• Kerry Yoakum on Billboard Property Taxes

    Kerry Yoakum, Vice President, Government Affairs, OAAA

    On Tuesday Insider ran an article by Paul Wright on a Pennsylvania Commonwealth Court ruling that billboard lease income could be considered when estimating the taxable value of land. This is a big issue for operators because landlords will be more reluctant to allow billboards on their property if a billboard results in a huge increase in property taxes.  Insider talked with OAAA Vice President – Government Affairs Kerry Yoakum about the Pennsylvania ruling.

    What’s your take on the Pennsylvania Ruling?

    When this case was announced in late December 2018, I had the opportunity to discuss it with J. Allen Smith of SettlePou.  Accordingly, this response isn’t entirely my work product.

    First, it is important to note that the court’s rationale was that signs are specifically excluded from real property taxation consideration under a Pennsylvania state statute. However, I believe taxing the landowner based on revenues of the billboard is an indirect tax on the billboard revenue. Obviously that revenue was already taxed when the billboard companies paid their income tax.  Thus, it could be considered a double taxation of the revenue.

    What’s Current Practice Among Most States?

    The taxing authorities in the case at hand were a school district and county.  On a state level across the country the overwhelming approach is the cost approach on the value of billboard structures.  There is no state I am aware of that includes billboard lease rentals paid as a consideration of tax valuation of the real property interest.

    Any other thoughts?

    While I appreciate Paul’s Wright’s assessment and concerns, this is an opinion from an intermediate, appellate state court in Pennsylvania and I believe that it is being appealed. Furthermore, I believe the state statute at issue only granted a limited number of taxing authorities with this taxing power.

    It should also be noted that in the court’s opinion, it expressly recognized that “…an appraiser must not indirectly value an existing billboard on a property by, for example, considering the revenue generated from the number of advertisements that are placed on that billboard in a given year.” However, the court attempts to claim a distinction in this case, but we all know that leasehold rentals paid by a billboard company on a given site are clearly based on the ability of such site to generate revenues from the advertisements on the billboard.  Accordingly,  the prohibition the court specifically recognized is actually being violated in this instance.   Hopefully, this internal inconsistency will be addressed by the higher court in Pennsylvania on appeal.

    One of the perks of an OAAA membership is that you can access to experts like Kerry Yoakum for advise on taxation and regulatory issues.  Contact Marci Werlinich (mwerlinich@oaaa.org, 202-833-5566) to learn more about becoming an OAAA member.

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    1. Hey Dave,

      I’m not sure if this will help, but California considers billboards to be fixtures. The State Board of Equalization issued a seven-page letter explaining why. At least as of January 22, 2010, the letter remains on the BOE’s Listing of Letters to Assessors. It is included in the 2016-17 “Business Equipment Valuation Authoritative Guidelines” issued by the BOE.

      If you or any of your readers would like a copy, of the Guidelines, let me know. (I would attach it to this response if I could figure out a way to do so.)

      Best regards,


    2. Glen Frailey says:

      Hi Richard,
      I would like to see a copy of how California considers billboards to be fixtures.

      Thank you.