Four Billboards in Norfolk, VA Condemned
In Snyder Plaza Properties, Inc. v. Adams Outdoor Advertising, Inc., No. 991306 (April 21, 2000), the Supreme Court of Virginia upheld a commissioner’s “variation of the income approach” to estimate the value of four billboard leasehold interests. The billboards located in the downtown financial district of Norfolk were condemned and removed through the power of eminent domain in 1995. The City of Norfolk settled the case with the landowner, Snyder Plaza Properties, Inc., for $2.4 million dollars, “plus up to …($38,000) to pay one-half of Snyder’s settlement with Adams Outdoor Advertising” (the billboard owner). Adams then filed suit against Snyder seeking a determination of the amount of damages to which Adams was entitled as a result of the condemnation.
The commissioner responsible for the case heard testimony from three appraisers, including Gregory A. Hanson and Donald T. Sutte for Adams Outdoor and Bruce F. Hatfield for Snyder Plaza Properties. Mr. Hanson estimated the value of the billboard leasehold interests at $83,000 based on a “gross income multiplier” approach. Mr. Hanson estimated annual income at $24,281, and the appropriate multiplier at 3.4 times annual income. Mr. Sutte estimated the value of the billboard leasehold interests at $112,300 based on the same approach. Mr. Sutte estimated effective gross annual income at $28,080, and the appropriate multiplier at 4.0 times annual income. Mr. Sutte also estimated the value of the billboard leasehold interests at $98,800 using a direct capitalization approach. Mr. Sutte estimated net annual income at $14,321 and applied a capitalization rate of 14.5%. Mr. Hatfield estimated the billboard leasehold interests at $21,500 based on net monthly income for the remaining lease term plus three years of possible renewal income.
The commissioner estimated net monthly income at $1,193 based on Sutte’s estimate of net annual income at $14,321. The commissioner multiplied this net monthly income by 60 months, based on testimony from Mr. Hatfield that the property would likely have been developed and the billboards removed in five years. The commissioner discounted the $71,580 ($1,193 x 60 = $71,580) to reflect its present value at $61,731.05.
| Appraiser/Commissioner | Billboard Leasehold Interest | Appraisal Approach | Annual Income | Net Monthly Income | Multiplier | Cap Rate |
| Sutte | $112,300 | Gross Income Multiplier | $28,080 | — | 4.0x | — |
| Sutte | $98,800 | Direct Capitalization | $14,321 | $1,193 | — | 14.5 |
| Hanson | $83,000 | Gross Income Multiplier | $24,281 | — | 3.4x | — |
| Hatfield | $21,500 | Gross Rent Multiplier | — | $436 | 67.0x | — |
| Commissioner | $61,731 | Net Income Multiplier | — | $1,193 | 60x | — |