ORDERS:
FINAL ORDER AND DECISION
I. Introduction
National Advertising Company, d/b/a Outdoor Systems, Inc. (National) seeks permission from the South Carolina
Department of Transportation (DOT) to allow National to repair a damaged sign used as an advertising billboard. DOT
opposes National's position and asserts that the sign cannot be repaired, but must be removed as an illegal structure. DOT's
disagreement with National places jurisdiction in the Administrative Law Judge Division (ALJD). See S.C. Code Ann. § 57-25-110 et seq.; 25A S.C. Code Ann. Regs. 63-341 et seq. After considering the evidence and arguments presented at a
hearing of this matter on June 30, 1999, I find the sign may be repaired.
II. Issues
Is the damage to National's sign less than fifty percent of the replacement cost as of March, 1999 (the date of the damage) so
as to allow the repair of the sign under S.C. Code Ann. Regs. 63-350(C)(4)?(1)
III. Analysis
Sign Repair
1. Positions of Parties
Regulation 63-350(C)(4) states that "[i]n the event a non-conforming device is partially destroyed by wind . . . or other
catastrophic occurrences, the Department must determine whether to allow the sign to be rebuilt." While DOT agrees that
National's non-conforming sign was destroyed by severe winds, DOT argues that the controlling determination of whether to
allow rebuilding turns upon two decisions. First, DOT argues the specific language of Regs. 63-350(C)(4) prohibits
rebuilding a non-conforming sign if the damage to the sign exceeds fifty percent of the sign's replacement cost. Second,
DOT argues the evidence in this case establishes that the damage to the sign exceeds fifty percent of the sign's replacement
cost. Thus, DOT asserts no repair is available.
While National agrees with DOT's framework of analysis, National does not agree with DOT's conclusion. Rather, National
argues the evidence demonstrates that the damage to the sign is less than fifty percent of the replacement cost. Accordingly,
National asserts Regs. 63-350(C)(4) does not prohibit the sign repair.
2. Findings of Fact
I find by a preponderance of the evidence the following facts:
a. Background
In 1980, National applied for a permit to erect a billboard in Darlington County, South Carolina. The permit request was
approved, permit 05-16-677810 was issued, and the sign was erected soon thereafter. However, due to later changes in the
applicable law, DOT determined that the sign was a non-conforming sign and began holding National to the requirements of
Regs. 63-350(C).
DOT found that the repair requirements of Regs. 63-350(C) were applicable in early March, 1999 due to National's sign
being severely damaged by high winds during that month. As a result of the damage, and in compliance with Regs. 63-350(C), National submitted an application to DOT on March 12, 1999 seeking permission to repair the sign.
Permission was denied by DOT on April 12, 1999. On that date, DOT informed National that no repair would be allowed
since DOT believed the damage to the sign exceeded fifty percent of the sign's replacement cost. National disagreed and this
case resulted before the Administrative Law Judge Division.
This case turns upon deciding the cost of the sign damage, deciding the replacement cost, and then deciding if the damage
exceeds fifty percent of the sign's replacement cost.
b. Sign Damage
The evidence demonstrates that the parties do not agree on the cost of repairs. After considering the testimony and exhibits,
I find a proper estimate of the total repair cost is $2,443.02(2) as listed below:
Item Quantity Cost Total
Class 2 - 50' poles 6 250.00 1500.00
Lumber - 2" x 6" x 20' 8 13.20 105.60
Plywood - 4' x 10' 5 58.00 290.00
Formetco 1 35.00 35.00
Edging 4 18.00 72.00
Sakrete 30 2.85 85.50
Light fixtures - mercury vapor 2 118.00 236.00
Light bulbs - mercury vapor 6 15.00 90.00
Electric Cable - 12 gauge 50' .20' 10.00
Bolts - 3/4 x 4" 6 1.65 9.90
Metal Strapping 1/10 of coil 90.20 9.02
Total Repair Cost $2,443.02
c. Replacement Cost
The parties also failed to agree on the replacement cost of the sign. DOT asserted that the replacement cost was the sign's
value of $4,380 in 1980. National asserted that the replacement cost must be determined by estimating the cost of actually
replacing the sign. National argued that such a cost would be $8,463. Again, after reviewing the testimony and exhibits, I
find the replacement cost to be $7,003.86(3) as established below:
Item Quantity Cost Total
Class 2 - 50' poles 6 250.00 1500.00
Lumber - 2" x6" x 20' 36 13.20 475.20
Plywood - 4' x 10' 20 58.00 1160.00
Marine plywood - 2' x 8' 10 21.00 210.00
Formetco 12 35.00 420.00
Braces 12 62.00 744.00
Edging 12 18.00 216.00
Sakrete (sacks) 30 2.85 85.50
Light fixtures - mercury vapor 6 118.00 708.00
Light bulbs - mercury vapor 6 15.00 90.00
Meter base 1 20.00 20.00
Breaker Box 1 75.00 75.00
Breakers 6 15.00 90.00
Ballast 4 110.00 440.00
Astronomical dial 2 237.00 474.00
Electrical cable - 14 gauge 500' .18' 90.00
Electrical cable - 12 gauge 50' .20' 10.00
Bolts - 3/4" x 4" 12 1.65 19.80
Bolts - 3/4" x 12" 12 7.18 86.16
Strapping - metal coil 1 90.20 90.20
Replacement Cost $7,003.86
d. Damage Percentage
Having determined the sign damage to be $2,443.02 and the replacement cost to be $7,003.86, I find the damage to the sign
is only thirty-five percent of the replacement cost.
3. Conclusions of Law
Based on the Findings of Fact, I conclude the following as a matter of law:
The sole issue presented in this case is whether the fifty percent rule of Regulation 63-350(C)(4) has been satisfied. That
rule states the following:
In the event that a nonconforming device is partially destroyed by wind . . ., the Department must determine whether to
allow the sign to be rebuilt. If the Department determines that the damage to the sign was greater than 50 percent of its
replacement cost as of the time of the damage, the sign . . . may not be erected again."
Here, while all agreed that the sign is a non-conforming device, the parties significantly disagreed on the method of
determining replacement cost. DOT asserted that replacement cost was equivalent to fair market value, while National
argued that replacement cost was best measured by the cost to reconstruct the sign. I agree with National.
While not entirely clear, DOT apparently argues that the term "replacement cost" is intended to require DOT to determine
the fair market value of the sign. From the fair market value premise, DOT appears to argue that since signs always
depreciate, the fair market value of the sign will never exceed its original value determined as of the date the sign was
constructed. Thus, DOT argues that a conservative estimate of replacement cost for the sign here under review is the fair
market value of the sign at the time of original construction in 1980. I cannot agree with DOT's approach to determining
the meaning of replacement cost for at least two reasons.
First, the regulation does not seek to measure the fair market value of the sign. On the contrary, the plain meaning of
"replacement cost" does not measure fair market value. Rather the term is "the present cost of replacing the improvement
with one having the same utility." Black's Law Dictionary, 1299 (6th ed. 1990). Thus, the best measure of replacement
cost is presented by evidence explaining what costs are incurred in replacing the sign so that the sign performs as it did
before the damage. In this case the best evidence of replacement cost was presented by National.
Second, DOT's view miscasts the role of replacement cost in measuring fair market value. Indeed, before fair market value
can be established by using replacement cost, such cost must be reduced by depreciation. See The Appraisal of Real Estate,
p. 321, Appraisal Institute (10th edition, 1992) (where determination of fair market value requires that replacement cost be
reduced by "all accrued depreciation in the property from that cost"). Thus, a regulation that solely seeks replacement cost
cannot logically seek fair market value. Rather, to seek fair market value, the regulation would need to be rewritten so as to
state that replacement cost must be reduced by accrued depreciation. Obviously, a judge should not add words to a
legislative pronouncement, but instead a judge should only apply the language given by the General Assembly. Banks v.
Columbia Ry., Gas & Electric Co., 113 S.C. 99, 101 S.E. 285 (1919). In short, had the regulation intended to reduce the
replacement cost by depreciation, it could have easily done so.
Based on all of the above, DOT failed to provide persuasive evidence that the damage to the sign exceeded fifty percent of
the replacement cost. Accordingly, DOT has no basis to deny National's request to repair the sign or to cancel National's
permit.
IV. Order
Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered:
The South Carolina Department of Transportation shall re-issue sign permit number 05-16-677810 and National shall be
allowed to repair the sign consistent with the estimated cost of repair identified in this order.
AND IT IS SO ORDERED.
RAY N. STEVENS
Administrative Law Judge
Dated: July 22, 1999
Columbia, South Carolina
1. This issue is the only issue argued. Certainly, to assure proper decisions, "[o]f necessity, [judges] must have the freedom
to depart from the particular arguments urged on us by adversary parties . . ." Bartles v. Livingston, 282 S.C. 448, 319
S.E.2d 707,717 (Ct. App. 1984). However, judges should be reluctant to reach issues not raised. Thus, other potential
positions supporting or refuting the repair are not addressed.
2. The repair cost does not include paint ($1,000), labor ($270), or the equipment to replace the poles ($300), as these items
were not included in National's prepared written estimate and they appeared too subjective to warrant inclusion. Were these
costs to be added to the repair cost total, they would also have to be added to the replacement cost total. Although doing so
would increase the percentage of the repair cost in proportion to the replacement cost, from thirty-five to forty-seven
percent, that percentage still would not exceed fifty percent.
3. As noted in footnote one, the replacement cost does not include paint ($1,000), labor ($270), or the equipment to replace
the poles ($300), as these items were not included in National's prepared written estimate and they appeared too subjective
to warrant inclusion. |
