ACTION: Outdoor Advertising Changes in the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA)

From: Associate Administrator for Program Development

To: Regional Federal Highway Administrators

The ISTEA contains certain provisions which affect the control as well as acquisition of outdoor advertising signs. The following information is provided for your interim use in assuring that these provisions are implemented by the States as mandated by Congress.

1. Illegal signs Section 1046(b) requires the removal of any sign along the Interstate System or the Federal-aid primary system which was not lawfully erected. The sign owner must remove such sign within 90 days of enactment of the ISTEA at own expense, or if not removed by the sign owner, the State must remove the sign and the sign owner will be liable to the State for this removal cost.

   Comment: The 90-day period starts on December 18, 1991. Division offices should notify States promptly, particularly those with high numbers of illegal signs. Failure of a State to assure that this provision is met may trigger the withholding of highway construction funds. We recognize that State law and/or procedures may inhibit timely State actions in some cases. This will be addressed in more forma guidance in the near future.

   Attached is a copy of the 1990 summary report indicating the States with illegal signs remaining. The 1991 summary report should be available by February 1, 1992.

2. Scenic Byway Prohibition - Section 1046(c) is a new provision that prohibits new signs adjacent to those portions of an Interstate or primary highway (other than exempt signs) that is designated a scenic byway.

   Comment: Since this provision also takes effect on December 8, States that have scenic byways on the Interstate and primary highway systems should consider withholding the issuance of permits for new signs until it is determined whether such highways are to be included in the term " designated scenic byway."

3. Controlled highways: This includes the Interstate System, roads that were on the Federal-aid primary system as it existed on June 1, 1991 and any highway which is not included above but which will be on the National Highway System (NHS). Congress has until September 30, 1995 to enact a law approving a designated NHS. Until then, outdooradvertising controls will apply only to the Interstate System and the Federal-aid primary system as it existed on June 1, 1991.

   Comment: The intent is to insure that as a minimum the controls in effect now will remain in effect until the NHS is identified.

4. Funding eligibility: Section 1046(a) establishes Federal-aid eligibility of 23 U.S.C. 104 funds for the removal of nonconforming signs. In section 1007, Surface Transportation Program (STP), subsection (d)(2) provides that 10 percent of the apportioned funds under 23 U.S.C. 104(b)(3) shall only be used for transportation enhancement activities. This term is defined to include "control and acquisition of outdoor advertising."

   Comment: States may want to consider giving some priority in the use of STP funds for the acquisition of outdoor advertising signs, especially the nonconforming signs on designated scenic byways, as a means to achieve the 10 percent transportation enhancement activity requirement.

5. Valuation of signs: The Federal law requires the acquisition and removal of nonconforming signs if Federal funds are available. To simplify the valuation of signs and sites and minimize administrative expenses, the development and use of a cost schedule is recommended. The State agency may determine that an appraisal is unnecessary when the valuation problem is uncomplicated and the fair market value of the sign or site is estimated at $2,500 or less. Although valuation by a schedule or an appraisal will not be required in this instance, an informed judgement must be made by a qualified person and value documentation is to be in writing and retained in the State agency's file.

When an appraisal is necessary, all relevant and reliable approaches to value, consistent with commonly accepted professional appraisal practices must be correctly used. In this regard the sole use of the Gross Rent Multiplier (GRM) to estimate the value of a sign does not meet the intent of 49 CFR 24.103 and 24.104. This method has limited use as a general "rule of thumb." It depends upon the reliability and proper analysis of sales of similar properties that exhibit a high degree of uniformity with respect to location, type, risk and financing (a condition rarely encountered in the case of signs). Where such sales do exist, the market approach should be applied since it would normally reflect a more accurate estimate of value.

The income approach can constitute an acceptable approach if business related elements are properly considered in the appraisal process. It is our position that the use of the cost approach will generally reflect the most reliable estimated value due to the special purpose nature of outdoor advertising signs. Further the "Principle of Substitution" provides that the replacement cost of a property typically sets the upper limit of its value.

The Appraisal Standards Board (Appraisal Foundation) has agreed that the Uniform Standards of Professional Appraisal Practice (USPAP) are consistent with the requirements of 49 CFR 24.103 and 24.104. Accordingly, appraisers should adhere to the applicable provisions of Standard Rules 1, 2 and 3 where sign appraisals are involved.

We anticipate issuing an ANPRM shortly on the administration of outdoor advertising under 23 U.S.C. 131 as amended by the ISTEA.

ATTACHMENT (1)

Attachment 1

NATIONWIDE SUMMARY REPORT
NONCONFORMING AND ILLEGAL SIGNS
Fiscal Year ending September 30, 1990

REGION	STATE	NONCONFORMING SIGNS REMAINING	ILLEGAL SIGNS REMAINING
**Region 1	CT ME MA NH NJ NY PR RI VT	85 0 42 135 491 2314 0 71 0	36 0 76 0 105 452 135 49 2
**Subtotal**		3138	855
**Region 3	DE DC MD PA VA WV	103 0 1450 7688 2164 47	32 0 0 2601 O 0
**Subtotal**		11452	2633
**Region 4	AL FL GA KY MS NC SC TN	2959 6584 2563 677 1077 3296 1971 3704	1159 200 1359 848 1416 0 0 0
**Subtotal**		22831	4982
**Region 5	IL IN MI MN OH WI	1950 5340 2989 60 3481 10195	200 2602 0 32 51 0
**Subtotal**		24015	2885
**Region 6	AR LA NM OK TX	1060 629 965 2494 7535	389 2820 1540 2539 1363
**Subtotal**		12683	8651
**Region 7	IA KS MO NE	461 5396 3221 1805	10817 480 342 257
**Subtotal**		10883	11896
**Region 8	CO MT MT ND SD UT WY	965 748 359 3036 0 1642	293 48 1091 111 4 6
**Subtotal**		6750	1553
**Region 9	AZ CA HI NV	3514 2884 0 12	97 395 0 0
**Subtotal**		6410	492
**Region 10	AK ID OR WA	0 142 14 32	131 58 0 38
**Subtotal**		188	227
***TOTAL***		98350	492

This Policy Memorandum was Canceled June 23, 1999.

FHWA Home | Directives | Policy Memos | Feedback United States Department of Transportation - Federal Highway Administration