HOW MUCH IS MY BILLBOARD WORTH?
VALUING THE INTEREST OF A BILLBOARD LESSEE IN EMINENT DOMAIN PROCEEDINGS
Law & Valuation
The Takings Clause of our Constitution guarantees that the government will not take private property for public use without just compensation. Just compensation is measured by the fair market value of the land as a whole, including all improvements and fixtures. The measure of just compensation becomes problematic in the commercial context when portions of the appropriated land are leased out to tenants who have placed valuable structures, such as billboards, on the land. Some jurisdictions consider billboards personal property not recoverable under eminent domain. Those jurisdictions that do allow recovery disagree as to the proper method of valuation to be employed. This issue is further complicated if the billboard cannot be relocated in the same market area.
1. Should a billboard be categorized as a fixture such that an owner may receive compensation through eminent domain?
2. If so, which of the traditional methods of real estate valuation most fairly reflects the market value of the billboards?
1. The majority of jurisdictions consider a billboard to be personal property removable at will by the tenant and not recoverable under eminent domain. However, the billboard lessee will usually receive compensation by a statute designation billboards and other such structures as part of the real estate.
2. Of the three traditional appraisal methods, cost, income and market, the reproduction less depreciation, a form of the cost approach is the most widely accepted method in coming to fair market value. However, courts are willing to employ different methods to when compensating for the costs of reproducing the billboard would not be reasonable.
In condemnation proceedings compensation is based on the fair market value of the property. This is defined as the price that a willing buyer and seller would agree on if sold in the open market under no obligation to do so. Only property denominated as real estate and fixtures that are attached to the real estate require compensation. If property is denominated as removable from the land, the value of that item is not included in the determination of the fair market value of the land. There are three traditional models used to determine fair market value: the cost approach, the income approach and the market approach.
Most jurisdictions recognize the cost approach as an appropriate measure of fair market value. Also known as the depreciated reproduction cost method, this approach determines the fair market value by evaluating the reproduction cost of the sign, less depreciation. An appraiser should consider all incidental expenses such as financing fees and architect costs before reaching a final figure. While this approach is widely accepted, in eminent domain cases whereby the property may actually be reproduced and relocated on another parcel of land, it does not represent just compensation when the structure cannot be relocated in an equally attractive location.
In these situations, combinations of the income approach and market based comparisons should be employed, subject to certain limitations. First, the property being valued must be income producing. Second, the income producing activity, the erection of the billboard, cannot be replicated in the same market area. If the billboard may be erected in an equally attractive location, the costs of reproducing the billboard will be sufficient compensation. If a city ordinance or general crowding prohibits the erection of a similar billboard in another location, the billboard lessee has suffered economic damage beyond the mere value of the structure itself. If this is the case, courts must take other factors into account.
Real estate developers contend that the most important part of a successful business is location. After location, a successful business must have proper advertising. Mr. and Mrs. Davis, owners of a competitive fast food franchise, want their restaurant located on the closest lot to the expressway exit ramp. If that lot is taken, they will be happy to build elsewhere but will want to be sure to have the largest billboard on the highway to compensate for its less convenient location. The location and advertisement of the Davis’ restaurant is directly related to the success of their business. If the state determines they need the Davis’ property to widen the interstate, the state will pay them compensation based on the fair market value of the land. If the widening of the road affects the location of the Davis’ billboard, they should receive compensation for that as well. However, the law is not in agreement on this issue.
By and large, an owner or leaseholder will be compensated in an eminent domain proceeding for the property taken, including all improvements, structures and fixtures on the property. Some jurisdictions consider billboard personalty, thus not recoverable in an eminent domain proceeding. When a court does consider a billboard to be a fixture, there are different approaches to determine the appropriate compensation. These approaches include measuring the reproduction cost of the signs less depreciation, the capitalization of the present worth of the rental income from the signs over the remainder of the leasehold, and the market value of the leasehold. This paper will briefly discuss the factors used to determine whether a billboard is considered fixed to the property or personality. Assuming billboards are considered fixtures, the focus of the paper turns to the extent to which a lessee of a billboard should be compensated in an eminent domain proceeding.
Before entertaining the question of the valuation of a billboard, the court must first determine if the structure is a fixture or personalty. If a sign is not a fixture, it is not appropriated with the land during condemnation. Cases are not unanimous as to this point. In some jurisdictions, billboards are generally considered personal property rather than realty and the owners of the billboards are entitled to remove them from the realty upon the expiration of their leasehold interest. The condemnor is only liable to the owner of the billboard if it takes the property without giving the billboard owner an opportunity to remove billboards. In that situation, the proper recovery is the billboard’s replacement value less depreciation. However, lessees may prove the billboard is a fixture by showing it is so connected to the property that it cannot be removed without injury to the real estate. A three prong test is usually applied in determining whether the object is appropriated along with the real estate. The three criteria include: 1) annexation to the realty, 2) adaptation to the use to which the reality is devoted, and 3) an intention that the object become a permanent accession to the freehold. Generally, there is a presumption that anything a lessee installs on the leasehold interest to improve his business is to be removed at the end of his term on the property. As a result, when a lessee makes an improvement to the leasehold, it is construed that the improvement was for his own benefit and not the enrich the leasehold. Based on this reasoning, billboards are and should be considered personalty and not recoverable in eminent domain proceedings. While this is the most rationale result at law, it results in an inequity to the leaseholder. A lessee has very little use for a billboard without an attractive parcel of land to put it on.
Because so many jurisdictions take this view, a federal statute protects lessees from the loss that they may incur as a result of their billboards and other like structures being classified as personalty. The Uniform Relocation and Assistance Act reads, “if the head of a Federal agency acquires any interest in real property in any State, he shall acquire at least an equal interest in all . . . structures located upon the real property.” To effectuate the statute, courts will interpret the structure to be a part of the real property so that the tenant may be for the fair market value of their structures regardless of their status as a fixture or the terms of the underlying lease. Some states have enacted statutes similar to the federal statute to alleviate the inequities that would otherwise result when billboards and other structures would not be considered “appropriated” with the land. These jurisdictions realize that the problems that occur in situations involving billboards and other structures that are worth much more on the property than taken apart and relocated on another piece of property. Accordingly, courts have ruled, “the property rights of the lessee have been taken just as those of the lessor have been, and those rights ... have a value for which the lessee is entitled to compensation.” In addition to the legislation denominating billboards as “statutory fixtures,” some states recognize billboards as fixtures without such legislation. For example, New York classifies all billboards as fixtures leaving no doubt that a lessee or owner of the billboard will receive compensation from the state. A billboard lessee who suffers a taking will generally not walk away empty handed in any jurisdiction. However, the classification of the fixture still remains a threshold question because the extent to which they do receive compensation depends on the status of the sign. If a billboard is denominated a fixture, the lessee has a much greater chance at a large recovery.
A. The Cost Approach
Most jurisdictions recognize the cost approach as an appropriate measure of fair market value. The cost approach is obtained by evaluating the reproduction cost of the sign, less depreciation. Some courts have included in this analysis builder’s profits, architect’s fees, and financing costs. As is the case with most cost approach models, the appraiser should include all direct costs, indirect costs, and all “entrepreneurial profit” before deducting necessary depreciation. Real estate appraisers are generally critical of this method of valuation because while it may be based on market comparisons, it is not considered a market based methodology.. Critics contend that a willing buyer or seller will rarely consider the recalculated costs of a structure while taking depreciation in account, in determining his offer to buy or sell. The cost approach simply lacks market reality. However, the cost approach is well suited in eminent domain cases whereby the property may actually be reproduced and relocated on another parcel of land. In cases involving billboard, the cost approach is a reliable method. If the structure cannot be removed and replaced in another location, the condemnee may use the compensation to reconstruct a duplicate sign in another location. Therefore, the estimated cost to construct the billboard at current prices, less depreciation, is an excellent method to determine just compensation. However, this method will not always be appropriate when relocating the billboard in the same market is unfeasible.
When a parcel subject to a leasehold interest is taken by eminent domain, most jurisdictions value the parcel as whole to determine the entire compensation. Next, the leaseholder and the fee simple owner will engage in a separate apportionment hearing to determine their respective shares in the compensation. In New York, billboards are considered fixtures and the taking of the land in eminent domain includes everything that is affixed to the land. When determining the property compensation for the billboard lessee, the court will look at how much the improvement enhances the value of the land. The appropriate number is found by looking a the fair market value of the billboard as measured by its replacement value. Many courts have relied on the replacement value of the billboard as reflecting the amount by which it enhances the value of the whole parcel. In a condemnation action in Florida, an advertising agency was granted a separate award of damages. On appeal, the court reversed the decision and held that the leasehold interest could not be valued as a separate interest from the fee and the exclusive method of determining compensation for the lessee is the replacement or reproduction value of the billboards. The court expressly rejected the use of the income approach. According to the court, this method is compensates the owner of the structure for business damages and focuses on income generated from the operation of a business on the land rather than the land itself. This is a continuous area of litigation when it comes to eminent domain cases. While most courts are in agreement that the cost approach is the primary way to valuate structure like billboards, courts are not in agreement as to what should constitute the “cost” or reproducing the structure.
National Advertising Co. v. State, Department of Transportation involved the valuation of an improved leasehold interest in property. National Advertising improved the property by erecting a billboard. Subsequent to the erection of the billboard, the county enacted a sign ordinance whereby all billboards newly erected were required to comply with zoning requirements. National Advertising’s leasehold had the potential of being extended until 2006 and as a result, was exempted from the city’s scheduled removal. However, if National Advertising moved the billboard to a new location, it would lose its “grandfather” status and be subject to the restrictions of the new sign ordinance. Because National’s request for a variance from the ordinance was denied, there was no place in the Jacksonville market to relocate the billboard. When the state took the property from the fee owner, National’s billboard became worthless. Still, National was awarded compensation based on what it would cost to reconstruct the same structure.
In its case in chief, the Department of Transportation (DOT) offered its expert appraisal’s opinion that the value of the billboard amounted to $38,400. This valuation was based on the replacement cost of the billboard in light of the fact that National could not replace or relocate the sign anywhere in the city. DOT’s appraiser failed to give testimony as to the value of National’s leasehold interest because the expert was only instructed to value the “billboard itself.” The trial court entered judgment according to the DOT’s value. However, National’s valuation technique took a different approach. Although the general rule is to value the fixture using the reproduction/replacement analysis, such a method should not be used if there is no place to relocate the sign. In that situation, the value of the leasehold itself should be determined.  Therefore, National’s appraiser testified as to the fair market value of the leasehold as improved by the billboard by using the income approach. The gross income multiplier method is a type of market approach whereby sales from comparable properties are used to determine what a hypothetical willing buyer would offer a willing seller had the property been sold on the time of the taking. The appraiser used a multiplier as a unit of comparison similar to the amount “per square foot” used in residential and commercial real estate valuations. The multiplier is derived by dividing the gross income produced by the sign into the sales price of the sign. The multiplier was established by looking at comparable sales data. Next, the appraiser determined the gross income from National Advertising’s sign by conducting a rent study to determine what the market rent would be for both sides of the billboard. The appraiser came to a net rental figure after deducting commission costs and other factors. National Advertising Leasehold interest was valued at $81,000.
Upon review of the case, the district court found that National Advertising should be compensated for the value of its leasehold interest rather than for the mere value of the billboard itself. First, the court noted the uniqueness of the case at hand. In typical eminent domain proceedings, the land is valued as a fee simple. Afterwards, the fee owner and any lessee entertain an apportionment hearing whereby the proceeds from the verdict are divided accordingly. However, in National Advertising, the fee simple owner settled out with the state and did not take the interest of the lessee, National Adverting, into account. Noting the unfairness of the situation to National, the court ordered National a jury trial whereby the jury could determine the property compensation for the leasehold interest. The state was responsible for providing the evidence to determine the value of National’s leasehold interest. According to the reviewing court, DOT did not meet this burden. The lower court’s decision was reversed simply because DOT did not present any evidence regarding the value of the leasehold interest and the only competent evidence remaining is that of the National’s. As a result, the National won “by default.” Accordingly, the court’s decision left many doors open. Because the court stated their holding, “makes no comment on and specifically declines to address the appropriateness of the gross income multiplier method utilized” the preferred method of valuing the taking of a billboard lessee’s interest was left undecided by the court. Unique to this case is that the court focused on the taking of the “grandfather” status of the sign rather than the sign itself. It was the “grandfather taking” that allowed to court to focus on the value of the land rather than the structure upon it. The market approach in valuing the interest in the leasehold may not hold must absent the involuntary termination of the status of the billboard.
C. The Income Approach
When an appropriated billboard cannot be located in the same market area, the cost of reproducing it is little or no value to the owner of the billboard. In these situations, evidence of the rental income the signs is expected to produce is another method used in determining their fair market value. The capitalization of income method is used to value property that is considered income-producing such as apartments, office buildings and shopping centers. Using the income method of valuation, the value of the leasehold interest is determined by dividing the net operating income by the capitalization rate chosen by the appraiser. This method was used in Scottsdale v. Eller Outdoor Advertising Co. of Arizona. In Scottsdale, the city acquired property as part of a redevelopment program. The property contained six billboards erected as part of a lease Eller had with the prior owner of the property. Pursuant to a city ordinance, billboards of the type at issue in this case are prohibited from the city limits. Pre-existing nonconforming billboards, such as Eller’s, cannot be removed and then replaced in another area. In other words, if removed, the billboards lose their grandfather status.
At trial, both the city’s appraiser and the advertising company’s appraiser took different approaches to valuation. Eller’s appraiser used a market-income approach. First, the appraiser pointed out the uniqueness of Eller’s advertising structure. Eller specializes in “showings” whereby the same advertisement is shown at the same time throughout the Scottsdale city limits. Each billboard is assigned a factor (DEC) evaluated by traffic patterns to determine the percentage of the city’s population that views the advertisement. Because Eller’s billboards are classified in these “systems,” the appraiser had to use comparisons based on sales of other similar systems. The appraiser took the sale price of four comparable systems and divided each by the net income of the companies. He then took the average of the four resulting net income multipliers as reflecting the relationship between the income and market value. From these comparables, the fair market value of the billboard was determined to be 2.16 times the income generated by the billboard. The appraiser assigned the billboards a DEC of 25 and determined that Eller received an average of $15,671 for each advertising structure that registers at that number. He then found that each of billboard of this type, four illuminated panels in this case, contributed to 8 ½ percent of the average income for a DEC factor of 25. Therefore, each billboard generated $1,332 in income. This number was multiplied by the net income multiplier to arrive at a figure of $2,877. The appraiser assigned the same method to the remaining two unilluminated poster panels and arrived at a figure of $2,030. The total amount of compensation amounted to $15,600. Additionally, Eller’s expert testified as to “severance damages” which was based on the fact that because of Scottsdales’ sign ordinance, the six billboards cannot be relocated. Evaluating Scottsdale’s population, per capita income and elevated tourism industry, the appraiser determined that the 33 billboards in Scottsdale contributed to 7% of Eller’s entire income. In light of Eller’s average yearly income for all billboard revenue, each structure in Scottsdale had an average income of $3,623. This figure was multiplied by the rate of 2.16, and then multiplied by 6, the number of signs taken, to reach a figure of $31,400.
On appeal, the court defended the use of the income method of valuation. The theory behind the method is that the market value of the property is the present worth of its future ability to produce income. As is often the case when using the income producing method of valuation, an opponent will often claim the condemnee is awarded business related damages in addition to damages arising from the loss of the real estate. While most jurisdictions prohibit income from the profits of the business, income in the nature of rentals is appropriate. However, the income approach to valuation is subject to certain limitations when applied in this context. First, the property subject to valuation must be income producing rather than simply being the location where a business is producing income. In this situation, the advertising makes a profit exclusively from leasing out a billboard to a client. According to the court, there is no question that the property itself is the basis for the income Eller is receiving. The second limitation to the income approach is that it may only be applied if the income producing activity cannot be replicated in another area. In this case, the question is whether the billboard may be relocated in the same market area. As far as income producing units are concerned, the success of a billboard depends not only on its design, but its location as well. Accordingly, the Scottsdale area is highly profitable location for advertising given the magnitude of its tourism and the wealth of its inhabitants. Because of the ordinance prohibiting the construction or relocation of they type of billboards at issue, Eller is being deprived of much more than the reproduction cost of the structure. After evaluating the facts of this particular case, the income approach is the only method of valuation that will sufficiently compensate the condemnee.
Once the income approach is approved, the proper rate of capitalization must also be determined. This is also an issue frequently raised on appeal. In Scottsdale, the city attacks the use of comparable sales because “the purpose of eminent domain proceeding is to determine the value of, or adjust compensation for, real property and not a business operated on the real property.” However, the court finds a distinction between the use of comparable sales as direct proof of the value of the land and the use of comparable sales as a mere factor to determine the just capitalization rate. As long as the comparable sales were recent and voluntary, there were no drastic changes in the market, and no substantial differences in the use of the property, prior sales are held to be reliable tools for value. Any questions of reliability, such as inside buyers or differences in shape and location, should go to the weight of the evidence rather than admissibility.
Different approaches are employed to determine just compensation for a the taking of a billboard that is located on a leasehold. However, the persuasive method is a combination the traditional methods of appraisal. One valuation has combined these approaches by identifying three assets that may be lost or relocated as a result of the taking: (1) the sign structures, (2) the interest in the ground lease and (3) the goodwill value of the location of the billboards. The signs were valued by estimating the cost of reproducing, less depreciation. The valuators took into account the age and expected remaining life of the signs and necessary depreciation. As an alternative to the traditional cost approach, the valuators estimated the present value of the land lease similar to the Florida court in National Advertising The valuation of the ground lease takes into account the fact that the lease rate is below market equivalent, the remaining life of the lease, and the use of a reasonable discount rate to calculate the present value of the rental savings in the remaining 16 years of the lease. The valuators employed a low discount rate of 13 percent to reflect that small amount of risk in maintaining the ground lease. Lastly, the valuators employed the residual method to value the locational goodwill of the ground lease. According to the valuators, the locational good will of the billboard, “reflects the residual value of benefits that are directly attributable to each sign.” The residual value is found by taking the value of all three billboards at issue and subtracting each of the value of the sign structures along with their individual interest in the ground lease. Traditional real estate appraisals will compensate for the goodwill of a business if it is completely destroyed by the taking. According to the valuation, the owners of the billboards should be reimbursed for the entire value of the locational goodwill since the signs will not be able to be relocated along the freeway corridor.
When employed by itself, none of the traditional approaches to real estate fully compensates a billboard lessee. This is especially true when a city ordinance prohibits the relocation of the sign within the same market area. The location of the billboard as well as the terms of the ground lease are equally valuable to the billboard lessee as the structure itself. The cost approach generally does not take into account factors such as the location of the billboard and the terms of the lease. Rarely will a billboard lessee be able to relocate his billboard in an equally favorable location. Sometimes, a billboard lessee will not be able to relocate the billboard at all. These scenarios mandate that a billboard lessee be compensated in areas beyond the mere value of the billboard. Therefore, methods such as the income approach and the market approach should be employed. These methods take into account the income producing capabilities of the property as well as the looking at comparable sales of the same property when determining fair market value. Just compensation requires the consideration of all pertinent factors not just the cost of the billboard itself.
 There are three accepted methods of determining the fair market value of property in eminent domain proceedings. These methods are the market data approach, the income approach, and the cost approach. The appraiser chooses the approach according to the use to which the land is put See James D. Masterman, Real Property Valuation: Highest and Best Use: The Basics. SF54 ALI-ABA 233, 235 (2001).
 See Sidney Z. Searles, Just Compensation for Outdoor Illuminated Advertising Structures and Billboards in Condemnation Proceedings C709 ALI-ABA 313, 315 (1992)
 One illustrative jurisdiction used in this paper is Florida. According to Article X, section 6(a) of the Florida constitution, an owner must be compensated for the taking of their property for public use. A lesseee is considered an “owner” for the purposes of this section and must be compensated for the value of his leasehold interest. See Dama v. Record Bar, Inc., 512 So.2d. 206, 208 (Fla. 1st DCA 1987).
 See generally, Rite Media, Inc. v. Secretary of Massachusetts Highway Dept., 712 N.E.2d 60 (1999). Lessees sought compensation for billboard acquired in government taking. Court held that lessee was entitled to fair market value, if any, of its leasehold interest but was not entitle to compensation for his billboard which was considered “personal property.”
 See State v. Obie Outdoor Advertising, 516 P.2d 233, 236-7 (Wa. 1999). The costs of reproducing and relocating the sign is the preferred method of determining the fair market value. However, if the sign is located in a place where it is impossible to relocate, the income approach may be used.
 See Hernando County v. Anderson, 737 So.2d 569, 569 (1999)
 See id. In Hernando, the county thought they had taken the property subject to the existing structures and gave the owners of the billboard no opportunity to remove them. They were subsequently destroyed.
 See e.g., Knell v. Morris, 247 P2d 352, 355 (Ca. 1952)
 See e.g., Empire Building Corp. v. Orput & Assoc's, 336 N.E.2d 82 (1975).
 42 U.S.C. § 4652 (2000). The structure is deemed to be part of the real estate notwithstanding the right of the tenant to remove the structure at the end of the lease.
 See United States v. 40.00 Acres of Land, More or Less, 427 F.Supp. 434 (W.D.Mo. 1976)
 See e.g., State v. Weber-Connolly, Naegele, Inc. 448 NW2d 380 (Minn. 1989)
 Division of Admin., State of Florida v. Allen, 447 So.2d 1383 (Fla. 5th DCA 1984).
 See Buffalo v. Michael, 209 N.E.2d 776 (NY 1965)
 See e.g., Rite Media, supra note 4. The billboard in this case was considered a trade fixture which is not considered to be appropriated along with the land. However, the state was responsible for relocation expenses incurred in removing the billboard to another location.
 See Division of Administration., State, Depart. of Transp. v. Allen, 447 So.2d 1383 (1984).
 See Richards, Of Course v. State, 36 Ad.2d 572 (1971)
 See Masterman, supra note 1 at 251.
 See id.
 See generally, Division of Administration, State, Depart. of Transp. v. Allen, supra, note 16 (citing Florida statute which indicates that a lessee of condemned property is not entitled to a special verdict); But see National Advertising, 611 So.2d 566 (Fla. App. D1 1992). In this case, the fee simple owner settled out with the state without taking the interest of the lessee into account. In this situation, the leaseholder is entitled to a separate verdict.
 See Rochester Poster Advertising Co. v. State, 113 NE2d 911 (1961)
 See id. at 1388.
 See id.
 See Scottsdale v. Eller Outdoor Advertising Co., 579 P.2d 590 (Az. 1978)
 There are situations were the cost approach is not an effective means of determining the fair market value. These situations occur when it is impossible to relocate the structure. This will be discussed later in the text.
 611 So.2d 566 (1999)
 See id. at 567.
 See id. at 570.
 The court cited Lewis v. City of Atlantic Beach, 467 S0.2d 751 (Fla. 1st DCA 1985) for announcing the rule that the involuntary termination of a grandfathered status required compensation by the government.
 See National Advertising, supra note 20 at 570., See also, Paul Stephen Kimsey, Recent Development in Eminent Domain. 23 Stet L. Rev. 572 (1994). Kimsey’s article discussed the National Advertising case and methods of valuation the court applied. Kimsey indicated that since the billboard was incapable of relocation, just compensation mandated the court look at other aspects of value than solely the replacement cost of the billboard.
 See id. at 569.
 See id. at 568. This is in spite of the fact that DOT’s appraiser admitted the sign was basically worthless because there was no place in the city for National to relocate it.
 In general, the depreciated reproduction cost method is disfavored by courts because it rarely represents the amount that a willing buyer and seller would agree on. It is usually only used, as in cases like the one discussed, when the property has a limited activity. See Masterman, supra note 1 at 252-3.
 See Obie Outdoor, supra note 5.
 For the general acceptability of this doctrine, see Newton Girl Scout Council v. Massachusettes Turnpike Authority, 138 N.E.2d 769
 See National Advertising, supra note 20 at 568.
 See id. DOT’s witness on rebuttal argued that the sign was personality and should not be valued with the land. The witness also found this method unreliable because it represented a business value rather than a value to the land itself. According to Florida law business damages are only recoverable as a matter of “legislative grace, not constitutional imperative.” See Jamesson v. Downtown Dev. Auth., 322 So.2d 510, 511 (Fla. 1975).
 See National Advertising, supra note 20 at 570.
 See id. at 569.
 See id. at 570.
 See Searles, supra note 2 at 319.
 See Masterman, supra note 1 at 247.
 579 P.2d 590 (Ariz. 1978)
 See id. at 594. See also Lewis, supra note 29 (loss of grandfather status constitutes a taking requiring just compensation)
 See id.
 See id. A number of 50 would mean that during a specified time, 50% of the population of the city will view the ad.
 See id. The net income component is found by taking the gross income of the system and subtracting operating expenses such as agency commissions and discounts. See also, Masterman, supra note 1 at 248. (discussing the mechanics of income method of valuation)
 The 2.16 net multiplier is analogous to the capitalization rate which is estimated as the return on investment necessary to attract necessary capital. See Matesterman, supra note 1 at 248.
 See Scottsdale, supra note 24 at 594.
 See id.
 Although the majority of jurisdictions will not allow damages for business loss, some forms are acceptable. When a business cannot be relocated or is relocated with a substantial loss of profits, jurisdictions may include this in the amount of property taken. See e.g., Richmond County v. 0.153 Acres of Land, 430 S.E.2d 47 (Ga. 1993)
 See Scottsdale, supra note 24 at 597, quoting 4 Nichols, The Law of Eminent Domain § 13.35(2)(a)(Rev. 3rd ed. 1976)
 See Kimball Laundry Co. v. U.S., 338 US 1 (1949); See also Jamesson, supra note at 511. Arizona specifically prohibits loss of business profits in State v. Carrow, 114 P.2d 891 (1941)
 See Scottsdale, supra note 24 at 598.
 See id. at 598.
 See id. at 599.
 A capitalization rate is defined by the rate of return on other similar examples. For example, if comparables sales of apartments show that they are selling for three times their annual rents, a proper capitalization rate for the income approach would be three. See United States v. Certain Interests in Property, 186 F.Supp. 167 (N.D.Cal. 1960).
 See Scottsdale, supra note 24 at 599.
 See Phoenix v. Clauss, 869 P.2d 1219 (Az. 1994).
 See Scottsdale, supra note 24 at 600.
 See Searles, supra note 2 (attached exhibit appraiser of Three Door Advertising Sings by Arthur Anderson & Co. herein after “Attachment”).
 See National Advertising, supra note 20. In this case, the court only looked at the value of the ground lease rather than the replacement cost of the structure.
 See Appraisal
 See id.
 See Masterman, supra note 1 at 250.