Fort Collins v. Root Outdoor Advertising

Citations: 788 P.2d 149; 14 Brief Times Rptr. 266; 1990 Colo. LEXIS 148; 1990 WL 19151Docket: 88SC413

Court: Supreme Court of Colorado; March 4, 1990; Colorado; State Supreme Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The Supreme Court of Colorado reviewed the case involving the City of Fort Collins and Root Outdoor Advertising, Inc., concerning the city's authority to require the removal of nonconforming outdoor advertising signs without just compensation. The court evaluated the court of appeals' decision, which concluded that the City could not mandate the removal of these signs, established under a five-year amortization provision of the sign code, without providing just compensation to the sign owners. Additionally, it determined that the City could not utilize its own funds for compensation but would need to wait for federal appropriations.

The Supreme Court found that both the Federal Highway Beautification Act and the Colorado Outdoor Advertising Act prevent the City from removing signs without compensation. However, it clarified that the City is permitted to remove the signs and compensate the owners without waiting for federal funds. The ruling affirmed part of the appellate decision while reversing another part, ultimately remanding the case for further proceedings.

The sign owners, including Root Outdoor Advertising, Inc. and Gardner Signs, Inc., had outdoor advertising signs placed before July 1, 1971, which were deemed nonconforming following amendments to the sign code in 1979. The City had stipulated that off-premises signs must be removed or brought into compliance by March 20, 1984. Following enforcement actions by the City against the sign owners for code violations, the owners sought declaratory relief and damages, with the Colorado Department of Highways intervening to address potential federal funding implications. The issues were narrowed to determining whether the sign code constituted a taking of property without just compensation or due process, and whether it conflicted with the Colorado Outdoor Advertising Act.

The trial court determined that the City's sign code did not constitute a taking of property without just compensation or due process, as it was a legitimate exercise of police power. However, it ruled that the City must provide "just compensation" before removing the signs, citing both state and federal laws. The City could utilize its own funds rather than being restricted to federal resources. The court noted that while "amortization" might qualify as "just compensation" under certain conditions, the City was required to follow eminent domain procedures for sign removal.

On appeal, the court of appeals found that the sign code was subordinate to state statutes, mandating that just compensation be paid before sign removal and clarifying that amortization does not suffice as just compensation. Additionally, it ruled that the City could not proceed with removal until federal funds were obtained.

The excerpt also references the Highway Beautification Act of 1965, which aims to protect public investment in highways, promote safety, and enhance the aesthetic value of travel. The Act requires states to manage outdoor advertising effectively; otherwise, they face a 10% reduction in federal highway funding. It regulates signs within 660 feet of federal highways, allowing only specific types of signage in that zone and establishing standards for signs in commercial areas through agreements with the Secretary of Transportation.

Provisions of the Act mandate just compensation for the removal of outdoor advertising signs erected lawfully under state law but not permitted by the federal guidelines, with federal funding covering 75% of the compensation costs. The Colorado General Assembly enacted the Colorado Outdoor Advertising Act to ensure compliance with the federal act, stipulating that just compensation must be provided for the removal of nonconforming advertising devices.

Section 43-1-416, 17 C.R.S. 1984 allows local municipalities and counties to impose stricter advertising device regulations, provided they do not endanger the state's federal highway funding. An agreement made on July 9, 1971, between Colorado and the Secretary established rules for outdoor signs in commercial and industrial zones, applicable only to signs erected after this date, while pre-existing signs are "grandfathered" and exempt from removal requirements. In National Advertising Co. v. Department of Highways, 751 P.2d 632 (Colo. 1988), it was determined that outdoor advertising control is a shared concern between state and local authorities, permitting local regulation as long as it does not conflict with state law. The City has enacted an ordinance mandating the removal of signs after a set time without compensation, prompting a review of potential conflicts with state law. The City argues that the Colorado act does not require compensation for signs that are not classified as "nonconforming advertising devices," asserting that these grandfathered signs fall outside the act's removal requirements. However, it is concluded that despite their grandfathered status, the absence of a compensation requirement does not negate the possibility of compensation due upon removal. Furthermore, the ordinance's provision for removal after an amortization period threatens the state's federal funding, leading to its preemption by section 43-1-416. The City also contends that signs in commercial or industrial zones are exempt from federal control under 23 U.S.C. 131(c) and (d), arguing that pre-existing signs do not fall under federal regulations. This interpretation is rejected, as the federal act mandates that all signs within 660 feet of federal highways are subject to removal, and grandfathered signs are still regulated under the federal provisions.

The City cites Ackerley Communications, Inc. v. City of Seattle to argue that certain signs are not covered by the federal act. In Ackerley, the court ruled that signs predating a state-federal agreement were not governed by specific subsections of the federal act, allowing their removal without compensation. This reasoning is rejected as flawed, conflicting with the federal act's language, which necessitates compensation under subsection (g) for the removal of any outdoor advertising sign that was lawfully erected under state law and not exempt under subsection (c). The signs in question do not qualify for exemptions, thereby triggering the compensation requirement. Federal regulations reinforce that just compensation must be provided for the removal of grandfathered signs, even if removed under more stringent local ordinances. Following a 1978 amendment to subsection (g), the requirement for just compensation applies universally to signs within the act's control zone, regardless of local laws. Non-compliance with this requirement can result in reductions of federal aid to the state. The FHWA has stated that states must ensure just compensation for all lawfully erected signs along interstate systems, emphasizing that failure to comply could jeopardize federal funding. The City’s ordinance must therefore align with the federal just compensation requirement to avoid preemption by federal law. The next step is to assess whether "amortization" can be considered just compensation under the federal act.

Amortization in the City's ordinance allows a nonconforming sign to remain for a designated period to enable the sign owner to recoup investments before it must be brought into conformity or removed. After this period, no compensation is owed to the owner. The removal process based on amortization is viewed as an exercise of police powers rather than eminent domain and does not imply compensation. The federal act, however, mandates monetary compensation for the removal of outdoor advertising signs, as stated in subsection (g), which emphasizes that "just compensation shall be paid upon the removal of any outdoor advertising sign." The legislative history indicates that this provision was included to prevent states from using police powers for sign removal without compensation. Originally, the federal act permitted police power use without compensation, but Congress later amended it to ensure that states pay for the acquisition of advertising rights through purchase or condemnation, reflecting a conscious decision against using amortization as compliance with federal requirements. Prior to 1978, some courts and the FHWA accepted police power use, but the amendment clarified that just compensation is required for all signs within the act's control zone to prevent circumvention through local zoning ordinances.

The referenced legal provisions emphasize that "just compensation" for the removal of outdoor advertising signs mandates monetary payment, as supported by federal regulations and multiple court rulings. The Federal Highway Administration (FHWA) clarifies that amortization is not an acceptable substitute for compensation following the expiration of an amortization period, specifically for signs legally erected after November 6, 1978. The FHWA's interpretation of the statute is given deference due to legislative history and the agency's expertise. The U.S. Attorney General's opinion from 1966 further asserts that states removing signs without compensation violate the act, incurring a penalty. Several court cases have also concluded that amortization does not equate to just compensation as required by federal law. Consequently, the City’s amortization provision in its zoning ordinance fails to meet the federal requirements for just compensation, rendering it preempted by Colorado law. Additionally, a provision in Colorado law stipulates that a sign cannot be removed until federal compensation funds are available, a position the court of appeals held, which the current interpretation disputes.

All parties involved, including the City, sign owners, and CDOH, concur that the court of appeals incorrectly interpreted the relevant statutory provision, which aligns with 23 U.S.C. 131(n, 1989). This provision indicates that signs are not mandated for removal if federal compensation for such removal is unavailable. The parties argue that sections 43-1-414(3, 17 C.R.S. 1984 and 23 U.S.C. 131(n, 1989) do not prevent the City from using municipal funds for sign removal. Instead, these statutes are intended to excuse removal in the absence of available funds, not to prohibit it. An interpretation requiring municipalities to retain nonconforming signs until federal compensation is accessible is deemed unreasonable and undermines the ability of municipalities to impose stricter regulations. The court of appeals’ misinterpretation, which constrained the City’s use of its own funds, is reversed. However, the requirement for just compensation remains affirmed, amortization is not recognized as just compensation, and the City's ordinance is preempted where it conflicts with the Colorado Outdoor Advertising Act. The judgment is partially reversed and partially affirmed, with the case remanded to the court of appeals to uphold the trial court's judgment.

The Code of the City of Fort Collins mandates the removal or conformity of off-premises signs within five years, as outlined in article IV, section 29-563(b). Federal regulations under 23 U.S.C. 131(c) restrict outdoor advertising signs based on proximity to right-of-ways and set standards for acceptable signage, which includes directional signs, property advertisements, and historical landmark signs, while allowing for some exemptions related to nonprofit activities. States retain the authority to implement their zoning laws for commercial and industrial areas, and local zoning determinations are accepted in lieu of federal controls. A "nonconforming advertising device" is defined as one lawfully erected before January 1, 1971, in compliance with state law, but signs in commercial zones established prior to January 1, 1970, do not qualify as nonconforming. Regulations under 23 C.F.R. 750.707(a) apply to nonconforming signs that must be removed according to state laws consistent with federal standards. Following the Ackerley decision, which risked federal funding for Washington State, a settlement was reached to protect those funds, emphasizing the importance of adhering to federal regulations to maintain highway funding. The decision regarding signs applies only within 660 feet of controlled highways and does not address the removal of signs outside these areas.