Knowledgebase-Amortization of Signs


Information Product

Title:Amortization of Signs
Summary:MTAS was asked whether amortization of signs could be required in Tennessee.
Original Author:Hemsley, Sid
Co-Author:
Product Create Date:08/22/2008
Last Reviewed on::04/19/2010
Subject:Sign control--Laws and regulations; Signs and signboards--Laws and regulations
Type:Legal Opinion
Legal Opinion: Amortization of Signs public.doc

Reference Documents:

Text of Document: August 22, 2008

Dear Madam:

The third sign regulation question you have is: your City would like to require that all existing signs must be brought into compliance with the sign ordinance after a specific time, to allow some time for amortization of the cost. Is that allowable?

In my opinion, the answer is no.

To date the Tennessee courts have dealt with (1) the constitutionality of amortization in general, and (2) the amortization of signs, specifically.

In Rives v. City of Clarksville, 618 S.W. 2d 502 (Tenn. App. 1981), the Court of Appeals considered the constitutionality of amortization in the context of a nonconforming junkyard. In that case, the ordinance provided for a two year amortization period if the junkyard was in a residential district and five year amortization period if the junkyard was in a nonresidential district. When the plaintiff, owner of a nonconforming junkyard, challenged the constitutionality of the ordinance, the court indicated that "amortization to eliminate nonconforming uses does not violate neither the Fourteenth Amendment to the United States Constitution nor Article 1, Section 8 of the Constitution of Tennessee." Id. at 509. The court went on to add the following caveat, however: "when requiring the termination of a nonconforming use within a specified period of time as a proper exercise of police power, the public benefit must outweigh the private injury; i.e., not only must the ordinance requiring the termination of a nonconforming use be reasonable in and of itself, it must be reasonable as it applies to the particular property owner." Id.

In regards to determining the reasonableness of the ordinance, the court indicated that the following should be considered: (1) the structure located on the property, (2) the use of the property, (3) the location of the property, (4) the cost of the property, (5) the benefit to be derived by the public, (6) the period of use, and (7) the amortization period. In determining whether the amortization period is reasonable, consideration "should be given to the length of the amortization period in relation to the property owner ' s investment and the length of the amortization period in relation to the use of the property." Id. at 510.

But in considering the plaintiff ' s contention that the ordinance was invalid under Tenn. Code Ann. ' 13-7-208, the court indicated that two requirements must be met before the statute applies: (1) There must be zoning where there previously was none, or there must be a change in zoning restrictions, and (2) there must be permissive operation of a business prior to the change. Id. at 505. Since there was no "significant change insofar as the plaintiff [was] concerned," the ordinance could not be invalidated as to the plaintiff on the basis of Tenn. Code Ann. ' 13-7-208 Id.

In Creative Displays Inc. of Knoxville v. City of Pigeon Forge, 576 S.W.2d 356 (Tenn. App.1978), the city of Pigeon Forge passed an ordinance prohibiting the use of off premises billboards. For signs already in existence, the ordinance provided a two year amortization (or removal) period. The court found that the grandfather clause contained in what is now Tenn. Code Ann. ' 13-7-208 "provides for continuation of non-conforming uses which existed prior to the establishment of the zoning ordinance," and therefore, the city could not enjoin the plaintiff to comply with the ordinance. Also see Outdoor West of Tennessee, Inc. v. City of Johnson City, 39 S.W.3d 131 (Tenn. Ct. App. 2000).

In Lamar Advertising v. City of Knoxville, 905 S.W. 2d 175 (1995), the court used the two part test set forth in Rives, finding that Tenn. Code Ann. ' 13-7-208 did not apply to landowner ' s request for permit to rebuild an existing billboard.

In summary, in Creative Displays, the court struck down an amortization period under ' 13-7-208. However, 3 years later in Rives, the court upheld an amortization period, indicating that such provisions were not unconstitutional under the Tennessee and U.S. Constitutions. Certainly the grandfather provisions in Tenn. Code Ann. ' 13-7-208 place significant restrictions on the use of amortization. However, under the test in Rives, those restrictions only come into play when (1) a change in the zoning law has imposed new or different restrictions on the establishment, and (2) the establishment conformed to previously existing zoning restrictions or exceptions. The plaintiff in Rives did not meet either qualification. Similarly, the plaintiff in Coe v. City of Sevierville, 212 S.W.3d 237 (Tenn. Ct. App. 2000), could not avail himself of Tenn. Code Ann. ' 13-7-208 to grandfather his sign as a preexisting nonconforming use because the sign was not a permitted use when the zoning change at issue occurred.

But the unreported case of Alexander Ford-Mercury, Inc. v. City of Franklin, 2005 WL 549163 (Tenn. Ct. App. 2005), citing Lamar Advertising v. City of Knoxville, and Coe v. City of Sevierville, above, points to a distinction between subsections (c) and (d) of Tenn. Code Ann. ' 13-7-208. The former applies to situations where the business seeks to expand, and the latter applies to situations where the business seeks to demolish and rebuild, in which case the plaintiff must show that the new facilities were necessary to the conduct of his business or industry, and declares that it is a heavy burden of proof to carry.

That distinction has a bearing on what a city does with respect to industries or businesses that wish to demolish or destroy and rebuild or replace those signs. However, those cases do not support the proposition that a municipality can generally employ amortization to require signs to meet current sign requirements.

Sincerely,


Sidney D. Hemsley
Senior Law Consultant

SDH/

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.