No. 88SC413Supreme Court of Colorado.
Decided March 5, 1990.
Certiorari to the Colorado Court of Appeals
Anderson, Sommermeyer, Wick Dow, Timothy J. Dow, Kent N. Campbell, for Petitioner.
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Wood, Herzog, Osborn Bloom, P.C., David L. Wood, for Respondents Root Outdoor Advertising; Gardner Signs; J. Trujillo; B. Trujillo; P. Hendrickson; D.M.H. Enterprises; and T. Walker.
Duane Woodard, Attorney General, Charles B. Howe, Deputy Attorney General, Richard H. Forman, Solicitor General, Lynn B. Obernyer, First Assistant Attorney General, Natural Resources Section, for Respondent Colorado Department of Highways.
Geoffrey T. Wilson, for Amicus Curiae Colorado Municipal League.
EN BANC
JUSTICE ROVIRA delivered the Opinion of the Court.
[1] On certiorari review, the City of Fort Collins (City) challenges the court of appeals decision in Root Outdoor Advertising, Inc. v. City of Fort Collins, 759 P.2d 59 (Colo.App. 1988), which held that (1) the City cannot require the removal of certain nonconforming signs, pursuant to a five-year amortization provision of its sign code, without paying just compensation; and (2) the City may not remove the signs and pay just compensation from its own resources, but must wait for Congress to appropriate federal funds. We believe that the Federal Highway Beautification Act and the Colorado Outdoor Advertising Act prohibit the City from removing the signs without paying just compensation, but that the City may remove the signs and compensate the sign owners without awaiting federal funds. We therefore affirm in part, reverse in part, and remand.I
[2] Root Outdoor Advertising, Inc. and Gardner Signs, Inc. own numerous outdoor advertising signs within the City of Fort Collins. James Trujillo, Beverly Trujillo, Paul Hendrickson, Gary Duncan, Ron Montross, and Thelma Walker are owners of real property which is leased to the sign companies for placement of the signs. For clarity, the above parties will be referred to as “sign owners.” The signs, which have been in place since before July 1, 1971, are known as “off-premises” signs because they advertise subject matter unrelated to the business conducted on the premises. All of the signs are within 660 feet of federal-aid primary highways as defined in the Highway Beautification Act of 1965, 23 U.S.C. § 131. Further, the signs are situated in areas which have been zoned commercial or industrial since prior to January 1, 1970.
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that the signs could not be removed without payment of “just compensation” based on the state and federal statutes. The City was not limited to using federal funds to accomplish this purpose, and thus could use its own resources. Finally, the court found that although “amortization” may constitute “just compensation” under certain circumstances, the City must remove the signs pursuant to eminent domain proceedings.
[6] On appeal, the court of appeals held that the sign code was superseded by state statute to the extent that the City must pay just compensation before removing the signs; amortization did not constitute just compensation; and the City could not remove the signs until the state receives federal funds for such purpose. II
[7] In 1965, Congress enacted the Highway Beautification Act, 23 U.S.C. § 131 (1966) (federal act). The federal act was enacted to protect the public investment in the interstate and primary highway system, to promote safety and the recreational value of public travel, and to preserve natural beauty. 23 U.S.C. § 131(a) (1966). Pursuant to subsection (b) of section 131, the states are given the primary task of providing for effective control over outdoor advertising. If a state does not make provision for effective control of outdoor advertising, a 10% reduction in the federal aid funds for the state’s highways is imposed until such time as the state adopts an appropriate provision. The federal act specifically applies to signs which are “within six hundred and sixty feet of the nearest edge of the right-of-way and visible from the main traveled way of the [interstate system and the primary system of federal highways].” 23 U.S.C. § 131(b) (1989).
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[9] Several provisions require that just compensation be paid for the removal of signs. 23 U.S.C. § 131(g) (1989) provides that: [10] “Just compensation shall be paid upon the removal of any outdoor advertising sign, display, or device lawfully erected under State law and not permitted under subsection (c) of this section, whether or not removed pursuant to or because of this section. The Federal share of such compensation shall be 75 per centum. . . .” [11] Subsection (k) reiterates the requirement for just compensation, providing “[s]ubject to compliance with subsection (g) of this section for the payment of just compensation, nothing in this section shall prohibit a State from establishing standards imposing stricter limitations with respect to signs . . . on the Federal-aid highway systems than those established under this section.” 23 U.S.C. § 131(k) (1989). [12] In order to comply with the federal act, the General Assembly enacted the Colorado Outdoor Advertising Act, sections 43-1-401 to -420, 17 C.R.S. (1984) (Colorado act). The Colorado act expressly states that “it is the intent of the general assembly that Colorado comply with the federal `Highway Beautification Act of 1965′ and rules and regulations adopted thereunder.” § 43-1-402(1)(b), 17 C.R.S. (1984). The Colorado act provides for control of outdoor advertising in accordance with the requirements of the federal act, and just compensation must be paid for the removal of a “lawfully permitted nonconforming advertising device.” §43-1-414(2), 17 C.R.S. (1984). Finally, section 43-1-416, 17 C.R.S. (1984), provides that local municipalities or counties may impose stricter controls on advertising devices “so long as such limitations or controls do not jeopardize the receipt by the state of its full share of federal highway funds.” [13] On July 9, 1971, the State of Colorado entered into an agreement with the Secretary governing regulation of outdoor signs within commercial and industrial zones, pursuant to 23 U.S.C. § 131(d) (1966). The size, lighting, and spacing requirements in the agreement apply only to signs erected after July 9, 1971. Those signs which predate the agreement may remain as “grandfathered” signs. 23 C.F.R. § 750.707(c) (1989). III A
[14] In National Advertising Co. v. Department of Highways, 751 P.2d 632
(Colo. 1988), we held that control of outdoor advertising devices along the state highway system is a matter of mixed statewide and local concern. Thus, the City is free to regulate outdoor advertising, so long as the local ordinances do not conflict with state law. If such a conflict develops, however, the City’s ordinance is preempted by state law. Here, the City has enacted an ordinance which requires the removal of signs after a certain time period, with no provision for the payment of compensation. Thus, we must examine the Colorado act to determine whether this ordinance conflicts with any state provision.
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paid for nonconforming signs, the City concludes that there is no conflict with the state statute.
[16] We agree that these signs do not fit within the statutory definition of “nonconforming advertising devices.”[4] Rather, these signs are “grandfathered” signs which are not subject to removal under the Colorado act. § 43-1-404(1)(d), 17 C.R.S. (1984); 2 C.C.R. 601-3(IV)(R) and (VII)(C) (1983). Because such signs are not subject to removal, the absence of a just compensation requirement does not necessarily mean that no compensation is due upon their removal, or that no conflict exists between the ordinance and the statute. We need not consider the City’s argument further, however, because we believe that removal after an amortization period jeopardizes Colorado’s receipt of its full share of federal highway funds. Thus, the City’s ordinance is preempted by section 43-1-416, 17 C.R.S. (1984). B
[17] The City contends that signs in commercial or industrial zones are exempted from control under 23 U.S.C. § 131(c) (1989), because they are considered separately in subsection (d). The City concludes that because these signs are not controlled by subsection (c), and because they were in existence prior to the effective date of the agreement between the state and the Secretary pursuant to subsection (d), the signs are wholly outside the scope of the federal act. We disagree.
(1966). [19] The City relies on Ackerly Communications, Inc. v. City of Seattle, 92 Wn.2d 905, 602 P.2d 1177 (1979), appeal dismissed, 449 U.S. 804 (1980), to support its contention that these signs are outside the scope of the federal act. In Ackerly, the court held that signs which predated the state-federal agreement were controlled neither by subsection (c) or subsection (d) of the federal act, and thus could be removed without compensation. We reject the reasoning in Ackerly as unsound. The conclusion reached in that case contravenes the plain language of the federal act and
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the federal regulations.[6]
C
[20] In our opinion compensation is required by subsection (g) of the federal act. That subsection requires just compensation to be paid upon the removal of any outdoor advertising sign lawfully erected under state law and not permitted under subsection (c). Because the signs in question do not fit within any of the exemptions in subsection (c), they fall within the express language of the compensation provision. The fact that such signs may have been protected by the agreement between the state and the Secretary has no bearing on whether the signs are permitted under subsection (c). The literal language of the federal act therefore compels compensation. See, e.g., RHP, Inc. v. City of Ithaca, 91 A.D.2d 721, 457 N.Y.S.2d 645 (1982); Metromedia, Inc. v. City of San Diego, 26 Cal.3d 848, 164 Cal.Rptr. 510, 610 P.2d 407 (1980), rev’d on other grounds, 453 U.S. 490 (1981). Further, federal regulations make it clear that just compensation must be paid for the removal of signs which are grandfathered under the state-federal agreements covering signs in commercial and industrial zones. 23 C.F.R. § 750.707(e) (1989).
(Tex.App. 1987); Lamar-Orlando Outdoor Advertising v. City of Ormond Beach, 415 So.2d 1312 (Fla.App. 1982). Moreover, subsection (k) only permits stricter standards to be imposed “subject to compliance with subsection (g) . . . for the payment of just compensation.” Finally, the FHWA, in reviewing the 1978 amendments to the federal act in an advance notice of proposed rulemaking, stated that: [22] “The States are required to ensure that just compensation is paid for any sign lawfully erected along the Interstate and primary systems and required to be controlled, even though the removal is made pursuant to a State or local law unrelated to the Highway Beautification Act. The amendment has been interpreted to apply to and guarantee the payment of just compensation for all signs lawfully erected under State law and in existence on or after November 6, 1978. . . . Failure to provide compensation for such signs will subject the State to a reduction of its Federal-aid apportionment.” [23] 44 Fed. Reg. 25,389 (1979).
D
[24] Payment of just compensation is part of the “effective control” which states must provide in order to preserve their federal funding National Advertising Co. v. City of Ashland, 678 F.2d 106 (9th Cir. 1982); Vermont v. Brinegar, 379 F. Supp. 606 (D. Vt. 1974). Thus, if the City’s ordinance does not comply with the just compensation requirement of the federal act, it conflicts with the Colorado act, and is preempted.
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as used in the City’s ordinance, constitutes a period of time which a nonconforming sign is permitted to remain before it must be brought into conformity or removed. It is an attempt to allow a sign owner to recoup some of his expenditure in the sign. After the expiration of the amortization period, no further compensation is due the sign owner. Removal of a sign by use of amortization, as opposed to eminent domain, is an exercise of a municipality’s police powers. “Amortization,” in this sense, contains no connotation of compensation or a requirement therefor. Art Neon Co. v. City County of Denver, 488 F.2d 118 (10th Cir. 1973), cert. denied, 417 U.S. 932 (1974).
[26] We do not believe that “amortization” satisfies the just compensation requirement of the federal act. The language of the act itself appears to require monetary compensation. Subsection (g) states that: “Just compensation shall be paid upon the removal of any outdoor advertising sign. . . .” (Emphasis added.) Thus, substitution of an amortization period for the payment of monetary compensation appears to be contrary to the language of the statute. [27] Moreover, the legislative history of the federal act and its amendments makes it clear that the just compensation provision was inserted to prevent states from using their police powers to remove signs. The original version of the federal act authorized the use of police power rather than the payment of just compensation for removal of signs. Subsection (g) originally read: [28] “Whenever a State shall submit evidence satisfactory to the Secretary that it is unable to secure effective control, as herein provided, under its police powers, Federal-aid funds may be used to pay the Federal pro rata share of the costs of providing effective control by purchase or condemnation.” [29] S. 2084, 89th Cong., 1st Sess. § 101(g) (1965). Congress rejected the use of police power, adding the compensation provision of subsection (g) in the belief that compensation would prevent economic devastation for billboard owners. In discussing the just compensation requirement, the Senate Committee on Public Works stated: [30] “This section, as originally proposed, would have required the States, wherever the authority exists, to exercise their police power in acquiring advertising rights. The committee emphatically and unanimously rejects the use of police power in acquiring these rights, and has provided for the use of Federal funds for paying the Federal pro rata share of the acquisition costs of such rights through purchase or condemnation. Such payment is mandatory, not permissive, on the States.” [31] S. Rep. No. 709, 89th Cong., 1st Sess. 7 (1965). Similar remarks appear in the report of the House Committee on Public Works. See H.R. Rep. No. 1084, 89th Cong., 1st Sess. 71 (1965). [32] Subsequent congressional actions further demonstrate a conscious political decision to reject the use of an amortization provision to comply with the federal act. Prior to 1978, several courts held that a municipality’s use of its police power was not inconsistent with the requirements of the federal act. See, e.g., Art Neon Co. v. City County of Denver, 488 F.2d 118 (10th Cir. 1973), cert. denied, 417 U.S. 932(1974). Further, the FHWA issued a decision which declined to assess a penalty on a state when a municipality removed a sign pursuant to its police power. In response, Congress amended the act to require just compensation for the removal of all signs within the act’s control zone, “whether or not removed pursuant to or because of [the federal act].” Surface Transportation Assistance Act of 1978, Pub.L. No. 95-599 § 122, 92 Stat. 2689, 2700 (codified at 23 U.S.C. § 131(g) (1989)). The 1978 amendment was designed to prevent the use of general zoning ordinances as a means of circumventing payment under the act. See H.R. Rep. No. 1485, 95th Cong., 2d Sess. 15 (1978); Lamar-Orlando Outdoor Advertising v. City of Ormond Beach, 415 So.2d 1312
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(Fla.App. 1982); City of Whitewater v. Vivid, Inc., 140 Wis.2d 612, 412 N.W.2d 519 (1987); Note, Billboard Removal: What Amount of Compensation is Just?, 6 Va. J. Natural Resources L. 323 (1987).
[33] Further evidence that the term “just compensation” requires monetary compensation is found in the federal regulations which control the payment of compensation for the removal of a sign. The regulations speak in terms of appraisals, market value, and monetary damages. See 23 C.F.R. § 750.304(c)-(d) (1989). Moreover, the administrative interpretation of the 1978 amendments by the FHWA emphasizes that amortization is unacceptable. In 44 Fed. Reg. 25,390 (1979), the FHWA stated: [34] “The 1978 amendments dealing with just compensation no longer allow the States or local governments to remove signs without compensation following the expiration of an amortization period. In the future, any sign removed along Federal-aid Interstate and primary systems must be compensated for, if the sign was legally erected and in existence on or after November 6, 1978, . . .” [35] We are entitled to give deference to the interpretation given the statute by the FHWA since we find no compelling indications that it was wrong. Columbia Broadcasting Sys., Inc. v. Democratic Nat’l Comm., 412 U.S. 94 (1973). In light of the legislative history of the just compensation provision, we believe due respect should be given to the administrative interpretation of the statute by those charged with administering it. Alper v. State, 96 Nev. 925, 621 P.2d 492 (1980). [36] Moreover, the Attorney General of the United States, in an opinion issued November 16, 1966, concluded that states which decide to use their police power to remove outdoor advertising signs, without payment of compensation, will be in violation of the act so as to incur the 10% penalty provided in subsection (b). 42 Op. Att’y Gen. 331 (1966). [37] Finally, numerous jurisdictions have concluded that an amortization provision does not constitute just compensation as required by the federal act. See Vermont v. Brinegar, 379 F. Supp. 606 (D. Vt. 1974) Metromedia, Inc. v. City of San Diego, 164 Cal.Rptr. 510, 610 P.2d 407(1980), rev’d on other grounds, 453 U.S. 490 (1981); City of Salinas v. Ryan Outdoor Advertising, 189 Cal.App.3d 416, 234 Cal.Rptr. 619
(1987); Lamar-Orlando Outdoor Advertising v. City of Ormond Beach, 415 So.2d 1312 (Fla.App. 1982); Battaglini v. Town of Red River, 100 N.M. 287, 669 P.2d 1082 (1983); City of Houston v. Harris County Outdoor Advertising Ass’n, 732 S.W.2d 42 (Tex.App. 1987); City of Whitewater v. Vivid, Inc., 140 Wis.2d 612, 412 N.W.2d 519 (1987); c.f. Markham Advertising Co. v. State, 73 Wn.2d 405, 439 P.2d 248 (1968). [38] For the foregoing reasons, we believe that the City’s amortization provision of its zoning ordinance does not provide “just compensation” as is required by the federal act, and therefore, the ordinance is preempted by section 43-1-416, 17 C.R.S. (1984), of the Colorado act.[7]
IV
[39] The court of appeals held that section 43-1-414(3), 17 C.R.S. (1984), prohibited the City from removing a sign until the federal share of the compensation required to be paid becomes available to the state. We disagree.
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along a secondary highway in this state until the federal share of such compensation becomes available to the state.”
[42] All of the parties in this case, the City, sign owners, and CDOH, agree that the court of appeals erred in its interpretation. The statutory provision in question mirrors 23 U.S.C. § 131(n) (1989), which states that “no sign, display, or device shall be required to be removed under this section if the federal share of the just compensation to be paid upon removal of such sign, display, or device is not available to make such payment.” We believe that both section 43-1-414(3), 17 C.R.S. (1984), and 23 U.S.C. § 131(n) (1989) do not prohibit the City from removing the signs by payment with municipal funds. The statutory provisions were designed simply to excuse removal when funds are not available, rather than to prohibit such removal. An interpretation requiring local municipalities to allow nonconforming signs to remain until compensation is available from the federal government is unreasonable and renders the provision allowing municipalities to develop stricter controls a nullity. [43] Because we believe that the court of appeals misinterpreted the state act to restrict a municipality from using its own funds, we reverse that portion of the judgment. We affirm the court of appeals determination that just compensation is required to be paid in this case; that amortization does not constitute just compensation; and that the City’s ordinance is preempted to the extent that it conflicts with the Colorado Outdoor Advertising Act. [44] Accordingly, the judgment is reversed in part, affirmed in part, and the case is remanded to the court of appeals with directions to affirm the judgment of the trial court.