No. 3–07–0439
______________________________________________________________________________
Filed July 31, 2008
IN THE APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2008
THE DEPARTMENT OF ) Appeal from the Circuit Court
TRANSPORTATION, ) for the 10th Judicial Circuit,
Plaintiff-Appellant, ) Tazewell County, Illinois
)
v. ) No. 02–ED–7
)
EAST SIDE DEVELOPMENT, L.L.C., ) Honorable
and ADAMS OUTDOOR ) John A. Barra,
ADVERTISING, INC., ) Judge, Presiding
Defendants-Appellees. )
______________________________________________________________________________
JUSTICE O’BRIEN delivered the opinion of the court:
______________________________________________________________________________
Plaintiff Illinois Department of Transportation (IDOT) initiated this eminent domain action
to condemn property owned by defendant East Side Development (East Side) on which a billboard
owned by defendant Adams Outdoor Advertising (Adams) was erected. IDOT filed a motion in
limine concerning appraisal evidence and valuation methodology regarding the compensation for the
billboard. The trial court denied IDOT’s motions and certified two questions for appellate review.
We answer both questions in the affirmative.
FACTS
In August 2002, plaintiff IDOT filed an eminent domain action to acquire a portion of
property in Tazewell County owned by defendant East Side, having purchased it from Clayton
Moushon. Moushon had purchased the property from Farmdale Valley Development, which had
1
entered into a lease agreement with defendant Adams in 1999. The agreement allowed Adams to
place a billboard on the property for an annual rent of $3,200. Following expiration of the lease on
December 31, 2001, the billboard remained on the property with the oral consent of the then-
landowner, Moushon. The billboard was still on the property when East Side acquired it.
Pursuant to IDOT’s condemnation action, an order was entered in September 2002, allowing
IDOT’s acquisition of the property, together with all its improvements, and an order vesting title was
entered in October 2002. The City of East Peoria would not allow Adams to relocate the billboard
because it was larger than allowed under local ordinance. Adams could, however, erect a billboard
that complied with the sign ordinance. As required under the federal Relocation Act, IDOT made
an offer to Adams to relocate the billboard. 42 U.S.C. §4655 (2002); 735 ILCS 30/10-5-62 (West
2006). The offer documented the cost of relocation at $10,410 and the reproduction cost at $20,770.
Adams did not accept the offer. IDOT removed the billboard in the summer of 2003.
The condemned portion of the property was appraised in order for IDOT to determine just
compensation for it. Both IDOT and East Side appraisers agreed that although the property was used
as farmland, its highest and best use was commercial. IDOT’s appraiser, Steven Geddes, opined that
the entire property had a value of $789,000 and that the acquired part had a value of $22,000.
Although he considered the billboard and the agreement concerning it, he did not believe that the
sign location enhanced the value of the land for its highest and best use. He considered the billboard
structure as personal property and did not calculate a value for it. East Side’s appraiser, Brian Finch,
valued the property with other parcels acquired by IDOT. In his view, the lost rental income from
the billboard was a measure of damages to the remainder. Adams’ appraiser, Rudolfo Aguilar, did
not value the whole parcel or the portion acquired. He valued only the billboard, using cost, income,
2
and comparative sales approaches. He gave no weight to the cost approach and gave the most weight
to the comparative sales approach. He valued the billboard at $126,800. He also determined the
bonus value of the billboard agreement, defining bonus value as the excess of market value over
contract rent. In his view, the bonus value was zero.
Prior to trial on damages, IDOT filed a motion in limine regarding the appraisal evidence.
It sought to bar Aguilar’s testimony because his methodology violated the unit rule. The motion was
denied. The trial also found that bonus value was not a permitted valuation method to determine the
value of the billboard leasehold interest. The trial court certified the following questions under
Supreme Court Rule 308.
“1. In a condemnation proceeding under 735 ILCS 5/7-101
(now 735 ILCS 30/10-5-5) involving a lawfully erected off-premises
outdoor advertising sign and the underlying land, does the unit rule
apply?
2. Is bonus value as described in I.P.I. 300.59 and the
commentary thereto a proper measure of the just compensation due to
the owner of the billboard under 735 ILCS 5/7-101 (now 735 ILCS
30/10-5-5)?”
In this appeal, East Side adopted the briefs of Adams (hereinafter collectively Adams). This
court allowed the Outdoor Advertising Association of Illinois, Inc., and Lamar Advertising Co. to
submit amici curiae briefs in support of East Side and Adams. We have thus considered the amici
arguments as well.
ANALYSIS
The first certified question asks if the unit rule applies in a condemnation proceeding
involving a lawfully erected off-premises outdoor advertising sign and the underlying land. IDOT
argues that the unit rule is the appropriate method for applying valuation standards where, as here,
3
the condemned property contains component parts and/or where a property is encumbered with a
lease. Adams argues that the 1993 amendment to section 10-5-5 of the Eminent Domain Act (Act)
provides an exception to the unit rule. 735 ILCS 5/7-101 (West 1992), now see 735 ILCS 30/10-5-5
(West 2006). Adams argues that the amendment clearly provides for separate compensation to owners
of lawfully erected off-premises outdoor advertising signs. Adams claims that, under the plain
language of the statute, the owners of the real property and the owners of the advertising sign are both
allowed to obtain separate fair market value for loss resulting from condemnation.
The determination of the proper method of compensation in an eminent domain proceeding
and the interpretation of a statute are questions of law which this court reviews de novo. Department
of Transportation v. Chicago Title & Trust Co., 303 Ill. App. 3d 484, 495, 707 N.E.2d 637, 645
(1999); In re Application of the County Collector, 356 Ill. App. 3d 668, 670, 826 N.E.2d 951, 953
(2005).
The Act was amended in 1993 providing, in pertinent part,
“(b) The right to just compensation, as provided in this Act,
applies to the owner or owners of any lawfully erected off-premises
outdoor advertising sign that is compelled to be altered or removed
under this Act or any other statute, or under any ordinance or
regulation of any municipality or other unit of local government, and
also applies to the owner or owners of the property on which that sign
is erected.” 735 ILCS 5/7-101 (West 1992), now see 735 ILCS 30/10-
5-5 (West 2006).
Both the United States Constitution and Illinois Constitution provide that private property may
4
not be taken or damaged without just compensation. U.S. Const., amend. V; Ill. Const. 1970, art I,
§16. The purpose is to make the owner whole. Department of Transportation v. Chicago Title & Trust
Co., 303 Ill. App. 3d 484, 495, 707 N.E.2d 637, 645 (1999). Just compensation is the fair market
value of the property, that is, “the amount of money that a purchaser, willing, but not obligated, to buy
the property, would pay to an owner willing, but not obligated, to sell in a voluntary sale.” 735 ILCS
30/10-5-60 (West 2006). The unit rule provides that the fair market value of property with
improvements is not the sum of the value of the improvements and the value of the land calculated
separately, but rather the value of the parcel as a whole. Department of Public Works & Buildings v.
Lotta, 27 Ill. 2d 455, 456, 189 N.E.2d 238, 240 (1963).
When resolving issues of statutory construction, the primary purpose is to ascertain and give
effect to the legislature’s intent. County Collector, 356 Ill. App. 3d at 670, 826 N.E.2d at 953. The
plain meaning of the statute’s language is the best indication of legislative intent. Lamar Whiteco
Outdoor Corp. v. City of West Chicago, 355 Ill. App. 3d 352, 367, 823 N.E.2d 610, 622 (2005). A
court must construe the statute as written and must not add exceptions or change the law so as to
depart from the statute’s plain meaning. County Collector, 356 Ill. App. 3d at 670, 826 N.E.2d at 954.
When a statute is amended, it may be presumed that the amendment was made for some purpose and
the statute should be construed as to give effect to the intended purpose. County Collector, 356 Ill.
App. 3d at 670, 826 N.E.2d at 954.
We disagree with Adams’ argument that the unit rule directly contradicts the statute. The
language of the statute is clear. The amendment simply states that the owner of a billboard has a
compensable interest under the statute. The statute does not require a second taking of the billboard.
The unit rule may be applied consistently with the amended statute. Moreover, it is unlikely that the
5
legislature would enact a law that would abrogate a long history of common law without any word
it intended to do so.
Adams argues that this interpretation contradicts the Fifth District’s holding in Department
of Transportation v. Drury Displays, Inc., 327 Ill. App. 3d 881, 764 N.E.2d 166 (2002). That case
involved a condemned property on which a billboard owner leased space. Drury Displays, 327 Ill.
App. 3d at 882-83, 764 N.E.2d at 168. The court interpreted the statute as saying “[b]illboard owners
have a right to just compensation for any condemned sign.” Drury Displays, 327 Ill. App. 3d at 888,
764 N.E.2d at 172. The court defined just compensation as “the fair market value of the property at
its highest and best use on the date the complaint [for condemnation] is filed.” Drury Displays, 327
Ill. App. 3d at 888, 764 N.E.2d at 172. We agree that billboard owners have a right to just
compensation under the statute, but find Drury distinguishable regarding the unit rule. In Drury the
landowner was not a party to the proceedings, the billboard owner operated under a valid lease, and
the structure was incapable of being relocated. Drury Displays, 327 Ill. App. 3d at 882-84, 764 N.E.2d
at 168-69. In that case, IDOT argued that the defendant’s only compensable interest was the leasehold
and that it did not even condemn the billboard because it was personal property. Drury Displays, 327
Ill. App. 3d at 886-87, 764 N.E.2d at 171. More importantly, at no point did Drury ever discuss the
unit rule and, thus, is not authoritative on this issue.
The statute provides for just compensation, but it does not state that just compensation for a
billboard is to be determined apart from valuation of the property as a whole. It has been long
established that the value of condemned property is considered as a whole, not the sum of its parts.
Without a clear statement of intent from the legislature to abrogate this rule, we will not read such
intent into the statute. Just compensation due Adams must be determined pursuant to the unit rule.
6
We are next asked to answer whether bonus value is the proper measure of just compensation
due the billboard owner, Adams. IDOT contends that bonus value is the proper measure of just
compensation and that there is no other acceptable method to determine just compensation for Adams.
Adams contends that bonus value was rejected in Drury as a proper method to value a leasehold
interest involving a billboard and that billboards are bought and sold for more than bonus value.
Adams also argues that bonus value does not satisfy just compensation because it does not take into
account the value of the billboard and the leasehold site’s inherent value for producing rental income.
It has long been established that the measure of compensation for a leasehold interest is the
value of the interest, subject to the rent covenanted to be paid. Corrigan v. City of Chicago, 144 Ill.
537, 548, 33 N.E. 746, 749 (1893). If the value is greater than the rent, the leaseholder is entitled to
the excess, but if it does not exceed the rent reserved, the leaseholder is not entitled to any
compensation. Corrigan, 144 Ill. at 548-49, 33 N.E. at 749. The Illinois Pattern Jury Instructions
conform to this measure of compensation.
“In deciding whether the tenant is entitled to a share of the
compensation to be paid for the entire property, you must first
determine the fair rental value of the tenant’s leasehold. If the fair
rental value of the leasehold exceeds the rent agreed upon in the lease,
the tenant is entitled to the excess. But if the fair rental value of the
leasehold does not exceed the rent, the tenant is not entitled to any
share of the compensation.” Illinois Pattern Jury Instructions, Civil,
No. 300.59 (2006) (hereinafter IPI Civil 2006)).
The instructions further explain that “[y]ou are to decide the following questions: First, what
7
is the total amount of just compensation to be paid for the entire property. Second, what part of that
total is the fair rental value of the leasehold.” IPI Civil (2006) No. 300.23.
When condemned property has a market value, any evidence of profits derived from it is not
admissible nor is it a basis for fixing compensation. City of Chicago v. Farwell, 286 Ill. 415, 423, 131
N.E. 795, 798 (1918). Just compensation includes the value of the land, at its highest and best use,
but excludes business profits. Farwell, 286 Ill. at 423-24, 121 N.E.2d at 798.
Adams asserts that Drury rejected bonus value as a measure for determining just compensation
of a leasehold interest. However, Adams misconstrues Drury’s holding. A closer reading of Drury
shows that it did not abolish bonus value as an adequate means of determining just compensation; it
merely held that bonus value was not the only method of valuation. Drury Displays, 327 Ill. App. 3d
at 888, 764 N.E.2d at 172 (“We reject the Department’s interpretation that ‘just compensation’ means
only bonus value”). The court further explained that “[h]ad the legislature intended just compensation
to mean only bonus value, it could have used the words ‘bonus value’ in the statute.” Drury Displays,
327 Ill. App. 3d at 888, 764 N.E.2d at 172. Adams’ interpretation of Drury fails.
Aside from Drury, Adams cites no case law to support its contention that its business value
should be considered in calculating the value of the leasehold interest. Bonus value has long been held
an adequate measure of just compensation and Adams’ contention that this court should consider
business value in the calculation of the leasehold interest has been specifically rejected by Illinois
courts. See Farwell, 286 Ill. at 423-24, 121 N.E. at 798. In the instant case, bonus value, if any, is
appropriate.
Certified questions answered.
LYTTON, J., concurs.
8
JUSTICE WRIGHT, specially concurring:
In the context of this case as presented to the trial court, I agree the majority has properly
answered the question certified for our review. Although I see some merit in the statutory construction
advanced by Adams and adopted by the trial court, the certified question cannot be answered in a
vacuum and must be considered in light of the facts of record and those recited to this court on appeal.
The written Farmdale lease that defined Adams’ contractual relationship to the billboard site
owned by Farmdale and later acquired by East Side, provided that if the land was no longer available
for billboard use and a suitable replacement site for the billboard could not be agreed upon by the
parties, then Adams would remove the billboard at their expense. This lease had expired and
ownership in the land had changed. Nonetheless, the lease demonstrates that the owner of the property
did not acquire ownership of the billboard.
While negotiating for a new, long-term written lease with the new owner, East Side, Adams
tendered the annual payment of $3,200 to East Side on January 2, 2002 pursuant to informal
understanding. 1 In my view, and consistent with the supplemental facts provided by Adams, this
annual payment would only create a leasehold interest for one year. It is significant that East Side and
Adams did not finalize a long-term lease agreement before the condemnation proceedings began.
Meanwhile, on October 9, 2002, title to the billboard site vested in IDOT. However, IDOT
did not compel Adams to alter or remove the billboard during the year of the informal agreement with
East Side subject to the $3,200 payment. The sign stood and presumably functioned as a billboard
1
Any subsequent $3,200 payment made by Adams to East Side after October of 2002 was
ineffective. The title to the billboard site previously vested in IDOT in the fall of that year and a
long-term lease did not exist that required such payment.
9
well past January 2003. Thereafter, IDOT contacted Adams in August 2003, requesting Adams to
remove the billboard. However, Adams did not remove the sign from the condemned parcel in August
as requested.
Based on these facts provided to this court with the certified questions, IDOT did not acquire
title to the billboard but acquired only title to the land. After acquiring title to the land, the State did
not compel the sign to be altered or removed until the informal lease expired. The State has taken
nothing from the billboard company. Adams left the sign behind.
Thus, the unique facts recited by the parties in this appeal, do not qualify as the separate taking
necessary to advance the statutory construction for just compensation suggested by Adams. The
question of just compensation for separate takings must be answered on another day. For these
reasons, I specially concur in the majority’s decision, which answers both of the certified questions
in this case in the affirmative.
10