. James and Karen E. 1974. Visual Communication Through Signage, Volume 3, Design of the Message. ST Publications Inc., Cincinnati, OH. Claus, R. James and Richard W. Bass. "The Economic Worth of On -Premise Signs, Part I." Signs of the Times, September 1998 ed., ST Publications Inc., Cincinnati, OH. THE VALUR OR SIGN; q itl"4T 3'd'9"AF'4'i1 a. `. Claus, R. James and Richard W. Bass. "The Economic Worth of On -Premise Signs, Pan 2." Signs of the Times, October 1998 ed., ST Publications Inc., Cincinnati, OH. Competitive Media Reporting, 11 West 42nd St., New York, NY 10036. Federal Highway Administration (FHWA), 400 7th St. SW, Washington, DC 20590. Gittings, Gary L. "Ton Liability in the Pennsylvania Department of Transportation." Conference proceedings: Effectiveness of Highway Safety Improvements, American Society of Civil Engineers, New York, NY, pp. 102-116, March 1985. institute of Traffic Engineers, 525 School St., S.W., Washington D.C. 20024 Jones, Ken and Jim Simmons. 1990. The Retail Environment, Routledge, New York, NY. Nichols on Eminent Domain, 8A. Ord ed. 1997, 1998). Matthew Bender Publishing Co. Inc., New York, NY. Nystrom, Paul H. 1978. Economics of Retailing. Arno Press, New York, NY. Outdoor Advertising Association of America (OAAA), 1859 M St., Suite 1040, Washington DC 20036. Schwab, Richard N. 1998. Safety and Human Factors: Design Considerations for On -Premise Commercial Signs, International Sign Association, Washington DC. Stern, Rudi. 1995. The New Let There Be Neon. ST Publications Inc., Cincinnati, OH. Signage Foundation for Communication Excellence Inc. "A Challenge to Sign Regulation," 1997. Letter to the Editors, Journal of the American Planning Association, 64, 1: 88-93. Swormstedt, Wade. "Delays and Damages." Signs of the Times, March 1998 ed., Si' Publications inc., Cincinnati, OH. REFERENCES & RESOURCES IM Swormstedt, Wade. "Is Blockbuster [v. Tempe AZ) Decision a Blockbuster-,' Signs of the Times, July.' 1998 ed., ST Publications Inc., Cincinnati, OH. Swormstedt, Wade. 'Me Valuation of an Electronic Message Center Freeway Sign." Signs of the Times, April 1999 ed., ST Publications Inc., Cincinnati, OH. Swormstedt, Wade. "The 1999 State of the Industry Report." Signs of the Times, July 2000 ed., ST Publications Inc., Cincinnati, OH. The Urban Land Institute, 1985, Shopping Center Development Handbook. The Urban Land Institute, Washington DC, Traffic Audit Bureau for Media Measurement, Inc, (TAB), 420 Lexington Ave., Suite 2520, New York, NY 10170. Transportation Research Board, National Research Council. 1988. Transportation in an Aging Society; Committee for the Study on Improving Mobility and Safety for Older Persons. U.S. Government Printing Office, Pittsburgh, PA, Ulmer, Mark S., J.D. Miami, Florida. (See, Chapt. 23, Nichols on Eminent Domain. Rel 44-4/97. Pub 243/460. Matthew Bender & Co. Inc., New York, NY.) U.S. Department of Transportation, Federal Highway Administration. 1988. Manual on Uniform Traffic Control Devices for Streets and Highways. U.S. Government Printing Office, Pittsburgh, PA. Weinstein, Alan C., Professor of Law & Urban Sntdies, Cleveland -Marshall College of Law, Cleveland, OH. Yarger, John, J.D. "Sign -Valuation Arguments Thwart Amortization." Signs of rhe Times, December 1998 ed., ST Publications Inc., Cincinnati, OH. Ziccardi, Donald with David Moin. 1997. Masterminding the Store. John Wiley & Sons Inc., New York, NY. THE VALUE OF SIGNS INDEX A Advertising See Commercial communication Advertising Age, 124 Agoura Hills, 26.29, 35, 91 Amendment, fifth, 4-5, 9, 11-12, 62, 70-78 abatement, 75-76 accessory -use. 77-78 amonization, 74-76 burden of proof, 10 compensation, 4-5, 70.78 condemnation, 72, 73-74 due process, 70 on -premise signs, 70, 73-74, 77-78 outdoor advertising, 70, 71-72, 77 police power, 75-76, 94 prior restraint, 78.79 removal, 71--3 state laws, 73'4, 76, 105 takings clause. 9-10, 70 U S. Supreme Court, 70, 77-78 valuation, 4-5,130-131 zones, 70 Amendment, first, 3, 11, 12, 62, 63-69 current status. 6869 history, 63.66 Lanham Act, 79-82 prior restraint, 78-79 state laws, 69. 80 traffic. 94 U.S. Supreme Court, 63-69 Amendment, fourteenth, 11, 12,62,78-79 due process, 63, 78 on -premise signs, 7880 permit, 78-79 prior restraint, 79.80 U S. Supreme Court, 79 American Planning Association (APA), 157.158 American Society of Appraisers, 8 Americans with Disabilities Act, 51 Anwrtlrmlon and abatement, 75-76 Agoura 111118, 26 Amendment, fifth, 74-76 codes, 92 compensation, 76-77 Highway Beautification Act, 6-7 history of, 74.75 nuisance per se, 7, 75-76 (See ako Nuisance, public) state laws, Iii Apprilsal approaches, 118-129. 139, 140.159 codes, 86,87-89 disputes, 131-132 enabling act, 86 Influences, 3.5 media coverage, 150.155 on -premise signs, 130.159 application of techniques, 140-158 outdoor advertising, 102.128 application of income approach, 125-128 See also On -premise signs, valuation; Outdoor Advertising, valuation Appraisal Foundation, 8 Appraiser Qualification Board, 8 Appraisal Institute, 132 Appraisal of Real Estate, 132.133 Appraiser role of, 9-10 a Baker, Edwin (Ted). 8 Best Buy, 45 Billboards, 5, 37, 77 Blackmun, Harry, 64 Blockbuster Videos Inc. & Video Update v. City of Tempe (A7.), 81-82 INDEX " Board of Trustees of State University of New York v Fox, 67 Bonus Act, 6, 50-51 BP Oil, 56 Brennan, William P., 77-78 Bulletins, 37-38 Burger King, 2749, 35, 61 Business and Professions Code, 29 C Caddy's v. Hamilton County, Ohio, 73.74 California Business and Professional Code, 26-27 Capitalization (CAP) rate, 126.127, 139, 145 Censorship, 3, 63-69, 79, 86, 90-91 Central Hudson Gas & Eleciric Corp. v, Public Service Commission, 65, 66.67, 68.69 Citizens United for Free Speech v. Long Beach Board of Commissioners, 82-83 City of Cincinnati v. Discovery Network, 67.68 City of Ladue v. GWeo, 83-84 City of Lakewood v. Colfax Unlimited Association. 84 City of Monterey v. Del Monte, 4 City of Waterloo v. Markham, 84-85 Claude, George, 58 Codes aesthetics, 88-89 amortization, 92 Business and Professions, 29 design review, 87, 88-89, 158 driver, 95 economy, 101 federal government, 110.112 hypothesis, 94-95 land -use, 12, 88 minimum adverse impact, 91-92 nuisance, 7, 75.76, 93 on -premise signs, 5, 90, l()0, 130.131, 136.137 restrictive, 89-91, 93, 100, 144 Specification, 87.89 state laws, 86, 94 `# THE VALUE OF SIGNS trade area, 25.26 traffic safety, 87-88, 93-99, 100 types of, 87-89 upscale communities, 89, 91 U.S. Supreme Court, 89, 94 Sea also Zoning Combined Communications Corporation dba Eller Outdoor Advertising v. City of Denver, 94 Commercial communication Amendment, first, 3, 63-66 devices, 16.17 economy, 3, 14-15 effectiveness measures, 16.17, 43-45 factors influencing, 3.9, 36 function of, 61 on -premise signs, 15.17, 46-49 outdoor advertising, 107-108 retail, 15-17 signage needs, 17-18 strategies, 10-11, 36-41 terms used in, 41.43 Sae also Media communication Condemnation, 5, 71, 73-74, 111.112, 122 Consulting studies, 131-132 Consumer behavior, 32, 36, 45-46 brand awareness, 33 effectiveness measures, 43.45 -nobility, 10, 14, 18, 22, 26, 32, 35, 93 research, 34-35 trade area, 21-24 Consumption, cyclical and noncyclical, 31-32 Cog -of -replacement approach, 103, 118420, 146-155, 159 Cost -per -thousand exposures, 45, 115, 147, 152155, 159 C:rescenta Valley, California, 156.157 D Daily Effective Circulation (DEC), 114 Deficiency hypothesis, 9495 Denny's Inc., et al. v. City of Agoura Hills, 26-29, 35,91 Desert Outdoor Advertising, Inc. v. City of Moreno Valley, 79 Destination/shopping trip, 19-21 Driver decision making, 95-97 distraction, 97-98 Frequency measurements, 44-45, 146 and legibility, 93. 98-99 message clarity, 96.97 profde data, 114175 See also Traffic 6 Economy Amendment, fifth, 70 base, 22 codes. 101 and consumption, 31-32 on -premise signs, 17, 100.101 and retail, 3, 31-32 role of, 3, 10, 14.15, 17 trade area, 22 Edison, Thomas, 58 Effective Gross Income Multiplier (EGfM), 102-103, 127-129 Electric signs, 56-57, 58 Euclid, Ohio, 134 Evaluation studies, 131.132 i F Federal Highway Acts, 5-7, 12, 50-51, 94, 106, 122.124 Federal highway Administration, 93. 94, 95, 105, 122 124 Federal highway Safety Division of the Federal Highway Administration (FHWA), 51, 123-124 Federal interstate highway system, 50-51 Federal loan programs, 3.4 Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), 5, 8-9 Fixed points strategy, 18 44 Liquormart Inc, v. Rhode Island, 68-69 Franchises, 11, 2425, 30, 45.46, 56, 61, 92,140 Freedman v. Maryland, 79 O General Motors, 14 Graphic designers, 60-61 Gross exposures, 116-117, 146-147, 151.152 Gross rating points (GRP), 115-117, 152 Gulf Industries of Torrance, CA, 44 H Highest -and -best use, 26, 91, 112, 137-138 Highway Acts Sete Bonus Act; Highway Beautification Act Highway Beautification Act, 6-7, 50-51, 71-72, 76, 109, 110.112, 118 Amendment, 7 Home Depot Inc., 22, 155-157 Hybrid retail strategy, 20.21 1 impressions Sea Cost -per -thousand exposures Impulse stop, 19, 20-21, 143, 149 In-home media, 36-37 See also Out -of -home media INDEX_ Incidental signs, 54, 84-85 See also Political signs; Real estate signs Income comparison approach, 122-129, 143-146 See also Market comparison approach Income statement, 126.127 Index theory, 25-26 Interstate AM See National System of Interstate and Defense Highways Act K Kmart, 45 L Land -use, 12, 70, 75, 76-78, 86, 88, 89 Land -value esUmate, 138-139 Lanham (Trademark) Act, 61, 79-82 laser technology, 59 :.egibd ity, 93, 96, 98-99 See also Visibility Letter heJght guidelines, 98 Letterheads, 57 Light -emitting diode (LED), 59 Linmark Associates, Inc. v. Township of Willingboro, 82 Lrsa's Party City, Inc. v. Town of Henrietta, 81-82 1.orrdlard Tobacco Co., et al. v. Reilly, 69 M Manual on Uniform 'traffic Control Devices (MUTCD), 51, 98-99 Market comparison approach, 120-122, 141.143 137-139, 160, 167, iso Sse also Income comparison approach Marketing 6merican business types, 46A9 codes, restrictive, 89.91 THE VALUE OF SIGNS profitability, 33.35 restrictive codes, 89-91 retailing rules, 33-34 strategies, 10-11, 30-35 See 4150 Commercial communication; Media Communication Matched -pair analysis, 155.158 McDonalds, 9, 17, 21, 24-25, 28, 34, 45, 56, 97 Media communication costs. 45-46, 150-155 on -premise signs, 15-17, 39-41, 146.147, 150-155 outdoor advertising, 37-39, 107-108 types of, 36.41 See also Commercial communication Meineke Mufflers, 4546 Metromedia Inc. v. City of San Diego, 66-67, 84, 94 Minimum sight distance, 98-99 Mobile points strategy, 18-19 Monitoring, 95 N National System of Interstate and Defense Highways Act (interstate Act), 5-6, 106 See also Bonus Act; Highway Beautification Act Neon, 58 Nonelectric signs, 57 North Olmsted Chamber of Commerce, el. al. v. City of North Olmsted, 79 Nuisance per se, 7, 75.76 public, 93 O Off-premtse signs w Outdoor advertising On -premix signs accessory use, 7-78, 135 codes, 5, 90, 100, 131-132, 136-137 commercial communication, 46.49 community impact, 24-26, 99-101 compensation, 4-5, 72-76, 130 condemnation. 73.74 cost -per -thousand exposures, 147, 152-155, 159 data collection and selection, 136-137 development strategies, 18-21 and the economy, 17, 100-101 effective, 15-18, 96.97 franchise, 24-25, 30 functions of, 2-3 gross exposures, calculations, 116.117, 146-147, 151-152 guidelines. 41 highest -and -best -use, 137-138 industry, 54-60 land value estimate, 138-139 legibility, 98-99 location of, 16-22, 41, 96 manufacturers of, 56.58 media communication, 15.17, 41, 146.147, 150-155 message clarity, 96.97 property interest, 135-136 retail, 15-17, 24-26 state laws, 26.29, 73-74, 135.136 technology, 58.60 trade area, 21-24, 148.150 traffic now, 95.97, 148.150 types of, 56-60 U.S. Supreme Court, 77-78, 85, 131 valuation approaches, 12-13, 139 140-159 consideration, 134 final, 139 indications, 139 process, 132.139 reconciliation, 139 techniques, 140-158 vs. evaluation, 131-132 visibility, 32, 41, 132, 136, 139, 140, 141-142, 155, 157 zoning, 4-5 Operating income, 125-126 Out -of -home media, 37-39 See also In-home media Outdoor advertising appraisal of, 102,108-117 bare leasehold, 104-105 block grants, 109 commercial communication, 107.108 compensation, 4-5, 6-7, 71-72, 104, 111.113, 120-122 condeauiation,111-112 cost -per -thousands exposures, 146-147 determine cost of, 111-112 driver pmnle, 114-115 fair -market value, 103 federal and state laws, 70, 71-72 effects of. S-7, 105, 110.117 government involvement, 1W I12 gross exposures, calculations, 116-117 highest -and -best -use, 112 imminent domain, 109 industry, 51-53, 106-108, 119 location of, 39 market area, 107-108 media communication. 37-39, 107-108 personal property, 104-105 removal of. 71.72 scope, 109-110 sign industry, 51-53 state laws, 110.111 strictures, 106-107 traffic Flow, 114.115 Uniform Act, 104-106, 111.112 valuation approaches, 12-13, 118.129 INDEX assignment, 108-110 description of, 103-105 Highway Beautification Act, 110-112 process, 118-129 visibility, 112-115, 124 Outdoor Advertising Association of America (OAAA), 42, 107, 122, 124, 148 Plant Operations Guidelines Manual, 107 P Palm Beach, Florida, 91 Pennsylvania Department of Transportation, 93 Point -of -distribution, 22, 143 Political signs, 83.85 Poster, 38.39, 56, 107 Power centers, 19-20 Printers, 59 Private/commercial industry, 51-54 Public, noncommercial induanr, 11, 50-51 a Quick -Service Food Business (QSF), 34-35 Real estate signs, 82-83, 137 Recall and recognition, 41-43. 115 Removal and Rehabilitation Aa Sea Uniform Relocation Assistance and Rani Property Acquisition Policies Act of 19'%,) Retell and codes, 90.91, 91.92 commercial communication. 14.15 development strategies, 18.21 and the economy, 3, 31-32 location strategies, 18.21 marketing rules, 33-34 THE VALUE OF SIGNS on premise signs, 15-17, 24-26 Profit margins, 33-34, 45-46 Quick -Service Food Business (QSF), 34-35 types, 16, 101 See also Trade area Roosevelt, Franklin D., 3-4 S Sambo's of Ohio v. City Council of Toledo, 80 Schwab, Richard N., 95 Shopping center, 141-143 Simi Valley, California, 156-157 Size guidelines, 98-99 Small Business Administration (SBA), 4, 8, 109 Small business owners, 44 South -Suburban Housing Center v. Greater South Suburban Board of Realtors, 82-83 Standard Metropolitan Statistical Area (SMSA), 38-39, 107, 110, 115, 125, 127-128 State Department of Motor Vehicles (DMV), 43 Stevens, John Paul, 68 Substitution approach See Cost -of -replacement approach Subway, 24, 25 Supreme Court See U.S. Supreme Court Temporary signs, 54, 84-85 See also Political signs; Real estate signs Texaco, 28 Thomas, Clarence, 69 Thousand Oaks, California, 156.157 Top -of -mind awareness, 42-43, 115 Trade arca calculations, 145-146 development strategies, 22-24 economic base, 22 Instability, 32-33 Quick Service Food Business (QSF), 35 regulation, 25-29 traditional, 18.20, 21.24 See also Retail Traffic accidents, 93 Amendment, fust, 94 calculations, 116-118 codes, 87-89, 93-95 distraction, 97.98 Bow data, 148-150 on -premise signs, 95-97, 114-115 outdoor advertising, 114-115 safety, 87-88, 93.99 See also Driver Traffic Audit Bureau (TAB), 51, 53, 113-114, 120, 124, 148 Plant Operator Statement, 113 Summary of Audited Markets, 113 U Undivided Fee Rule, 104-105 Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 71.72, 76, 104-105, 111-112, 123.124 Uniform Standards of Professional Appraisal Practice (USPAP), 8, 9, 130-131, 132, 134 Unit rule See Undivided Fee Rule United Advertising Corp. v Borough Raritan, 77 United States v. 40 Acres of land in Henry Co., 105 U.S. Department of Housing and Urban Development (HUD), 4, 8, 109 U.S. Supreme Court, 63-70, 71.72, 77-78, 79, 82.83, 85, 89, 94, 131 V Valencia, California, 156-157 Variable. -message center, 58-59 Veterans' Administration, 8 Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 64-65, 68.69 vi.sihillty, Agoura Hills, 29, 91 federal standards, 50 on -premise signs, 32, 41, 132, 136, 139, 140, 141-142, 155, 157 outdoor advertising, 112-115, 124 and public nuisance, 93 Quick -Service Pood Business (QSF), 35 restrLtive, 91 traffic safety, 94 See also legibility W Wal -mart, 14, 33-34, 45 Wall Street Journal, 124 Wayfinding, 56, 87.88, 95, 99, 100 White, Byron, 67 Z Zero-sum garne theory, 31-33 Zoning commercial, 100 diminution, 4-5, 72 enabling act, 86 exclusionary, 91 land use, 12, 70, 75, 76-78, 86, 88, 89, 158 on -premise signs, 4-5 retail, 91.92 See also Codes INDEX NOTES NOTKS THE VALUE OF SIGNS INDEX NOTES ". . THE VALUE OF SIGNS ammov— A m E .cA- RUG COMA�MYr _ n_ N' - A INTERNATIONAL SIGN ASSOCXATION 707 N. St. Asaph St. Alexandria, Virginia 22314-1911 Phone (703) 836-4012 FAX (703) 836%353 World Wide Web Site: http://Www.signs.org ® 1 41� 1 �r ! L-A INTERNATIONAL SIGN ASSOCIATION 707 N. St. Asaph St. Alexandria, Virginia 22314-1911 Phone (703) 836-4012 FAX (703) 836-8353 World Wide Web Site: http://vvww.signs.org CCopyright 2001 by the International Sign Association. All rights reserved and may not be reproduced in any form without written permission from ilia ISA. Some of the illustrations in this book previously appeared in Signs ojthe 77mes magazine. They are reprinted with permission of the publisher. Authors: R. James Claus and Susan L. Claus Editing: Anne Marie Melmon Layout and Design: Becky Miller For more information, contact: The Slgnage Foundation for Communication Excellence P.O. Box 128 Sherwood, OR 97140 also visit these wehsites www.signagefoundatiou.org www.stra.Rov/starting/%linage -. _.� -_ �MabAa.4ii�J1i.Y�.Yasa+l+awi�♦.+'n.M M:+.a d. i.i.® .. 4 Uh.d.Ji.•Js..i.A r.-A.&A tai►4a+1.♦.Is.y.'4-A..b.+.MYO+i�h+�rit.Y..Ca:.Y Introduction............................................................................................... 4 The What, Why and Who of Signage......................................................... 7 Signage: What is it?................................................................................................8 Signage: What does it do?......................................................................................9 The Signage Industry: Who is it?.......................................................................... I1 Sign Industry Technology and Expertise................................................................12 InteriorSignage.....................................................................................................13 Evolving Site Selection and Development Strategies; Trade Area Dynamics ........ 14 A Word about Outdoor Advertising......................................................................16 Myth #1: Signs Compromise Traffic Safety ............................................ 21 Driver's Decision Making Process.........................................................................23 The"Distraction" Factor...............................................................................-t Enhancing the On -Premise Sign's Traffic Safety Role ........................................... 2 5 The Two Most Important Legibility Variables: Letter Height and Sign Size ........28 SignSize.............................................................................................................''S Superior Safety Aspects of Electronic Variable Message Signs ............................. ',) Abatement.............................................................................................................. 31 Myth #2: Censorship of Commercial Speech is Legal ............................ 33 Constitutional Protections......................................................................................34 TheFirst Amendment............................................................................................ 36 Background............................................................................................................ 36 First Application of Cen"lHudson; Distinguishing Between On -Premise andOff -Premise Signs......................................................................................38 Further Guidance from the Court ..........................................................................40 Where the Law Stands Today: Central Hudson Altered; Virginia Board Strengthened.....................................................................................................41 Federal Trademark Law (The 1958 Lanham Act): A Corollary to the First Amendment....................................................................................................... 43 TheFifth Amendment............................................................................................44 Condemnation of On -Premise Signage..................................................................45 Caddy's v. Hamilton Counrv. Ohio........................................................................46 The Accessory Use Doctrine: A Corollary to the Fifth Amendment ....................46 Regulatory Takings of On -Premise Signs..............................................................47 TheFourteenth Amendment..................................................................................48 Temporary Signs: A Class by Themselves............................................................49 1111MIA71M flAr C'KV r. AAW 06yw Contents Myth #3: Signs in and of Themselves Have Little Economic Value ........ 53 Asset Management of the On -Premise Sign: Its Value in the Marketplace ........... 54 ACase In Point......................................................................................... .......56 The Value of Consumer Exposures via Signage....................................................60 The Valuation Process in a Nutshell.......................................................................63 Recall and Recognition..........................................................................................64 Top -of -Mind Awareness; An Overview.................................................................64 Measuring and Developing Top -of -Mind Awareness: Relevance to MarketShare....................................................................................................66 MatchedPair Analysis............................................................................................66 The Value of Interior Signage, or Point -of Purchase Displays...............................69 Regulatory Takings and Amortization Revisited....................................................70 Compensation: Federal Law Contrasted with State Law......................................72 Myth #4: Sign Limitations do not Impact the Economy .......................... 75 Marketing and Advertising in the U.S. Economy: A Derived Demand ................78 Myth #5: Sign Regulations Level the Playing Field ................................ 81 Decreased Commercial Speech Fosters Small Business Stagnation ......................83 The Value of Sign Centric Design: A Case Study.................................................83 The Role of On -Premise Signs in Business Ownership and Management Models..............................................................................................................85 Selecting the Right Mix of Signage for a Business................................................87 Advertising Cost/Benefit Considerations............................................................... 89 Myth #6: Signs Negatively Impact Aesthetics ........................................ 91 Amortization Undermines Aesthetics.....................................................................93 Aesthetic and Graphic Design Considerations.......................................................95 An Enjoyable Visual Experience for the Tourist....................................................96 Variable Message Signs..........................................................................................97 Advantages Electronic Message Centers Offer to a Business................................98 Myth #7: Signs are of Little Value to the Community ........................... 101 Fostering a Pluralistic Society ..............................................................................103 Reducing Urban Sprawl and Urban Deterioration ...............................................104 Encouraging Local Business................................................................................106 Creating a Steady Tax Base.................................................................................108 The Bottom Line for all Community Stakeholders ..............................................109 References.............................................................................................. 110 PJ .._..._........___-___._.___ �.�.__...r._�,..,._�.,...�...,...�..�: Marketing and retailing are responsible in large part for propelling the economy after the WWII and Korean War period. Consumer -oriented retailing has become one of the dominant factors in our society. This $3 trillion dollar segment of our economy provides goods and services to our citizens at a lower cost than anywhere else in the world. But, as with any discipline or activity that is new, huge amounts of information about retailing have been treated as proprietary trade information and have not been general knowledge. Consequently, despite the significant role signs have played in promoting consumer benefits through competition, few have really understood their importance to the economy or the level of sophistication that has evolved in the industry. Sign codes bring the urban planning profession and the marketplace face to face. It has not always been a pleasant encounter. Over the past forty years, the urban planning educational community has promulgated a number of myths about signage. Their purpose has been to convince local planners and regulators that restrictive sign regulations will bring certain benefits to a community. But the planning educational community has little understanding of the role that commercial communication plays in the level of success which businesses have in providing American consumers with low-cost retail goods and services. In this document we will carefully examine each of the great signage myths proclaimed as fact by the planning educational community. But first, we will explain briefly what signs are, the functions they perform, and the industry that produces them. 161m dw *' 0(#Y/V.Abw! 0Atijttr Introduction Signs come in many shapes, colors, and sizes. As an art form, their variety is limitless, and their aesthetic qualities can tum an ordinany cityscape into a visually stimulating and attractive destination. Wnmwktn the 0*11is about 0��vs Learning to Use Signage as a Planning Tool for Intelligent Community Development The What, Why and Who of Signage ._.. .. _: _.... :_. .,_____•-__....._._,_»...�......,:,..,.,...o-«.,...,.•,.�....,.��...«....+w.��.awvrwrrw�wwinwvwr�+ I C.� %&if E7" The What, Why and Who of Signage Signage: What is it? Trying to define what signs are today is nearly impossible. Early in the history of place -based advertising, however, signs were fairly simple to define. They were messages of one sort or another that were tacked on a wall, posted on a pole, or mounted on a roof or the side of a building. They rapidly evolved into unique presentations of the business and its message to potential customers. In sign centric design, the building itself may be non-descript, but the graphics Of the sign, which may be the business' trademark, are echoed throughout the building's entire theme and dEcor. With the development of corporate identification programs, the sign has often mutated for regional and national retailers to include signature buildings, product displays, product dispensers, special site lighting, and distinctive landscaping. Signature buildings (most commonly seen in fast food restaurants and service stations) include architectural embellishments, site selection and landscaping that are all standardized and easily recognized, even when placed in a community with a highly restrictive sign code, making the entire site function as a sign. All of the many variations of place -based communication systems and devices are used interchangeably by the market -wise retailer. When sign regulations limit size or placement of the more traditional signage, the national retailer creatively circumvents signage restrictions. Consequently, the phrase "place based communication devices and graphic systems" may better describe the complexity of on -premise commercial communication than the term "signage." he freestanding signs set the design theme of colors and 'aPhics, which is then carded through the building. This known as sign centric design. lixrrkr�2ny rlri' C(l�Nlu "{/e w t The What, Why and Who of Signage Signage: What does it do? For retail businesses, the most cost-effective, efficient, and readily -available form of advertising to potential customers is the on -premise sign. In fact, the business sign is the basic link to customers in 98% of all United States retail transactions (totaling $3 trillion annually), and is essential both in impulse shopping and in the development of repeat customers for the good, product or service. It is, in it sense, the broadest of all the communication forms. As with many forms of commercial speech, whether verbal or visual, sign use is site specific and an essential business strategy component. Businesses exist in a highly competitive environment, and inferior communication with customers about the products or services offered results in poor business performance. In a world of increasing competition, it is critically important for the place -based small business community to manage assets well. No amount of money spent on other forms of communication media will equal the investment return of the well-designed and optimally visible on -premise sign. Surveys of new customers/clients disclose over and over that the on -premise business sign either (1) provided the new customer with their first knowledge of the company, or (2) provided the new customer with their first impression of the company. This is true even if the customer originally learned of the business through some other communication medium, such as the Yellow Pages or "word of mouth." It is no longer overstatement to assert that legible, conspicuous place -based signage, easily detectable and readable within the cone of vision of the motoring public, is essential to small business survival. The retail environment is composed of local "mom-and-pop" stores, local and regionally owned franchises and a full range of multi -outlet corporate owned retail sites. Regardless of the type of business involved, research has proven that the on -premise signage is responsible for 20 to 50% of the business volume. Financial success or failure is determined by the ability of the location's on -premise signage to communicate with potential consumers. Accessibility to other advertising media is frequently limited due to the cost of such alternatives, size of the media market versus number of retail outlets in the market, or the customer type and their lack of access to other media. Alternative channels of communication, which could replace the business volume gained as a result of on -premise signage, do not exist for retail businesses. No amount of money spent on other forms of communication media will equal the investment return of the well-designed and optimally visible on - premise sign. McDonelds' signature buildings are so easily recognized that the entire site functions as a sign. Choice of recognizable landscaping and convenient location, as well as standardized building construction, make McDonalds easy to find even if a freestanding sign Is not allowed. On -premise signage is the most significant factor in the success of most retail businesses. On -premise signage is the only viable vehicle for gaining the customers needed to enable continued economic sustainability of the retail location. An on -premise business sign is capable of performing many functions. From a purely business revenue perspective, signs serve four notable commercial functions with measurable effectiveness: S1 you begin to see signs as 1. Acquiring customers by developing a memory, or "branding," for a location, place -based and the goods, products or services available at the site; ommunication systems and 2. Retaining customers by reinforcing a memory, once it is there; devices, then >u find you can 3. Generating specific sales by prompting a purchase, especially an "impulse' :) longer define the size or the purchase, and generating healthy turnover of inventory (thus preventing product industry. obsolescence and excessive carrying costs for the business); and 4. Increasing sales or changing a purchase decision by directing a customer to the product or service the business has available that is most profitable. In addition to serving as a commercial communication device, on -premise signs offer much to the communities in which they are located. These signs often function as guideposts, telling motorists where they are in relation to where they want to go. This is especially true if the signs include a street address. An on -premise sign can be designed to enhance the aesthetics, character or architecture of its surroundings, without sacrificing its primary communication functions, provided it can be detected and read by motorists in sufficient time to safely react. On -premise signage can be a valuable tool for planners seeking to revitalize an urban core and reduce urban sprawl. Signage is useful for drawing customers in to areas that would otherwise be difficult to find, allowing productive use of commercial sites that might otherwise go unoccupied. When local businesses are healthy, cities see better maintenance and beautification of business structures. And signage draws in customers that keep existing businesses operating at capacity, reducing the need for new business construction to serve the needs of those who can not find existing businesses. On -premise signage presents its message to all members of our society without discrimination against any class or citizen. The sign industry is increasingly using ADA - compliant signage. ar freeway oriented businesses, as any as 50% of their customers are m -locals, who neither live nor work aarby, or who may pass the rsiness only once. Z2rrn10 imi tlee 0(flA(/u-cV-1t tLFu The What, Why and Who of Signage Finally, signage can help a community send a strong "welcome" message to new or underrepresented members of the community and to visitors from elsewhere, helping to foster a pluralistic society. How many times have you traveled down the freeway looking for a place to eat or fill your gas tank, but been unable to find one because restrictive sign codes kept those businesses from communicating with potential customers? Such towns do not send a "welcome' message to travelers and the local economy suffers for it. The Signage Industry: Who is it? Here, these big box buildings are given a distinctive archi- tectural design pleasing and useful to their potential cus- tomer by putting a thin skin, called signage, on the build- ing, which is enhanced and rnatched against the free- standing signs in front. The on -premise sign manufacturing industry is a classic small business industry. Many sign manufacturing companies are family-owned businesses, passed on from generation to generation. Others are new business started because the owner(s) have a personal interest in metalwork, graphic design, or creative construction. Sign companies range in size from small shops that gross less than $100,000 per year and employ only one or two people to very large manufacturers grossing nearly $200 million per year and employing thousands of people. Many sign manu- facturing compa- nies are small, family-owned businesses. The typical company was started to pur- sue an interest in construction or creative design. Swonnstedt, Wada 2000. "I'he 19" State of the h,duntry Repott.- Signs of the Times. Jul), Sign Industry Technology and Expertise Sign construction is about as difficult and complex a manufacturing phenomenon as one will find. Signs range from sandwich boards to very tall, massive structures with complex construction similar to that of many high-rise buildings. They may be small lit cabinets mounted on a roof, or they may have sophisticated lighting systems and be constructed with remarkably advanced and complicated electronics producing televi- sion -quality moving images. They may be a skillfully designed three-dimensional sculp- tures or intricately designed pieces of machinery with many moving parts. The techno- logical variations are endless. When discussing the quality of construction and aesthetic design, it is essential to keep in mind that the sign is a communication device. Usually it is a visual communica- tion device, but in some cases a sign is a tactile communication device, such as a Braille sign inside an elevator or hotel to help the visually impaired. A sign must be readable, that is, it must have adequate size, placement, height, and lighting in order to successfully communicate its message to its intended audience. And it must be well-maintained if its audience is to remain receptive to its message. National codes and standards exist to regulate electrical, structural and mechani- cal safety of signs. These safety codes and standards are considered to be minimum requirements. Local condition may necessitate additional structural or electrical con- struction. Conformance with state and local building and electrical codes assures that a sign meets these safety requirements. A sign must not only be constructed properly to conform to safety codes and standards, it must visually present the intended appearance. Special letter styles or logos must be accurately replicated when enlarged to full size from an original design created in Today's signage is expansive and innovative, and can effectively and attractively perform its vital communication functions alone or in partnership with other advertising mediums, including the Internet LGnae.dznfrlrc 4t�'�rc�`ut�ut li"�M The What, Why and Who of Signage small scale. Letter spacing as well as the individual letter or logo details maybe modified to provide proper readability and/or to facilitate illumination. Signs are engineered and installed to facilitate economical maintenance, such as lamp changes, as well as to include provisions for face changes when the business owner changes name, logo or marketing presentation. in addition to safety codes and standards, a properly designed and constructed sign must present the desired image and be constructed for longevity. While signs function When discussing as an advertising medium, they are also a fixed asset of the business which, with proper the quality of can be expected to last for many years. construcmaintenance, and aesthetic design, it is Design embellishments to the sign within the copy area or as additional construe- essential to keep tions, such as a pole cover, are a common way to enhance the overall appearance of the in mind that the presentation and accomplish the aesthetic appearance a community desires. Engineering sign is a of technical details can be used to eliminate the need for distracting support elements devi eunicatiorr such as the angle braces or guy wires used in the past to support projecting or roof signs. Sign design can readily support and enhance the theme of designated special use areas. such as entertainment districts. Signs can convert the visual presence of a bland building to that of the intended use. Properly designed, sized and placed signs enable economic success of marginal commercial property (i.e., freeway -oriented districts which are not visible from the freeway.) interior Signage Advanced technology and design concepts are continually expanding the possibilities in the area of interior signage. Consumers are increasingly demanding and selective, and retailers must constantly improve the interior signage presentation if they are to increase sales and retain customers. Because point-of-purchase advertising is not regulated its producers have been free to experiment. Point-of-purchase advertising can range from a small decal that goes on a store window to a huge three-dimensional display. It can be flat, done in bas-relief, Interior signage serves both the business owner and the customer. Not only does it increase sales, it also helps the customer easily find the Item he or she wishes to purchase. p., 13 or be a free-standing composition. It can be designed to stand on the floor or on a table or counter, attached to a wall, painted on the floor, or hung from a ceiling. It can be made of paper, metal, foam core construction board, Styrofoam„, plastic, foil, crepe paper, paper mache, or any other material. It can utilize every conceivable technique to reach people through any of their senses — color, light, motion, sound, touch, scent, and even taste (free samples) — to attract attention and help convey its message. Interior signage Customers is often used to create a complete visual interior space of what was an empty building wart to Rnd shell. ^'�e"Gttandise easity, and signs are the The defining factor that makes point-of-purchase a single entity is simply its key. location. Any advertising medium that is placed at or near the site where the purchase is made automatically falls into the point-of-purchase category. Customers want to find merchandise easily, and signs are the key. They provide wayfinding, direct traffic flow in predetermined directions, define the interior visual environment presenting the business' intended image, and advertise the merchandise available for sale. Without them, the shopper is likely to form a negative opinion about the store and look for some other place to shop. At the other end of the spectrum, a store that is cluttered with too many signs will confuse the customer and lead to similar problems. A well-planned interior signage program works to enable and enhance the customer's shopping experience. Evolving Site Selection and Development Strategies: Trade Area Dynamics Traditionally, trade areas were geographically defined areas encompassing a 5- 1.0 10 -mile radius, dependent on business type, and containing a fairly immutable mix of iand uses (residential, commercial, governmental, recreational, and manufacturing/ -dustrial). Site selection and development decisions by retailer were based on the area's boundaries, population, and consumer income levels and spending patterns (Jones and Simmons 1990, 318). The volume of business revenue available within a trade area was aOr#-of-distnbuhon retailers are either franchised or part of a regional or national chain. The asapor ""*de mar*e" and adverfisrng programs of the parent company assist in cre )f ttre sr'f- and cersarn expectations regarding the quality or price of ating recognition the Llany ccs^ ur+t. sFs ars made on impulse, prompted product or service offered. solely by how well the sign reinforces what knows or has heard about the product, In the absence of an easily visible --pulse stops would not occur, and the business site would eventually fail. %, Oe" The What, Why and Who of Signage presumed to relate to the area's population mix and numbers of competitors, as well as revenue from non -local customers who might patronize a business infrequently, or only once. The development of the interstate highway system, community design of primary arterial streets, the geographic dispersal of work activities, the social evolution to daily employment by all adult family members, and reliance on travel from recreational and entertainment activities have all resulted in the increasing mobility of the consumer public. This has significantly changed this notion of the trade area tirr many types of businesses, making trade areas much larger overall. Today, it is estimated that 35 to 50 percent of the consumer population shops outside the local area (Signage Foundation 1998). As a result, large segments of the retail and service industry now serve as a "point of distribution," where many customers at any given time on any given day are visiting for the first, and perhaps the only time. Applying a point -of -distribution approach to the site selection process relies more oil quantitative analysis of travel patterns within an area than on traditional trade area measurements, such as population and household income. In terms of signage, retailers that function at points of distribution must capture consumers who are traveling between destinations if they want to stay in business. In certain areas, retailers and other businesses serve a standard trade area and also function as a point -of -distribution, combining old and new market area definitions, Another significant change is the development of "destination" retailers. This first occurred with the advent of enclosed shopping center. These destinations supported Specialty stores lo- cated in close prox- imity to a primary destination store can draw consum- ers to their extended business area, If their signage Is vis- ible and readable from the street fronting the destina- tion retailer. A Word about Outdoor Advertising The difference between on -premise business signage and outdoor advertising (or Off -Premise signage) is that the former communicates information concerning goods, products, or services available in very close proximity to the sign, while the latter references goods, products, or services, and sometimes activities, available somewhere else. Although the focus of this document is on -premise business signage, a brief discussion of outdoor advertising is useful at this point, not only because the medium is a big player in the massive major media advertising mix ofcorporate America, but also because advertising effectiveness measures applicable to on -premise signage are derived from those routinely used by outdoor advertisers. Street -?,used exposures represent a valuable munidpal esourr e,, and are successfully exploited by many cities 'c' g /he �it�vhr.�lt+ru U549t, The What, Why and Who of Signage —-"k.ww..,er.1�a:�..m..�n.r.�...sy..:.:.e..i.x.._,...... ny,_m.a..... c...�-.. Outdoor advertising is commonly referred to as "billboard" advertising, although this is an inaccurate definition, as many varieties exist. its most prolific and rapidly growing forms are transit advertising (on the sides of buses and but; shelters), airport advertising, and subway advertising. It can be painted on water uutks, the sides of buildings, city benches, newsracks, hot air balloons, race cars, and even private vehicles. It can be composed of illuminated panels in a skyscraper's windows, or it lighted cabinet mounted on top of a taxicab or delivery vehicle. The term "billboard" itself derives from the colonial American custom of attaching a "bill" (or paper poster) containing a written or pictorial message on a "board," and then displaying the device about town or out on the road. Today, the typical structure is standardized in size. The message (or bill) placed on the structure, however, may or may not be standardized. Today's outdoor advertising companies sell their structures as a discrete message unit. Occasionally a "stand alone" advertisement utilizing a single structure may be purchased, for example to advertise a freeway oriented business or tourist destination, but usually outdoor advertising is an integral part of an overall advertising strategy to convey a particular message about a particular product or service to as many people as possible. Standardized outdoor panels are often grouped as "showings" in and around a trade area, which outdoor advertising companies refer to as a "Standard Metropolitan Statistical Area" (SMSA). Such showings are representative of major media advertising. Placement of the panels (or billboards) is based upon carefully researched and analyzed marketing data, and designed to reach the "main road" traveler. (Note: The outdoor panel that advertises a local business is not considered a major media participant, but instead functions for the local business much like an on -premise high rise sign, although removed from the site). Outdoor advertising structures dramatically expand street communication for the retailer. They develop specific memory about a business by offering convenient and useful information along travel paths. Industry studies show that an outdoor structure will Increase business an average of 15%. These studies also disclose that signs that Include time -and -temperature information Increase consumer attention, and enhance retention or recall of the commercial message. (Research data available at Outdoor Advertising Association of America Inc (OAAA), 1859 M Street, N. W, Suite 1040, Washington, D.C. 20036.) n� R" Ratm, Real. People. w My multiple retailers, "anchored" by major tenants who provided a primary reason for consumer visits, This destination marketing concept later evolved into free-standing large, category specific businesses (e.g., Nome Depot). Both versions differ from both the local and point -of -distribution merchant, primarily because the customer is "bound for" that particular commercial destination A number of anyway. IOC -1 communi- ties have recog- Entertainment retailing followed the same concept as it evolved from older point of distribution operations, the nor desst anon such as Riverview in Chicago, and the original Disneyland in Anaheim, into destination developments, such as Disney World, which are essentially complete ,-etailin.g and communities. utilize this technique to revitalize old rer sit districts, A numberof local communities have recognized the value of destination retailing and utilize this technique to revitalize old retail districts. Once there, visitors orshoppers may travel to additional commercial destinations within the same center or nearby area. In effect, the primary destination operates within a large trade area, while "satellite" businesses serve as points of distribution, seeking to attract, through on -premise signage, customers whose chief purpose was to visit the primary destination. Trade areas are no longer static, they are dynamic and fluid with constantly changing borders and population. As a result, the task of crafting a responsive sign program requires some rethinking of historic perspectives for the communication needs of a business and its customers or clients. In an automobile -dominated world, business signs play a central role. The modern business person understands this, and will keep in mind both the present and projected course of retail dynamics when juxtaposing economic realities, business goals, and signage decisions. A Word about Outdoor Advertising The difference between on -premise business signage and outdoor advertising (or Off -Premise signage) is that the former communicates information concerning goods, products, or services available in very close proximity to the sign, while the latter references goods, products, or services, and sometimes activities, available somewhere else. Although the focus of this document is on -premise business signage, a brief discussion of outdoor advertising is useful at this point, not only because the medium is a big player in the massive major media advertising mix ofcorporate America, but also because advertising effectiveness measures applicable to on -premise signage are derived from those routinely used by outdoor advertisers. Street -?,used exposures represent a valuable munidpal esourr e,, and are successfully exploited by many cities 'c' g /he �it�vhr.�lt+ru U549t, The What, Why and Who of Signage —-"k.ww..,er.1�a:�..m..�n.r.�...sy..:.:.e..i.x.._,...... ny,_m.a..... c...�-.. Outdoor advertising is commonly referred to as "billboard" advertising, although this is an inaccurate definition, as many varieties exist. its most prolific and rapidly growing forms are transit advertising (on the sides of buses and but; shelters), airport advertising, and subway advertising. It can be painted on water uutks, the sides of buildings, city benches, newsracks, hot air balloons, race cars, and even private vehicles. It can be composed of illuminated panels in a skyscraper's windows, or it lighted cabinet mounted on top of a taxicab or delivery vehicle. The term "billboard" itself derives from the colonial American custom of attaching a "bill" (or paper poster) containing a written or pictorial message on a "board," and then displaying the device about town or out on the road. Today, the typical structure is standardized in size. The message (or bill) placed on the structure, however, may or may not be standardized. Today's outdoor advertising companies sell their structures as a discrete message unit. Occasionally a "stand alone" advertisement utilizing a single structure may be purchased, for example to advertise a freeway oriented business or tourist destination, but usually outdoor advertising is an integral part of an overall advertising strategy to convey a particular message about a particular product or service to as many people as possible. Standardized outdoor panels are often grouped as "showings" in and around a trade area, which outdoor advertising companies refer to as a "Standard Metropolitan Statistical Area" (SMSA). Such showings are representative of major media advertising. Placement of the panels (or billboards) is based upon carefully researched and analyzed marketing data, and designed to reach the "main road" traveler. (Note: The outdoor panel that advertises a local business is not considered a major media participant, but instead functions for the local business much like an on -premise high rise sign, although removed from the site). Outdoor advertising structures dramatically expand street communication for the retailer. They develop specific memory about a business by offering convenient and useful information along travel paths. Industry studies show that an outdoor structure will Increase business an average of 15%. These studies also disclose that signs that Include time -and -temperature information Increase consumer attention, and enhance retention or recall of the commercial message. (Research data available at Outdoor Advertising Association of America Inc (OAAA), 1859 M Street, N. W, Suite 1040, Washington, D.C. 20036.) n� R" Ratm, Real. People. w My Two general rules govern outdoor sign location: 1) if the sign is more "directional" than anything else, then the closer it is placed to the advertised business, the better (always keeping in mind safe traffic entry and exit); and 2) if the sign is more "influential' than anything else, then it must be placed far enough prior to a highway exit or point-of-purchase to permit consumer deliberation (of the message) and decision (to make the invited purchase) in time to complete any necessary lane change or other traffic maneuver to exit safely. The viewer of a message, displayed on an outdoor structure, may act immediately upon the message, like the weary driver observing the advertisement for a motel located two exits away. At times, the message may function as a reinforcement device for a major media campaign, which also includes television, radio, and newsprint advertising. Other times, a message may provide public-service information, such as road conditio the location of rest stop, time -and -temperature data, or gasoline availability and pricins, ng information. Members of the business community are not alone in recognizing the value of outdoor advertising; increasingly, cities are leasing public spaces to advertisers on buses, bus shelters, transit stations, and sidewalk kiosks, to name a few. Although public advertising space is generally much smaller than that offered by traditional outdoor structures, lease rates of $500/month/poster face are not uncommon, underscoring the intrinsic value of such exposure. Advertising comes in many forms and can We found on virtually anything. 0 1?/ P__ `, i lvhr glrvq Cleo• Myth #1: Signs Compromise Traffic Safety Signs fall into three categories: on premise, outdoor advertis- ing, and temporary. These signs can be ground -mounted or building -mounted. The term "signage" covers everything from the typical pole sign in front of business to signature buildings to banners and awnings. In general, signs are place -based com- munication devices and graphics. (-Zenwub� the Learning to Use S for Intelligent C Development Myth #1; Signs Compromise Traffic Safety More than any other myth, the myth that signs cause traffic accidents is used by Planners as a justification for restricting commercial communication. Local governments have regulated signs for many decades and, for an almost equal span of time, courts have held such regulation to be a legitimate exercise of a local government's police power to Protect the health, safety, and welfare of its citizens. No reasonable person would argue that traffic safety is outside the regarding signs cannot be provescope OfPOI ice powers. However, traffic safety concerns sign regulations. n and, therefore, cannot legally be used to justify restrictive Over the last four decades, two hypotheses have been advanced which propose that commercial signs compromise traffic safety: (1) commercial sign resulting in more accidents: (2) commercial signs distract drivers, mask the visibility ss highway signs, resulting in more accidents. While these hypotheses have been put forth as reasons to severely restrict commercial signage, courts presented with the issue, after reviewing evidence and the stipulations of the parties, have routinely discarded them. The claims are based entirely upon faulty, incomplete, and unscientific research. They have been rejected many times by the Federal Highway Administration and Congress when offered as reasons to deny just compensation for the removal of outdoor advertising structures, as mandated by the federal Highway Acts of 1958, 1965, 1975 and 1978. They continue to be rebuffed by federal highway authorities and legislative bodies today. A case in point is Metromedia Inc v City of San Diego, 453 U.S. 490 (1981). In Metromedia, San Diego initially attempted to justify severely restricting private signage by presenting the "signs cause traffic accidents" argument. After thorough review of available evidence by the litigants and the U.S. Supreme Court, all accepted that there was no positive correlation between private signs and traffic accidents; consequently, traffic safety, in a negative sense, was removed from the case as a reason to regulate signage. Traffic safety Another case in beint is Combined Communications COrPOralion d. b. a. Eller o-riprow cannot ,ad, in tat case reviewed v CiryofDen-r 42 P d 79 (Colo 1975). Transporter on engineers r proven and, in that case reviewed the city's traffic safety justifications for sign removal, and found trefore, ::annot ialty be used to them to have no basis in fact. itify res -:-,curve ?n regui.xt:,ons. A better hypothesis, and one that has not been contradicted by the evidence, is that commercial signs have a positive effect on traffic safety, ently provided they are suftiei legible and readable, are contrasted with the background, and are kept in good cies ly err• Because this premise is based on optimum visibility of t lows that standards, it fola signs which are deficient in these standards, or are missing altogether, l fOl result driver disorientation and inappropriate or dangerous driving decisions. in The Gittings' Pennsylvania Ton Claim study disclosed that inadequate sigarc ns me of the major causes of traffic accidents. Traffic engineers testify that on -premise �fgns that are large enough, and placed properly so they can be seen from an adequate Myth #1: Signs Compromise Traffic safety i.1P.,i�ll.i. --_-.a.L..t.ilA.1,Y..A.iJY.d,9.i dilY ad.s..ad.ra2 %:.i.►d distance, help direct the motoring public safely to their destination, functioning to.improve traffic safety in the same way highway signs do. The "deficiency" hypothesis better serves the public interest than others which propose that commercial signs, by their very existence, cause accidents. As noted in a recent study by Richard N. Schwab, a former Federal Highway Administration program manager for research on highway visibility and night driving surety: 711ajffc safety is not jeopardized by the sign Itself or some sort ofstimulus overload: instead the culprit is inadequate sign size or lighting, or inappropriate placement, or a combination of these factors.' Driver's Decision Making Process 7\vo immediate decision-making tasks are involved in driving – monitoring and wayfinding. Monitoring involves speed control and lateral land positioning, and is dependent upon visual perception of the roadway and the vehicle itself. Wayfinding consists of determining and following a route to a particular destination, and is dependent upon visual information gathered from the environment surrounding the road, which includes, in addition to roadway signs, other road users, fixed or random obstacles, outdoor advertising and on -premise signage. Often these tasks are engaged in at the same time. While rational driving would demand that the safety, or position monitoring task take priority, a driver's traffic behavior often demonstrates the contrary, and accidents occur. Fatigue, aging, or an improperly displayed message (part of the signing deficiency spectrum) may decrease a driver's ability to move safely through traffic. Traffic risks and accidents may occur when people are not provided easy access to information necessary to their purpose. Drivers look for, and expect to find, sighs telling them where to go and what is available once they get there, as well as how to avoid potential risk. An informational or The wall -mounted sign below Is hard to see, a problem that Is compounded by the partial blocking of a tire rack; its replacement on the right – a roof sign – speaks for Itself.! Excerpt from a study by Richard N. Schwab, entitled Sajety and Human Factors- Design Consideratioru fpr On-Prrmtse Commercial Signs, pub'd by The Signage Foundation for Communication Excellence, Inc. and the International Sign Association (1998). P _....-...-..-...��...............+..e......�w...-.............a-- rars.��riYfr'r,:rw-Nr.�n.xa.r'ii�.m® directional sign that is too small, inadequately placed, poorly illuminated, not easily seen, or in disrepair is frustrating to mobile consumers and may cause them to try unsafe traffic maneuvers. Furthermore, as the present motoring population ages, and their visual acuity concurrently decreases, the need for better signage readability and conspiLuity will correspondingly increase throughout the urban and suburban landscape. Safe wayfinding is not only important on major highways, but also within a community itself. A municipality which relegates business activities to certain areas, and then won't permit adequate informational and directional signage, is creating a hazard for the public. Frustrated consumers will make unsafe traffic maneuvers to get where they want to go. Hie "Distraction" Factor The information conveyed by an on -premise sign simultaneously may be specific to one driver's immediate needs and largely irrelevant to another's. However, most drivers can seek and process vast amounts of information, and filter out all but the necessary, in very rapid succession. These "before"signs (far below left and below) are too small, pooryy placed, badly designed, and inconspicuous. The replacements (below right and right) not only provide optimum com- munication with motorists, but also en- hance business image and credibility. Although irrelevant information on advertising signs can produce a statistically measurable decrease in tracking or detection tasks, research on this "distraction" factor discloses that the decrease is so small it has no practical impact on driving functions. For the consumer who pre -planned More specifically, test results reveal that: l . Drivers look at the messages displayed, and usually within milliseconds are able to filter the offered information and collect only the information sought or needed, a visit to "Bob's, "spotting his sign from the be difficult. Once provided lite signs are easy to read and understand. 'fhis is so, even in the presence of competing messages nearby. 2. The more complex the driving situation, the more easy -to -read a sign needs to road would the sign may spotted, s n influence the be. This is particularly true for multi -lane roads, and at complex intersections and a positive side effect of legible, freeway interchanges, where the driver is often required to make split second well-placed, and decisions. Illuminated signs is the 3. Proper sign lighting or illumination enhances driver readability and safe -reaction decrease in time Ames. that the driver is looking away from the road. A positive side effect of legible, well-placed, and illuminated signs is the decrease in time that the driver is looking away from the road.' Enhancing the On -Premise Sign's Trafflc Safety Role If it is properly designed and placed, the on -premise sign can effectively perform its communication functions and simultaneously promote traffic safety. To maximize its full potential, the on -premise sign must meet two essential requirements: it must be viewable and, once seen, it must be capable of being understood (or "read"). For the consumer who pre -planned BOB'S I BOB°S a visit to "Bob's, "spotting his sign from the be difficult. Once Seo Niirf P L A C E ]PLACE road would the sign may spotted, s n influence the ., �•,rycaf consumer to be unwilling to let Bob w T� work on his or her car. Certainly, the "belore"sign (far left) in this case does E not invite an Impulse stop or plant a ;+ A u T 0 ! favorable memory. However, its REPAIRS i w�' replacement (left) — perpendicular to height, u the road, at a proper and r.._ _ aurant , 626'5070,14 626 1070 creatively designed — promotes safe I traffic choices, and enhances top -of- 785 mind awareness for those who may ....,,.,.___ -- � have future need of Bob's services. Lxccrpt ftum u study by Richard N. Schwab, entitled Safety and Human h'aciors: Design Considerations ju On -Premise Commercial Signs, pub'd by The Signage Foundation for Communication Excellence Inc and the International Sign Association 2 nFJ D/ tT�ykr G{/f lir ()6Wr MYth #1: Signs Compromise Traffic (1998). y Safety •�':..`SS.v.....aL,:a.kw.tl4.s.a.a.-.w.1J, .,�.i wri.,4 ,l .wm :�r,r. ,�... _.__...............:..+.,..s-.,.....:, ,. _.-. 4 a:.ua._._.: ., _-. r.. .—.r - /1 m _.0-__ Sign viewing falls into two categories: "Read/React" or "Read/Recall." In "Read,' React" the sign functions to alert the driver, who then reacts in a particular way. In "Read/Recall" the sign functions as a reminder to the viewer. Viewers of highway signs and other directional signs that guide traffic respond with a "Read/React" action. Viewers of outdoor advertising tend to respond with the "Read/Recall" action, as the intent of the advertiser is to communicate with the viewer about a product, service, event that is not available at that particular location. On -premise signs function to facilitate viewing in both of these categories. Not only are viewers reminded of the existence and offerings of a business each time they pass, but also they are guided through traffic and into the parking lot safely by the on -premise sign. The Outdoor Advertising Association of America has completed the best and most comprehensive research on "Read/Recall." The Manual on Un form as is Control Devices has added to the knowledge needed to make the size, placement, and lighting of signs offer the traveling public sufficient readability to allow motorists to respond safely. Both knowledge sources have been utilized by the on -premise sign industry to design signs that communicate clearly, effectively, and safely. The expert research has revealed that the most readable sign, with the optimum conspicuousness, placed as close as possible perpendicular to the roadway, will be either an illuminated ground -mounted or building -mounted roof or projecting sign. Visual factors such as the choice of letter, symbol, graphic style, letter and background color, and illumination can have an enormous impact on the sign's readability. Once the graphics, symbols, and words are selected, a minimum size, height, and lighting system can be established for the sign. As a maxim to sign design, after the minimum size, height, and lighting have been confirmed, any changes will require larger - not smaller - sign sizes. All too often regulators forget to consider - and thus impede -the simple rules of design that are utilized by the sign industry to create environmentally compatible signs that are still commercially viable. Messages received from signs are processed by the driver and, depending upon the driver's needs or expectations, become the basis for decisions. The correctness of any given decision, and the degree of success the driver has in completing the driving task, depends upon the sign's ability to quickly and adequately communicate its intended Whether a s,9n is visible to the "'rage mod� depends upon three factors: (i) 7:e visual acuity of the mcatorist; (2) tole sign's placement (perpendicular 10 the travel path is apaimum, by farV; and (3) the sign's readability and conspicuity. The ordinal sign /above left), while attractive and appreprlately placed, is mauler readable nor conspicuous, even for the mcaorist with 20/20 or betthmr vision, unman compared with its 'cement !t=ar right). Myth #1: Signs Compromise Traffic Safety message. For on -premise signage, information concerning the product, good, or service available on site, and confirmation of location, are usually the most important messages. The following factors should be considered in optimizing a sign's ability to communicate these messages clearly: All too often 1. Comprehension: The message should be unambiguous. A symbol can otter regulators forget significantly greater legibility for a given sign area, but it may not always be to consider - and immediately understood by all viewers. Recognition is a strong reason for the thus impede - the use of standardized si in protocols, e. standardized corporate signage. � g p g" �design simple rules of that are However, if a retailer is not part of a national corporate identification program, utilized by the sign copy (or content) should receive careful attention and consideration. industry to create environmentally 2. Conspicuity: The sign must be distinguishable from its surroundings, i.e., itmust compatible signs be sufficiently conspicuous to attract the driver's attention. Conspicuity is a that are still commercially particular problem for commercial signage after daylight. Often, vehicular viable. headlights do not reflect off of the sign, and if the sign is not illuminated at night or during inclement weather, it can simply fail to function as a communication device. Legibility: The sign must be readable to the extent that its copy or symbols are discemable enough to permit nearly instant comprehension by the observer. For example, on a two lane, 25 mph street (characteristic of business districts), the typical on -premise sign will require a minimum legibility distance of 300 feet - a distance allowing the sign to be read from the nearest intersection, approximately one block away. For signs in rural areas or on high speed roads, a greater distance is required, and larger legends are needed, e.g., the San Diego sign code allows signs to be 75 feet high and 300 feet square along the city's high speed interstates. 4. Expectancy: The sign's legend (message) and location should reasonably conform to the driver's expectations. In many cases, travelers will plan to stop en route for food, gasoline, or lodging, but won't know in advance where to find them. It is illogical, and perhaps even irrational, to zone commercial land and not allow for adequate placement and size of signs to attract and direct motorists (even travelers who have preplanned will expect to flnd adequate signs at or near the intended destination - to assure them they are on target). 5. Emphasis: Information most important to the driver should be emphasized by size, location, letter type, color, or other means. The information may be conveyed by "copy" or "logo." 6. Credibility: This divulges whether drivers believe that a sign's message (a) is true, and/or (b) pertains to them. Proper maintenance is a critical factor in assuring consumer confidence in private signage. On -premise signs in poor condition, badly out-of-date, or lacking a communication system consumers understand, exemplify less -than -credible signing that may be disregarded.' ' Excerpt ftom a study by Richard N. Schwab, entitled Safety and Human Factors: Design Considerations Jbr On -Premise Commercial Signs. pub'd by The Signage Foundation for Communication Excellence Inc and the International Sign Association (1998). `p 27 TABLE 1: Letter Height Guidelines for 0ii-Premise Signs Speed Limit Minimum Sight Distance Recommended Letter (Miles/Hour) (Feet) Height (Inches) 2 200 7" 35 280 10 45 360 12 55 445 15 The minimum standards generally employed to determine sign size and height arc lound in the Manual on Uniform Nfflc Control Devices, and companion literature. Destination signs often exceed the MUTCD minimum of 20 square feet, and freeway signs often span 150 square feet, or more, with letters up to 20 inches high. Because the on -premise sign will he further from the travel lane than the roadway destination sign, it must be larger than the freeway sign to attain the same visibility level. Sign Size As a general rule, the sign size guidelines in Table 2 below are adequate for the allowed copy area. The Table assumes that the sign is at the edge of the right of way, with its base at least 8 feet above ground level. Type 1 refers to double-faced parallel signs, and projecting, free standing and roof signs. Type II refers to wail signs and any other sign not perpendicular to the roadway. Please note that size increases as speed and distance increase. Further, both size and height need to be increased if the sign is off=set from the right of way or less than O&JIlf Myth #1: Signs Compromise Traffic safety optimum type styles or contrast are utilized for aesthetic considerations. Any decorative sign design in the copy area and/or letter styles usually will require increasing copy size, all other things being equal.' It is also important to note that these arc only guidelines based on average copy length. For example, "Joe's Books" will need significantly less copy area for safe communication compared to "Schwartz's Religious Bookstore and Coffee Shop." TABLE 2: Sign Size Guidelines for On -Premise Signs The Two Most Important Legibility Variables: Letter Height; Sign Size lfa sign is to be ellective, it must be legible at a distance sufficient to permit the driver to respond safely. The letter height required to ensure legibility can be determined based upon type style, contrast with the background, traffic speed and the LANES viewer's visual acuity. The time required to safely see, read and respond to a sign is referenced as the "minimum sight distance." This distance HEIGHT (Feet) will vary according to the speed of approaching vehicles, the sign's placement in relation to the roadway, and the sign's design HEIGHT (Feet) details. It should be mandatory that a city enlist the services of a competent traffic engineer who can assist in assuring that the If a sign is to be signs determined as allowable are within the driver's cone of vision and sufficiently readable and conspicuous effect;,ve, it must to permit safe response. be !lesgible at a dtcta to sufficient to Table I below sets out recommended letter heights based u pon the minimum sight distance ;r,ermit the .river �_, respond utilizing optimum type style and contrast, assuming a visual acuity of 20/40 for the observer — the standard required by most safety, states to obtain a driver's license —and a Legibility Index of 30 feet/inch. It is further assumed in Table 5 that the sign is 12 mounted perpendicular to the vehicular path and at the nearest edge of the public right-of-way.' TABLE 1: Letter Height Guidelines for 0ii-Premise Signs Speed Limit Minimum Sight Distance Recommended Letter (Miles/Hour) (Feet) Height (Inches) 2 200 7" 35 280 10 45 360 12 55 445 15 The minimum standards generally employed to determine sign size and height arc lound in the Manual on Uniform Nfflc Control Devices, and companion literature. Destination signs often exceed the MUTCD minimum of 20 square feet, and freeway signs often span 150 square feet, or more, with letters up to 20 inches high. Because the on -premise sign will he further from the travel lane than the roadway destination sign, it must be larger than the freeway sign to attain the same visibility level. Sign Size As a general rule, the sign size guidelines in Table 2 below are adequate for the allowed copy area. The Table assumes that the sign is at the edge of the right of way, with its base at least 8 feet above ground level. Type 1 refers to double-faced parallel signs, and projecting, free standing and roof signs. Type II refers to wail signs and any other sign not perpendicular to the roadway. Please note that size increases as speed and distance increase. Further, both size and height need to be increased if the sign is off=set from the right of way or less than O&JIlf Myth #1: Signs Compromise Traffic safety optimum type styles or contrast are utilized for aesthetic considerations. Any decorative sign design in the copy area and/or letter styles usually will require increasing copy size, all other things being equal.' It is also important to note that these arc only guidelines based on average copy length. For example, "Joe's Books" will need significantly less copy area for safe communication compared to "Schwartz's Religious Bookstore and Coffee Shop." TABLE 2: Sign Size Guidelines for On -Premise Signs SIGN SIZE TYPE i SPEED LIMIT (Miles/Hr) LANES SIGN SIZE (Sq. Ft.) HEIGHT (Feet) SIGN SIZE (Sq. Ft.) HEIGHT (Feet) 25 2 25 12 50 12 25 4 32 12 70 12 35 2 36 20 75 20 35 4 42 20 90 20 45 2 75 35 100 40 45 4 90 35 120 40 55 2 150 50 250 90 t Than Pwy. 300 74 450 90 Superior Safety Aspects of Electronic Variable Message Signs Electronic variable message centers are common victims of the traffic safety myth. But these variable message signs are not a distraction to drivers; quite the contrary. 'Their exceptional readability and conspicuity means that these signs may actually increase driver safety. The federal government and other reviewers, after conducting numerous studies, analyzing court cases, and reviewing the available literature, have concluded that signs and electronic message centers, when used properly, arc traffic safety enhancement devices. in a 1980 study commissioned by the Federal Highway Administration, researchers Ross Netherton and Jerry Wachtel set out to prove electronic variable message signs were unsafe. They concluded, however, that no credible statistical evidence existed to support the conclusion that electronic or variable message centers negatively impacted Because the on - premise sign will be further from the travel lane than the roadway destination sign, it must be larger than the freeway sign to attain the same visibility level. If a sign is wall mounted, parallel to the roadway, the letters will appear foreshortened. This effect can he overcome to some extent by use of larger letters and adjustments in height to width ratios. Excerpt from a study by Richard N. Schwab, entitled Safety and Ilium" Factors: Design Considerations for On -Premise Commercial Signs. pub'd by The Signage Foundation for Communication Excellence Inc and the International Sign Association (1998). r Schwab, /bid. p 29 road safety. Their report also said that roadside signs provided a stimulus that helped maintain driver alertness, and increased safety by combating "highway hypnosis." Several states have conducted studies on the safety of roadside signs, including electronic message centers, and none have found an increase in traffic accidents - and in some cases found a significant decrease in accidents - related to the signs. Furthermore, nine leading insurance companies were surveved, and all indicated that they had never received an accident claim involving an advertising sign. Richard Schwab conducted a study that concluded these signs could not be linked to traffic accidents or any reduction in traffic safety. Professor Alan Weinstein, among others who have reviewed court cases on the subject, has also discovered no basis for either restricting or banning electronic message centers. In 1996, the Kentucky Supreme Court struck down a state statute that prohibited signs near highways if they contained or included "flashing, moving or intermittent lights except those displaying time, date, temperature or weather The court said the state had failed to demonstrate that a legitimate government interest was advanced by the prohibition, and said no evidence supported the notion that so limiting the content on the display had "anything to do with highway safety or aesthetics." The federal government recognizes the superior communication value of electronic variable message signs and uses them on many freeways as traffic safety devices to wan drivers of possible hazards. The use of portable electronic warning signs at constriction or accident sites is also increasing. Under the Manual on Unijonn N91c Control Devices (MUTCD), they are used for regulatory, warning, and guidance purposes related to traffic control. The MUTCD, published by the Federal Highway Administration (2000), contains standards and guides for traffic controls for street and highway construction, maintenance, utility, and incident management operations. State Highway Departments have also realized the value of electronic message centers, and are increasingly using them to inform and direct traffic in large metropolitan areas, thereby easing traffic congestion and increasing traffic safety. Large-scale urban studies are currently being done to expand message center use in this area, with other "intelligent" components, to create integrated intelligent transportation systems. Electronic message centers are used by State Highway Departments, communities and by businesses because, as opposed to traditional signage, they are versatile and easy to read day or night and in ail kinds of weather t - lP+narzKdrrcrtJrt Glrttr/u =lrru Q�Simr Myth #1: Signs Compromise Traffic Safety The sophisticated hardware that is now available makes maximum readability possible for the driver. Airports and highway departments are developing expertise in positioning and sizing of these signs to enable the driver to read, react and move through traffic with optimum safety. It is a testament to the safety of electronic variable message signs that, since 1979, the Federal Highway Administration has not seen any need to revise its recognition of the legality of on -premise commercial variable electronic message signage, provided The sophisti- that: cated hardware that is now 1) the displays are changed at reasonable intervals, available makes maximum read - 2) the signage does not violate the compliance agreement's definition of flashing ability possible lights, and for the driver. 3) a state has accepted local controls in lieu of state controls and such signs are considered to have been in customary use within the locality, or a state court has determined that such signs do not constitute flashing, intermittent or moving lights. It is important to note that arbitrary time constraints on message change intervals may result in unintended negative impacts. In the case of single line message centers, which often require multiple displays to accommodate the total message, copy change interval restrictions can cause the failure of the message to be read and comprehended, possibly even creating a traffic safety distraction because the message cannot be timed for proper readability. Additionally, such restraints favor multiple line message centers which can still communicate a complete message. This results in the granting of an unfair competitive advantage to the larger retailer, local or national, who can afford to purchase a multi -line display. .Abatement Generally, actions undertaken precipitously to protect public health and/or safety are deemed "abatement" actions, and are predicated upon a perceived imminent threat to the public, that is, the use itself is dangerous. In abatement proceedings, a use may be immediately terminated, without preliminary hearing, and in some cases, without subsequent compensation.' On the other hand, signage regulation which "takes away" a previously conforming sign (a type of "use"), is seldom predicated upon a dangerous situation, although restrictive sign regulation is sometimes defended as necessary to promote public safety (usually based on the traffic safety myth). See Muggler v. Kansas, 123 U.S. 623 (1887), p 31 (Itnmraby the, o-Vp&f about 03 Learning to Use Signage as a Planning Tool for Intelligent Community Development ,AX, CJh�nkr 3 Myth #2: Censorship of Commercial Speech is Legal - qtr c2` <7 Myth #2: Censorship of Commercial Speech is Legal Commercial signs generally fall into three classifications with differing property interests, often leading to differing treatment by the controlling law: • Outdoor advertising. The permanent ground or building -mounted outdoor advertising (or off -premise) structure, if located on private property, is considered a primary land use, possessing a primary real estate interest. • On -premise. The permanent ground or building -mounted on -premise sign is considered an accessory land use, possessing a partial real estate interest. A sub- category of on -premise signage is comprised of incidental signs (such as credit card signs, restroom signs, and ADA signs), which may be either permanently or - ICm "'may tine 0,Wg1a'.LJan/ Q*rptr Myth #2: Censorship of Commercial Speech is Legal 4 temporarily attixed to the premises, and may or may not possess a partial real estate interest, depending upon the controlling law. • Temporary. Temporary signs, such as political, real estate, or special event or activity signs, are short-term, impermanent communication devices that do not possess a real property interest; they are personal property. Legal issues arising from signage regulation generally focus on the First, Fifth or Fourteenth Amendments to the U.S. Constitution; sometimes more than one Amendment is involved. The following Table summarizes these issues as they relate to the three Amendments. TABLE 3 Planners are often tempted to write signage regulations that favor signs they like and Fourteenth Amendments and limit or eliminate signs they do not like. The regulations they write may require RELATED SIGNAGE ISSUES reading what is on a sign before you can tell what the rules for that sign will be. For example, they may allow temporary signs that guide people to a neighborhood garage Restraints on commercial and sale, but attempt to outlaw temporary real estate signs pointing to a home that is for sale. noncommercial communication. Such restrictions have the effect of allowing one type of speech, but censoring another. Content control. Censorship. Signs are a complex subdivision of what we call speech, They include outdoor Just Compensation. Amortization. advertising in its many placed -based forms, and on -premise signs ranging from traditional Abatement. Contributory value of sign to ground- and building -mounted signs to sign centric site design and signature buildings, overall business. Valuation of signage. Valor such as commonly used by franchisers in the fast food or service stations trades. Too of the communication component of a site. often that complexity is overlooked in discussions of signage. Regulatory takings. Takings. Eminent Although the on -premise business sign is the most regulated form of commercial domain. expression now in existence, the sign industry does not object to regulation per se - Discrimination. Code administration. neither does today's business community. Both sign makers and sign users accept the Variances, Application of the code. Code need for regulation; the objection is to regulations based on personal preferences amounting interpreations. Conditional uses. to censorship and a misunderstanding of the First Amendment "free -speech" protections Amortization. Censorship. afforded signage. Sign regulations based on nuisance theory are usually supported by either subjective interpretations of what makes for a "beautiful" and/or "safe" sign, or demonstrate a failure to recognize the important role signage plays in creating a vibrant, vital business district. This is not only potentially lethal to long-term, sustainable retail revenues, but is also toxic in terms of the fiscal health of the average pluralistic town or city. --he on -premise It is now well established that sign codes regulating private signs must he time, auslness the sign g n is st place, and manner regulations that are content neutral. In this chapter we will examine -egulated fo-m the Constitutional protections and case law that apply to regulations of signage. of commercial expression Mow in existence. Constitutional Protections Commercial signs generally fall into three classifications with differing property interests, often leading to differing treatment by the controlling law: • Outdoor advertising. The permanent ground or building -mounted outdoor advertising (or off -premise) structure, if located on private property, is considered a primary land use, possessing a primary real estate interest. • On -premise. The permanent ground or building -mounted on -premise sign is considered an accessory land use, possessing a partial real estate interest. A sub- category of on -premise signage is comprised of incidental signs (such as credit card signs, restroom signs, and ADA signs), which may be either permanently or - ICm "'may tine 0,Wg1a'.LJan/ Q*rptr Myth #2: Censorship of Commercial Speech is Legal 4 temporarily attixed to the premises, and may or may not possess a partial real estate interest, depending upon the controlling law. • Temporary. Temporary signs, such as political, real estate, or special event or activity signs, are short-term, impermanent communication devices that do not possess a real property interest; they are personal property. Legal issues arising from signage regulation generally focus on the First, Fifth or Fourteenth Amendments to the U.S. Constitution; sometimes more than one Amendment is involved. The following Table summarizes these issues as they relate to the three Amendments. TABLE 3 First, Fifth, and Fourteenth Amendments First, Fifth, and Fourteenth Amendments CONSTITUTIONAL RELATED SIGNAGE ISSUES AMENDMENT First Amendment Restraints on commercial and noncommercial communication. Content control. Censorship. Fifth Amendment Just Compensation. Amortization. Abatement. Contributory value of sign to overall business. Valuation of signage. Valor of the communication component of a site. Regulatory takings. Takings. Eminent domain. I uurteenth Amendment Discrimination. Code administration. Variances, Application of the code. Code interpreations. Conditional uses. Amortization. Censorship. It Is now well established that sign codes regulating private signs must be time, place, and manner regulations that are content neutral. When terrorists attacked New York, many business owners used their variable mes- sage boards to express their patriotism. The First Amendment In ten words, the First Amendment prohibits Congress from establishing any law Thee ;ravernment that curtails the right to speak — "Congress shall make no law abridging the freedom of carnnot place speech..." inmts on time- w:nre-m a n n er Although this command appears to be straightforward enough, the founding fathers basanz upon what neglected to clarify how to go about preventing abuses of the right to "free speech," or sa . s e ^ n w ho is for that matter, whether there were different kinds of speech which might be deserving of saying it. different levels of protection. Consequently, the U.S. Supreme Court, over the years, has produced a shopping list of balancing tests and speech categories. However, written or pictorial advertising — on signs — was not foremost in either mind or law until 1942, when the "commercial speech doctrine" made its appearance. To understand what occurred then, and where it has lead today, some background is in order. Background Prior to 1942, it did not occur to litigants to characterize their advertisements as "commercial speech" because advertising was thought of as an occupation, not a form of expression. Then, in 1940, a New York City entrepreneur, Mr. Chrestensen, distributed a leaflet, which on one side advertised the exhibit of scrapped navy submarine he owned, and on the other, protested the city's denial of wharfage facilities. He "sub -divided" his leaflet in order to avoid the city's "sanitary" code which prohibited distribution of advertising handbills in the streets, but did permit distribution of "political" messages. The police put a stop to his promotional efforts, and he sued the city, charging that its sanitary regulation violated the Due Process Clause (not the First Amendment). The U.S. Supreme Court found that Chrestensen's printed protest amounted to an attempt to dodge the sanitary code, and held that the owner's usage of the streets for advertising Purposes was unlawful.' In its opinion, the Court did not address commercial speech or the First Amendment, but only the issue of whether commercial conduct could be regulated by legislatures. However, its holding that commercial advertising receives no Constitutional protection originated the distinction between commercial and noncommercial speech. This holding held sway until 1976, when the Court decided Vuginia State Bd. Of Pharmacy u Virginia Citizens Consumer Council. Inc.' In Virginia Board, a state regulation prohibited pharmacists from advertising the Prices of drugs. Consumers of prescription drugs brought suit against the state, charging that the advertising ban violated the First Amendment and denied them the benefit of learning the prices of drugs from advertisements. The core question was whether an advertisement, unaccompanied by any political expression, receives protection under the First Amendment. The Court responded that it did. Justice Blackman, writing for the majority, explained why. Justice Blackman noted that: the profit motivation of a speaker did not remove speech from the protection of the First Amendment; the public needed commercial information as much as, if not more than, it heeded Political information; ZL.msezcbej I/ed �,{f vhr.�bxd (-Id w Myth *2. Censorship of Commercial Speech is Legal __,.4._r_.R._6-J.h.-I..J.tl.+Y.- ><s...n a.., the success of a democracy and a free economy required that commercial information be freely disseminated and readily available; and the First Amendment prohibited the government from preventing the flow of commercial information in order to affect the public's decision.' The opinion further observed that "time, place and manner" restrictions on commercial speech are permissible if they: 1. are justified without reference to the content of the speech; 2. if the restrictions serve a significant government inicrest; and 3. leave open ample alternative channels for communication of the information! In the context of the above three -pronged test for constitutionality, time refers to "when" a message may be displayed; place refers to"where" where" the message may be displayed, and manner to "how" the message may be displayed. The phrase "without reference to the content of the speech" means that the government cannot place limits on time -place - manner based upon what the message "says," the number of words used to convey the message, or who is saying it, unless the message contains false or misleading information, or otherwise poses, or proposes an imminent threat to public health, safety or welfare. The Supreme Court has ruled that these latter forms of expression do not receive First Amendment protections. While the case granted commercial speech First Amendment protection, the protection was weakened because the Court observed in a footnote that "common sense differences" between commercial and noncommercial speech made commercial speech more regulable.s As a result of this judicial "aside," in several cases following Virginia State Board, the Court drew on "common sense differences" to afford commercial speech something less than full First Amendment protection.' Then, in 1980, a four -pronged balancing test was devised to determine whether a state regulation banning advertising violated the First Amendment. The case, Central Hudson Gas & Electric Corp v Public Service Commission, 447 U.S. 557 (1980), arose Consumers must have ready access to in- formation on the cost of goods; such knowl- edge is essential to a free economy. ^ EL I Justice Blackman posited that the success of a democracy and a free economy required that commercial information be freely disseminated and readily available. Valentine v. Christensen, 316 U.S. 52 (1942). 2 Vhginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976). ' "Our pharmacist does not wish to editorialize on any subject... philosophical or political. He does not wish to report any particularly newsworthy fact, or to make generalized observations, even about commercial matters. The idea he wishes to communicate is simply this: '1 will sell you X prescription drug at Y price.'" Justice Blackman, Virginia Sune Board, at p. 771. ' Virginia State Board, st p. 771. ' Virglnia State Board. at p. 771.772 n. 24. ' See Ohralik v. Ohio State Bar.4ssn, 436 U.S. 447 (1978). The Court opined that if commercial speech were granted full First Amendment protection, the protection granted to other forms of speech would be diluted and the First Amendment.., "devitalized" lhid, p. 449. from a challenge of a New York state law that prohibited public utility advertising. The State asserted that such advertising would increase consumerdemand, thereby leading to increased energy consumption in direct contravention of the state's interest in energy conservation. The balancing test used to decide the issue is as follows: I . The court must fust ask if the commercial speech at issue concerns "lawful activity" and is not "misleading." If the answer here is negative, then no protection is afforded, and the inquiry is ended. Regvriatiort of 2. The court must then ask if the government interest served by the regulation is cownen,ertial substantial. If the answer here is negative, then the First Amendment will apply apeec*I must tae -w r+✓are because speech should not be limited for insubstantial reasons. exteresive Man necessary to if the answer to both of the first two questions is affirmative, then the court must —r-eve the determine answers to the following: siu,c sta ri ti a l gov ;--PtePee rrta1 3. goes the regulation directly advance the government's interest? 4. is the regulation no more extensive than necessary to serve that interest? In applying the test to the facts of the case, the Court found that the ban failed the fourth requirement because the state could achieve its goal by requiring that the utility include in its advertisements information regarding energy conservation. And while still paying deference to the "common sense differences" between commercial and non- commercial speech, the Court clearly articulated more scrutiny of restrictions on commercial speech than the deferential standards of "reasonable" or "rational" or "not arbitrary and capricious," normally applied to test the validity of governmental regulations of purely economic interests. First Application of Central Hudson; Distinguishing Between On -Premise and Off -Premise Signs At its first opportunity to apply the Central Hudron test and analysis, the Supreme Court experienced some difficulty. The case was Metromedia Inc v City of San Diego, Signs mom, be Wulated based on time, place, and manner restrictions, but all regulations must be ,:iontent-r,&utr& A city may, for example, ban all temporary signs, or limit their number, location or duration ckf posting: but it may not regulate based on what the sign says or who is saying it, unless tt"te message is misleading, fraudulent or otherwise illeoat 1-4-, Ju' i•l;K/cr_ihYt( lhnpU Myth #2: Censorship of Commercial Speech is Legal 453 U.S. 490 (1981). The issues were many, and the resolution produced five separate opinions. The crux of the matter was the constitutionality of the city's sign ordinance that permitted on -premise signs while banning off -premise signs - or outdoor advertising. The primary reasons advanced by the city for its ban on outdoor advertising structures were (1) they significantly degraded the attractiveness of the community, and (2) they compromised traffic safety. The ban included both commercial and non-commercial speech. While none of the five opinions garnered a majority of the Court's members, the justices could agree on some points. First, the Court was unanimous in finding that a community could ban off -premise commercial signs, but still permit on -premise commercial signs as a legitimate exercise of police powers to reduce sign clutter (or improve "aesthetics") and promote traffic safety. t While the opinion states that promotion of traffic safety is a legitimate exercise of police powers, the city had conducted research and was unable to prove this point, therefore both litigants agreed there was no evidence that the off -premise signs had caused traffic accidents. Next, seven justices agreed that, based on the Central Hudson four -prong test, the city's interest in promoting traffic safety and avoiding visual clutter was substantial enough to justify a complete prohibition of off -premise commercial signs. Finally, although the Court ruled 6-3 that the city's sign ordinance was unconstitutional, the six judges couldn't agree why. Two justices simply found that the ordinance failed the Central Hudson test because the city had not conclusively shown (hut the city's interest in aesthetics and traffic safety was substantial enough to justify a prohibition of signs in commercial and industrial areas. The other four justices joined in a plurality opinion that found two flaws: (1) the ordinance favored commercial over noncommercial speech because commercial speech could be displayed on on -premise signs while noncommercial speech could not; and (2), the ordinance discriminated among various noncommercial messages by creating exceptions for some, but not all such messages. Justice White summed up his opinion by stating, "it is apparent ... that the ordinance distinguishes in several ways between permissible and impermissible signs at a particular location by reference to their content. Whether or not these distinctions are themselves constitutionul, they take the regulation out of the domain of [content neutral] time, place and manner restrictions."' "The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good." I While the opinion states that promotion of traffic safety is a legitimate exercise of police powers, it was not it controlling tactor in Metromedia, because all the litigants agreed there was no evidence that the off premise signs complained of by the city caused traffic accidents. However, Justice White did address the issue by finding that the record was inadequate to ahow any connection between "billboards" and traffic safety, and therefore, the ban did not directly advance the city's interests in traffic safety. Metromedia, at p. SIO. ' Metromedia, at pp. 516-517. .10 Further Guidance from the Court Two cases following Metromedia provided additional guidance on parts three and four of the Central Hodson test,In Boar7htstees of State Universin, of yew York v Fox, 492 U.S. 469 (1989), the Court specified a more precise standard required by the third part of the test: regulation of commercial speech must be "no more extensive than necessary to achieve the substantial governmental interest." While the Court did not go so far as to require the least restrictive means of regulation, it did say that more than mere reasonableness was requited — "a means narrowly tailored to achieve the desired objective."' In City of Cincinnati v Discovery Network, 507 U.S. 410 (1993), the Supreme Court rejected a claim that the city's ban on commercial news racks was justified by the city's legitimate interests in the safety and attractive appearance of its streets and sidewalks, particularly since the ban would remove only 62 commercial news -racks while leaving 1,500-2,000 noncommercial news racks (those dispensing only "newspapers") in place. The Court found that the benefits to be derived from the ban were "minute" and "paltry," given the city's supposed goal of achieving a reduction in the total number of news racks. The Court also rejected the city's claim that its ban was justified because of the "low value" of commercial speech, holding: In the absence of some basis for distinguishing between "newspapers " and "commercial handbills " that is relevant to an interest asserted by the city, we are unwilling to recognize Cincinnati's bare assertions that the 'low value" of commercial speech is sufficient justification for Its .selective and categorical ban on news racks dispensing "commercial handbills. 'Q lL :ai ytlteCttxltr AJW1l i26YX1 Myth *2: Censorship of Commercial Speech is Legal The Court discussed the "reasonable fit" test, noting that: [the] regulation need not be absolutely the least severe that will achieve the desired end, but if there are numerous and obvious less -burdensome alternatives to the restriction on commercial speech, that is certainly a relevant consideration in determining whether the ' Jlt " between ends and means is reasonable.' The government may no longer Finally, the Court determined that the ban could not be considered a valid content- manipulate the marketplace by neutral regulation of"time, place and manner," because the very basis for the regulation suppressing was the difference in content between commercial and noncommercial news -racks. truthful speech about a legal Where the Law Stands Today: Centrad lludson Altered; Virginia Board product when less -restrictive, Strengthened or speech - neutral, In 1996, the Supreme Court delivered its most significant pronouncement on the alternatives are available to status of commercial speech since its Virginia Board decision 20 years earlier, establishing further the that the First Amendment protected commercial speech, government's goal. In 44 Liquormart Inc v. Rhode Island, 116 S.Ct.1495 (1996), the Court unanimously struck down a state law that prohibited the advertising of retail liquor prices except at the place of sale. The state argued that the ban was a necessary extension of its interest in reducing alcohol consumption among all drinkers, The justices found it difficult to agree on the reason to strike down the law - the decision consists of an eight -part plurality opinion. In taking the views together, however, the result is an expression of a significant change in how the Court views the First Amendment status of commercial speech, together with a willingness either to apply a more stringent test than Central Hudson or to apply Central Hudson with "special care.'" Justice John Paul Stevens wrote: In recent years this Court has not approved a blanket ban on commercial speech unless the expression itself is flawed in some way ... [t]he First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark.for what the government perceives to be their own good." Justice Clarence Thomas argued that when a government regulation works to keep information from the public in order to control the public's choices or conduct, the Central Hudson test is inapplicable. Adhering to the principles of FIrginia Board, Justice Thomas stated that (1) a democracy and free enterprise economy require well-informed citizens free to make independent decisions, (2) the First Amendment protects the Board of 7hartees, at p. 480. Discovery Network 113 S.Ct. 1505, p. 1516. ibid., p. 1510 n. 13. ' "We review with special care regulations that entirely supporess commercial speech in order to pursue it nonspeuch•related policy." Central Hudson, 447 U.S. at 557, 566. ' 44 Liquormart, Justice Stevens; P.P. 1507-1508. circulation of commercial speech, and (3) regulations which suppress information are not Permissible, even if they pass a balancing test. Additionally, Justice Thomas predicted that given the fourth prong of the Central Hudson test, there would almost always be a speech -neutral alternative available to advance a state's interest and, for that reason alone, restrictions on commercial speech would rarely, if ever, pass constitutional scrutiny.' Before 44 Liquormart, the Central Hudson balancing test arguably sanctioned the suppression of truthful commercial speech. After 44 Liquormart, it seems clear that the government may no longer manipulate the marketplace by suppressing truthful speech about a legal product when less -restrictive, or speech -neutral, alternatives are available to further the government's goal. This point is illustrated in a recent Supreme Court decision on commercial speech regulation, Lorillard 7bbacco Co., et at. v Reilly, 121 S,Ct. 2404 (2001). In Lorillarrl, the Court struck down a Massachusetts law that imposed severe location restrictions on signs advertising tobacco products in an effort to discourage tobacco use by minors. Applying the Central Hudson test, the Court acknowledged that Massachusetts had a substantial, and even compelling interest in preventing children from using tobacco. Notwithstanding this interest, however, the Court found that the regulations failed to meet Central Hudson's "reasonable fit" requirement because the state's effort to discourage underage tobacco use unduly impinged on advertisers' "ability to propose a commercial transaction and the adult listener's opportunity to obtain information about products." (Id at 2427.) The Court further noted that " [I]n some geographical areas, these regulations would constitute nearly a total ban on the communication of truthful information about smokeless tobacco and cigars to adult consumers." (@ 2425;) Although the Court's rulings in 44 Liquormart and Lorillard are not specifically attributed to the application of strict scrutiny, they come very close. Thus, for the present, it appears reasonably safe to assume that when judging the validity us bans on commercial speech, the Court will apply Central Hudson with sufficient "special care" as to be the practical equivalent of strict scrutiny, thereby effectively equating the First Amendment status of commercial speech with that of noncommercial speech in such instances. As a condition to placing its sign, a city cannot demand, for any reason, that McDonald's change its golden arch" to a purple one, or Shell, its "shell" to a star; or require Hollywood Video to straighten the baseline of its letters. NOlLYW00D 11 1e +mro>inrjrhrL'(iptltr�tltxu OfjrpU Myth #2: Censorship of Commercial Speech Is Legal XYYrss°�.-�.y i.wJ�u.:c err.. J.a`.a a..c.u. r..� �: �. r. r.a� s a ..... .......:. r ., ......� •. y .. � .., - ,.:.. Federal Trademark Law (The 1958 Lanham Act): A Corollary to the First Amendment The federal Lanham Trademark Act (15 U.S.C., section 1051, et seg.) protects federally registered names, marks, emblems, slogans, and colors, if included in the registration. The first clause of Section 1121 (b) of the Lanham Act reads as follows: No state or otherjurisdiction of the United States or any political subdivision or anv agency thereof may require alteration of a registered mark, or require that additional trademarks. service marks, trade names, or corporate names The Court recog- that may be associated with or incorporated into the registered mark be nized that the displayed in the mark in a manner di,(fering from the display of such function of a additional trademarks, service marks, trade names or corporate names trademark Is to contemplated by the registered mark as exhibited In the certificate of convey recogni- tion of a product registration issued by the United States Patent and 7Fademark Office. or service by utilizing a uniform While a governing entity may regulate signs, so long as no Constitutional appearance. protection is abridged, the plain language of the Lanham Act prohibits federal, state and local governments from requiring alteration of a registered trademark or copyrighted slogan, as registered, as a condition of obtaining a sign permit. An oft -cited case addressing the question is Sambo s of Ohio v City Council of Toledo. 466 F.Supp 177 (N.D. Ohio 1979). Here the plaintiff enterprise initially sought and received a minor zone change to operate a newly constructed restaurant; it then requested a sign permit for that restaurant. The city would not issue a permit unless the applicant agreed to change its registered trade name and logo because the city determined that the name and logo were racist. The Court ruled that the city's effort to require alteration of a federally registered trade name as a condition of permit on alleged racial grounds was unwarranted, over broad, and in violation of both the First Amendment and the Lanham Act. In finding against the city, the Court noted that if the registered name had to be changed on the sign, it would also prevent the plaintiff from advertising or using the name in other media advertising, or even inside the restaurant. The Court further declared that one cannot have freedom of speech if only innocuous utterances are permitted. (Id at 180.)= A more recent case involving Section 1121 of the Lanham Act is Blockbuster 111deos Inc. & rideo Update v City of Tempe (AZ), 141 173d 1295 (9th Cir. 1998). In Blockbuster, the city required that mall signage conform to certain color schemes as set out in a comprehensive sign plan approved by the city in concert with shopping center owners. Video Update's trademark colors did not comport with the city's color scheme, and the city refused to approve a sign permit unless Video Update agreed to change its red letters to white. Blockbuster Videos received permission to display its tom -ticket logo as registered, but it did not receive approval to install its other registered mark ---a blue awning. ' 44 Liquormart, pp. 1515-1520. ' See also, Texas v Johnson, 491 U.S. 397, 414 (1989) —" [o]ne bedrock principle underlying the First Amendment is that government cannot prohibit expression of an idea simply because smiely finds jilt otTensive or disagreeable." �.icier.►isYlY.iaota..ax.s.n.o-wS6.b;,L.,C�3..C�ea$.:.%-.i .i. n•-,4.rn .a .,..0 .. .. ... w.,.. ...:.v.:... In a majority opinion the Court held that a municipality may not enforce zoning regulations if those regulations require the alteration of a registered mark. in reaching this decision, the Court reasoned that if the law recognizes that the function of a trademark is to convey, via a symbol, recognition of a commodity by potential customers, then it must have a uniform appearance, not only in design, but also in color. The Court did not extend Lanham Act protection to Blockbuster's awning request, however, finding that while an ordinance can not require alteration of a mark, it can entirely preclude display of a mark. Although the Ninth Circuit in Blockbuster deferred to what it believed was the "plain meaning" of the Lanham Act, a correct interpretation of the Act is not yet settled, Often the as evidenced by a case arising in the Western District of New York—Lisa's Party Clty, econom.c harm Inc. v. Toxin of Henrietta, 185 F.3d 12 (2d Cir. 1999). flowing from a "regulatory taking" is in this case, the Second Circuit relied extensively on legislative history, and determined substantial, yet that Congress never intended that section 1121(b) should interfere with uniform aesthetic many times this zoning requirements, so long as the subject ordinance did not require actual alteration of harm is not the trademark. Therefore, the Court held that an ordinance limiting sign color typefaces willingly and decorative elements for aesthetic reasons was not in violation of the Lanham Act. In recognized by governmental so ruling, the Court found that the subject regulations "simply limit color typefaces and a u ttrorities, decorative elements to certain prescribed styles [and thus]... have no effect on businesses' trademark .... limit[ing] only the choice of an exterior sign at a particular location. As such, though entirely disallowing the use of a registered trademark in carefltlly delimited instances, these regulations do not require 'alteration' at all." (® 15.) While the two cases above differ on interpretation of the Lanham Act, they do agree on two points: (1) regulations that condition a sign permit on an actual alteration of a trademark are in violation of the Lanham Act, but (2) regulations that totally ban the display of registered trademarks or logos do not violate the Lanham Act. This is not to say, however. that such a prohibition could withstand judicial scrutiny under First Amendment content -neutrality requirements, particularly if the only articulated reason for the prohibition is based on aesthetics. Unfortunately, neither Blockbuster nor Lisa's Party City raised or discussed First Amendment issues. The Fifth Amendment The Fifth Amendment contains two separate guarantees for property rights: the due process clause and the "takings" clause. The due process clause - "No person shall .., be deprived of life, liberty, or property, without due process of law" - protects citizens from government action that arbitrarily deprives them of a fundamental right, and applies to both the act itself and the procedures incidental to the act. The "takings" clause - ..... nor shall private property be taken for Public use, without just compensation" - is designed to prevent the government from forcing individuals to bear public burdens which more fairly should be borne by the citizenry at large. rj� Gif tdir�>irxd O; iVPI, Myth Ott: Censorship of Commercial Speech Is Legal These provisions apply not only to the federal government; for over 100 years the Supreme Court has interpreted the "due process clause" of the Fifth Amendment to be applicable to the actions of state and local governments as well. The Supreme Court has long held it permissible for local governments to divide a jurisdiction into zones, segregating one use from another, even if the zoning resulted in adverse economic consequences for impacted land owners.' However, the regulation of land use through zoning may at times diminish value to the point that a "takings" has occurred. Compensation is most likely to be required for zoning, or other land use regulations, either when the government action results in total or near total destruction of land value, or when the governmental regulation serves no valid public purpose.' When signage is affected by a "takings," it is generally the result of condemnation of the host site or a change in law or regulation that makes a previously legal and conforming sign suddenly illegal. Often the economic harm flowing from a "regulatory taking" is substantial, yet many times this harm is not willingly recognized by governmental authorities. On -premise signage has suffered more from this lack of recognition than off -premise signage, largely due to federal legislation mandating just compensation for those property owners and interests most directly affected by the "i•lighway Acts" of the 1950s, 1960s and 1970s. Condemnation of On -Premise Signage Compensation for loss of on -premises signage as a result of traditional condemnation action against its host site, under eminent domain theory, is relatively new concept. However, as the contributory value of a sign to its site gains in recognition and appreciation, it is increasingly likely that the signage will be considered separately for purposes of assigning a value and paying compensation. One example is outlined below. In some cases, the sign is so important to a business that without the sign the business ceases to exist. Consequently, the value of a sign to a business may be much greater than the actual cost of building the sign. The seminal case is Nllage oJEuclid v. Ambler Realty, 272 U.S. 365 tl'126), which upheld a zoning code that excluded multiple -dwelling houses from areas of one -family residences as a legitimate exercise of police powers to promote community health, safety, more, and general welfare, even though the value of the land so zoned is significantly diminished. ' See, City oJMonterev v. Del Monte Dunes, 95 F. 23" 1422 (1999), holding that if it is determined either that the aggrieved party has been denied all economically viable use of his property or the government's action does not substantially advance a legitimate public purpose, the government will be held liable for compensation. See also, Lake Nacimlento Ranch Co. v. San Luis Obispo, 841 F.2d 872, 877 (9th Cir. 1987), holding that the court may review the owner's investment expectations when determining if a regulation denies an owner economically viable use to the extent that a takings has occurred; Dolan v City of 71gard. 512 U.S. 374 (1994), which held that a compensable takings occurs if there exists no rough -proportionality or nexus between the regulation as it impacts the landowner and the government's asserted interest. 'p �� The Accessory Use Doctrine: A Corollary to the Fifth Amendment Off -promise signs are frequently deemed to be nothing more than advertising, and are often widely viewed as significantly degrading to the attractiveness of communities, particularly in the case of large outdoor structures. Thus, communities often seek to ban off -premise signs altogether, and generally succeed without running afoul of the First Amendment.' Caddy's distinctive murels and signs provided extremely valuable on-site advertising for the restaurant. When the restaurant was forced to relocate, the court recognized this value, awarding Caddy's a sizable sum of money to replace the lost exposure. '!h ruflhn C(fyttltr glbu/ 06", Myth #2: Censorship of Commercial Speech is Leaal By contrast, on -premise signs, although regulated, are never completely banned, because it is evident to most they are a practical and commercial necessity for the business or business site to which they are attached. in all incorporated U.S. towns and cities, businesses and their signs are located in commercial zones or districts, with clearly defined primary or principal uses (retailing), together with lesser supporting or accessory uses, of which sign use is one. The separation of use into "principal" and "accessory" is a legal principle (the Caddy's s Hamilton County, Ohio (a lower court case, no West Law cite) "accessory use doctrine") premised upon recognition that it is not possible to plan for This case was decided by jury trail in a lower court in Hamilton County, Ohio—a every use that may occur on a given site. Therefore, in practice, the local government state that recognizes the "visibility component" of a commercial site as a partial real will first establish a general primary use zone, and secondarily, and in general terms, estate interest. in Caday S, the business' building was to be "taken" under exercise of address incidental or "accessory" uses which commonly accompany the primary use, and eminent domain to make way for a municipal stadium. The county tax assessor placed a value of $1.3 million on the land building perhaps significantly contribute to the full success and enjoyment of the primary use. and and no value on the business' signage, which had been "grandfathered in" and was highly visible to adjacent streets and highways. Because Caddy's very distinctive, 3,000 square foot wall murals and a roof sign were non -conforming under present codes, they could not be duplicated on the replacement buildings used by the county as comparable The on -pr emise relocation sites; neither did the comparables have equal or similar exposures to the freeway. Therefore, if income levels were to be sign (referred to maintained after relocation, alternate forms of commercial communication, such as outdoor by Justice advertising or television and radio commercials, would have to substitute for the lost on - Brennan as a premise visibility to potential customers. "business sign) is part of (rhe business)" or in During trial on the issue ofjust compensation for lost visibility, expert testimony established that the cost of other words, an accessory use. replacement intheformofoutdooradvertisin was Yg $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. Using a capitalization rate of to%, thejury awarded 51.8 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 (or `outdoor advertising structure") exposures for a new location lacking on-site signage visibility. The jury also awarded 51.3 million for the real property and building. Thus the combined award gave the owner sufficient money with which not only to replace land and building, but also to protect the former income stream with funds, which, if prudently invested, would annually cover replacement -exposure expenses without adversely affecting sales volume. The Accessory Use Doctrine: A Corollary to the Fifth Amendment Off -promise signs are frequently deemed to be nothing more than advertising, and are often widely viewed as significantly degrading to the attractiveness of communities, particularly in the case of large outdoor structures. Thus, communities often seek to ban off -premise signs altogether, and generally succeed without running afoul of the First Amendment.' Caddy's distinctive murels and signs provided extremely valuable on-site advertising for the restaurant. When the restaurant was forced to relocate, the court recognized this value, awarding Caddy's a sizable sum of money to replace the lost exposure. '!h ruflhn C(fyttltr glbu/ 06", Myth #2: Censorship of Commercial Speech is Leaal By contrast, on -premise signs, although regulated, are never completely banned, because it is evident to most they are a practical and commercial necessity for the business or business site to which they are attached. in all incorporated U.S. towns and cities, businesses and their signs are located in commercial zones or districts, with clearly defined primary or principal uses (retailing), together with lesser supporting or accessory uses, of which sign use is one. The separation of use into "principal" and "accessory" is a legal principle (the Prior restraint occurs when the "accessory use doctrine") premised upon recognition that it is not possible to plan for right to every use that may occur on a given site. Therefore, in practice, the local government communicate is will first establish a general primary use zone, and secondarily, and in general terms, subject to the address incidental or "accessory" uses which commonly accompany the primary use, and prior approval of perhaps significantly contribute to the full success and enjoyment of the primary use. o government official. The landmark case establishing the application of the accessory use doctrine to on -premise signage is United Advertising Corp. v. Borough of Raritan, 11 N.J. 144, 93 A.2d 362 (1952). The opinion was written by Justice William P. Brennan before his appointment to the U.S. Supreme Court. Justice Brennan's opinion established an important point: The on -premise sign (referred to by Justice Brennan as a "business" sign) is "part of [the business]" or, in other words, an accessory use. Brennan writes: The business sign is in actuality apart of the business itself, just as the structure housing tire business is part of it, and the authority to conduct the business in a district carries with it the right to maintain a business sign on the premises subject to reasonable regulations in that regard....' In arguments over whether a permanent on -premise sign possesses a real property interest or whether compensation should be paid separately for the condemnation of a sign as part of the condemnation of its site, the "Accessory Use Doctrine" may be invoked as a legal tool to assist in defining the sign's property status, and establishing the right to monetary damages for its demise. Regulatory Takings of On -Premise Signs Compensation for regulatory downsizing, removal or ban of a previously legal sign (or a regulatory takings) is vigorously resisted by many local governments. However, as it becomes more and more apparent that on -premise business signs contribute significantly to business success, it may also become more and more apparent, at least to the courts, that new codes, which retroactively render a sign nonconforming, may owe I Although regulations based on the distinction between on -premise signs and off -premise signs are content -based, courts accept as rational a local determination that on -premise signs are an inseparable part of the business use of a piece of property, while off -premise advertising is a separate use unto itself that may be treated differently from on -premise signage; therefore, efforts to ban off -premise signs are generally acceptable under First Amendment content analyses, as a valid exercise ol'police powers in the protection of community "aesthetics." I Id. at 365. The Fourteenth Amendment In on -premise signage regulation issues, the Fourteenth Amendment commonly enters the picture at the permit counter. In order to pass constitutional muster the permitting or licensing, or conditional use or variance request, must be structured to assure easy understanding of objectively -based requirements, reasonable application fees, speedy decision on the application by the permitting authority, and recourse to automatic and swift appeal of any denial. Because a sign is essential to communicating one's presence and effectively competing in the marketplace, a failure in any of these minimum due - process requirements can give rise to a "prior restraint" issue. Prior restraint occurs when the right to communicate is subject to the prior approval of a government official. Therefore, it is always present in the sign permitting process, making it incumbent upon the official to act pursuant to clearly defined standards that strictly limit the official's discretion and guarantee resolution within a short period of time. Prior restraint problems might even arise in the construction materials and electrical code provisions if these provisions unduly delay the permit process. Although the Supreme Court has not yet applied the prior restraint doctrine to a municipal sign code permitting issue, it has made it clear since 1965 in Freedman v. Maryland, 380 U.S. 51; 59 (1965) that (1) the decision whether to issue a permit must be made within a specific brief period; (2) the scheme must also assure a prompt final judicial decision, to minimize the deterrent effect of an interim and possibly erroneous denial of a license; and (3) a censorship scheme must place the burden of instituting judicial proceedings and proving that the expression is unprotected on the censor. 7£ rmf//tCC t{p//tr �/rrrt kAA/,pv Myth #2: Censorship of Commercial Speech is legal And while the U.S. Supreme Court has not decided a prior restraint issue outside the context of zoning, several lower courts have. For example, in Desert Advertising, Inc v City of Moreno Valley, 103 F.3d 814 (9th Cir. 1996), the Court struck down an ordinance where the only standards for granting a sign pennit were that: [the sign] "will not have a harmful effect upon the health or welfare of the general public" and "will not be detrimental to the aesthetic quality of the community." In North Olmsted Chamber of Commence, et al v. City of North Olmsted, U.S. Dist. Ct., Northern Dist. of Ohio, Eastern Division, Case No, 1:98 CV 0810, the Court determined that the city's ordinance lacked sufficiently narrow, objective, and definitive standards which, therefore, gave government decision makers unfettered discretion in issuing a permit and further did not provide any of the procedural safeguards set out in Freedman. In sum, the North Olmsted Court found that "a system of prior restraint that fails to provide procedural safeguards does not comport with the Constitution" (Id. at 37). For this, and for violations of content -neutrality and equal protection requirements, the Court found the ordinance unconstitutional in its entirety. temporary Signs: A Class by Themselves A common definition for a temporary sign is "a sigh announcing special events or sales, the sale or rental of property, political positions or other matters, and intended for use for a limited period of time." Temporary signs may be portable, as a "sandwich board," or attached, as a window sign. Local governments often enact special restrictions and prohibitions regarding temporary signs, generally based on the argument that the haphazard use of these signs is detrimental to several legitimate governmental interests, including aesthetics, traffic safety, and hazard to pedestrians, if placed on the sidewalk or other public right-of-way. Although regulations may be struck down if a court finds they are irrational or overly restrictive, the present judicial trend is to permit restrictions if (1) they are reasonable on the grounds of safety and aesthetic objectives, and (2) they do not overly censor the free flow of marketplace information or, even more importantly, the expression of political choice or opinion. For a commercial land use to be economically effective, the use must be permitted a sign of adequate size, placement, height, and lighting to guarantee readability and conspicuity. compensation to the owner for provable consequential loss of business revenues and diminution of real property value. Under a retroactively applied sign code, in order to avoid paying compensation for the removal of a previously conforming sign, many communities have resorted to "amortization" — theorizing that if an "offending" sign is permitted to remain for a reasonable amount of time after the new code is in place, the owner will recoup his investment in the sign, thereby negating the need to pay him anything extra for its ultimate removal. Amortization is discussed more fully in the following chapter: MYTH 113 — Imcreasingly, SIGNS IN AND OF THEMSELVES HAVE LITTLE VALUE, tine concept of nne nt tent -premise Increasingly,the conce t of permanent on -premise business signs as possessing a bus,,--ess signs compensable real property interest is recognized by our legal system. Thirty-five states as pcassessing a now have some type of statute recognizing and protecting the real property value of on - co« ,,pen sa b le premise business signs. In many instances, for a commercial land use to be economically rea., property +rnterest is effective, the use must be permitted a sign with adequate size, placement, height, and recc-gnized by lighting to P g 8 guarantee readability and conspicuity. As studies continue to expand our our legal understanding of the significance of signs in the economic survival of a business, and as system. attempts are made to retroactively downsize signs below the visual acuity level of the average consumer, the federal government should extend its present prohibition against non -compensatory takings for outdoor advertising displays to permanent on -premise business signage. Additionally, these actions are likely to be considered censorship subject to the First Amendment protection. The Fourteenth Amendment In on -premise signage regulation issues, the Fourteenth Amendment commonly enters the picture at the permit counter. In order to pass constitutional muster the permitting or licensing, or conditional use or variance request, must be structured to assure easy understanding of objectively -based requirements, reasonable application fees, speedy decision on the application by the permitting authority, and recourse to automatic and swift appeal of any denial. Because a sign is essential to communicating one's presence and effectively competing in the marketplace, a failure in any of these minimum due - process requirements can give rise to a "prior restraint" issue. Prior restraint occurs when the right to communicate is subject to the prior approval of a government official. Therefore, it is always present in the sign permitting process, making it incumbent upon the official to act pursuant to clearly defined standards that strictly limit the official's discretion and guarantee resolution within a short period of time. Prior restraint problems might even arise in the construction materials and electrical code provisions if these provisions unduly delay the permit process. Although the Supreme Court has not yet applied the prior restraint doctrine to a municipal sign code permitting issue, it has made it clear since 1965 in Freedman v. Maryland, 380 U.S. 51; 59 (1965) that (1) the decision whether to issue a permit must be made within a specific brief period; (2) the scheme must also assure a prompt final judicial decision, to minimize the deterrent effect of an interim and possibly erroneous denial of a license; and (3) a censorship scheme must place the burden of instituting judicial proceedings and proving that the expression is unprotected on the censor. 7£ rmf//tCC t{p//tr �/rrrt kAA/,pv Myth #2: Censorship of Commercial Speech is legal And while the U.S. Supreme Court has not decided a prior restraint issue outside the context of zoning, several lower courts have. For example, in Desert Advertising, Inc v City of Moreno Valley, 103 F.3d 814 (9th Cir. 1996), the Court struck down an ordinance where the only standards for granting a sign pennit were that: [the sign] "will not have a harmful effect upon the health or welfare of the general public" and "will not be detrimental to the aesthetic quality of the community." In North Olmsted Chamber of Commence, et al v. City of North Olmsted, U.S. Dist. Ct., Northern Dist. of Ohio, Eastern Division, Case No, 1:98 CV 0810, the Court determined that the city's ordinance lacked sufficiently narrow, objective, and definitive standards which, therefore, gave government decision makers unfettered discretion in issuing a permit and further did not provide any of the procedural safeguards set out in Freedman. In sum, the North Olmsted Court found that "a system of prior restraint that fails to provide procedural safeguards does not comport with the Constitution" (Id. at 37). For this, and for violations of content -neutrality and equal protection requirements, the Court found the ordinance unconstitutional in its entirety. temporary Signs: A Class by Themselves A common definition for a temporary sign is "a sigh announcing special events or sales, the sale or rental of property, political positions or other matters, and intended for use for a limited period of time." Temporary signs may be portable, as a "sandwich board," or attached, as a window sign. Local governments often enact special restrictions and prohibitions regarding temporary signs, generally based on the argument that the haphazard use of these signs is detrimental to several legitimate governmental interests, including aesthetics, traffic safety, and hazard to pedestrians, if placed on the sidewalk or other public right-of-way. Although regulations may be struck down if a court finds they are irrational or overly restrictive, the present judicial trend is to permit restrictions if (1) they are reasonable on the grounds of safety and aesthetic objectives, and (2) they do not overly censor the free flow of marketplace information or, even more importantly, the expression of political choice or opinion. For a commercial land use to be economically effective, the use must be permitted a sign of adequate size, placement, height, and lighting to guarantee readability and conspicuity. Notable Cases on Point: 2. Regulation of political signs. Regulations that distinguish signs based'on their subject matter or viewpoints raise First Amendment concerns, and are subject to 1. Regulation of real estate signs. In Linmark Assoc s, Inc. v Township of strict scrutiny. in the area of politically -based noncommercial speech, the Supreme Willingboro, 431 U,S. 85 (1977), the Supreme Court held that a local government Court is very firm on the point. in City of Ladue v. Gilleo, 512 U.S. 43 (1994), may not prohibit the use of temporary real estate signs in residential areas because the Plaintiff was prohibited from displaying an antiwar sign on her lawn by the With regard such a prohibition unduly restricts the flow of information. This is not to say, city's ordinance that banned all residential signs except those within 10 exempted generally to or however, that a local government may not place reasonable restrictions on the categories; the Plaintiff's sign did not fit into one of these categories. The Court political election signs, size, number and location of real estate sips in furtherance of a legitimate interest Bn B ruled that the ordinance violated the First Amendment rights of homeowners an ordinance (e.g., aesthetics), but again, the government must convince the court that its because (1) it totally foreclosed their opportunity to display political, religious, or prohibiting such regulations are necessary to achieve a legitimate governmental interest or were personal messages on their own property via an important and distinct medium of signs is clearly not aimed at curtailing information. For example, in Citizens United far Free expression—lawn signs, and (2) the city had failed to provide adequate substitutes unconstitutional. Speech v Long Beach. Bd. Of Comm is, 802 F. Supp. 1223 (D.N.1. 1992), the for such an important medium. federal trial court held that an ordinance permitting "for sale" signs, but prohibiting "for rent" signs during certain periods was invalid because the government Although the Court accepted the city's contention that the ordinance was a content - presented no convincing evidence that the differing (or discriminatory) regulatory neutral time, place and manner regulation and was only intended to prevent "visual treatment achieved its claimed interest in aesthetics. clutter," the Court held that a prohibition on nonconunercial speech at one's own home could not be sustained under even a minimal level of scrutiny, and expressed A similar aesthetic argument was raised by the City of Euclid, Ohio to justify a the opinion that the city should find "more temperate measures" to satisfy its city ordinance restricting real estate signs to window display only. The federal regulatory goals. Sixth Circuit Court of Appeals struck down the ordinance based on its findings that the ordinance was neither narrowly tailored to achieve the city's claimed With regard generally to political orelection signs, an ordinance prohibiting such interest (in aesthetics), nor did it provide an adequate alternative channel of signs is clearly unconstitutional, and courts have struck down prohibitions on communication. The Court observed that Euclid's decision to restrict lawn signs political signs that applied in both residential and other districts, Courts have also was not motivated by a desire to improve the physical appearance of residential struck down sign ordinances that discriminated among different political messages. neighborhoods, but instead, was principally intended to stem the proliferation of For example, in City of Lakewood v Colfar Unlimited Assn, 634 P.2d 52 (Colo. real estate signs in some neighborhoods– a proliferation the city deemed as 1981), the Colorado Supreme Court invalidated an ordinance that restricted the conveying "negative" messages about the general community. (See Cle-eland content of political signs to the candidates and issues being considered in an Area Bd. Of Realtors v City of Euclid, 88 F.3d 382 (6's Cir. 1996).) upcoming election, finding that the ordinance violated the principle that 9 "[gJovernment may not set the agenda for public debate." /d. at 61. While a local government may not prohibit temporary real estate signs on private property, it may totally prohibit the posting of real estate signs on public property— There is some disagreement among courts regarding the placing of limits either either in the public right-of-way or attached to public property. However. the on numbers of political signs that may be displayed or the time period they can be prohibition must extend to all privately -owned temporary signs, or the ordinance displayed. However, there seems to be consensus that reasonable time and number will run afoul of content -neutrality requirements and be subject to strict scrutiny. limits may be imposed as part of a "comprehensive" program to seriously address aesthetic issues. (See Collier v. City of Tacoma, 854 P.2d 1046 (Wash. 1993); Temporary signs fill a need that l000la Tauber v. Town of Longmeadow, 695 F.Supp 1358 (D. Mass. 1988).) permanent signage cannot. They When cities fail to enforce existing sign codes, the are used extensively by chains, = g. ; s �' proliferation of temporary signs that results often provides mom-and-pop retailers, and even �� ! 3 the Impetus for tightening regulations for all signage. individual entrepreneurs to reach 1 ften, simply enforcing existing regulations will solve potential potential customers with timely apparent "sign clutter" issues without causing harm to local int businesses and the local economy. W000 CR SAL AMr i 1 ��� 'Tl.Mra�fvt�r/re G(4�r/u�Lbu! 1pr Myth#2: Censorship of Commercial Speech is Legal /" s� „ !! W nMgkiny the G�C�rI beim Caber Learning to Use Signage as a Planning Tool for Intelligent Community Development i i • • { 0 Myth #3: Signs in and of Themselves Have Little Economic Value LJ Myth #3: Signs in and of Themselves Have Little Value Signage regulators have consistently failed to realize the value of signs. They typically acknowledge the cost of the sign structure itself, but completely ignore the income it draws for a business and the valuable purpose it serves for the good of the community. In the U.S. retail economy, on -premise business signage is the most ubiquitous of all communication systems, including television, radio, print, and direct mail. It is a complex communication phenomenon capable of performing many informational and directional functions simultaneously, as well as making all other media advertising more effective. On -premise business signs are an elemental component of successful business strategies and asset management. The on -premise business sign is more valuable to a commercial zone's success than sidewalks, streetlights, curbs, and parking, and should receive careful attention to the details necessary for success. Business reliance on signs is increasing. As the automobile has come to dominate the urban landscape, the shift toward the "highway" end of the continuum has been significant, and generated a tangible impact on retail location theories, especially the 'trade area" theory. Asset Management of the On -Premise Sign: Its Value in the Marketplace For a retail business, success will depend on how effectively a sign lets potential customers or clients know the type of goods and services they can expect to find at the sign's location. Identity or "name" of the business, while an important "recall" trigger for national chains and franchisors, is of secondary concern to the independent merchant or or freeway oriented businesses, as many as 50% of their ustomers are non -locals, who neither live nor work wart y, or Avho may pass the business only once. Without high rise sign, visible to the freeway, these businesses vould be essentialty invisible and they could not succeed. service provider. Their first concern will be to establish communication with residents, those new to the area, and those just passing through. New and one-time customers will not be attracted by a mere name. The importance of the name in this context is primarily for future - not immediate - reference. If an attractive image is not communicated by signage, the business will rarely get the clientele it wants or be able to let people know the true flavor of the business. In other words, it is just as important to today's businessperson to convey to the passing public the proper image as it is to the community to present an attractive retail environment. In our highly competitive retail economy, profit margins are continually squeezed. Large corporations like Best Buy, WalMart, or Kmart operate on such narrow margins that any small increase in advertising costs can have disastrous effects on the corporate bottom line. Because of slim profit margins, large retail corporations have created a major media advertising mix that relies heavily on the on -promise sign for reinforcement of the messages and corporate logo identifiers conveyed by television and print advertising. Product franchisors such as McDonald's have utilized on -premise signage with remarkable success. With business format franchisors, such as Meineke Mufflers, which sell a corporate identification and a "way of doing business" instead of a product, the on -premise sign, backed by corporate major media advertising, is the essence of the franchise package. While large national corporations understand the value of on -premise signage, many small business merchants and proprietors, unfortunately, do not. By utilizing the on -premise sign as the primary medium for attracting the attention of passers-by, any other media efforts, if crafted to reinforce the sign's image or message, are enhanced, resulting in significant advertising budget savings. In fact, every site development strategy will benefit if the on -premise sign is made the focal point of the site. In other words, if site development or renovation is sign centric, the positive effect on gross revenues should be immediately recognizable. An example of this is provided by a car dealership in San Fernando, California. In late 1996, the site that was to become Aztec Motors was purchased and renovated. Prior to its purchase, three previous auto sales companies had failed over the It is just as Important to today's businessperson to convey to the passing public the proper Image as It is to the community to present an attractive retail environment. Businesses have realized the effectiveness of corporate identiflcation in attracting customers. Business format franchisors capitalize on this phenomenon by selling the independent businessman an image and a way of doing business, backed up by national advertising, that bring n sense of predictability and comfort to the consumer, and, as a result, Increase business dramatically. firobn� tlr �i� Or L�y�tr Myth #3: Signs in and of Themselves Have Little Econ x,,. ,rale value � Years in the same location. In the first few months, the new owner invested much time, energy and money into improving the business's image, and on saturation advertising - mostly print and radio ads, costing more than S16,000 per month. Once building and lot renovations were complete, the new owner replaced the existing on -premise signs with two new ones - one wall and one pole double faced - for a total cost of $7,400. In-store customer surveys following placement of the new signs disclosed that the signs generated a minimum of ten new walk-in customers per week, resulting in at least six additional sales per week. According to the owner, the signs paid for themselves in less than a month, and even better, the signs enabled him to reduce his monthly advertising budget to $4,000/ month -a savings of $12,000/month, or 5144,000 per year! This savings allowed the owner to purchase three more locations, each with on -premise signage that reinforced other media efforts. The owner reports: "Potential customers now LOOK FOR USI" A Case In Point The importance of the single on -premise sign was the subject of seminal California case, Dennys Inc., et at v City of Agoura Hills, 97 C.D.O.S. 6341 (1997), Second Appellate District. The City is a picturesque suburban community situated in the foothills Of western Los Angeles County. A portion of the City is y a major high volume bisected b freeway which is part of U.S. Highway 101, locally referred to b the Ventura Freeway. The city wanted to enhance its visual aesthetics - a purpose generally within local police powers. As part of its enhancement program, the city enacted a sign ordinance which, among other things, prohibited all pole signs, with the exception of a few under six feet in height. But the city's failure to understand how people operated in and moved through their community had the potential to result in a poor allocation of resources. The affected business proprietors were identified by the city as being in violation of the ordinance. Their traditional pole signs, which typically announced the location of the business by name and/or logo, considerably exceeded the new height limit. Under the sign ordinance, the pole signs became non -conforming on March 20, 1985, and, following an amortization period ofeight years, were subject to removal on March 20, 1992. During the amortization period, the affected businesses repeatedly applied for zoning variances, but were turned down. Eventually, litigation ensued.The businesses alleged that the city's sign ordinance violated Section 5499 of the California Business and Professional Code which, in large part, proscribed the removal of any on -premise sign on the basis of height or size if topographical circumstances would materially impair the visibility of a 'dot every business will realize the same -nomenal success as Aztec Motors from sign centnc site development strategies, but every AZTEC "OTORS business will benefit if the full potential of on - premise signage is exploited, particularly since the capAalized cost of an effective on -premise sign is minuscxOle when compared to that of other „ r advertising meaia. Cab 1 �W Myth #3: Signs in and of Themselves Have Little Et Ia.:—.= ia.Y >j1.�I:X.iI:M.JIY.IY.I.ia-1iAl. i1.L— 4.4-4..�.- conforming sign or the sign user's ability to adequately and effectively continue to communicate with the public through use of conforming sign. If impairment ofvisibility or the ability to communicate was a result of the enforcement of the ordinance, the offending sign was to remain and be deemed conforming, as a matter of law. Section 5499 controlled all sign ordinances adopted after March 12, 1983. The city's ordinance was enacted in 1985, so the affected business establishments and their signs all predated enactment.' Based on Section 5499, and its preemption of local law, the businesses requested an injunction against city enforcement of the ordinance against them. The city concurred that the state code applied to its ordinance, but in essence countered, as a defense, that other merchants in the area with conforming signs were enjoying vigorous business and healthy sales. The trial court rejected this argument? One business affected by the city's ordinance was a Burger King franchise located adjacent to the Ventura Freeway. The subject's pole sign was highly visible both ways to potential customers traveling along the freeway. Traffic counts showed that 88% of those vehicles passing the restaurant did so via the freeway; the other 12% passed by on local frontage roads. Due to surrounding topographical circumstances (e,g„ the business site was blocked by the freeway), a sign of the type and height required by the ordinance could not be seen by either north or south bound motorists. Also, the business premises could not be seen until it was too late to safely exit the freeway. Thus, a forced takedown of the nonconforming pole sign would render the business site essentially invisible and incapable of attracting the freeway motoring impulse buyer. The city's failure to understand how people operated In and moved through their community had the potential to result in a poor allocation of resources. To compete with nationally recognized retailers with communication resources usually beyond their means, independent small business (especially in the start-up phase) generally relies on the single on -premise sign to attract the attention of potential customers, and prompt a stop. ' Section 5499 of the Coda states: "...no city or county shall require the removal of any on -premises advertising display on the basis of its height or size by requiring conformance with any ordinance or regulation introduced or adopted on or after March 12, 1983, if special topographic circumstances would result in a material impairment of visibility of the display or the owner's or user's ability to adequately and effectively continue to communicate with the public through the use of the display. Under these circumstances, the owner or user may maintain the advertising display at the business premises and at a locution necessary for continued public visibility at the height or size at which the display was previously erected and, in doing so, the owner or user is in conformance. ' In response to the City's argument, the trial court stated: "lust how commercially effective signs may he at other locations is not directly relevant here... vigorous business and healthy sales [of third party businesses]... may be generally true [but] that is not the statutory test." Value The Agoura Hills Burger King, and its sign, were specifically built to service Ventura Freeway motorists, and its profit structure was designed with that in mind. Corporate field studies found that nearly 60% of the store's business was attributable to its on -premise sign. Even after factoring down the potential loss in business attributable to loss of the sign from 60% to 37.5% (a compromise "averaging" of Burger King's data and that of the city's expert), corporate accountants found that the franchisee would lose a profit of S2 million over a 15 year period - the term left on the lease at the time of controversy. Using the higher 60% business loss calculation, a calculation the corporation believed more accurate, the lost profit would be closer to $3.2 million, perhaps forcing the franchisee out of business. A comparison was also made between the Agoura Hills Burger King and another Burger King located in nearby Camarillo. As with the Agoura Hills site, the Camarillo premises were not visible from the freeway, and although the store had a pole sign, the sign was visible only to southbound traffic and could not be seen until the motorist had passed the appropriate exit. Because of a lack of visibility and ready access from the freeway, the Camarillo Burger King relied much more on the local population and local frontage road traffic than the Agoura Hills store, and not surprisingly, its sales were only 48% of the sales achieved by the Agoura Hills site. The difference in volume tended to support a finding that up to 60% of the sales of the Agoura Hills Burger King flowed from its visibility to traffic in both directions for distances great enough to provide ample time for the unfamiliar driver or impulse purchaser to exit safely. In fact, Burger King Corporation permitted a deviation from its customary practice of siting only one franchise per 5 -mile radius trade area because only the Camarillo location was considered trade -area oriented; the Agoura Hills franchise was strictly "point of purchase" or freeway oriented, expected to draw only a small percentage of the local consumer pool. The studies provided by all business litigants similarly found that extensive adverse impact to business revenues and profits would result if their pole signs, visible to the freeway, were removed. Among the other litigants were McDonald's and Texaco.' In Texaco's case, the predicted loss in dollars amounted to 5336,000 the first year of sign T s+?s f Apure Hills litigants provided Important information to drivers who, for example, T r"r ,.e -_rririg low on gas, experiencing engine trouble, or wishing to eat before continuing their ,rrxs -Y - sconknse to questionnaires concerning how they first became aware of a business, and *0­ycced, many customers noted their appreciation for the sign as a "beacon"- signaling sy+e ;ri ser -e Y z place nearby to obtain products or services to satisfy an Immediate requirement. take-down. The record is silent on predicted dollar losses for the McDonald's restaurant after take-down of its pole sign, but R. James Claus, Executive Director of the Signage Foundation for Communication Excellence, Inc„ assisted the litigants in analyzing data. Dr. Claus estimated the gross revenue loss to the franchisee at minimally $900,000/year, based on a 35% reduction of present gross revenues averaging $2.7 million/year; the corporation calculated the first-year loss at S 1.3 million (or 50%), rising to $2.3 million (or 85%) within five years as non -local motorist recall of the site diminished. Such losses would force the restaurant to close. The trial court concluded that enforcement of the ordinance would result in a limitation of the plaintiffs' ability to adequately and effectively continue to communicate with the public due to topographical conditions, which included trees, hills, concrete highway structures, other buildings, utility poles and wires, vehicles traveling the freeway, and any other visual impediment other than the natural limits of human eyesight.' The court then ruled that the attempted enforcement of the city's ordinance was Lack of freeway visibility of the in contravention of the Business and Professions Code. This meant the plaintiffs could premises itself keep, maintain, and exhibit the disputed signs on their business premises, and that such precluded the signs would be deemed in conformance. Also, the city, because of its "wrongful and on- business from going conduct," was permanently enjoined from enforcing the ordinance against the overcoming any sign height plaintiffs. On appeal by the city, the appellate court affirmed the trial court's decision. restriction by alternate forms The appellate court, in upholding the trial court, did not reach the commercial of signage. impact of the ordinance, deciding the case on the narrow question of"material impairment of visibility." However, the trial court clearly paid attention to the economic research and data submitted not only by the affected businesses, but also by the city's own expert, who agreed that significant losses in customer base and business revenues would result from the loss of signage.' The trial court stated, "[tlhe evidence clearly establishes that... special topographic circumstances would materially impair the noticeability, or perceptibility, of conforming signs for each plaintiff... [and] as to each of the plaintiffs, there would be a material impairment of the commercial effectiveness [emphasis added] of a conforming sign ... [because] each of the businesses relies on its existing sign to attract customers ... substantially ... from the freeway," Significantly, none of the trial ' Plaintiff Agoura Restaurants, Inc., d.b.a. McDonald S, is located adjacent to a freeway off -ramp and signaled its potential customers via a 75 -Coot pole name and logo sign. The trial court found that the restaurant was heavily dependent on freeway traffic for its customer base, and that no sign or display conforming to the City's ordinance would be visible to freeway motorists "at a safe and reasonable decision point for the off -ramp." Further, the trial court found no reason to question or examine plaintiff's research in detail, because research provided by the City's expert alone disclosed that removal of the pole sign would result in a gross revenue loss to the restaurant of 35% of present revenues. Similarly, predicted losses for the freeway -oriented Texaco station, according to the City's expert, wen 35% of present revenues. ' The trial court determined that the State code's statutory language minimally required "a circumstantial analysis of not only the simple visibility of the sign, but also whether the sign will be noticed [emphasis in original], and the massage imparted to the viewer's brain....[11he additional circumstances bearing on noticeability or perceptibility, would include the origin and nature of the customer base and buying motivation, general visibility in the area, the high speed, high volume nature of the freeway, location of decision points for motorists along the freeway, identification time and reaction time, and time to make safe lane changes." ' Regarding the research provided by the affected businesses, the trial court said, .....[nithoughl plaintiffs arc entitled to prevail based on material impairment [alonat if more were required, it would be a showing of a material impairment of effective commercial communication, which is generally shown by the [City expert's] report without a need for an in depth study of plaintiffs' own figures (however] it should be quickly added that plaintiffs' awn figures and related information are supported by logic...." (Emphasis added.) —'r':ts9a..r 77r the Ct(ptk -AhMul 0' Ignr Myth #3: Signs in and of Themselves Have Little Ecor is Value court's findings, including those regarding plaintiffs' research, were overruled or otherwise excepted by the appellate court. In the Agoura Hills Burger King case, lack of freeway visibility of the premises itself precluded the business from overcoming any sign height restriction by alternate forms of signage. Had a "signature" building, for example, been a viable alternative (because the site itself was effectively visible to the freeway), the Agoura Hills Burger King, and other freeway merchants similarly situated and adversely impacted by the city's before;r, can tae height restrictions, may not have litigated for ten years, in a case that was costly to both rarmd as a me¢fium of the businesses and to the city.' advert:s:tng, an expression of A review of trial and appellate court documents in this case, including market consrrnercw survey and consumer profile exhibits, is recommended for all business persons. speec:f must nave verifilabte "read,e,^ship. The Value of Consumer Exposures via Signage One of the most sophisticated and extensive markets in the world is the buying and selling of consumer exposures to people passing on the street. It is a multi-million dollar market in which transactions occur daily. One can readily see the result in major cities such as New York, Chicago, and Los Angeles. These exposures are bought and sold by extremely knowledgeable parties (generally advertising agencies and their customers), who go one step further than is the usual case in a commercial transaction. They categorize and work out efficiency measures. Because a sign's cumulative value to its user is almost entirely dependent upon its ability to effectively communicate its.message to the intended receiver, it is a part of the major media advertising industry. This industry relies on four measures to assess the effectiveness of an advertising/marketing program: reach, frequency, readership, and cost per thousand exposures. 1. Reach: This measurement addresses what types of consumers are being exposed to the advertiser's message. For example, newspaper advertisers obtain address lists of subscribers and from the demographics disclosed by the lists, determine fairly accurately the types of people their messages are reaching. 2. Readership: This measurement determines whether a message is effectively speaking to the intended recipient. Before it can be rated as a medium of t se vert large signs are an ex- fizmeiy co.sr-erRect'rye form of advertis- rr; because the barye number of con- s- rner exposures Mey generate. 4�M( 0?34111 Myth *3: Signs in and of Themselves Have Little advertising, an expression of commercial speech must have verifiable "readership." This is done through a process, formally labeled as auditing, whereby a neutral party can determine readership for an outdoor advertising sign or any form of third party place -based expression. The neutral party considers a series of factors in order to determine the readership, and thus the effectiveness, of the location of the place -based expression. In outdoor advertising cases, the auditing agent is the Traffic Audit Bureau, located in New York City and Washington D.C. The Five Step Process developed for auditing readership takes into account the following factors: • Visual blockage: First, there must be an assurance of no blockage of the sign (a sign is a visual acuity device). • Viewing Distance: The particular display panel needs to have adequate viewing distance. Under 55 mph Over 55 mph Eight sheets 502 feet N/A Thirty sheets 1002 feet N/A Painted bulletin 1502 feet 3002 feet • DEC: The Daily Effective Circulation (DEC) is calculated on vehicular streets. This is traffic count times a factor for additional vehicular occupants. • Showing or Distribution: The market coverage of the display panel or percentage of the trade area who view the display panels. • GRP: If more than one display panel is purchased, a Gross Rating Point (GRP) is calculated, showing the percentage of the trade area who see the displays — and how many times per month. Small business owners not engaged in franchised business operations usually do not have access to national rating service readership tabulations, because such data is generally protected as trade secret information by the parent franchiser company. For such independent or non-affiliated small business owners, the services of a local market researcher may be required to obtain readership measures. Also, on -premise sign companies will often assist in compiling data. 3. Frequency: Here the measurement ascertains the number of times a viewer/ readerAistener is exposed to the advertiser's message. For example, a newspaper advertiser can accurately determine the number of people exposed to an advertisement based on the total newspapers purchased. ' Subsequent to the appellate court's decision, and following presentation of the cost bill to the City Treasurer, the Agoura Hills Mayor and City Counsel were recalled by the t, wn's c iwens. c Value / 01 t'"Ad— � Ro:1,a TV NewspaCs: Using the "visual" media charted above, Table 4 compares advertising media over a tour -week period with an equal amount (approximately $33,000) spent on each medium. From the above media cost evaluations, one can quickly note that the on -premise sign provides exposure of its message to a large pool of potential customers at a fraction of the cost of other media. If, for whatever reason, a business loses an optimally visible and readable on -premise sign, the cost to replace the sign's exposures for any length of time with other media would be cost prohibitive for many businesses, particularly small businesses and proprietorships. heanY srnetl businesses rely Sony ut- Merron -premise sign to attract:: customers. Other forms Of WVeeftsing are simply cost `Or"1&wf V and inefficient for the rl-79,rie-dent merchant. a,.,„, - - C h_' rajlhF C41 vhr<`UtvN t6gxr Myth #3: Signs in and of Themselves Have Little TABLE 4 Frequency measures are more difficult to determine for sign advertisers and Assumptions owners, particularly those dependent upon on -premise signage. Many drivers are "just passing through" and may see the Newspaper sign only once; other drivers live in or near the sign's trade area. and therefore see the sign many times a month. Sur'Vett s show tha: signs While origin/destination studies and traffic counts provide accurate information are +o most on the number of vehicles daily passing a sign, this number must be factored down using tested formulae to account for Cffen_ti•a�e 1'Qrnt of the infrequent passerby.' advertising for Audience of ttte small in--,e>endent 4. Cost per Thousand Exposures: This measurement ascertains the cost of "exposures" *-Merchant. (or gross impressions) of the advertiser's message, and is the 80,000 one common denominator among all commercial communication media, whether radio, television, per day print. direct mail, outdoor advertising or on -premise signage. Calculating comparable costs per 1,000 exposures for advertising media relies "frequency" households on measures. Once frequency data is assembled, the total out- of-pocket cost for the subject medium is divided by the number of exposures 2.5 million occurring during a defined time period. 20 million Table 4 below compares advertising media over a four-week period with an impressions equal amount (approximately $33,000) spent on each medium. t'"Ad— � Ro:1,a TV NewspaCs: Using the "visual" media charted above, Table 4 compares advertising media over a tour -week period with an equal amount (approximately $33,000) spent on each medium. From the above media cost evaluations, one can quickly note that the on -premise sign provides exposure of its message to a large pool of potential customers at a fraction of the cost of other media. If, for whatever reason, a business loses an optimally visible and readable on -premise sign, the cost to replace the sign's exposures for any length of time with other media would be cost prohibitive for many businesses, particularly small businesses and proprietorships. heanY srnetl businesses rely Sony ut- Merron -premise sign to attract:: customers. Other forms Of WVeeftsing are simply cost `Or"1&wf V and inefficient for the rl-79,rie-dent merchant. a,.,„, - - C h_' rajlhF C41 vhr<`UtvN t6gxr Myth #3: Signs in and of Themselves Have Little TABLE 4 COST PER 1000 EXPOSURES CALCUt.AT10N Assumptions Television Newspaper Outdoor On -Premise Sign Advertising (two faces) Trade Area Audience of Circulation of 666,700 cars 60,000 cars 80,000 40,000 per day per day households households Gross 2.5 million 9.5 million 20 million 1.8 million impressions (monthly (30 days) exposures) Gross 2,500 9,500 20,000 1,800 impressions In Thousands Cost 533,000 $33,000 $33,000 533,000' Formula Media Cost + Media Cost + Media Cost + Monthly Cost + Gross Gross Gross Monthly Impressions Impressions impressions Exposures Calculation $33,000+2,500 $33,000+9,500 $33,000+20,000 $393+1,800 Cost per 1000 $13.20 $3.13 $1.65 $0.22 exposures 'Bared on an amortization period of 7 years, the cost of the sign per month is $393.00. 'Fhe Valuation Process in a Nutshell Any real-estate valuation or appraisal process begins with an understanding of the site being appraised. Generally, appraisal of commercial real property addresses three location factors — visibility, accessibility and parking. Whenever a sign's contributory value to its site is a concern, determination of that value will concentrate on the so-called visibility factor, based on two components: (1) the site's overall visibility, and (2) how useful the sign is to passing motorists — how easily it can be seen, understood and safely reacted to from the road. In signage valuation, the concern is the cost of replacing the visual messages or exposures provided by a certain sign. As part of the valuation task, the appraiser answers three related questions: • What percentage of the target market is exposed to the message? • How many repetitions of the message are received by the viewer? • How much does it cost to reach a given number of people? When these questions are answered, you can generally determine a sign's cost effectiveness compared to other media. Further, you can establish the sign's true value to the business based on net revenue attributable to the sign's presence. Most retailers operate under the marketing conceptthat "share of mind" equals share of market. ' Numbers and percentages representing viewers who may see the sign, but are not potential consumers of the goods, products or services advertised are defined as "waste" factors. c Value (_: Recall and Recognition Two tests — recall and recognition — are routinely utilized, particularly by outdoor advertisers, to determine the value of a communication structure or device and its message. Recall tests disclose a commercial message's effectiveness by testing a consumer's recollection of a particular message. The responses arc categorized as unaided, partially aided, or totally aided. Consensus dictates that if a message obtains strong unaided recall after 48 hours, it is considered very effective. When introducing new or improved products, the advertising campaign must achieve significant unaided recall in the first 48 hours after the listener or viewer has been exposed to the advertisement or message, or the campaign is judged to be of limited or no success. It is common knowledge in both retailing and politics that name recognition is extremely valuable. When a consumer is faced with a choice between brands of a product he or she has never tried before (or candidates with which he or she is unfamiliar), the consumer will often choose based on simple recognition of a name. Of course, sometimes even excellent recall will not improve product or service purchase patterns e, in the case Of political campaign, increase votes. Without it, however, failure is virtually assured. eloping memory of the location and products Ind aiding recall of the location when a need ses. NUMBER OF CUSTOMER RESPONSES Recognition is measured by testing memories before and after a particular advertising/marketing 1234 820 212 139 3 322 38 campaign. Such testing is also extensively used in political campaigns, particularly to measure"face" recognition. Other factors, such Consensus as gross rating points, complicate these measures, but for present overview purposes, they will not be discussed in depth here.' dictates that if a message obtairts strong Top -of -Mind Awareness: An Overview una16 d recall 31110 after 4.8 hours, it is cor*sidered very effective. A prime goal of advertising, and amain reason for buying/selling exposures, is to develop what is called "top -of -mind awareness," which involves both recall and recognition. Most retailers operate under the marketing concept that "share of mind" equals share of market. For example, if a consumer "What is asked, product first comes to mind when You think of hot dogs?" the answer is thought to be a good indicator 9% of the market share of that brand of hot dogs. Consumers are believed to have top -of --mind awareness for a product that is purchased or used more often. Many companies base advertising strategics on the answer to the "what first comes to mind" question. When introducing new or improved products, the advertising campaign must achieve significant unaided recall in the first 48 hours after the listener or viewer has been exposed to the advertisement or message, or the campaign is judged to be of limited or no success. It is common knowledge in both retailing and politics that name recognition is extremely valuable. When a consumer is faced with a choice between brands of a product he or she has never tried before (or candidates with which he or she is unfamiliar), the consumer will often choose based on simple recognition of a name. Of course, sometimes even excellent recall will not improve product or service purchase patterns e, in the case Of political campaign, increase votes. Without it, however, failure is virtually assured. eloping memory of the location and products Ind aiding recall of the location when a need ses. NUMBER OF CUSTOMER RESPONSES Their Sign Word of Mouth Newspaper Yellow Pages Radio 1234 820 212 139 3 322 38 PERCENTAGE BY CATEGORY 31110 9% 6% The graph above shows the results of a survey conducted by Gulf Industries in 1997 to answer the question: Where do small businesses get their new customers? The survey was conducted by a cross section of 185 independent merchants throughout the United States, and involved 2,475 customers who made purchases for the first time at those businesses. The surveys were given 30 to 45 days after installation of a new sign. Customers were asked, "How did you loam about us?" The results above clearly demonstrate two things: (1) the subject signs were effectively speaking to (or being "read" by) potential customers; (2) signs are the most effective form of advertising for the small independent merchant. Chains spend significant money on advertising to obtain "top -of -the -mind" awareness, Franchises and corporations have a distinct advantage over the Independent retailer be- cause their sign backs up the national advertising, reinforcing consumer awareness of their products and services, as well as where they can be found. 'For more information, see Sutte, Donald T., Jr., The Apprairal of Roadslde Advertising Signa, National Academy of Sciences, Chicago, IL: American Institute of Real Estate Appraisers of the National Assn. of Real Estate Hoards (1972). Other sources are the Outdoor Advertising Association of America, Washington D.C.; Institute of Outdoor Advertising, New York; Traffic Audit Bureau, New York. to **r.'li:'U elk'�, ti�y�lr �j � CV' jrr+ Myth #3: Signs in and of Themselves Have Little Econ nvC Value Matched Pair Analysis Matched pair analysis often is the most valuable tool available to those seeking to establish or understand what the market will pay for a retail site's visibility component. The residential valuator routinely uses matched pair analysis to bolster determinations via other methods. For example, to arrive at a reasonable value for a tract home, the appraiser will look at recent market sales data concerning two nearby tract homes, similar in every way except location, i.e., one home, which sold for $100,000, is located on a busy collector street, and the other, which sold for $110,000, was located on a quiet residential side street. The appraiser may reasonably assume and report that the $10,000 difference between the two otherwise comparable homes is due to location. Similarly, matched pair analysis can effectively quantify variable changes in a commercial site's value that are attributable to the on -premise signage permitted by the respective municipal sign code. An excellent example of such analysis is provided by the This ouftl"bulletin is located in Southern Califomia. adiacert to a major freeway... and while 'speaking in '0anisr} . the sign is also instantly "understood" (for ener recall) by non -Spanish speaking viewers. The 9arers6 in commercial expression and concurrent 'ViansIL-n of the potential customer pool increases ' e sign s value to the advertiser, while increasing the ease races which can be charged by the advertising '.Impary- that placed the sign. hh 1-l�l%rc i`ifr/lsr�(/ L\..nr Myth #3: Signs In and of Themselves Have Little Econ -W NAW ` a - -- -- experience of the Do It Center, a small, four -store independent chain orhome improyement stores located in Crescenta Valley, Valencia, Simi Valley and Thousand Oaks in southern California. Home Depot moved into the chain's trade areas (l lotne Depot is a big box, one category national chain). The small chain owner decided to go head to head with Home Depot, and initiated a total remodel of his old and obsolete stores ("old" with respect to structure and "obsolete' with respect to on-site marketing techniques, including signage). All of the stores, before and after remodel, had approximately 44,000 square feet of retail space. Prior to remodel, signage for all four stores was similar, and gross sales per store were within 15% of each other. Because the stores were located in different trade areas, with different municipal sign codes, the owner had to tailor each store's signage to fit the relevant code. Although he was able to partially standardize his building store fronts with respect to corporate logo and colors, the owner could not standardize the balance of his on -premise signage - specifically wall or fascia signs and free standing signs. Crescenta Valley has a more lenient sign code that permitted the chain owner to place a large store -front wall sign over the main entrance and border wall signs listing specific products (e.g., housewares, paint, electrical, plumbing) along the sides of the building. A large, double -pole free-standing sign displaying corporate colors and logo was placed adjacent to the street. The sign was not shared with any other retailer and had a variable message board which permitted the owner to advertise special sales. Valencia has a code similar to Crescenta Valley, and the owner was allowed to place large wall signs over the main entrance and along the sides. In contrast to the Crescents Valley location, however, the visibility of the free-standing sign was somewhat hampered by a landscape median between the street and sign, and a parking barrier in front or the sign; the sign was also somewhat shorter in height. Simi Valley has a much more restrictive sign code than either Crescenta Valley or Valencia, and consequently, the site's storefront signage is considerably smaller, limited to narrow border wall signage. Although the on -premise sign is tall and located close to the street, the store must share the sign with others, because the code does not permit individual free-standing signs for retailers located in a retail "ribbon." mic value The multi -sign structure for a shopping mall may provide, in some cases, information relevant to an immediate need, while in other cases, may trigger a singular impulse stop. In all cases, for those who frequently pass the structure, a memory of the signs and the busi- nesses they reflect is being created, ready for recall when pertinent to a specific consumer need or decision. The Illustration below also shows how Hollywood Video, a national corporation, utilizes an inte- grated signage program which reflects its corporate logo at every opportunity- from " the sign on the multi -sign structure, to its —roof sign, to its signature building. When- ever affordable, a local small business i should adopt sign centric site development strategies. r - Measuring and Developing Top -of -Mind Awareness: Relevance to Market Share The most sophisticated studies on recall/recognition factors are undertaken by outdoor advertisers, Not surprisingly, these studies have established that larger signs on high-density tragic routes are more effective than smaller signs on less frequented roads. High traffic count and premiere space position are primary factors in the cost of outdoor advertising because they translate into greater recall/recognition Situdies have (or top -of -mind awareness) and market share. established that Carper signs on � igh-density era For example, the larger outdoorpainted bulletin typically is placed on roads with higher traffic counts than the smaller routes are more outdoor poster. This disparity is reflected in lease rates, A bulletin space of 720 square feet effective than smas ,er signs generally commands $3,500 - $7,500 per month, whereas poster space of 320 square feet sells for $500 - $750 per month, on less frequented sometimes less. and roads. On -premise business signs and political campaign signs e function as the outdoor advertising structure for their targeted audiencett ey devthe elop top -of - mind awareness, and thereby increase the viewer's inclination to choose as the displayed message suggests. An on -premise business sign will be passed many times by consumers who work or live in the local trade area. Even though its message may not be immediately relevant, repetitive passing will imprint it in viewer memory, for later recall should a need arise for the product or service it advertises. Matched Pair Analysis Matched pair analysis often is the most valuable tool available to those seeking to establish or understand what the market will pay for a retail site's visibility component. The residential valuator routinely uses matched pair analysis to bolster determinations via other methods. For example, to arrive at a reasonable value for a tract home, the appraiser will look at recent market sales data concerning two nearby tract homes, similar in every way except location, i.e., one home, which sold for $100,000, is located on a busy collector street, and the other, which sold for $110,000, was located on a quiet residential side street. The appraiser may reasonably assume and report that the $10,000 difference between the two otherwise comparable homes is due to location. Similarly, matched pair analysis can effectively quantify variable changes in a commercial site's value that are attributable to the on -premise signage permitted by the respective municipal sign code. An excellent example of such analysis is provided by the This ouftl"bulletin is located in Southern Califomia. adiacert to a major freeway... and while 'speaking in '0anisr} . the sign is also instantly "understood" (for ener recall) by non -Spanish speaking viewers. The 9arers6 in commercial expression and concurrent 'ViansIL-n of the potential customer pool increases ' e sign s value to the advertiser, while increasing the ease races which can be charged by the advertising '.Impary- that placed the sign. hh 1-l�l%rc i`ifr/lsr�(/ L\..nr Myth #3: Signs In and of Themselves Have Little Econ -W NAW ` a - -- -- experience of the Do It Center, a small, four -store independent chain orhome improyement stores located in Crescenta Valley, Valencia, Simi Valley and Thousand Oaks in southern California. Home Depot moved into the chain's trade areas (l lotne Depot is a big box, one category national chain). The small chain owner decided to go head to head with Home Depot, and initiated a total remodel of his old and obsolete stores ("old" with respect to structure and "obsolete' with respect to on-site marketing techniques, including signage). All of the stores, before and after remodel, had approximately 44,000 square feet of retail space. Prior to remodel, signage for all four stores was similar, and gross sales per store were within 15% of each other. Because the stores were located in different trade areas, with different municipal sign codes, the owner had to tailor each store's signage to fit the relevant code. Although he was able to partially standardize his building store fronts with respect to corporate logo and colors, the owner could not standardize the balance of his on -premise signage - specifically wall or fascia signs and free standing signs. Crescenta Valley has a more lenient sign code that permitted the chain owner to place a large store -front wall sign over the main entrance and border wall signs listing specific products (e.g., housewares, paint, electrical, plumbing) along the sides of the building. A large, double -pole free-standing sign displaying corporate colors and logo was placed adjacent to the street. The sign was not shared with any other retailer and had a variable message board which permitted the owner to advertise special sales. Valencia has a code similar to Crescenta Valley, and the owner was allowed to place large wall signs over the main entrance and along the sides. In contrast to the Crescents Valley location, however, the visibility of the free-standing sign was somewhat hampered by a landscape median between the street and sign, and a parking barrier in front or the sign; the sign was also somewhat shorter in height. Simi Valley has a much more restrictive sign code than either Crescenta Valley or Valencia, and consequently, the site's storefront signage is considerably smaller, limited to narrow border wall signage. Although the on -premise sign is tall and located close to the street, the store must share the sign with others, because the code does not permit individual free-standing signs for retailers located in a retail "ribbon." mic value The multi -sign structure for a shopping mall may provide, in some cases, information relevant to an immediate need, while in other cases, may trigger a singular impulse stop. In all cases, for those who frequently pass the structure, a memory of the signs and the busi- nesses they reflect is being created, ready for recall when pertinent to a specific consumer need or decision. The Illustration below also shows how Hollywood Video, a national corporation, utilizes an inte- grated signage program which reflects its corporate logo at every opportunity- from " the sign on the multi -sign structure, to its —roof sign, to its signature building. When- ever affordable, a local small business i should adopt sign centric site development strategies. r - 1 alcnci:t Thousand Oaks Thousand Oaks' sign code is very restrictive, and the site's store front signage is limited to a small entrance sign and two small "hanging" signs at either end of the building. The free-standing on -premise sign is located on a landscaped strip next to the road, and because the code limits signs in size to 6 x 6 feet, the sign's visibility is severely compromised by surrounding foliage. Following remodel, and despite Home Depot's presence, Crescents Valley increased its sales by 45% and Valencia by 38%; on the other hand, Simi Valley's increase was only 20% and Thousand Oaks' increase was a mere 10%. Further, the difference in sales volume between the Thousand Oaks site and the Crescents Valley site, which prior to remodel was only 15%, increased considerably. Because the store owner did not expand local media advertising (e.g., local TV and radio spots, newspaper ads), the disparate increases in sales volume among the stores can only be attributed to the availability, or lack thereof, of on -premise signage easily visible and readable to street traffic.' The Value of Interior Signage, or Point -of -Purchase Displays The outdoor on -premise sign clearly serves a vital function for a business, but interior signage may also be designed to play a significant role in business success. The variety of interior displays is endless, but one excellent example oreffective, comprehensive point-of-purchase signage is the Do It Center interior -sign program. Wal-Mart, Target, True Value Hardware, and several other stores boast interior merchandising concepts — very profitable ones, no less — modeled after Hardware Wholesalers, Inc.'s (HWI, headquartered in Ft. Wayne, IN) Do It Center interior sign program. A Do It Center contains abundant signage and graphics, yet the store is not cluttered because sign placement is systematic and well executed. When a new store opens, the design team creates a site plan for it, taking the broad merchandising package and tailoring it to meet that particular store's specific space and demographic requirements. Then the design team and the sioreowner continue to handle any adjustments and day-to-day execution of the interior sign package. The Do It Center's Interior signage program can reportedly be expected to increase sales 20 to 30%, and in some cases even more. The Do It Center employs bright colors and large signs to create a welcoming and stimulating atmosphere. Warm red was chosen as the primary identification color, with yellow and white as accents. The store is arranged to be user-friendly; signs show how staff can he of help and point out specials. Striping on the floor guides customers- through ustomersthrough the store, past several impulse displays, and finally to the check-out counter. At first, few believed that this format would work. The volume of interior point- of-purchase signage was an extreme change. The concept took a while to catch on, but once it did other hardware stores had to play catch-up. The Do It Center's interior signage program can reportedly be expected to increase sales 20 to 30%, and in some cases even more. This information was obtained from a presentation and handout made by Jess Ruf, Chairman Do It Censor, Inc., at a meeting of sign industry and American Planning Association representatives in Cleveland, OH in February, 1996. At the tate of presentation, the chain's head office was in Van Nuys, CA. The chain has since been purchased by Hardware Wholesalers, Inc, headquartered in Ft. Wayne, IN. ves Have Little Eco 0611 - Myth #3: Signs In and of Themselves P Y h b N __ ' mic Value • . � V ' - Promotional and display signage strategies require constant review. And while many of the current trends go back several Under old English common law, the word "amortize" was used to describe years, many others invariably emerge. Some of the most pertinent current trends that are affecting interior alienation ofproperiy held by a fictitious entity (or in mortnmin), Over time, it has come signage are: to mean the extinguishment of a debt or other liability through use of installment payments. • greater control by the volume retailers; Thus, in general usage, amortization refers to that period during which a loan taken out • larger stores with fewer salespeople; to purchase an asset is paid back. At the end of the amortization period, the asset is • husbands and wives sharing the shopping responsibilities; owned "free and clear" and cannot be legally taken away without payment of compensation, • an overall desire on the part of the consumer to move through the stores at greater speed; and absent gift or voluntary consent by the owner. In the case of a home purchase, for The problem Is example, at the end of the period, the homeowner- at least in theory - will recapture his amortization • more buying decisions being made at the point-of-purchase. or her initial investment, plus any appreciation, upon sale or a "takings" by the sovereign fails to account Successful point-of-purchase for - and for a public purpose. compensate for strategies have to tie together regional retailer and consumer needs with the desired national brand image, Also, promotional displays Provide In the case of a depreciable asset (e.g., a car used for business purposes), the tax -the lost advertising life downward p Ys must a consumer service and help the retailer with additional merchandising Opportunities. codes permit its cost to be recovered over the theoretical of the asset through value the sign To meet goals effectively it's clear that in store p ( provides to the adjustments in reportable income, At the end of the depreciation or amortization) period, business. signage must full communicate value and help retailers merchandise better through the asset may or may not be worth more than its original cost; however, whatever the ideas, offers, or premium tie-ins that meet the consumer's needs and desires. original cost during the asset's depreciable "life," it has been frilly recovered. Further, once the asset's economic life is over, it is usually replaced by a similar asset, which is then "depreciated" for tax purposes all over again. Anyone acquiring the asset during its Regulatory Takings and .Amortization Revisited depreciable life may continue the depreciation schedule. The cycle ofsavings continues until the taxpayer/owner voluntarily terminates his or her business need for depreciable Many community officials and administrators assets. Amortization in sign code terms, however, is specifically intended to prevent in their quest to restrictively regulate Promotions% signs,generall for"aesthet;c"' displays mus y reasons, either fail replacement or resale, and instead force removal of the asset. or refuse to take into account the value provide a a sign contributes to its site. Lack of consideration for the contributory value of a sign consu mar has led many urban In the land use (or zoning) and regulatory context, one succinct definition of planners and public officials to the erroneous conclusion that allowing rvice and hefp a "grace period," during which a previously legal amortization was provided by a Delaware Court in 1984: "... simpl[y] ... the amortization sign may remain in place after passage place e retailer with of a more restrictive code, is sufficient ofa non-conforming use contemplates the compulsory termination of the nonconformity compensation for the burden additional Such a theory is perhaps the replacement. at the expiration a specified period of time -the time period, in theory, being equal to most nerchandisinq pervasive and insidious of all the myths perpetuated about on- opportunities. premise businesssi¢nage. However, explainingatnortizationtheo the useful economic life of the nonconformity."' i of signage regulation is not an easy task—the subject is complex, and requirry ines not only in-depth analysis of underiyin Thus, amortization theory, as relied on by signage regulators, presupntext poses a sign g policy, but also rigorous legal analysis. g y is worth only what it cost to produce, and once that cost is recovered over a certain Because the term "amortization" has prod (generally five years), the municipality can demand removal without paying true multiple meanings, to effectively address its Impact in signage regulatory terms, one must first understand not only what it is, but also 'What it is not. consequential monetary damages. Upon expiration of the period, itis presumed that the owner's original capital investment is completely recaptured, and that the owner is now merely prohibited from doing what everyone else similarly situated is prohibited from doing, i.e., constructing or maintaining a non-conforming sign, Amortization is used as >int o%purcha advertising allows the business to inform a substitute "compensation" for immediate mandatory removal or down-sizing of existing Istomers of varcvs specials and new products, as well asThese splay prices fcr all the businesses, lo- regular items available. interior )nage is an important tool for guiding customers through Gated off the main drag, ME -fore and heipu*y here rind what they need. would be hard pressed to succeed without their % signs. The value these -'-MCIM signs provide to their to- spective businesses is much greater than the s 9' cost of their production. L L , �` `ldtvd C6,-1 New Cattle v. Rollins Uuuoor A,hverridng, Inc., 459 A2d 541 (Del Ch 1983), revd 475 A2d 355 (Del Sup 1984). Myth #3: Signs In and of Themselves Have Little eco tarurr no mic Value signs. The problem with amortization is that it fails to account for -- and compensate for the lost advertising value the sign provides to the business. Too often, amortization is advocated without adequate preliminary investigation into either economic impact or alternative remedial measures, or both. In the signage regulatory context, amortization is the end product of an extraordinary exercise of police power, beginning with the initial permit. followed by a period of conformity to the existing code, and ending with what is essentially a unilateral invalidation of a permit agreement by a public body, without recourse for the affected sign owner or user. If the sign remains after becoming illegally non -conforming, the In *-on" "non -conformist" will be subjected to penalty, sometimes severe. The possibility of large i,m fines and/or incarceration for failure to timely comply with a sign code is particularh ,ea, -v is ulffized harsh when the code is retroactively applied to a previously legal activity. to sties•wtate ves-ment- NOT to calculate 1p'"l-ati011 for Compensation: Federal Law Contrasted with State Law coi- iscation of Property or rinspeanent of a In non -signage contexts, amortization theory is utilized to stimulate investment, property right. NOT to calculate compensation for confiscation of property or infringement of a property right. In spite of this dichotomy, many public officials and land use planners hold strong to their conviction that the theory makes sense, and further that it is legally defensible at both state and federal court levels. however, most of the cases in support of amortization, upon which they often rely, were decided before the United States Supreme Court ruled test several major Fifth Amendment "takings" cases.' It is.worth noting that amortization is not allowed as "compensation" in outdoor advertising removal cases involving signs within 660 feet of an interstate or primary highway, and on -premise signs within that area can enjoy the same legal and compensatory protections.' While many states have adopted the federal position, others have not. In [he states which have not, sign owners must resist amortization. In doing so, they should w-gue federal law — not only the "Highway Beautification Acts" but also the 1970 Rehabilitation and Removal Act, which makes payment of "just compensation' mandatory in any case in which federal funds, through state or local exercise of police powers, are involved in adversely impacting the property interest. This Act should be of particular assistance to small business owners who have SBA loans, where removal of a sign may I n r0&Deef10&r1t business person is less likely to west r a Aeli-crafted sign such as those on the Ight f that s+gr may be taken through amortize - on ar, sorre Do®nf in the future. Signs such as ie errea-t: more likely to be purchased. adversely affect the value of loan collateral represented by the sign. Impacted individuals should also advise their congressional representatives of the inequities of amortization, and seek congressional assistance to include on -premise business signage as protected under federal law to the same extent as off -premise our outdoor advertising. Several states (e.g., Arizona, Colorado, Georgia, Indiana, New Hampshire and Minnesota) specifically reject amortization of signs that become non -conforming following a change in the code. In these states, when a governmental body wishes to restrict or remove a recently conforming sign, the owner must be monetarily compensated. In other states, specific statutes, or case law, make the use of amortization problematic, at least in specific circumstances.' Other states (e.g., Arkansas, Connecticut, Florida, Maryland and New York) apparently approve of amortization as a form of compensation nix lost signage; however, the legislative trend in states that have thoroughly investigated the issue is to restrict amortization as appropriate compensation for sign downsizing, displacement, or removal by means of retroactive enforcement. Also, while some state courts still find legal arguments in favor of amortization persuasive, a growing number are applying federal law to amortization issues' Titus, before undertaking any legal analysis of an amortization statute or issue, one must first determine which law is applicable — state or federal, or both. Art Neon Co. v City of Denver, 488 F.2d 118 (10 Cir. 1973), cart. denied, 417 U.S. 932 (1974) and Major Media Y. City of Raleigh, 792 F.2d 1269 (4th Cir. 1986), which generally supported amortization as permissible compensation, were Overruled by subsequent decisions addressing "takings" law. See Nollan v California Coastal Comm'n, 438 U.S. 478 (1987), Key. tone Bituminous Coal Assn v. DeBenedictus, 480 U.S, 478 (1987), l lrst English Evangelical Church v County ojLor Angeles, 482 U.S. 304 (1987), and Lucas v. South Carolina Coastal Council, 112 S.Ct. 2886 (1992). r 23 U.S.C. section 131(g). Violations of the Highway Beautification Act aro sanctioned by denying federal highway construction a and maintenance funds to the offending jurisdiction; e.g., see tiller Outdoor Advertising Co. of Arizona v C.,11y of scotisdale, 579 P.2d 590 (Ariz.Ct.App 1978). e.g., in California, the noacompensated removal of signage is prohibited or limited in cases where substantial harm to the primary activity as zoned occurs because of topographical constraints or other factors which impair the activity, including loss of adequate signage; in such cases, signage can be restricted or removed, but monetary compensation for the takings must he paid. See (California) Business and Professions Code 5499; also see DennyS Inc, et al v. City ojAgoura Hills, California Court of Appeal, Second District, Division Three, Case No.B098621 ' For examples where courts have addressed amortization provisions under federal takings law, see Naegle Outdoor Advertising. Inc, v. City of Durham, 844 F.2d 172 (4th Cir. 1988) on remand, 803 F. Supp. 1068 (M.D.N.C. 1992); Georgia Outdoor Advertising Co., Inc. a Clry of Waynesville, 900 F.2d 783 (4th Cir. 1990); Outdoor Systems, Inc. v City ojMesa, 997 F.2d 604 (9th CU. 1993). 'Umaeuiasir c •v'%a 4Aw cleor Myth *3: Sign In and of Themselves Have Uttle Eeona�mie Value (7.enmmsbn the OUpI& about C)iy7ff. Learning to Use Signage as a Planning Tool for Intelligent Community Development r - &WP&T,� -Mqq Myth #4: Sign Limitations do not Impact the Economy MV h *4: Sign Limitations do not Impact the Economy One of the more dangerous myths propounded by planners is that signs may be strictly limited or eliminated and the consequences to the economy will be that businesses will flourish. The facts show the opposite will occur. And when individual businesses suffer, the entire economy suffers. It is essential, therefore, that sign regulators have a basic understanding of how the American economy works and the role that signage plays in keeping it healthy. U.S. citizens live in a sophisticated, highly mobile, market-based society, where trillions of dollars are exchanged annually for goods, products, and services, No society in the world is as rich in communication media as is the U.S. In 1999, the United States' retail economy alone generated three trillion dollars (the overall economy totaled $10 trillion). Of this total, advertising and marketing revenues accounted for $250 billion. By way of comparison, more dollars are spent per year on advertising than on the following categories of sales: local and long distance telephone calls, ($170 billion), toys ($25 billion), or soft drinks ($55 billion). Generally, only new carilight truck sales ($350 billion), and retail food sales ($450 billion), produce significantly larger annual revenues than advertising and marketing.' This vast capacity for quality commercial communication, which sprang up from our consumer -based economy, has in tum had a substantial reciprocal impact on consumer behavior. Neither N.W. European nor Japanese retailing are consumer -based to the degree ofthe U.S. model. Retailing in N.W. Europe is labor union/competitive retailer -directed. and in Japan, it is manufacturing -dominated. Retailing in the U.S. is an open, speech - based, consumer -oriented process. Our consumer -orientation has spawned a wide range of types of stores: small freestanding stores, strip shopping centers, large mall or regional shopping centers, large department stores, large mass merchandise stores, and complete category stores. While exceptions to the consumer -based model can be identified (motion pictures or new car/light truck sales are clearly controlled by the producers or manufacturers), it is the WalMart model of"consumer first" that is the trend and dominant factor in retailing millers rw_ziond 20 the r*)rican nsi. -7ers' , nre for -. err,ence ,t- value 4d entuTkvaw %Ire C %gjVIb'ZAMII 0lil4nf Myth #4: Sign Limitations do not Impact the Economy in the U.S.. As consumers benefit from economics of scale, retailing is being further concentrated in franchises. Today, just five manufacturers make over 75% of the toys and five retailers disperse over 75% of those toys. Additionally, 400/6 of the grocery business is amassed by just five chains. It cannot be over -stressed that U.S. retailing is driven by the simple precepts of cost, convenience, and a comfortable retail environment. That is, consumers prefer competitive prices, have the mobility necessary to make retail choices, and like to shop where they can feel pampered - and retailing has responded to those consumer demands. It would be impossible for any N.W. European country or for Japan to foster our retail shopping patterns because of legal constraints on site selection and development in those countries (WalMart, the largest U.S. retailer in 1999 with a gross income over $130 billion, has been forced to buy existing retail operations in Europe). Both the restraints placed on retailers and government oversight of price competition are hampering WalMart's ability to grow in markets like Germany, where WalMart is being accused of anti-competitive price cutting. Even McDonald's can only advertise sales at specified times, and price competition is nearly unheard of. The barriers that both N.W. Europe and Japan put on competition are too numerous to allow what U.S, citizens would call competition. As a result, goods in the United States sell for 15% to 50% less than the same goods in Europe or Japan. Additionally, it is impossible to fully compare the U.S. consumer -driven retail model with the European model, because key transportation differences have limited Europe's ability to give the consumer the same market control afforded in the U.S. Consumer choice is limited in N.W. Europe and Japan by transportation policies which have placed hefty gasoline taxes on cars and light trucks in part to subsidize "public" transportation. Pro -automobile policies in the U.S., however, have had a profound impact on the retail economy. As a result of its consumer - driven economy, goods in the United States sell for 15% to 50% less than the same goods in Europe or Japan. TABLE S Automobile Use Statistics p)h0 1948 Motor vehicle licensed drivers 87,252,563 184,980,177 Passenger carimotorcycle vehicle registrations 62,245,422 135,717,988 Passenger car/motorcycle vehicle -miles traveled 587,000,000,000 1.556,090,000,000 Passenger car/motorcycle vehicles registered 62,254 135.718.000 Average miles traveled per vehicle 9,500 14,300 Fuel consumed (gallons) 41,171,000,000 72,414,000.000 All economic figures are obtained from Robert Coen, an executive and expert economist at McCann-Erickson Advertising Agency. Mr. Coen's figures are routinely published in the Wall Street Journal, Advertbing Age, and other such respected I,uh i, atiunc TABLE 6 Automobile Travel Statistics (for 1998) Passenger car/motorcycle vehicle -miles traveled Rural 579,258,000,000 Urban Interstate 222,066,000,000 Other Urban 758,536,000,000 U.S. travel patterns and, therefore, shopping habits, began to shift after World War 11, and the shift was accelerated by the 1958 and 1965 Highway Acts, which developed the primary interstate away from traditional cores. Today, 85% of all retail shopping is now done outside the old central business district, while in Europe 85% is still focused in those traditional districts. Another difference is how gas taxes are spent. In the U.S. there is a commitment to spend most of the taxes on highways, but in Europe these monies are used to blunt the use of the automobile or as a means of indirect conservation. Consumer behavior in the U.S. has been significantly altered by the continuing increase in automobile use (see Tables 5 and 6), together with expanding job opportunities and accompanying shins in population.' These changes generate information needs that place -based businesses must recognize and address if they are to remain competitive. Nothing can meet those needs as quickly, safely, and effectively as a well designed and placed on -premise sign. In fact, the sign may be key to a business's success. Marketing and Advertising in the U.S. Economy: A Derived Demand Markets consist of basic sizes or consumption figures. Generally, the job of a market researcher is to identify the subject market, determine its volume, and then subdivide n into discrete components or segments. Based upon expected short run consumption --thin the subject market or one of its components by a targeted population (pre- drtermined through extensive consumer profiling), demand for the product or service :order study is projected. Long term marketing strategies and adaptations are based on market studies, as are advertising programs, which arise as a by-product of the marketing and sales process. In fact, advertising is (or should be) a direct reflection of the dynamics of a highly competitive supply/demand marketplace.= It is essential for regulators to understand how marketing fits into the national --nomy. Most understand that America is a market economy - but they do not realize 1 independent small business, with an r�refive 519n optimaNy visible and readable to r sneer affers passersby an intervening prrrtun' 3U Select their product or service e,l anctner. perhaps better known, 'nl;tetitor - iitlmil Dbj + Cilyrltr_-UH 1 L%Glnr Myth #4: Sign Limitations do not Impact the Econom that it is a micro- and a macro -market economy. A myriad of micro -markets exist, each meeting all of the definition of a market. They have knowledgeable buyers and sellers. Sales occur in arms -length transactions. Parties enter into extensive negotiations. Generally, the demand and targeted consumer population remain relatively constant. And even if a shift occurs, a decline in revenues in one market quite often is accompanied by a comparable increase in another market, so that total available revenues or gross sales volume throughout the retail economy remains the same. However, as with most theories in American retailing, this so-called "zero sum game" dynamic does not always hold true, and although overall consumption usually is not increased by advertising, advertising may increase consumption within discrete markets by introducing "intervening opportunities" along customary travel paths, This is especially so in highly discretionary areas, such as quick service foods and economy lodging. It is true, also, for the entrepreneurial business or sole proprietorship, with more specialized products or services to offer.' Compounding the attempt to generalize "zero sum game' and the overall market is the nature of the U.S, retail system, which constantly adjusts to marketplace forces. Goods, products and services that are consumed regardless of overall business and economic conditions - e.g., food, beverages, cosmetics/personal hygiene products, and durable/nondurable household goods - are considered "non-cyclical." Categories subject to consumption decreases or increases in response to economic factors - e.g., autos/auto parts, toys, overnight lodging, and entertainment - are considered "cyclical." In a thriving and very competitive economy, at both die local and national level, market share per retail category may fluctuate dramatically, especially in traditionally "cyclical" segments. In such an environment, retention of a viable market share is fundamentally dependent upon the effectiveness of one's advertising programs and use of commercial communication devices and systems. Today's highly mobile consumer" tends to consume both by habit and by impulse. It is the tendency to purchase impulsively or for the first time (with respect to the area newcomer) that makes market share so difficult to predetermine. This in turn makes signage programs based on the "zero sum game" theory problematic for many businesses. For some, the theory may lead to economically counter-productive decisions. Therefore, one must be careful in applying the "zero sum game" theory to one's individual business circumstances in advance of an in-depth market study and thorough understanding of relevant trade area dynamics.' It is essential for regulators to understand how marketing fits into the national economy. ' According to 1995.96 U.S. Census Bureau figures, nearly 43 million people, or 16,33%of the U.S. population, moved during that poriod; of this percentage, approximately Vi moved either to a different county in the same state or to a different state. ' Publications like the Wall Street Journal or Economist aro excellent market information sources. ' Certain professional services may increase consumption within the category simply by a sign which advertises a "specialty" that the consumer may not expect to be available at the site. For example, a veterinary clinic may provide pet grooming or a general practice dental clinic may provide "teeth whitening" as add-on services. ' Vehicle miles traveled in U.S, per year: 2,691.335,000,000; Registered vehicles: 212,685,157; Licensed driven: 187,170,000; Avenge annual miles driven per vehicle: 12,654; Avenge annual miles driven per driver. 14,379. 1999 figures, U.S. Dept. of Transportation, National Highway Safety Administration. 'Although generally when a mass merchandiser such as WelMart eaten a community, other merchants lose volume nearly proportional to WalMart's gain, the losses may be offset by introducing "specialty" items not carried by WalMan. In addition to regaining former sales volumes, specialization or scale economics can also increase consumption throughout the community's retail system. For example, a Saks Filth Avenue customer may find a WalMan irresistible and spend dollars there that he or she might not have otherwise spent. Conversely, a Wa1Mart customer may spend additional dollars at a shop offering "Tall Men" apparel — a specialty niche usually not filled by a mass merchandker. _il ribim ukirtj the c*11zs <.�b(1ut C )3YNs: Learning to Use Signage as a Planning Tool for Intelligent Community Development V a Myth 45: Sign LRegulations level the Playing Field Myth #S: Sign Regulations Level the Playing Field Often motivated by a sense that "big box retail" is taking over the town, or a fear that their town will begin to look like "Everywhere, USA," planners naively fall prey to the myth that restrictive sign codes will level the playing field for businesses and thereby help their small businesses compete against "Corporate America." In order to believe this myth, you must be willing to make a series of assumptions. First, you must assume that the consumer should not be allowed to control retailing with their vote of dollars. You must also assume that the U.S. retail market is a simple, straight -forward retail market without multiple strategies. Another assumption you must make is that businesses, which rely on signage for their success, will not exercise their legendary American ingenuity to find their way around the regulations to gain an advantage in the competitive marketplace through the use of alternate forms of signage such as signature buildings and sign centric site design. This highlights one of the most difficult problems in signage ordinance or bylaw construction: dealing with changing technologies. The central trouble with sign codes that focus on specifications is that either they will inhibit the development of new technology or new technology will find a way around the codes. The limitations result in a turning over of the playing field to those people who can afford all other forms of signage that the codes will not, and can not regulate. The bottom line is that when sign codes are brought into play that only regulate ground- or building -mounted signs, the codes simply have the effect of targeting the less -franchised and the less-abled to challenge the code. It is discrimination, per se. Such discrimination fails to recognize the sophistication of the marketplace and the complexity of American retailing, as well as the ability of the retailer to overcome incomplete, silly, and poorly -thought -through government regulations. In effect, what these leveling -the -playing -field regulations do is exactly what groups like the American Planning Association and Scenic America say they don't want to accomplish: they standardize the environment, by forcing everyone to go to signature buildings and standardized storefronts, backed up by national advertising, through business form and business product franchises, and they put mom-and-pop retailers out of business. 4r ettracfn*, readable vin allows 'mom and 3c,p' a reasonable :11mrice to compete for %astomers. 9% CAFE <ZAW-ci-ft rbc 0Qj1f1i1_/rw! (20Pu' Myth #S: Sign Regulations Level the Playing Field Decreased Commercial Speech Fosters Small Business Stagnation Whether a sign is freestanding, projecting, wall or roof, reduction in its size does not create economic equality for local businesses, nor is the temporary economic advantage provided during the limited amortization grace period suffeient to compensate local business for the inevitable loss of site visibility. One obvious reason is that large national corporations, with comprehensive advertising programs and standard site designs, e.g., architecture, landscaping, product displays and company "logos," have a marketing advantage sufficient to withstand any downsizing of their respective business signs. Large franchisors and national chains spend approximately S 175 billion annually on major media advertising and marketing campaigns. Whether they are business product or business form franchises, these businesses have multiple ways to attract customers in a media -mutated market that includes national advertising, corporate identification, location, and signature buildings. Signage regulations often ignore the newer, non-traditional forms of signage, such as signature buildings and sign centric design. When sign codes address only ground - mounted and building -mounted signs, they discriminate against the independent or small merchant who may be leasing a building and who is entirely dependent on his or her traditional sign to attract customers. The non -franchised small business relies on local place -based advertising for economic viability, and strict sign limitations will harm the local shopkeeper or small businessperson much more than the large corporation with national recognition. For example, a McDonald's franchise does not rely exclusively on its sign to let the world know what is available on site. It also counts on standardized building design, landscaping, and window product displays. All of these corporate identifiers, including the sign, are reinforced by major media advertising and marketing campaigns. Thus, when local place -based advertising is limited, regional and national advertising becomes more effective, financially handicapping the local independent or non -franchised retailer.' The Value of Sign Centric Design: A Case Study The North American retailer's passion for satisfying consumers' needs and lowering costs while raising profits can be no better illustrated than in the network of sign centric retail sites. One of the first retailers to capture this process was Shell Oil in Canada. Shell Oil purchased a regional gasoline retailer, White Rose. The White Rose stations had the full complement of types of locations (neighborhood, strip center, car wash, and freeway oriented stations) and were the leading stations in the region. By completing a matched paired analysis, Shell discovered the number of gallons of gasoline a location sold (or its "throughput") increased approximately 15% at neighborhood stations and more than 40% at freeway stations when the identification on the station changed from the local corporate name "White Rose" to the national corporate name "Shell Oil." All that is accomplished by passing leveling -the - playing -field regulations is the creation of a standardized environment that puts the mom-and-pop retailers out of business. ' Under restrictive sign codes, franchised businesses in particular have a significant advantage over nonfranchised competitors, often increasing gross revenues by 10.15 percent. Conversely, nonfranchise gross revenues are reduced by similar percentages. Why would a simple name change from the leading local company to an international company have such an impact on sales? Certainly it was not because people preferred to buy from an international franchise rather than from the local company that W served them faithfully for years. Signa mm Shell discovered that newcomers and travelers telt significantly more comfortable ccocorpoww" doing business with a company whose name they recognized. In the U.S., on average � mmodhoes 18.9%ofpeople relocate each year, and the numbers are similar in Canada. This explained our moaiie the 15% increase in business at the neighborhood locations. Newcomers to the area lifestyle and preferred to do business with the company they recognized. Along the freeway, a high consuna ersr' percentage of the business came from vacationers and business travelers. Again, these ad for prowlIA t consumers preferred to buy from the recognized company. The normal pattern of a fa thr'ow9k certain percentage of neighborhood transience and the influence of the out -of -region o� advertisii�nq_ traveler at the freewaylocation necessitated a shift from White Rose to Shell at all of the stations. Shell discovered something else: that an entire throughput ratio could be increased if their stations used the complete corporate identification system, using sign centric design, rather than simply changing the freestanding sign face. Where Shell owned 15 to 17% of the stations in a market, it could, using sign centric design, capture 21 to 23% of the throughput ratio in that market. The point here is simple. Signature corporate classification accommodates our mobile lifestyle and consumers' need for product familiarity through advertising. The consumer wants the same product he or she is accustomed to obtaining, and the standardized sign centric design of these stations operates as a regional/national advertising system that communicates the desired familiarity to the consumer. The emergence of sign centric commercial site design as a guiding force in urban renewal projects, especially business district renovations and rehabilitation, is generating much excitement in architectural and sign design professional circles. Awareness of :urrent sign technology is growing as retail buildings are retrofitted to make the sign an integral and attractive component of the building and its surroundings. A city that encourages signage innovation, and provides bonuses for streetscape enhancement through izgnage, will find the sign industry cooperating with these efforts in a way heretofore cnimaginable. 7rxcentnc de-S9r enables a business's entire site to function a s!gn, giv,nc a near advantage to the businesses that The � .si-wsses below would still be recognizable a tree;r_arii*ig sign, the one to the right would not. The Role of On -Premise Signs in Business Ownership and Management Models The American business system is not only highly competitive, but also extremely varied, particularly in terms of types of ownership and operation. The advent of franchising has increased the complexity of the U.S. retail economy, intensifying the layperson's difficulty in comprehending it. Nonetheless, some level of understanding of the various segments of the marketplace, particularly that sector represented by franchising, is necessary before a business owner can determine the value of on -premise business signage to his or her business. The morphology of retailing in the U.S. is the most sophisticated in the world. No other country, including Canada, has the full variety found in the U.S. We have the typical mom and pop business, which can be a small free-standing unit or part of a complex. It can have its own facilities, offices, or even living quarters. We have department stores and strip malls. These stores have evolved into shopping malls that have mutated into many forms. We have fairly recently seen a shift to the large, free-standing complete category store, such as Toys R Us or WalMart. Signage has evolved similarly to serve the ever-changing retail industry. We are the only country in the world that allows such morphology to come fully into existence. The Japanese, through their restrictive zoning, have limited retailing to mom and pop stores and department stores. The Canadians have such a huge country they have not been able to develop chains and franchises to the extent found in the U.S. Europeans have gone out of their way to stop it. A comparison of two operations in the quick service food segment of the franchising industry will illustrate the diversity and subtlety of the system. McDonald's The morphology of retailing in the U.S. is the most sophisti- cated in the world. Product franchisers may exercise extensive dominion and control over their franchisees, often Insisting on signature buildings and sole ownership of the underlying real property. However, the ma/or media advertising advantages provided to the franchisee generally outweigh any dissatisfaction with loss of management control or site ownership, 1 C((Iyhf-4dwrt 061471r Myth #5: Sign Regulations Level the Playing Field 1' and Subway are both product franchisers; such franchisers retain considerable power over their franchisees, particularly with respect to operational management and quality control. In the McDonald's franchise system, the parent company exercises nearly absolute proprietary control - the franchisee usually cannot own the underlying real estate upon which the establishment is located and must rigorously conform to certain standards or protocols which dictate not only the type of product and the manner in which it will be served or delivered, but also the type and manner of building and signage that will appear Corporate on site.' Conversely, Subway, while exercising control over the product, permits its mentircation franchisee to control building type and store "trade dress," with the exception that the creates, in corporate on-premise signage package must be utilized. effect, an on- e billboard for If diversity in the product franchise system is not enough, the business format the business. franchiser is entirely different from either a Subway or McDonald's franchise. In most paov erns an : ases, the business format franchiser permits use of existing buildings and retention of advertising p g g ntue of 56,000 real property ownership. In exchange for 10% of gross revenues, the franchiser provides Tr. S12,000 a xsrporate identification, and national major media advertising and marketing programs. month. in this business form, the independence of the original small business owner and his/her business are preserved (i.e., a local motel or muffler shop). All that changes is the visual image and access to regional/national advertising. In the face of severe sign -size limitations and perhaps "mere survival" circumstances, such changes can be especially beneficial for a small business. Despite the fact that business must be increased 30-40% in order to "break even" after paying the 10% of gross due to the franchiser, this business form is flourishing. Its success is proof that an effective on-premise signage program, in tandem with a standardized national advertising and corporate identification system, will usually hring in substantial additional customers and extra dollars. At least fifty (50) percent of retail business volume in the United States today is controlled by product and business format franchisers. Because on -premise signage programs for local franchise businesses are inextricably tied to the parent company's major media advertising and marketing campaigns, such major media efforts make certain that company trademarks and logos are prominently featured, and that these company "identifiers" are echoed on site, primarily by on -premise signage. Federal case law prohibits requiring changes be made to registered trademarks as a condition of receiving a sign permit.-' In many cases, however, additional reinforcement of the company's image and its producuseryice is provided by signature improvements (for example, uniform building architecture and accessory improvements), further enhancing the site's total signage ,Tectruni and ability to communicate with the consumer. vviness form franchisers permit franchisees to retain v-& snap of the meal property and improvements, while - ,,Oing on -premise signage that can be adapted to the a-rc fs.messapereinforced bymajor media advertising. llmnt�rroa� C-(6Y11r AAvt t\4,,,r Myth #S: Sign Regulations Level the Playing Field Signature buildings are a valuable form of signage for a business. Corporate identification and standardization programs, all backed by national advertising, give a business an advantage by developing in consumers an instant recognition of a highly complicated array of information (called a "chunk," as opposed to a series of "bits" of information). The corporate identification creates, in effect, an on-site billboard for the business. Its value is somewhere between $6,000 and $12,000 a month in advertising exposures. Because ownership and management controls radically differ from franchise to franchise, one cannot generalize about how much commercial speech a particular site will need if it is to be successful, or how the franchise system will respond to restrictive regulation of signs. In instances of regulation, which limit sire and/or restrict content, a franchise may forego creative sign design in exchange for standardized corporate signage. Such signage enjoys near instant recognition by a majority of consumers, often without the business displaying anything other than a small corporate logo sign, perhaps reinforced by "signature/trademark" site design. Thus, when municipalities attempt to "level the competitive playing field" between franchised and non -franchised businesses by implementing across-the-board restrictions on size, copy, or placement (or all three), the business most likely to suffer is the non -franchised business. The regulatory scheme will restrict the small business's only communication device with potential customers - it is sign - limiting the business's ability to compete with the comprehensive and unregulated signage package available to the franchise (including corporate identification, site selection I and development, signature building, and national advertising). Selecting the Right Mix of Signage for a Business I The signage needs of various businesses may be viewed on u continuum. At one end is the typical service-oriented business (such as a single -office attorney, accountant, dentist, or travel agency) that has an established clientele and has been in the same location for many years. It may function economically with only an identification sign on the door to the office. At the other end of the signage needs continuum are businesses which rely entirely on their sign to stay in business. The clearest examples are highway -oriented businesses, such as gas stations, fast-food restaurants, and economy motels, whose customers may rely completely on signs visible from the highway to lead them to the necessary goods or services. A business may select a relatively simple signage program such as a free standing sign, or a more complex program reflecting the full range of communication devices including the traditional permanent and temporary signage, plus product dispensers and displays, a signature building, and landscaping. Obviously, the signage needs of a small "mom and pop" operation are radically different from those of a national franchise, such as Burger King. The purpose of a sign is to communicate, therefore, sign programs must take into account the particular message needs of both sender and receiver, as well as the site specifics of the individual location or facility. t The many types of American retail operations and sites range from the small independent freestanding store (under 10,000 square feet) to mass merchandisers, complete The purpose of a sign is to communicate, therefore, sign programs must take into account the particular message needs of both sender and receiver. McDonald's has approximately 16,000 retail sites in the U.S.A. and owns 95% of the underlying rent estate for (nese $tics. IS" Bloctbusrer 67deos Inc. & ildeo Urxlete a Cin, of Tempe (A7.), 141 Fad 1295 (9" Cir 1 WX` category stores, strip malls, regional shopping centers, and retail "clusters" (which are neither shopping center or strip mall). Such diversity requires a sophisticated analysis of signage requirements for both the business and its customer or client, if the business is to A succeed. Each business must construct a comprehensive business strategy, including an Rich t effective signage program, site location, and development considerations. sae CO s,gnage, or wise Because the on -premise sign is one of the most important ingredients of an taiets rause and advertising campaign, whenever possible or practicable it should be integrated into all '*eat 'r sib`lity media advertising campaigns. Building design and colors, product displays and dispensers, has 'r-aee a landscaping, lighting and layout also may art of the "signature" visey saki -a p gesture" mix of an advertising rtenttiro,.ity or program. When used correctly, on -premise signage provides immediate marketing whrcr- flavors advantages. -Anchiasaed and n baasir vesses_ The modern business person in today's ever -evolving business realm cannot simply consider traditional forms of on -premise signs. He or she must take into account all fortes of signage and the way a site's overall visibility functions to inform, direct, identify, and advertise. Nonetheless, the on -premise sign, when standing alone, should be considered and treated as a full function communication and design system. In any commercial setting, the sign should possess optimum readability, and conspicuity. This can be accomplished if the sign: 1) is of sufficient size and height not to be masked or obstructed by intervening traffic or other objects in the visual field; 2) displays "content" (copy and/or graphics) that is legible; 3) is prominently placed; and 4) is sufficiently lit to be clearly legible in all weather conditions and times of day. For the service-oriented business, longstanding customers can find their way to the office without the visual cues provided by a sign. New customers may become aware of the business through other forms of advertising, such as the yellow pages or newsprint and direct mail advertising. Referrals are another way to increase business; however, the mobility of the American consumer, including frequent change of residence (on average, inf►ectloe sit must be tall and large enough to be seen "ve kw,=aPnng. easily readable, prominently oriented V w0# rt fOr a4 weather conditions. The signs to the V am c+errow right are easy to spot; the one below left, '"d or 3 +socia. busy street, is not. (r NEYlELaNE 'CIi1LD CARE 3 aria• every year 18.9% of Americans relocate), is such that referrals are thr less likely to increase the customer or client pool than an on -premise sign visible to the street. Advertising CostBeneilt Considerations Generally speaking, the more national an operational base is,•the greater the choice of cost-effective media advertising options; conversely, the more local an operational base is, the fewer such choices. Signs provide cost-effective advertising. Without tolerant sign regulation, local businesses are hard pressed to elTcclively compete with giant corporations. Therefore, a municipality which limits the use of signage, or otherwise restricts size and street visibility, has made a policy decision, intentionally or not, which favors franchised and chain businesses. The result: the local -economy playing field is not level. In instances where the failure of local small business, and consequent loss of local business revenue, was not the intended result of retroactive regulation and amortization, economic reality alone may influence the municipality to rethink its position and revise its code. In such cases, the adversely -impacted business owner may not have to spend much effort or money to accomplish the change of heart. However, in those instances where the decline of local business was intended, the small local merchant may be hard-pressed to fund a challenge.' The financial inability of the small company to litigate generally means that local businesses will lose any competitive struggle with the national franchises and chains, which not only have unlimited war chests but also enormous access to alternate major media advertising that will reinforce "logo" images, no matter how small they appear on signs.' Street frontage offers a unique opportunity to interact with each passerby. If this advantage is not maximized by a well-designed sign visible to the street, the potential patronage of many newcomer or non -local customers will be lost. These lost sales may ultimately represent the difference between the success or failure of a business. ' The cost of a typical lawsuit snacking amortization as just compensation for lost business due to lost visibility (signage) is $500,000, or more. The adversely -impacted national corporation (particularly franchise and chain operations) can "expense" this cost over a long penod of time; the small local company usually cannot. ' Practically speaking, personal experience is all that is required to verily that a McDonald's franchise needs nothing more than a sign displaying golden arches (the corporate "logo") to effectively advertise and compete in the local market place. "'i' �V/Lr,{/tvR C117iM "#5: Sign Regulations Level the Playing Fleld _..• 4'`) aYi= ��a u a a....~.... .: . ,,.�.. , ...., ..........�.. • .:� ., . ,..... ,... r..." .�irr,xacr �R T'.1"'+'2'e!R'��!'!'!��llllP ;. I�Yt.YSt' ,. z.r....a...�.. i...m::.yiy./►.�itl..�L .G .: id: �s-�a-d.ai4.dl.M.aW..Jr-M�rii.tY�M IY1l �-1�.1 u._ _ r ..• .. �. _...: w�-u+-.r. -• � ..»�..._n Myth 06: Signs Negatively Impact Aesthetics An assumption often propounded by land use planners and regulators is that severe signage restrictions enhance community aesthetics and livability. This assumption is rarely correct. What is more likely to occur is that local businesses will fail and local revenues will decrease, resulting in urban decay. Planners are reluctant to admit that signs function, in many ways, as urban artwork and that the public actually likes them. When people are shown pictures of on -premise signs with beautiful face moldings, excellent balance of color or letter or graphics, and adequate lighting, consistently a large majority of those surveyed can be expected to tell researchers that they appreciate the artwork of the signs and enjoy looking at them.' Large painted wall murals, cut-out extensions on billboards, and colorful decorations of the otherwise mundane (such as buses, transit structures, and public benches) are often seen as adding character and life to the cityscape. The most aggressively signed stores in existence in this country are malls, which are very popular with consumers. Although a mall may have one large sign out front, inside each store has an intensive amount of advertising - usually four times the amount of signage the average main street merchant is allowed to have. The signage typically includes creative window displays and point of purchase displays that are visible from outside, as well as a lighted sign above the entrance to the store. Even the lighting systems in malls are dimmed to enhance the visibility component of the store: Why doesn't the public complain about mall signage? The public does not complain because the signage is attractive and serves the consumer by calling attention to the goods and services available within the store. While many will agree with the desire to approve visual appearance, it is nonsensical to equate absolute numeric sign size, height and placement restrictions with aesthetics. Nobody claims that large buildings are ugly when compared to small buildings, or that buildings in older sections of a city are unacceptable when compared to new buildings set I ack significant distances from the roadway. 'a`rme`d murals and `yell -crafted signs are seen by most 190010u as addeno flavor to the cityscape. I1:—,;,'W-*1 4:�adtrJA„1/1^ptr Myth #6: Signs Negatively Impact Aesthetics The simple fact of the matter is, in most cities, when voters are asked straight out whether they support the specific code changes being proposed to further restrict signs, surveys consistently show that 75% of the people do not approve. The public does not support restrictive sign codes that are, in effect, blatant censorship. Poll after poll in city atter city has found that the vast majority of people consider outdoor advertising to be interesting and informative, believe it is good for business, and do not support banning it. planners are Typically, just 12 ''/2% of the American public supports doing away with outdoor reluctant to advertising. The fact is, Americans love their advertising. admit that signs function, in In many instances, "aesthetics" is simply a pretext for censorship of commercial many ways, as urban artwork speech. and that the public actually It is important to keep in mind that the U,S. economy does not function like the likes them. economies of Europe or Japan. Planners may benefit from studying the models of other countries, but there certain economic influences at work in the United States make those models non-functional here. The U.S. economy is driven by consumers, and nothing planners can do will change that. A city simply can not have "smart growth" if its first assumption is that consumers don't know what they are doing and businesses do not have to appeal to their needs. Amortization Undermines Aesthetics Amortization in the land -use context is inherently anti -commerce, carrying with it the imprimatur of negation and punishment rather than fair payment for loss of property and civil rights. An amortization policy clearly implies both a distaste for signs and a certain ignorance of their true value. The fallout of such a policy generally is a higher interest rate on the loan and a concurrent lower expenditure of borrowed funds on signage that could be subject to noncompensable removal at municipal whim. Despite the proven value of a sign to business success, a decision concerning the amount of money one is willing to pay for one's sign is heavily influenced by the controlling sign code and the reception one is likely to receive when applying for a permit. A lender considering a business loan application will be equally interested in sign code provisions, Creative outdoor advertising structures with cut-out extensions provide points of interest that ease driver boredom while providing information. i k P 1 fitslstughly NMAIA 1AX to X* Thirty years ago, after San Diego had written a draconian sign code that banned all billboards and retroactively took them, the city enclosed a public opinion survey in all utility bills. What they learned surprised them: the public did not feel there was a sign problem in San Diego, did not support banning billboards or taking them without compensation, and felt the signs were useful and good for business. Furthermore, codes that call for amortization are nearly impossible to enforce, and when the amortization period ends the majority of signs will not have been amortized and replaced. As a result, all that has been accomplished is that the municipality has given an unfair advantage to the established businesses with the larger non -conforming signs over newcomers in the marketplace. Such marketplace involvement is not the function of government. Absent a forced amortization period, signs will be replaced in a matter of time on their own because a sign Inas a limited life span. If business owners understand that sign regulators are trying to improve the aesthetics of the community, while at the same time trying to help them stay in business and promote their businesses effectively, they will design better signs and the old, nonconforming signs will comedown. Moreover, cities that have studied the results of amortization programs and have instead focused on enforcement of the existing sign code have discovered that up to 75% of businesses wishing to erect a new sign have not asked for the maximum amount of signage allowed under the code. They have asked only for the amount of signage they needed. When cities focus on enforcement, they find there is no reason to resort to "takings" through amortization. Amortization is reactive rather than proactive, in both nature and application, and in the end works to undermine a community's aesthetic goals. --iencar:s icve .!."*,air advertising. Pk- 0 (f1dl, Aiwd Myth tf6: Signs Negatively Impact Aesthetics Aesthetic and Graphic Design Considerations Aesthetic enhancement through signage is generally a function of creative design which always affect the borrower's ability to effectively compete in the marketplace, and, attained by the full use of all available materials and technologies. However, creative therefore, the value of collateral assets. design is expensive. A municipality which offers only amortization as compensation for It is axiomatic that the local business community will not readily respond to a retroactive taking of place -based communication devices will not encourage a willing municipal efforts to improve sign design and community aesthetics if amortization is the expenditure of funds by the local business sector. Further, retroactive regulations and only compensation provided in the regulatory scheme. A business owner will not invest amortization, enforced by fines or criminal sanctions, or both, have a deleterious effect to abeautifully crafted, aesthetically pleasing sign that performs adequately for the business ne puboi,: doss not su ipportt if experience has taught him or her that the sign can be taken away without compensation estrictree signs and if what he or she perceives as a credible source — that is, the government - says the :odes t, -.Pt are. sign will harm the public. effect, _,iatand experience has cen.,sc-strip. When municipalities create an environment that is hostile to signs, they also ensure absolute limits on sign size, height and placement, his or her only option is to maximize that existing signs will not be improved or well-maintained. Why invest more money in the usable copy area of the sign at the expense of a creative visual appearance. a sign that will be removed in a few years? Instead, many businesses tum to temporary signage, often placed in violation of the sign code but seen by the merchant as the only feasible way to communicate with customers in an oppressive sign code environment. Furthermore, codes that call for amortization are nearly impossible to enforce, and when the amortization period ends the majority of signs will not have been amortized and replaced. As a result, all that has been accomplished is that the municipality has given an unfair advantage to the established businesses with the larger non -conforming signs over newcomers in the marketplace. Such marketplace involvement is not the function of government. Absent a forced amortization period, signs will be replaced in a matter of time on their own because a sign Inas a limited life span. If business owners understand that sign regulators are trying to improve the aesthetics of the community, while at the same time trying to help them stay in business and promote their businesses effectively, they will design better signs and the old, nonconforming signs will comedown. Moreover, cities that have studied the results of amortization programs and have instead focused on enforcement of the existing sign code have discovered that up to 75% of businesses wishing to erect a new sign have not asked for the maximum amount of signage allowed under the code. They have asked only for the amount of signage they needed. When cities focus on enforcement, they find there is no reason to resort to "takings" through amortization. Amortization is reactive rather than proactive, in both nature and application, and in the end works to undermine a community's aesthetic goals. --iencar:s icve .!."*,air advertising. Pk- 0 (f1dl, Aiwd Myth tf6: Signs Negatively Impact Aesthetics Aesthetic and Graphic Design Considerations Aesthetic enhancement through signage is generally a function of creative design attained by the full use of all available materials and technologies. However, creative design is expensive. A municipality which offers only amortization as compensation for a retroactive taking of place -based communication devices will not encourage a willing A business expenditure of funds by the local business sector. Further, retroactive regulations and owner will not amortization, enforced by fines or criminal sanctions, or both, have a deleterious effect invest in a on the local business community. Such a policy does not encourage creative or optimum beautifully crafted,aesthetically sign design, but instead generates litigation, a distrust of government, and the loss of a balanced economic environment. pleasing sign if experience has When a business owner's need and right to communicate has been restricted by taught him or absolute limits on sign size, height and placement, his or her only option is to maximize her that the sign can be taken the usable copy area of the sign at the expense of a creative visual appearance. away without compensation. On the other hand, community aesthetics and livability can be enhanced if a municipality offers incentives, rather than punishments, to obtain a desired result. In such instances, the local business community will respond affirmatively. For example, by offering bonuses for custom sign designs, Barbertown, Ohio was able to gain the trust and cooperation of the local business community and successfully rehabilitated its business districts and streetscapes through attractive sign design. Merchants were encouraged to incorporate all necessary place -based advertising on one, custom-designed sign, and design — not size — was the controlling factor. By working with and rewarding its local retail and service community, Barberto-n achieved positive reaction to its "new" sign code and averted both owner neglect during any grace period and the unsightly proliferation of replacement signage (e.g., inexpensive cardboard window signs or temporary "A -frame" signs)) Theme signage can be enhanced by using traditional false -front concepts. Although dating back to 19th Century, "old West" America, this commercial communication "art form" retains its relevancy and vitality. Amortization of nonconforming signs oven heralds a period when owners halt all efforts to maintain existing signs, resulting in unattractive, broken, unreadable and even unsafe signage - "sign blight" in the truest sense. i 1k, Elu Tate Fromronf Experience im Las Vegas its duly a street of rlrghts. An Enjoyable Visual Experience for the Tourist V sitors to specific geographic locations that function as major tourist destinations (e.g., Times Square) not only consider the signage in and around these areas to be an important part of their total experience, but also respond to signage messages that invite purchases. Along the same line, destination cities such as Las Vegas or Santa Fe/Taos, are home to signage that both entertains and invites commercial transactions. While destination districts or cities must strive to meet the signage expectations of the thousands who visit them annually, they must also consider the signage requirements of the local community. Generally, all signage needs and expectations are met by emphasizing theme design in the controlling sign codes. For example, all businesses in Las Vegas, casino or otherwise, must submit their signage designs to rigorous design review tests before construction or placement. New York City municipal authorities exercise strict dominion over Times Square signage, including imposition of rigid sign size -to -site ratio standards. !r^ such peaces .as Las Vegas, Hollywood and Times Square, the signs themselves have become a tourist attraction, and e' essaf'7tial to :she local tourist economy. if �C dl; dtt Lft�y/tr.�lt�rN t Myth #6: Signs Negatively Impact Aesthetics Variable Message Signs From the beginning the sign industry's methods of changing copy have continued to become more sophisticated. As this has happened, the opportunity for merchants to communicate their messages to customers has expanded. But it is with some level of difficulty that these new technologies adapt to both the marketplace and regulatory forums. Currently, these types of outdoor variable message centers, including electronic message centers, range from simple monochromatic scrolling message boards to huge screens with television -quality resolution. As the capability of electronics has expanded or changed, this powerful medium has become a valuable communication option with tremendous aesthetic capabilities. The sign industry is quick to seize upon any lighting system that can make their communication expression more valuable and attractive. The Fremont Experience in Las Vegas is a good illustration. The original "Glitter Gulch" helped begin the growth in Las Vegas gaming. As the gambling business developed and spread to metropolitan Clark County, along the Strip, a series of experiments were tried in order to bring more people to Las Vegas. The sign industry, through the use of electronics in new lighting systems, created a phenomenon that people traveled to, without a particular casino in mind, simply to enjoy this lighting exhibition. Thus the Freemont Experience is literally a street of lights. A good example of the value of variable message signs is found in the experience of the airport in Monmouth, N.J. The owner of the airport carefully drew up traffic profiles on his street, and the origin/destination trips of the travelers going by using the particular time of each trip. He then carefully charted customer profiles so he knew what times of day to display price or route information for the different flights on the electronic or variable message center. During the balance of the day he was able to offer groups, including those in government, the opportunity to use the electronic message center to communicate with those living in the area during their daily commutes. Community aesthetics and livability can be enhanced if a municipality offers incentives, rather than punishments, to obtain a desired result. The wide variety of electronic message centers available today allow the business owner unprecedented opportunities to communicate with passers-by. At first this would appear to hold real potential for merchant use. Unfortunately, this method of outdoor expression has continually seen attempts to limit its use. To explain this, in some measure, one needs to understand the components of the 1965 Highway Act. While Congress did nothing to actually prohibit or proscribe the use of –;r;oly tierc:hnwally advanced variable message signs are an rmcreas-gly common sight in big cities around the world. Myth #6: S i g i electronic message centers, which were in their infancy at the time, the Federal Highway Administration (FHWA), developed its own regulation to prohibit flashing and other forms of variable message changes. Essentially, the only variable message systems allowed were those that provided time and temperature or other "public service" messages. The federal regulations of variable message signs were clearly content -bused, and awareness was growing that they would probably not hold up to Constitutional muster. By 1978 the industry had grown so concerned about the proscriptions that were occurring on these variable or electronic message centers that they took their case to the U.S. Congress. For the first and only time the 1965 Act was amended to allow electronic message centers along the highway, without invoking some kind of federal penalty, The tide of regulations of these signs may be starting to turn. Municipalities that wish to prevent urban sprawl or deterioration of urban land are passing enabling acts that require optimization of urban space. Because signs are critical if a business is to succeed, restrictions on standard signage can actually result in more clutter as business owners resort to temporary signs to communicate with customers. Electronic variable message centers allow businesses to convey these critical consumer -oriented messages without having to resort to a variety of temporary signs. Advantages Electronic Message Centers Offer to a Business Because electronic or variable message signs attract customer attention and increase business, they have the ability to increase the economic viability of difficult commercial sites with limited space. They also offer the unique ability to consolidate information into one attractive space, eliminating the need for multiple temporary signs F iect ro n is in store windows or on sidewalks, thereby enhancing aesthetics. Consequently, the business !tiriabie message community is demanding them and municipalities are becoming more willing to consider signs offer the dowing them. ainicue ability to -rsoli4,rte intor- Tnatio,- into one • They allow an unlimited number of message changes and variable controls, all laefirns i•ve space, easily completed with a computer. The result is lower labor cost and elimination ehmie*,ating the of the physical liabilities often associated with co changes on traditional reader p y copy ge .mad for multiple boards. ':e:mpor-ary signs • They communicate variable messages as people pass by, allowing greater flexibility store windows _ on s,,aewalks, in communicating to the public. The business owner can change the message as .hereby mhos - needed to provide information to specific retail customers, and can be used for ,:ung aestnetics, political, social or community events. • With their automated dimming and focusing systems, they can respond to the visibility needs of the public, increasing safety and conspicuity day and night. • These signs can quickly "brand" a business site in the local community. • They provide the best and most cost-effective form of paid advertising, allowing a business to market its products and services to its immediate trade area and prevent wasteful advertising expenses. The only form of advertising that may be more powerful is word of mouth (although it can be neither purchased nor controlled). • Their effectiveness is not limited by space or surface area constraints as with a reader -board. • Software is available that enables a business owner to display sophisticated logos or images on the board precisely as planned. • They allow for sign consolidation, so a business owner does not need numerous banners and window signs to display specials, reducing visual clutter. At first this would appear to hold real potential for merchant use. Unfortunately, this method of outdoor expression has continually seen attempts to limit its use. To explain this, in some measure, one needs to understand the components of the 1965 Highway Act. While Congress did nothing to actually prohibit or proscribe the use of –;r;oly tierc:hnwally advanced variable message signs are an rmcreas-gly common sight in big cities around the world. Myth #6: S i g i electronic message centers, which were in their infancy at the time, the Federal Highway Administration (FHWA), developed its own regulation to prohibit flashing and other forms of variable message changes. Essentially, the only variable message systems allowed were those that provided time and temperature or other "public service" messages. The federal regulations of variable message signs were clearly content -bused, and awareness was growing that they would probably not hold up to Constitutional muster. By 1978 the industry had grown so concerned about the proscriptions that were occurring on these variable or electronic message centers that they took their case to the U.S. Congress. For the first and only time the 1965 Act was amended to allow electronic message centers along the highway, without invoking some kind of federal penalty, The tide of regulations of these signs may be starting to turn. Municipalities that wish to prevent urban sprawl or deterioration of urban land are passing enabling acts that require optimization of urban space. Because signs are critical if a business is to succeed, restrictions on standard signage can actually result in more clutter as business owners resort to temporary signs to communicate with customers. Electronic variable message centers allow businesses to convey these critical consumer -oriented messages without having to resort to a variety of temporary signs. ar :.J �nmasr�rj� the C %�C�tl�s c�bc�z�t C�r���: Learning to Use Signage as a Planning Tool for Intelligent Community Development 5 Myth #7: signs are of Little Value to the Community 4r�, N", h *7: Signs are of Little Value to the Community Signs often fall victim to public policy misperceptions that they, at best, are necessary evils, generally too big or too bright, or too prolific, and that, to the extent that existing signs can be retroactively reduced in size or numbers, or eliminated altogether, the community will benefit. Often these misperceptions are grounded in anti -commerce sentiment that fails to address modern society's need or desire for consumer information. When such sentiment becomes law, the result is a form of censorship that adversely impacts the community at large. Where such censorship is especially egregious, courts have acted to redress the harm.' Until recently, there has been little definitive research acceptable to the land use planning community to counter these assumptions or test their impact. It is now known, however, that these assumptions are highly questionable or wrong. One of the most common mistakes municipalities make when writing or revising sign codes is having agenda -driven people write them. These people often do not take the time to understand what it is that they are regulating. They don't understand the speech protections involved in signage, and do not have even the most basic understanding of the sign industry, resulting in many unintended consequences. Most important, they fail to see how signs can be used as a very effective tool by planners to facilitate intelligent and effective allocation of urban resources. Fostering a pluralistic society. Restrictive sign codes close a community off from outsiders. Open societies that welcome all people typically have fairly dynamic signage.t Reducing urban sprawl and urban deterioration. Proper signage can ensure that each business site succeeds by guiding potential customers to the business SJ,grs crmarice roe economic vitality of a business -; stict -3"–�,-rmg customers and welcoming all ?e shopping experience. \ UEV0 AM+1_A�EiCER .. -FIR .Tvtrr • J..., '74-0*W he Myth #7: Signs are of Little Value to the Community location. Signage keeps consumers shopping locally, reducing the demand for a new business to fill their needs because they cannot find the existing business. This reduces urban sprawl and urban deterioration. Encouraging local business. Planners often neglect to recognize that sign types include much more thiol just freestanding, building -mounted, or temporary. Tight limits on these traditional types of signs give an advantage to large corporations and squeeze out the independent merchant, who can no longer compete because his customers can not find him. Creating a steady tax base. Successful businesses contribute significantly to the tax base, guaranteeing stable funding for local government programs and services, including schools, parks, and public safety. Fostering a Pluralistic Society In a pluralistic society, it is only natural that speech, both visual and verbal, would be legally protected – without a protected "right to speak," communities could hardly be called open and free. With regard to sign messages, speech protections are frequently associated with only noncommercial expressions, sometimes referred to as belief/opinion "pure" or "political" speech (as in City ofLadue v Gilleo, 512 U.S. 43 (1994)).' However, commercial expressions displayed on signage are also protected, and serve a free and open society by providing welcome and welcoming information to local residents and non -local visitors or passersby alike. In addition to assisting safe wayfrnding and location of products or services for which a need is perceived, another social benefit conferred by commercial signage is assisting informed consumer choices, especially through display of price information. When signs are permitted to provide price information, the consumer is able to allocate revenue more productively. Productive use of family funds is particularly important for lower-income families. Thus, commercial information has been recognized as conferring not only economic benefit upon the retailer, but also upon the consumer who is seeking the best product at the most affordable price --and that is most of us. (See Virginia State Bd. Of Pharmacy a Virginia Citizens Consumer Council, 425 U.S. 748,761-773 (1976))! It is true that substitutes for the commercial speech provided by on -premise signs may exist for some businesses — radio and television commercials, newspaper advertisements, the Yellow Pages, direct mail, and outdoor advertising, to name the most When signs are permitted to provide price information, the consumer is able to allocate revenue more productively. In the seminal case, Vhginio Pharmacy v ftrginta Citizens Consumer Council, Inc., 425 U.S. 748 (1976), the Court found that on -premise price advertising provides a social service by permitting consumers to make informed decisions, and held that banning of such advertising was impermissible. ' Las Vegas is the largest destination -oriented city in the United States, with 30+ million visitors a year, more than in any other city, and it has the most aggressive signage program. The reason is that everyone is welcome there. Carmel, CA, on the other hand, is a wealthy exclusive community that does not wish to encourage or accommodate non -local visitors. Their signage program is among the more restrictive in the country. So-called "gated communities" also typically have tight restrictions on signage. ' The Supreme Court held that the First Amendment precludes a ban of lawn signs expressing a political, religious or personal message, even in the interests of promoting "aesthetica," if the ban will completely foreclose this important medium of expression, and no adequate substitute is provided in the regulatory scheme. ' The fact that the advertiser's interest in a commercial communication is purely economic does not disqualify him from protection under the First and Fourteenth Amendments. Both the individual consumer and society in general may have strong interests in the free flow of commercial information. prominent. A dentist, doctor, or lawyer might be able to afford and use these substitutes; they can absorb a higher cost of acquiring customers in their fees (or they may use "professional organizations" to screen and limit competition and charge higher prices). However, there is always an exclusionary factor in such advertising or "messaging" behavior. There are certain segments of society that may depend almost exclusively upon the visual cues provided by neighborhood store signage to assist in making informed Overty consumer choices. For example, the decision in l lrginia Pharmacy turned on the issue ,b icti. a sign of providing pharmaceutical pricing information in ways most likely to reach every potential ms nn,sy lead consumer, especially lower-income consumers who must be able to comparison shop in iexcrabty to order to make an informed purchase decision that is within their budget. The full impact born urban of restrictive commercial speech regulations on lower income groups has not et been sprawvt and PB P Y it -ban decay, thoroughly researched. But common sense tells us that there is an impact, and that it is very likely harmful in the sense of impeding the free flow of information in a democratic, pluralistic society. Reducing Urban Sprawl and Urban Deterioration Most communities understand that one of the fundamental goals of land use Ti=ming should be to maximize business market volumes and revenues for their commercial districts, but they are not always certain how to accomplish the goal. It is important, in today's economy to recognize mobility, and then craft sign policies and programs that meet the informational and directional needs of drivers and their passengers. A community rxrponsive to consumer mobility and consumption patterns will capture at least 25 percent, and possibly up to 50 percent, of its business income from people who live or work :outside the definable trade area. Revenue provided by the non -local consumer population a. the least expensive (most cost-effective) revenue to generate, and provides significant funding for community infrastructure and services. As touched on earlier, at any given moment retailing is a "zero sunt" game. in tither words, if someone gains a sale by attracting a customer, someone else loses that sale for failing to attract that same customer. For most businesses, the on -premise sign is the primary attractor for the site. If the visibility of that sign is impaired because it is irmited in height or size, or is located outside a driver's cone of vision, or is poorly illuminated, or otherwise cannot be easily detected in its surrounds, the consequent loss :,f business revenues for the site can be anywhere from 15% to 40%. For freeway- ursented businesses, the loss can exceed 50%, forcing the business into decline, and probably failure. The other side of the coin in "zero sum" game is that the customer, who was "loaf- because he or she did not see a sign in time to make a stop, is looking elsewhere to u;, business. This need to look elsewhere creates a demand that is met by opening up udditional space for commercial development. it is at this point "urban sprawl" enters tar picture, in detriment not only to the existing merchant whose sign failed its :snmmunication function, but also to the community at large. Concurrent with urban sprawl traceable to the economic forces of supply and a. -nand in a highly mobile, consumer -based society is urban deterioration, especially in ::-nn-al business districts or older commercial developments bypassed by new roadwny Whrn a hu1111"I , wmwc i, restricted to the point where it can no longrr adequately communicate with potential customers, either the business will slowly deteriorate in both appearance and taxable revenues or it will pick up and relocate to a more commercial and sign -friendly area—usually along a commercial corridor outside the reach of the local sign code.' In both cases, blight is the result. Thus, overly restrictive sign codes may lead inexorably to both urban sprawl and urban decay. in instances where a regressive sign code prevents retrofit of an existing storefront or a business's "trade dress," the opportunity for that business to succeed may also be foreclosed. One example of this is presented by the independent value -oriented motel or inexpensive, family-oriented restaurant. If the local sign code will not permit signage sufficient to gain the attention of the potential but unfamiliar customer, often the only recourse for the business is to enter the franchise system, which offers reinforcement of a sign's message through major media advertising, and projected increases in business of 20%-50%. However, the franchise package requires adaptation of signage to fit the corporate image and identification system. if the necessary retrofit or renovation is disallowed by the sign code, then municipal resource allocations are adversely impacted, as well as consumer preference for a communication device—the sign—that is both familiar and expected. Furthermore, prevention of the face-lift of a marginal building may increase the rate of its deterioration, thus contributing even more to the vicious cycle of urban flight -blight -sprawl. In addition to preserving, even enhancing existing commercial areas, optimum signage can address another problem often found within the district - that of the odd - shaped lot and the hard -to -find or "flag" lot. With a good signage program, these lots can attain the visibility required to attract customers; without such a program, these lots will remain under -productive or stagnant. To prevent sprawl, and maximize the use of land already zoned commercial, a progressive sign code is an essential partner in the planning and implementation process. The independent merchant relies heavily on distinctive signage to attract customers. A creative signage program Is necessary to compete with franchises and corporations. ' Often businesses relocate to the so-called "strip mall" generally found along major urban corridors. These malls are able to function profitably because they contain both commercial office and commercial retail facilities, thus providing a broad range of consumer options within a discrete area easily seen (via signage), and safely entered and exited. Although increasingly disliked by urban planners, who are actively seeking ways to cause their demise, these "malls" exist not only because of consumer demand, but also because the businesses within them could not competitively and successfully enter the marketplace anywhere else. 'w.roeaaRmi;« 11W ilnepo' Myth #7: Signs are of Little Value to the Community Ji� Concentration of commercial activities in commercial districts that are successful, vital and vibrant because of progressive codes that recognize the communication needs of both retailer and consumer would result in the release of 15% to 25% of urban space for other uses and activities. On the other hand, a restrictive sign code seldom equates As oppo"d to with intelligent use of urban space. small bus-iness rners, na t,onat The crux of the matter turns on deciding whether it is "smart growth" to forestall franccoe and the abiUty of commercial area or site to function "as zoned" b restricting chain corpora- y ng its ability to ,ns can readily effectively communicate with potential customers or clients, or it is "smart growth" to afford au the engage the commercial community in crafting sign regulations that will enhance commercial experts they communication, thus enabling successful functioning as zoned, to the cumulative benefit !ed to oa+;xin a of the whole community. The imperative choice is clearly, or should be, the latter choice. v ae^.a nce. Encouraging Local Business A city that values its independent local merchants and wants to help them compete -ill not be successful if the method it chooses is uniform restrictions on business sign ,�'pe, size, placement, copy, graphics and/or colors. Such regulations are actually inhospitable to the very businesses they seek to help. In nearly every case, the independent merchant cannot afford, or has limited access to, major media advertising which will lack up recognition of his or her "little" sign — even supposing the sign might be capable of detection by a passing motorist. If that merchant is forced to forego distinctive, custom signage, he or she will either tum to the franchise system, where major media advertising and signature trade dress are available, or not go into business at all. If he or she is already in business, the business may be so competitively disabled that it fails. As it becomes more apparent that oppressive sign codes have a detrimental effect on a town's business community, rather than fix the sign code, cities are increasingly relying on variances or exceptions, making decisions on a case by case basis. While this may seem fair, in reality it is just the opposite. Small business owners ("mom and pop," llimal sign regulations allow a zone to function properly. The trimermai zone to the right allows signage that enhances mmerGrar' activity, while the more residential zones below call more rrncdest sagnage. Mll are of Little Value to the Community if you will) generally lack the expertise or resources to successfully negotiate the variance permit process, either on their own or with the help of a legal expert. On the other hand, the national franchise and chain corporations know the drill very well, and can readily afford all the experts they need to obtain a variance. On -premise signs play a major role in the success of retailers and local economies, performing important identification, advertising, and wayfinding services, often simultaneously. As an advertising medium, signage can make or break a business' ability to compete. In considering the economic context of signs and their regulation, the job of all community stakeholders is to know what types, sizes, and numbers of signs work best for each business, in each business district, while remaining mindful of community character and ambience. The retail market is so sophisticated and varied, that a small business must have a fluid marketing strategy in order to meet the demand of the market. Marketing needs vary from business to business, and even from day to day. When limitations are placed on sign face changes or changeable copy signs, businesses are unable to vary their message without a properly to meet the needs and wants of consumers. designed and placed on -premise business sign, a In those areas that are zoned for commercial use, communities should strive to commercial site help the businesses that choose to locate there succeed. Residential aesthetics should cannot function at never be applied to commercial zones; at the same time, well -crafted signs that meet all its full economic legibility, readability, and conspicuity standards for safe viewing and response certainly potential ( d can be used to create a sense of place in central business districts, neighborhood commercial "highest and best B use"), blocks or corners, urban commercial corridors, entertainment centers, and tourist destinations. If a commercial area is zoned in such a way that it is meant to attract impulse buyers, then the sign code should allow businesses in that zone to use signage that encourages impulse buying. If it is zoned for a large shopping center, the code should allow the shopping center to have adequate signage so that the site functions fully as it is zoned. It makes no sense to create a business district and then refltse it the opportunity to visibly interact with those customers who are necessary to its prosperity by regulating its signs as though they will be located on a residential street. The reason is extremely obvious: commerce is a commercial activity. The reason zoning exists is to appropriately segregate various uses so that each may thrive. The courts have clarified speech protections for signage in several cases. in Greater Area Cleveland Board oj'Realtors u The City of Euclid, 88 F. 3d 382 (6'^ Cir. 1996), the Court blocked govemmental attempts to establish strict non -place and manner regulations on commercial expression or outright ban it, whether sign or other media, stating the government must find other ways to achieve its ends than censorship of speech. For instance, the government should not attempt to use speech restrictions to, in effect, rezone or down -zone a parcel of land. A governmental action should be directed against the land use zoning or discriminatory practice; it should not be a collateral attack on signs or speech, in the landmark case 44 Liquormart v. Rhode Island, (517 U.S. 484 (1996)), Rhode island attempted to prohibit the advertising of retail liquor prices except at the A very important partnership exists between retailers and a city. The primary principle of that partnership is for each to keep their partner in an optimal position so the two can help each other. When a city destroys the ability of the retailer to communicate, this violates the primary principle of the partnership. $2 billion of government revenues annually are generated through sales taxes on retail goods and services. If you consider the federal gasoline taxes, property taxes, inventory taxes, and other tares paid by business in this country, you find that the government profits nearly as much from retailing as the retailers themselves. When a city's severe limits on signage reduce its business's sales by 15% to 40%, it is not only curtailing the business opportunity of its partner, but also harming its own ability to serve the community. 10,y dZGr w*W, 1he COgns Myth #7: Signs aro of Little Value to the Community. The Bottom Line for all Community Stakeholders place of sale. The court said that you cannot outlaw truthful commercial speech through Too often business people and municipal regulators fail to recognize the depth, u sign code if you have a speech -neutral way to further your goats. breadth and complexity of the U.S, retail economy. As a result, in many cases sign codes We often see deterioration in the urban core as older main streets have been are developed without any sense that the censorship they have created is working contrary bypassed through the years and the businesses located there begin to fail. The only way to the needs of the community: w get tourists into those areas is through signage. In addition, creative on -premise signage often keeps local income in town, by informing and attracting consumers who • they compromise safety by limiting readability and conspicuity so drivers have live and work there. little time to read and react with proper care, In the modem marketplace, the right place -based advertising will effectively and • they manipulate business strategies in a way that gives preference to one retailer economically permit the local shopkeeper to successfully compete, even with the mass over another, even if not intended, and merchandiser or big box retailer. Without a properly designed and placed on -premise • theycause the deterioration of business districts by underminingthe signs'ability business sign, a commercial site cannot function at its full economic potential (or in to attract customers, resulting in the very blight the aesthetics -driven code was to signage valuation terms, the site cannot reach its "highest and best use"). prevent. The shortsightedness of many regulatory efforts leads to discrimination. Too often, if faced with a sign or signs which every reasonable person can agree Limitations on face changes for on -premise signs, for example, are discriminatory because degrade the streetscape, a municipality enacts a new, and generally oppressive, sign code, off -premise signs are allowed to change faces as often as they find a new customer who when a simpler solution exists: enforce the sign code already in place. A preliminary step wants to advertise there. No community benefit can be demonstrated from such a police. in the process would be to identify "offending" signs by preparing an inventory of all and in fact, such laws are clearly based on content. Awnings, freestanding signs, projecting signs in the jurisdiction. At least one state — California - now requires an inventory signs, wall -mounted signs, and roof signs are regulated, while signature buildings or before a new code can even be considered, let alone implemented and enforced. entire store fronts are not. This oversight leads to inequitable sign codes that hamper the small, independent business community's ability to communicate on a level that allows The pre rnary competition with the larger chains and franchises. principal of the partnership t"t'" Creating a Steady Tax Base ^etailers and a airy is for each to keep their The economic well-being of many communities depends to a significant degree partner in an .on the success of their commercial districts. Retail and service businesses provide jobs ,p�ttmal position and income for residents. Commercial districts also contribute to property and sales tax sm the two can bases which translate to stable revenues for the local government from a source other ,eov each anter. than residential property taxes, helping to reduce or steady homeowners' tax bills. Consequently, business decision makers and government regulators should seek to have a basic understanding of advertising and marketing, in the context of the United States economy. A very important partnership exists between retailers and a city. The primary principle of that partnership is for each to keep their partner in an optimal position so the two can help each other. When a city destroys the ability of the retailer to communicate, this violates the primary principle of the partnership. $2 billion of government revenues annually are generated through sales taxes on retail goods and services. If you consider the federal gasoline taxes, property taxes, inventory taxes, and other tares paid by business in this country, you find that the government profits nearly as much from retailing as the retailers themselves. When a city's severe limits on signage reduce its business's sales by 15% to 40%, it is not only curtailing the business opportunity of its partner, but also harming its own ability to serve the community. 10,y dZGr w*W, 1he COgns Myth #7: Signs aro of Little Value to the Community. The Bottom Line for all Community Stakeholders Too often business people and municipal regulators fail to recognize the depth, breadth and complexity of the U.S, retail economy. As a result, in many cases sign codes are developed without any sense that the censorship they have created is working contrary Too often, a to the needs of the community: municipality enacts a new, • they compromise safety by limiting readability and conspicuity so drivers have and generally oppressive, sign little time to read and react with proper care, code, when a • they manipulate business strategies in a way that gives preference to one retailer simpler solution over another, even if not intended, and exists: enforce • theycause the deterioration of business districts by underminingthe signs'ability the sign code already in place. to attract customers, resulting in the very blight the aesthetics -driven code was to prevent. Too often, if faced with a sign or signs which every reasonable person can agree degrade the streetscape, a municipality enacts a new, and generally oppressive, sign code, when a simpler solution exists: enforce the sign code already in place. A preliminary step in the process would be to identify "offending" signs by preparing an inventory of all signs in the jurisdiction. At least one state — California - now requires an inventory before a new code can even be considered, let alone implemented and enforced. Once the inventory is complete and the obviously illegal signs identified, the town can then determine whether these signs can be brought to an acceptable level of conformance through enforcement. If they can, the problem is resolved. If they can't, or if the inventory discloses a significant number of illegal signs, then the community should consider an overhaul of the code. However, as part of the new code process, extensive meaningful public hearings should be held, with testimony from affected business owners, traffic engineers, market researchers, architects, attomeys, economists, sign trade and business organization representatives, professors teaching in the field, and any others with special knowledge or expertise who can shed light on the complex signage issues then at hand. Signage can help revitalize an urban core by guiding customers into the area. Downtown businesses that are allowed to use attractive signage see increases in business that allow them to restore decaying buildings and bring new life to an aging business district. 1 Anderson, Raymond T. 1983. The Economic Values of On -Premise Signs. Alexandria, Va.: National Electric Sign Association. Arthur, Paul and Romedi Passini. 1992. Wayftnding: People, Signs, and Architecture. New York: McGraw-Hill Book Company. Brown, Jacqueline J., 1988. Mission Valley Automobile Dealers' Marketing Research Project, in The Economic Value of Signage. California Electric Sign Association and International Sign Association, 1997. California Electric Sign Association (CESA) and the International Sign Association. 1997. The Economic Value of On -Premise Signage. Claus, R. James and Susan L. Claus, July 2001. Marketing Aid .W 12, Signs: Showcasing Your Business on the Street: The Importance of Signage for Your Business. Washington, D.C.: U.S. Small Business Administration (SBA Auth.No. 00-7630-43). Claus, R. James and Susan L. Claus and Thomas A. Claus, October 2001. The Value of Signs: A Guide for Property Appraisers, Real Estate Brokers, Legal Professionals, Sign Users and Municipal Land Use Planners. Alexandria, VA: the International Sign Association. Ellis, Seth R. and Robert Johnson. 1997. `Research on Signage Performance." In The Economic Value of Signage. Prepared for the Sign Guidelines Committee of the California Electric Sign Association and International Sign Association. Hyder, Zakia. 1998. "Defeating a Sign Code." Signs of the Tunes, Volume 220, No. 5. April Jones, Ken and Jim Simmons. 1990. The Retail Environment. Routledge: New York. Peterson, Robert A. ed. 1992. The Future of U.S. Retailing. New York: Quorum Books. U.S. Department of Transportation, Federal Highway Administration. 1988. Manual on Uniform Traffic Control Devices for Streets and Highways. Pittsburgh, Pa.: U.S. Government Printing Office. U.S. Small Business Administration, Office of Business Initiatives and The Signage Foundation for Communication Excellence, Inc. 2000, World Wide Websire address: http://Sba.gov/starting/signage. Washington, D.C. (SBA Auth No. 00-763043). Wolf, Richard. 1997. Senior Counsel, Cendant Corporation. Presentation at a forum on signage and First Amendment issues. Cleveland, Ohio, July 25. Ziccardi, Donald with David Moin. 1997. Masterminding the Store. New York: John Wiley & Sons, Inc. 7Lmntct 1if the CG thr 4AW Ct yw References GKD'TRAVEL y/16102 Complete Travel Services, Domestic & International January 6, 2002 Mayor Judie Hammerstad City Hall 380 A Avenue, P.O. Box 369 Lake Oswego, OR 97034 Dear Mayor Hammerstad, With this letter I am enclosing a copy of an earlier letter that I sent to the city planning department relative to our pole sign. Ramsay Sign Company, from whom we lease our sign, requested a variance to allow the pole sign to remain in place. The planning department indicates that it should be replaced with a monument sign. The variance request was denied. To support the denial the planning department did a study accompanied by photographs taken from both the ground and the air. The showed in an aerial photo how they felt our street front parking should work. They included photos of a variety of monument signs already in place on Boones Ferry Road. They also took photos of the parking area in the rear of the building, We receive deliveries from UPS, FED -EX, and Airborne nearly every day. They all use large vans. With the clearance we have in front of our building they can pull in one driveway and go out the other. The flow through traffic works well. With the planning department's proposed monument sign they, and our customers, would have to pull up in front of the building and upon exiting would have to back out into the heavy traffic on Boones Ferry Road. If you have daily experience with Boones Ferry Road traffic you understand that backing into that traffic is not a very practical thing to have to do. As for the monument signs up and down Boones Ferry Road, my first reaction when I saw the pictures was that I would not want to have to depend on those signs to locate a business. With just one exception they serve no useful purpose. They are either very difficult or impossible to see from a moving automobile. 15835 S.W. Boones Ferry Rd. • P.O. Box 1169 • Lake Oswego, OR 97035 (503) 635-7766 • FAX (503) 635-7781 • www.gktravel.cont Internollonal Airlines Ilovel AgenNeIw wv Nelwolk e Regarding the parking at the rear of the building, whoever was out here taking photographs, did not park on our property. They must have used the post office parking lot next door, which we cannot do. The also took shots from angles that make the parking area appear larger than it actually is. They came and took photos at a time when there were only two cars in back and one on the side. When we have a full staff in the building we have eight cars to deal with. There is barely enough room in back to allow parking and turning around to go in and out, so we usually have a couple of our employees park at one end of the space in front. I fully understand that the folks in the planning department are doing their utmost to uphold city ordinances and I respect them for it. However, rather than have someone come out here and snap photos and leave without a word I respectfully request that you send someone out who will walk on the property and talk with us. The management at Ramsay Sign has informed us that they are going to file an appeal to the variance denial, but since our livelihood is at stake here we want to be sure that all possible considerations will be made before the appeal is heard. I read the article in the December 27"' issue of the Oregonian about Joshua Thomas, the new citizen information coordinator for Lake Oswego. The article stated that he wants to seek out small business owners who have problems with the city. This could be a situation in which he would have an interest. Please have him or someone from your office come out and do the review that we are requesting. We look forward to hearing from you at your earliest convenience. Sincerely, W. H. Gillison Co -Owner 9.1.1 04/16/02 CITY OF LAKE OSWEGO AGENDA REPORT SUMMARY MEETING DATE: April 16, 2002 SUBJECT: Authorize the City Manager to execute an amendment to a personal services contract with MWH Americas, Inc. in the amount of $145,900 to provide additional design and construction management services for Clackamas River Intake Fish Screen Modifications (Work Order 1144). RECOMMENDED MOTION: Authorize the City Manager to execute an amendment to a personal services contract with MWH Americas, Inc. in the amount of $145,900 to provide additional design and construction management services for Clackamas River Intake Fish Screen Modifications. EST. FISCAL IMPACT: $145,900 ATTACHMENTS: NOTICED (Date): Komarek Council Report dated 3/29/02. STAFF COST: Ordinance no.: BUDGETED: Resolution no.: — _---- Y X N Previous Council FUNDING SOURCE: consideration: February 20, 2001 Water Fund Cif ENGINEER COMM. DEV. DIRECTOR CITY PfANAGER 3/0 A Date — 4' /c:> z_ Date H:\JOF.i.-K\wn\ Wo_.11441ntakeScreon\age nda_checkliet•M W Hpere_contr_Amend4.doc Date 3 OZ 33 CITY OF LAKE OSWEGO COUNCIL REPORT TO: Douglas J. Schmitz, City Manager FROM: Joel B. Komarek, P.E., City Engineer SUBJECT: Recommendation for executing an amendment to a personal services contract with MWH Americas, Inc. to provide additional design and construction management services for Clackamas River Intake Fish Screen Modifications. DATE: March 29, 2002 Action The Council is requested to authorize the City Manager to execute an amendment to a personal services contract with MWH Americas, Inc. in the amount of $145,900 to provide additional design and construction management services for Clackamas River Intake Fish Screen Modifications. Introduction Pursuant to Section 2.03.C.5 of the City's Contracting and Purchasing Procedures, amendments to major personal services contracts in excess of $50,000 must be approved by the City Council. Background At its February 20, 2001 regular council meeting, the City Council of the City of Lake Oswego awarded a personal services contract to Montgomery Watson/Harza, Inc. (now MWH Americas, Inc.) to provide engineering design and permitting services for the City's Clackamas River Intake Fish Screen Modifications project. Award of this contract was the last step in a solicitation/selection process that included issuing Requests for Proposals, proposal evaluation by a team of engineering staff and interviewing those firms short listed from the teams review and evaluation of proposals received. (See Exhibit `A' attached to this report for additional project background.) 35 Council Report Page 2 of 2 Discussion Because our project is the first of its kind in the Portland Metropolitan region, significant uncertainty existed with regard to how Federal and State regulatory agencies would evaluate this project and under what provisions of the Endangered Species Act (ESA) this project would be permitted. In the best case, informal consultation with National Marine Fisheries Service (NMFS) under Section 7 of the ESA could mean only a six-month review process. In the worst case, an evaluation under Section 10 could have required the City to prepare a Habitat Conservation Plan (HCP), which is a multi-year process. Because of this uncertainty, the personal service contract awarded February 20, 2001 by Council did not include engineering fees to provide construction management services. Since that time, NMFS has determined this project can be permitted using the Section 7 process and based upon recent conversations with their staff, we fully expect to have permits in hand in early May thus paving the way for the project to be started and completed by August 31, 2002. Because of the complexity of this project and limited in-house staff availability during the summer construction season, engineering staff requested and received a proposal from MWH Americas, Inc. to provide construction management services. A review of their proposed scope of services and associated costs appeared reasonable and therefore, were accepted. Alternatives The alternatives are to: 1) authorize the City Manager to execute a personal services contract amendment with MWH Americas, Inc. in the amount of $145,900; 2) do not authorize the City Manager to execute a personal services contract amendment with MWH Americas, Inc. in the amount of $145,900, or 3) remove from the consent agenda and discuss. A review of year-to-date expenditures indicate that the project budget for the current fiscal year will support this additional expense. Funds to support engineering expenses incurred after July 1 are contingent upon adoption of the FY 02/03 budget. Conclusion Based upon the foregoing discussion, staff recommends that the City Council authorize the City Manager to execute a personal services contract amendment with MWH Americas, Inc. in the amount of $145,900. Attachments: Exhibit `A' February 13, 2001 Council Report. 1]:JOEL_K\wo\Wo_11441ntakeScreen1,cnc1rpt_M WI I_amenM.doc 36 a EXHIBIT As CITY OF LAKE OSWEGO COUNCIL REPORT TO: Douglas J. Schmitz, City Manager FROM: Mark Schoening, P.E., City Engineer/AK PREPARED BY: Joel B. Komarek, P.E., Assistant City Engineer?6,e— SUBJECT: Recommendation for Award of a Professional Services Contract for Design and Permitting Services for Clackamas River Intake Fish Screen Modifications. DATE: February 13, 2001 Action The Council is requested to award a Professional Services Contract to Montgomery Watson/Harza, Inc. in the amount of $209,700 for providing engineering design and permitting services for the Clackamas River Intake Fish Screen Modifications. Introduction This contract requires Council award in order to comply with City and State contracting and purchasing procedures. Background In 1967, the City of Lake Oswego constructed an intake facility on the Clackamas River as part of the development of its new water supply system. At the time of its construction, the intake facility exhibited features accepted at that time as being state of the art. Mechanical screens located just behind an opening on the river side of the structure prevented debris from being sucked into the pumps and provided limited protection to migratory anadromous fish species. Since then, a better understanding of fish biomechanics at various life stages has identified that improperly screened diversions may have a detrimental impact on the survival of salmonids in their early life stages. With the recent listings of Coho, Steelhead and Chinook as threatened mid endangered in the Clackamas River and subsequent promulgation of the 4(d) Rules "take Council Report February 13, 2001 Page 2 of 3 prohibitions" under the Endangered Species Act (ESA), the need to retrofit our intake structure with fish screens that comply with current fish screen design criteria became apparent. Based upon a review of the take prohibitions and potential liabilities of non-compliance with the 4(d) rules, the City's legal department recommended the City proceed quickly with modifications to the structure necessary to achieve compliance with the ESA. In response to this recommendation, the engineering department developed a scope of work and Request for Proposals. Proposals were solicited from four engineering consulting firms known to have expertise in engineering design, fisheries biology and biomechanics and permitting public works projects under the Endangered Species Act (ESA) 4(d) rules. Three proposals were received on January 19, 2001 and evaluated by a three-member team of City engineering staff. Each proposal was evaluated against a predetermined set of criteria and each was found to be generally responsive to the Request for Proposals. Interviews with the three consulting firms were conducted on February 1, 2001. The interview provided each consulting firm the opportunity to describe their respective project approaches in more depth. In each proposal and during the interview, similarities between the proposing firms were evident. However, there were marked differences between the proposing firms' understanding of the local regulatory environment, its players and strategies for securing permit approvals for the project. Neither the proposal nor the interview of the team of Carollo Engineer's/FishPro demonstrated a thorough knowledge of the local regulatory agencies, their permitting protocols or permit procurement timelines. In addition, strategies to successfully secure all necessary permits and obtain a favorable biological opinion for the project were absent. While the proposal fee of Carollo/FishPro was lowest, it clearly reflected an inadequate understanding of the complexities of the project. The proposal prepared by the team of Murray, Smith & Associates, Inc. and CH2M-HILL demonstrated a thorough knowledge of the local regulatory community and its players. However, in both the proposal and interview this team demonstrated a preconceived notion that the project could not be completed until the summer of 2003 and that possibilities to permit the project for withdrawals in excess of the current 16 million gallons per day were unlikely. In contrast, the firm of Montgomery Watson/Harza displayed a much clearer understanding of the regulatory permit criteria the City's project would be evaluated against, agency staff who would be directly involved in reviewing the City's permit applications and permit timelines. In addition, the firm of MWH developed a detailed project schedule, which indicated the project could be constructed by August 31, 2002. Strategies to expedite permitting and construction timelines were also identified as well as different design concepts, which considered the City's desire to exercise a variety of options concerning its long-term water supply needs. H JOEL K\wo\Wo_11441n1akc3arcn\cnclryhMWawn1Joc Council Report February 13, 2001 Page 3 of 3 For these reasons, it appeared to the selection committee that the firm of Montgomery Watson/Harza, Inc. would provide the best service to the City. The proposing firms and their estimated fees are shown below: Firm Name Proposal Fee Montgomery Watson/Harza, Inc. $209,700 Carollo Engineers, Inc. $182,800 Murray, Smith & Associates, Inc. $223,500 Alternatives The alternatives are to 1) award the contract, 2) do not award contract, or 3) remove from consent agenda and discuss. Conclusion Staff recommends that Council award the contract to Montgomery Watson/Harza, Inc., in the amount of $209,700. H'JOBL K\wo\Wo_I144intnkeScreen\cncltpt-MWawrddoc 9.1.2 04/16/02 CITY OF LAKE OSWEGO AGENDA REPORT SUMMARY MEETING DATE: April 16, 2002 SUBJECT: Award a Construction Manager/General Contractor (CM/GC) construction phase contract to Natt McDougall Company in the amount of $1,288,978 for the Clackamas River Intake Fish Screen Modifications project (Work Order 1144). RECOMMENDED MOTION: Award a Construction Manager/General Contractor (CM/GC) construction phase contract to Natt McDougall Company in the amount of $1,288,978 for the Clackamas River Intake Fish Screen Modifications project (Work Order 1144). EST. FISCAL ATTACHMENTS: NOTICED (Date): IMPACT: $1,288,978 • Komarek Council Report - - -- --- dated 4;05/02. STAFF COST: Ordinance no.: BUDGETED: Resolution no.: Y X N Previous Council FUNDING SOURCE: consideration: -_August 7, 2001 Water Fund 3CIT ENGINE -ERS 4f Date CO DEV. DIRECTOR "t P oz Date li`-.JOEL K\—\W,, 11441ntaY.r�rv'�•n�nyndn_rhk_f'Md7C CMP_ron.h'urtinnyluter.(N. CITY NI! , .GER I. Date 41 CITY OF LAKE OSWEGO COUNCIL REPORT TO: Douglas J. Schmitz, City Manager FROM: Joel B. Komarek, P.E., City Enginee,?.6y-' SUBJECT: Award of Construction Manager/General Contractor (CM/GC) Construction Phase Contract to Natt McDougall Company in the amount of $1,288,978 for Clackamas River Intake Fish Screen Modifications. DATE: April 5, 2002 Action The Council is requested to award a Construction Manager/General Contractor (CM/GC) construction phase contract to Natt McDougall Company in the amount of $1,288,978 for Clackamas River Intake Fish Screen Modifications project. Introduction The City's public contracting procedures and Oregon State contracting and purchasing statutes allow public agencies to use alternative contract procurement processes when such alternative processes can be shown to provide substantial public benefit in terms of cost and quality of the constructed work. One of these alternative processes is the CM/GC type contract for construction of public improvements. On August 7, 2001 the City Council awarded a CM/GC contract to the Natt McDougall Company (NMC) related to the construction of improvements to the City's water supply intake facility. The language of the motion the Council approved reads as follows: "Move to Award a Construction Manager/General Contractor (CM/GC) contract fur the Clackamas River Intake Fish Screen Modifications prR1ect to Nutt McDougall Company in the amount of $24,860 (preconstruction phase) and authorization of the Public Contracting Officer to negotiate a guaranteed maximum price (GMP) and erecute a contract for construction phase services. Discussion Since the August 7 Council award, the City, its engineering consultant and the NMC have been partnering in the permitting and design phases of this project. The permit application was submitted to the Corps of Engineers/Division of State Lands and National Marine Fisheries Service in early February and recent correspondence with the agencies indicates the City's project will be approved late this month. With permit in hand, the construction phase of the project can proceed. 43 Council Report Page 2 of 3 A final task of the preconstruction phase contract is negotiation of a Guaranteed Maximum Price (GMP) for construction of the improvements based upon 95% complete plans and specifications. The preconstruction phase contract established strict procedures for the CM/GC contractor to follow to ensure competition among sub -bidders for any work not self -performed and for the GMP development process itself. The NMC has complied with these procedures and on March 21, 2002 submitted its preliminary GMP. Pursuant to the preconstruction phase contract, both City engineering staff and its design consultant reviewed and commented on the preliminary GMP. On April 2, the NMC submitted a revised GMP for review. In response to the City's comments, the NMC reduced the overall GMP by $138,137. Presented below is a breakdown of this amount for the preliminary and final GMP: Preliminary GMP Final GMP Direct Costs (DC) $1,134,461 $1,053,850 Indirect Costs: (IDC) Project Overhead $117,538 $86,140 Contingency @ 3% of DC $45,378 $31,808 Sub -total IDC's $162,916 $117,948 March 21 GMP April 2 GMP Sum DC's + IDC's $1,297,377 $1,171,798 CM/GC Fee @ 10% $129,738 $117,180 Total GMP $1,427,115 $1,288,978 Budget Impacts Engineering staff originally set a budget of $1.6 million -dollars for this project. With the above GMP amount and including consultant and staff costs, the estimated budget need is $1,713,478. The original budget amount would have been sufficient for the project scope as originally envisioned but early in the pre -design phase, a detailed geotechnical reconnaissance, revealed that the intake structure was founded on highly weathered soils and that the structure would likely suffer irreparable damage during an earthquake. It was decided that seismic strengthening of the structure during the fish screen work, was the last, best opportunity to complete this work and therefore, it was incorporated into the project scope. The additional work added about $150,000 to the original project cost. However, due to the excellent bidding climate the City has enjoyed over the last several years, the water fund capital budget can absorb this additional cost and the proposed FY 02/03 water fund capital budget reflects this. Alternatives The alternatives are to: 1) award a CM/GC construction phase contract to the Natt McDougall Company for a guaranteed maximum price (GMP) of $1,288,978 for construction of Clackamas River Intake Fish Screen Modifications project, or 2) remove from the consent agenda and discuss prior to award. 44 Council Report Page 3 of 3 Conclusion The CM/GC partnership with the Natt McDougall Company has provided significant value to the City on this regulatory driven project. Project costs for the original scope of work are well within original budget estimates and sufficient additional funds are being budgeted for FY 02/03 to cover the additional costs of providing seismic upgrades for this irreplaceable component of the City's water supply system. All provisions of the preconstruction phase contract concerning competitive bidding for subcontracted work have been complied with and the GMP has been negotiated to the satisfaction of the City. Based upon the above, staff recommends award of a CM/GC contract to Natt McDougall Company for a GMP of $1,288,978 for construction phase services. NV08L K\wo\Wo_IIMIInInktScrccn\Cncirpl_CM•GC GMPAwuddtx 9.1.3 CITY OF LAKE OSWEGO AGENDA REPORT SUMMARY MEETING DATE: April 16, 2002 SUBJECT: Resolution of the City Council of the City of Lake Oswego Authorizing the Mayor to Sign an Intergovernmental Agreement between the City of Lake Oswego (City) and Clean Water Services (CWS) for the Tualatin Basin Floodplain Restudy. RECOMMENDED MOTION: Move to adopt Resolution 02-22 authorizing the Mayor to sign an Intergovernmental Agreement between the City of Lake Oswego (City) and Clean Water Services (CWS) for the Tualatin Basin Floodplain Restudy. EST. FISCAL ATTACHMENTS: NOTICED (Date): IMPACT: w Komarek Council Report ---- -- - -- ------ $29,600 dated April 10, 2002. STAFF COST: 0Resolution 02-22 Ordinance no.: BUDGETED: Resolution no.: 02-22 - — Y X N Previous Council FUNDING SOURCE: consideration: No Surface Water Management Fund `— . i + Y ENGINEER ¢Z1a/a 2 -- Date Date Pf:\.IOEI.,-N\Cmmcil\Fema-renmp agenda checkhat.dnc COMM. DEV. DIRECTOR _4Z a LC .4, Date CITY MA6,1fGER i� 02 Date 4'1 CITY OF LAKE OSWEGO COUNCIL REPORT TO: Douglas J. Schmitz, City Manager FROM: Joel Komarek, P.E., City Engineer KOIL-- SUBJECT: Intergovernmental Agreement for the Tualatin Basin Floodplain Restudy. DATE: April 10, 2002 Action Staff requests the City Council to adopt Resolution 02-22 authorizing the Mayor to sign an Intergovernmental Agreement between the City of Lake Oswego (City) and Clean Water Services (CWS) for the Tualatin River Basin floodplain analysis and floodway mapping update. Introduction Two important and parallel efforts are currently underway related to floodplains located within the City's Urban Services Boundary. These efforts are: v FEMA/CWS Floodplain Analysis and Remapping - In May 2000, FEMA and CWS jointly agreed to manage and fund an analysis and remapping effort of the floodplain for the Tualatin River Basin. Last year, Congress appropriated $32 million dollars to initiate FEMA's Flood Map Modernization plan, which FEMA estimates will cost more than $100 million per year for the next 7 years. With the recent appropriation of federal funds, FEMA and CWS received $390,000 to undertake the joint remapping effort. During the 1996 flood event, many properties located along the Oswego Lake canal and surrounding the topographic depression along Sycamore Avenue north of Childs Road (Rivergrove Gap) suffered flood related damage. At the City's request, CWS and FEMA agreed to include the Rivergrove Gap and the entire length of the Oswego Lake main canal within the project study area. The IGA between the City and CWS will establish Lake Oswego's share of participatory costs, expand the study area to include areas of interest to City, establish the study period and prescribe project deliverables r Floodplain Standards Amendments - Title 3 of the Metro Urban Growth Management Functional Plan, sets minimum performance standards for local governments related to the protection of property located within federally designated Special Flood Hazard Areas (SFHA). To ensure consistency with Title 3, the City of Lake Oswego's Planning Commission is currently considering amendments to the City's floodplain standards. The proposed amendments, if adopted, will modify the City's current floodplain development standards, which were codified in 1987 shortly ager FEMA completed its first Flood Insurance Study (FIS) in 1986. 4 �i Council Report Page 2 of 4 Background In 1986,.FEMA concluded a decade long study to investigate the existence and severity of flood hazards in communities nationwide, including the City of Lake Oswego. The study results were used to develop Flood Insurance Rate Maps (FIRM) that delineated Special Flood Hazard Areas (SFHA). Properties located within a SFHA, are eligible to purchase federally subsidized flood insurance at or below actuarial rates. Lenders require such insurance when financing properties located in a SFHA. Real estate located within a SFHA is subject to minimum floodplain management requirements for communities participating in the National Flood Insurance Program (NFIP). Portions of most properties that border Oswego Lake, West Bay, Lakewood Bay, Oswego Canal, Blue Heron Canal, the Tualatin and Willamette Rivers are located within the SFHA. Recent amendments to Statewide Planning Goal 7 require local governments to participate in the NFIP. As a Participating Community, the City's current floodplain standards reflect the federal regulations set forth in the Code of Federal Regulations — Title 44. Discussion The two projects described in the introduction section of this report share commonalities of purpose, yet each is distinct in its respective scope of work. Commonalities include: ✓ Each share a common "driver"; that being the flood event of 1996. ✓ Each acknowledges that existing FIRM's do not account for new development patterns, zoning and additional impervious area added to the basin since 1986. ✓ Each acknowledges that base flood elevations shown on the FIRM's do not reflect flood elevations observed and recorded during the 1996 flood event. ✓ Each seeks as an end product, a set of updated, digital floodplain maps that reflect current jurisdictional boundaries, the floodway elevation datum relative to the '96 flood and accurate topographic features. While the two projects currently underway share some common objectives, their respective goals exhibit some differences. These differences include: PEMA/CWS Restudy: ✓ The purpose of the Oswego Canal and Rivergrove Gap floodplain -mapping project is to complete the engineering and surveying necessary to create a FIS submittal package for review by FEMA. The updated FIS could be used by FEMA to generate updated FIRM's for the Tualatin River Basin including the Oswego Canal and Rivergrove Gap. ✓ The FIS submittal package to FEMA would be science based and adhere to strict study specifications enforced by FEMA. ✓ The maps produced from the study effort will be the property of FEMA, who will distribute and regulate their use. Floodplain Standards — Amendment Process: ✓ The purpose of the Floodplain Standards amendment process is to define a Flood Management Area (FMA) that is subject to an amended Flood Management Area Ordinance. The City's existing ordinance would be amended to be consistent with Statewide Planning Goal 7, Metro's Title 3 requirements and CFR Title 44. J (1 Council Report Page 3 of 4 ✓ In contrast to the FEMA/CWS restudy, the FMA and related standards are being developed in a collaborative public process involving citizen and agency stakeholders. No rigorous scientific or hydraulic analysis is contained within the scope of work to develop the FMA. The FMA process simply overlays the 1987 FEMA maps with the base flood boundary observed and recorded during the 1996 flood. Impact of Respective Study Efforts Benefits for each effort include: ✓ Development of new digital maps with current topography, jurisdictional boundary's and flood a elevation datum relative to the 1996 flood. ✓ Accurate flood maps can help reduce the risk to citizens and property by providing the necessary tools to help cities make informed decisions about development. ✓ Floodplain maps assist local officials in determining where to locate critical facilities, evacuation routes and natural resource management. ✓ LOC 50.44.035 requires a registered professional engineer or surveyor to submit a survey documenting the 100 -year flood boundary as part of the pre -application process for development proposed within the floodplain. New, accurate maps may allow some property owners to avoid the expense of a survey. ✓ New, accurate maps will confirm the need for certain property owners to purchase or maintain flood insurance. It may also indicate that certain owners do not need flood insurance. ✓ This FEMA/CWS study and the associated maps will be valuable tools that are used on a daily basis to provide guidance for community development and important decision-making information to staff, current and potential homeowners, realtors, insurance companies, and developers. ✓ Land use decisions based upon the 1987 FIRM's may increase the risk of exposure to legal action as a result of post decision flood related property damage. Decisions based upon the use of more accurate maps may reduce this risk. Potential Liabilities for each effort include: ✓ The FEMA/CWS remapping effort will likely confirm that new, upstream development since 1986 has translated into an increase in the base flood elevation along the Tualatin River and Oswego Canal. The increased flood elevations may mean more properties are subject to floodplain regulations. ✓ Absent removal of existing non -conforming structures located within the floodplain, FEMA may deny coverage to those properties or alternatively, increase flood insurance rates. Conclusion The FEMA/CWS remapping effort for the Tualatin River Basin is currently underway and will continue with or without the inclusion of the Oswego Canal and Rivergrove Gap in the study area. The similarities/differences and benefits/liabilities of each of the City's floodplain related projects have been noted above. These efforts appear consistent with the current administration's goal of facilitating mapping modernization efforts between local governments and FEMA and the National League of Cities position in support of pre -disaster mitigation. 11 J0G1. KWouna1kFemn remnp_COUNCRPTdoc 51 Council Report Page 4 of 4 Recommendation Based upon the foregoing, it is staff s recommendation that the City Council support modernization of floodplain maps and authorize the Mayor to sign an Intergovernmental Agreement between the City of Lake Oswego (City) and Clean Water Services (CWS) for the Tualatin Basin Floodplain Restudy. Alternatives 1.) Adopt Resolution 02-22 authorizing the Mayor to sign an Intergovernmental Agreement between the City of Lake Oswego (City) and Clean Water Services (CWS) for the Tualatin Basin Floodplain Restudy. 2.) Do not adopt Resolution 02-22 authorizing the Mayor to sign an Intergovernmental Agreement between the City of Lake Oswego (City) and Clean Water Services (CWS) for the Tualatin Basin Floodplain Restudy. Glossary of Terms Base flood elevation: -11w 1w base flood elevation (or 100 -year flood) is the flood surface water elevation from a flood event, which has a 1% chance of being equaled or exceeded in any given year. Floodplain: - The elevation reached by floodwaters. In this community the term may be applied either to base flood elevations as mapped by FEMA, or 1996 flood elevations, which are generally regarded as considerably above the 100 -year base flood elevation. Floodway: - The portion of the floodplain where floodwaters move fastest and where risks to life or property are the greatest. The floodway is the channel of a stream plus any adjacent floodplain areas that must be kept free of encroachment so that the 1% annual chance flood can be carried without substantial increase in flood elevations. Special Flood Hazard Area: - The area subject to flooding by the 1% annual chance flood. J- H JOP.L_KWuuncihFena_r mnp_C0VNCRYT.doc RESOLUTION 02-22 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE OSWEGO AUTHORIZING THE MAYOR TO SIGN AN INTERGOVERNMENTAL AGREEMENT BETWEEN CLEAN WATER SERVICES (CWS) AND THE CITY OF LAKE OSWEGO (CITY) FOR THE TUALATIN BASIN FLOODPLAIN RESTUDY. WHEREAS, the parties hereto have the authority to enter into this Agreement pursuant to their respective principal acts and ORS 190.003 et seq.; and WHEREAS; the City is a participating Community in the National Flood Insurance Program (NFIP); and WHEREAS; the City is responsible for flood management in the Tualatin River system within its jurisdiction; and WHEREAS; many of the properties under City jurisdiction, located in the Dogwood/Sycamore Road(s) area and properties abutting the Oswego Canal are situated within the Federal Emergency Management Agency (FEMA) designated floodplain; and WHEREAS; many of said properties experienced flooding in February of 1996; and WHEREAS; CWS is registered as a Cooperating Technical Partner (CTP) with FEMA for the purpose of remodeling and remapping the floodway and floodplain of selected Tualatin Basin streams and sections of the Tualatin River; and WHEREAS; CWS has entered into Memorandum of Agreement with FEMA to complete hydrologic and hydraulic analysis and floodplain mapping for the Tualatin River and major tributary streams; and WHEREAS; the results of this remapping effort will benefit the City in assessing community safety as it relates to potential future flooding events; and WHEREAS, the parties desire to enter into this Agreement, in the interest of furthering economy and efficiency of local government and agree to reimburse CWS's payments for services performed on behalf of the parties; 53 NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lake Oswego authorizes the Mayor to sign the attached Intergovernmental Agreement, confirming its intent to join efforts with Clean Water Services for the Tualatin Basin Floodplain Restudy Considered and enacted by the City Council of the City of Lake Oswego at a regular meeting held on the day of April 2002. AYES: NOES: ABSTAIN: EXCUSED: Judie Hammerstad, Mayor ATTEST: Robyn Christie, City Recorder APPJOVED AS TO yo City Attorney Attachment: Intergovernmental Agreement Attachments are available for review in the City Recorder's Office. ?.c:olution 02-22 54 9.1.4 CITY OF LAKE OSWEGO 04/16/02 AGENDA REPORT SUMMARY MEETING DATE: April 16, 2002 SUBJECT: Completion of Infill Development Task Force RECOMMENDED MOTION: Authorize the City Manager to execute a contract extension with the University of Oregon for up to $14,000 for the consulting services of Ron Kellett in regard to the Infill Task Force. ESTIMATED FISCAL ATTACHMENTS: IMPACT: • Schmitz memo of April 12, 2002 • Lashbrook memo of STAFF COST: $ April 11, 2002 BUDGETED: Y N FUNDING SOURCE: DEPARTMENT DIRECTOR signoff/date N:\AGENDAS\C0UNCII,\2002\E Heports\infill cover.doe NOTICED (Date): Ordinance no.: Resolution no.: Previous Council consideration: April 9, 2002 n �- C:-)%� 0 Z- signoff/date CITY MANAGER'S OFFICE TO: Judie Hammerstad, Mayor Members of the City Council FROM: Douglas J. Schmitz, City Manager' SUBJECT: Infill Task Force DATE: 12 April 2002 BACKGROUND MEMORANDUM At the conclusion of Tuesday's study session, 9 April, the Council asked staff whether or not monies would be available to extend the consulting contract with the University of Oregon for Mr. Ron Kellett's services. The preparation, consideration and adoption of infill ordinances is one of the City Council's goals for calendar year 2002. As noted in the attached memo from Stephan Lashbrook, Community Development Director, the interim ordinances regarding the height of new homes in certain neighborhoods expires in January 2003, thus providing impetus to complete the infill report preparation and adoption of the ordinances by the first of December, so that the ordinances will take effect in January 2003. For the current fiscal year 2001-02, we will have to make adjustments to the Planning Department's budget to cover any additional expenses that arise between the conclusion of the current contract and 30 June. For next fiscal year, commencing on 1 July, monies have been included in the Planning Department's budget to study consultant design for the Infill Task Force. RECOMMENDATION: BUDGET Authorize the City Manager to execute a contract extension with the University of Oregon for up to $14,000 for the consulting services of Ron Kellett in regard to the Infill Task Force. 5 '( MEMORANDUM: Infill Task Force Page 2 12 April 2002 TIMING For the new ordinances to take effect in January 2003, the Council would need to have final adoption on or about 1 December 2002. I am proposing the following timeline for consideration by the Council and, if acceptable, forwarding to the Infill Task Force and Planning Commission: April -May 2002 Task Force concludes its work June -Sept. 2002 Planning Commission considers information from task force and preparation and recommendation on implementing ordinances 1 Oct. -1 Dec. 2002 City Council study sessions and public hearings on the proposed ordinances Dec. 2002 30 -day implementation period for ordinances to take effect RECOMMENDATION: TIMING It is recommended that the Council, at the meeting on 16 April, adopt the motion, including the above timeline, so that the information can be transmitted to the task force and Planning Commission and to ensure that each group is aware of the need to judiciously finalize the work of the task force, and commence and conclude its examination of the material and recommendations on implementing ordinances (Planning Commission). 5", COMMUNITY DEVELOPMENT MEMORANDUM TO: Doug Schmitz, City Manager FROM: Stephan Lashbrook, Community Development Director SUBJECT: Completion of Infill Development Project DATE: April 11, 2002 At the conclusion of Tuesday evening's study session with the City Council and Infill Development Task Force, Mayor Hammerstad asked the staff to return with recommendations that will lead to completion of this project. Specifically, the Mayor asked about the availability of funds to pay Ron Kellett to continue to provide consulting services and asked that we look at separating those tasks that can be completed soon from those that are likely to take considerably more time. Now that the City Council has had the opportunity to review the work that has been completed on this subject, it should be clear how much has been accomplished, and how much remains to be done. The staff will work with the Planning Commission to make sure that the recommended code amendments are packaged in a way that retains the continuity of the information without unnecessarily delaying the completion of the overall project. This will be important to keep the project on track while also recognizing that the Infill Development Task Force has recommended some trade-offs (making some requirements more restrictive while relaxing others). The staff actually envisions dividing the consulting budget into two parts, totaling not more than $14,000. The initial $10,000 involves doing more of the same kinds of work that have been completed by Mr. Kellett and his assistant to date. The additional $4,000 would cover the cost of preparing a collection of design alternatives to be available to the public. Given that we are nearing the end of this fiscal year, and the fact that the costs for this additional consulting budget can be divided as noted above, the staff does not hesitate to recommend that Mr. Kellett's contract be extended to complete these tasks. The City Council started the process of studying ways to improve infill development with the adoption of ordinances that limit the height of new homes in certain neighborhoods. Those ordinances will sunset in January 2003, unless suitable replacement standards are enacted before then. The staff feels that all of us involved with this project need to be mindful of that deadline as we continue work. Infill Completion 04111102 Recommendations 1. Authorize the City Manager to extend the consulting contract with Ron Kellet (through the University of Oregon), for up to $14,000. 2. Have the staff poll the members of the Infill Development Task Force to determine which of those members are willing to continue to function as a technical committee to review the continuing work of the staff and consultant before it is forwarded to the Planning Commission. 3. Forward the recommendations of the Infill Development Task Force to the Planning Commission and ask the Commission to schedule study sessions and public hearings as necessary to implement these recommendations by January 2003. CC: Denny Egner, Long Range Planning Manager Jane Heisler, Project Planner Ron Kellett, U of O Infill Development Task Force Infill Completion 04/11/02 CITY OF LAKE OSWEGO AGENDA REPORT SUMMARY MEETING DATE: April 16, 2002 SUBJECT: Resolution 02-25 A Resolution of the City Council of the City of Lake Oswego Adopting a Proposed Collective Bargaining Agreement Between the Lake Oswego Police Officers' Association and the City of Lake Oswego. RECOMMENDED MOTION: Move to adopt Resolution 02-25 entering into a labor agreement with the Lake Oswego Police Officers' Association effective July 1, 2001 through June 30, 2003. EST. FISCAL IMPACT STAFF COST: FY 0 1 -02 - $ 76,000 FY 02-03 - $126,000 BUDGETED: FY 01-02: 3% FY 02-03: 3% FUNDING SOURCE: Public Safety Fund (Property Taxes) CITY ATTORNEY Date R,\1,0P0A\Report Cover R02.215 doc ATTACHMENTS: • 04/12/02 Memo from D. Schmitz outlining the Summary of the Tentative Agreements Resolution 02-25 NOTICED (Date): Ordinance No.: Resolution No. 02-25 Previous Council Consideration: n/a AS!_� �. l8� T. CITY MANAGER UU Date CITY ANAGER Date To: Judie Hammerstad, Mayor Members of the City Council FROM: Douglas J. Schmitz, City Manager CITY MANAGER'S OFFICE MEMORANDUM SUBJECT: Resolution 02-25 — Labor Agreement Between the City and the Lake Oswego Police Officers Association DATE: April 12, 2002 The City Council has previously, in Executive Session, provided direction regarding the negotiations between the City and the Lake Oswego Police Officers' Association. The result of those negotiations is a proposed Agreement for 1 July 2001 through 30 June 2003. A summary of the major points of the agreement follows: • 3% wage increase retroactive to 1 July 2001. • 4% wage increase effective 1 July 2001 • 1.2% into a Voluntary Employer Beneficiary Account (VEBA) effective 1 July 2002. • Holiday compensation adjustment as follows: over ten hours of compensation but less then 21 hours may be cashed out. The cash equivalent of 21 hours and over will go into the VEBA account. • The cap on sick leave has been reduced from 1200 hours to 1150 hours. If an employee has sick leave accrual between 1151 and 1200 hours, the cash equivalent will go into a VEBA account (one time only). The cash equivalent of any hours over the cap will be placed into a VEBA account. A full copy of the agreement is on file in the City Recorder's Office. P I ()I'OA\CC re R 02-25.doe RESOLUTION 02-25 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE OSWEGO ADOPTING A PROPOSED COLLECTIVE BARGAINING AGREEMENT BETWEEN THE LAKE OSWEGO POLICE OFFICERS' ASSOCATION (LOPOA) AND THE CITY OF LAKE OSWEGO WHEREAS, The City of Lake Oswego collectively bargains with LOPOA, over wages, hours, and conditions of employment; and WHEREAS, The current collective bargaining agreement expired on June 30, 2001; and WHEREAS, The City Council of the City of Lake Oswego provided guidance regarding the City's position in Executive Session; WHEREAS, The City of Lake Oswego and LOPOA reached a tentative successor agreement. NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Lake Oswego authorizes the City Manger to sign the collective bargaining agreement between the Lake Oswego Police Officers' Association and the City of Lake Oswego for the period of July 1, 2001 through June 30, 2003. This resolution shall take effect upon passage. Approved and adopted by the City Council of the City of Lake Oswego at a regular meeting held on the day of , 2002. AYES: NOES: ABSTAIN: EXCUSED: Judie Hammerstad, Mayor ATTEST: Robyn Christie, City Recorder APPROVED AS TO FORM: David Powell, City Attorney PALOPOMLOPOA Resolution 02-25.doc