Victory in ADAMS Advertising in Michigan

By July 11, 2000News

From Environmental Policy Project,
Georgetown University Law Center

On Wednesday, July 26, 2000, the Michigan Supreme Court issued a decision in Adams Outdoor Advertising v. City of East Lansing, unanimously reversing a court of appeals ruling that a municipal ordinance requiring the removal of billboards effected a regulatory taking. The City of East Lansing had adopted an ordinance in 1975 requiring that billboards be removed at the end of a twelve year amortization period. The court of appeals, in a dramatic departure from the nearly universal rule followed across the country, had ruled that the use and value of the billboards during the amortization period was irrelevant in a takings analysis. See 591 NW 2d 404. The Supreme Court reversed the finding of taking and eliminated this adverse precedent.

In reaching this decision, however, the Supreme Court relied on somewhat strange and rather narrow reasoning. Four justices, in the majority opinion, relied on the bizarre and so far as we know unprecedented reasoning that the alleged taking of the plaintiff’s leasehold interests had to be analyzed by asking whether the ordinance effected a taking of the lessors’ property interests. Because the lessors’ owned entire buildings while the leasehold interests covered only the spot on the buildings where the billboards are located, this analysis led to the conclusion that there was no taking. These four justices and two others (who filed a concurring opinion) also reasoned, more convincingly, that there was no taking because the plaintiff purchased the billboards and entered into new leases after the ordinance was already in effect and, therefore, lacked a sufficient property interest or investment-backed expectation to claim a taking. The seventh justice filed a brief opinion concurring in the result of the majority opinion but seeming, in substance, to dissent from the conclusion that there was no taking.

While a valuable victory, the decision leaves open for debate in the Michigan Supreme Court in some future case the question whether a reasonable amortization period does preclude a finding of a taking. Whether the majority’s novel analysis of a lessee’s takings claim based on the property interest of the lessor has any long-term viability seems very much open to question.

John Bagg, of counsel with the Environmental Policy Project, drafted an amicus brief on behalf of Scenic Michigan and Scenic America in the case. The brief developed the lack of protected property interest/lack of investment-backed expectation argument relied upon by six of the justices. John Rohe served as local counsel and provided invaluable assistance on the brief.

A copy of the opinion is available at: http://www.lawyersweekly.com/misup/113674.htm