Case Law Pertaining to Constitutionality of Billboard Amortization by State and Local Governments, B-302809, November 12, 2004

B-302809 Nov 12, 2004 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights This responds to your request for an update of our February 6, 1991 opinion to Senator Chafee, B-239187 (Enclosure 1), summarizing case law regarding the permissibility of billboard amortization under the U.S. Constitution. At the time of our 1991 opinion, the vast majority of cases had upheld the general practice of amortization as constitutional; some courts also addressed, on a case-by-case basis, whether a particular amortization practice was constitutional. As discussed below and in Enclosure 2, the small number of additional cases involving billboard amortization decided since 1991 have likewise upheld this practice, ruling that billboard restrictions which provided for an amortization period did not rise to the level of a "taking" triggering constitutional compensation obligations. View Decision Case Law Pertaining to Constitutionality of Billboard Amortization by State and Local Governments, B-302809, November 12, 2004 B-302809 November 12, 2004 The Honorable Mike McIntyre U. S. House of Representatives Subject: Case Law Pertaining to Constitutionality of Billboard Amortization by State and Local Governments Dear Mr. McIntyre: This responds to your request for an update of our February 6, 1991 opinion to Senator Chafee, B-239187 (Enclosure 1), summarizing case law regarding the permissibility of billboard amortization under the U.S. Constitution. At the time of our 1991 opinion, the vast majority of cases had upheld the general practice of amortization as constitutional; some courts also addressed, on a case-by-case basis, whether a particular amortization practice was constitutional. As discussed below and in Enclosure 2, the small number of additional cases involving billboard amortization decided since 1991 have likewise upheld this practice, ruling that billboard restrictions which provided for an amortization period did not rise to the level of a "taking" triggering constitutional compensation obligations. Background The Takings Clause of the Fifth Amendment to the Constitution prohibits the federal government from taking private property for public use unless the government provides "just compensation." The courts have long imposed these same obligations on state and local governments through the Fourteenth Amendment. See, e.g., Chicago, B. & Q. R.R. v. City of Chicago , 166 U.S. 226 (1897). Under the government's inherent "police power," the use of private property may be reasonably regulated and restricted through zoning or other land use laws, as long as the regulation bears a substantial relationship to the public health, safety, convenience or general welfare. See, e.g., Penn Central Transp. Co. v. City of New York , 438 U.S. 104 (1978). The Supreme Court has specifically applied these principles in the context of billboards, holding that a local ordinance excluding billboards (among other things) from a village residential district was a permissible exercise of municipal power. Village of Euclid v. Ambler Realty Co ., 272 U.S. 365 (1926). When such regulations effectively take the billboard owner's property, however, by eliminating or severely restricting the owner's reasonable investment-backed expectations, they may rise to the level of a so-called regulatory taking and require compensation under the Takings Clause. See, e.g., Penn Central , above. State and local laws restricting or prohibiting billboard use are an example of such public welfare regulations. In a number of cases, the restrictions are mitigated by inclusion of a phase-in period, allowing the billboard owner to continue using the billboard for a specified period after which it is considered a non-conforming use and must be removed. This phase-in is referred to as amortization. Billboard owners have argued that the restrictions constitute a taking of their property and that the taking is unconstitutional because the government has not paid them monetary compensation. Governments have responded that the restrictions do not rise to the level of a taking, because of the effect of the amortization, or that even if there is a taking, amortization constitutes just compensation. In either case, the governments believe, amortization is constitutional. Our 1991 Opinion and Subsequent Case Law Our 1991 opinion reviewed a number of cases in which billboard amortization was challenged on constitutional grounds. These cases, representing the decisions of three federal appellate courts and 17 state courts, and amortization periods ranging from one year to 10 years, uniformly rejected the argument that amortization was a per se violation of the Takings Clause. As we explained, however, in deciding whether a particular amortization scheme was reasonable and constituted just compensation, courts were required to carefully weigh a number of factors reflecting public and private interests.