Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
f/k/a Naegle Outdoor Advertising Co., Inc.,
City of Cottage Grove,
File No. C197710
Richard I. Diamond, Diamond, Liszt & Grady, P.A., 9855 West 78th Street, Suite 210, Minneapolis, MN 55344 (for respondent)
James J. Thomson, Kennedy & Graven, Chartered, 470 Pillsbury Center, Minneapolis, MN 55402 (for appellant)
Considered and decided by Kalitowski, Presiding Judge, Short, Judge, and Foley, Judge.**
Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
Appellant City of Cottage Grove challenges the district court's grant of summary judgment in favor of respondent Universal Outdoor, Inc. We reverse and remand.
[I]t is not the province of the court to substitute its judgment for that of the body making such a decision, but merely to determine whether that body was within its jurisdiction, was not mistaken as to the applicable law, and did not act arbitrarily, oppressively, or unreasonably, and to determine whether the evidence could reasonably support or justify the determination.
Village of Edina v. Joseph, 264 Minn. 84, 93, 119 N.W.2d 809, 815 (1962).
Appellant city, acting pursuant to ordinance, refused to issue a permit to respondent to allow it to re-erect a legal nonconforming billboard damaged by a storm. Appellant's ordinance provides:
Whenever a legal nonconforming sign shall have been damaged by * * * an act of God and the damage of the sign and/or structure is fifty percent or more of its fair market value as estimated by the building inspections department, the reconstruction shall comply with all provisions of this article.
Cottage Grove, Minn., City Code § 21-7(c) (1992).
The city building inspector concluded that the damage to the sign was greater than 50% of its fair market value, and that, as a nonconforming use, the sign could not be rebuilt. Respondent challenged this decision in district court, where its appraiser presented evidence that the fair market value of the sign was between $60,000 and $65,000 prior to the windstorm. That calculation included all costs necessary to replace the structures and included income generated by the billboard. The appraiser estimated the cost to repair the sign at $6,676.39. The district court granted summary judgment in favor of respondent, finding that based on the difference between the fair market value and the cost of repair, as presented by respondent's witness, the damage did not exceed 50%.
We conclude the district court erred by adopting a calculation of fair market value that incorporated the sign's ability to generate income and then comparing this value to the cost of repairing the physical structure. Including income potential in determining value but not considering income potential in determining the amount of damage results in a fair market value that will always exceed by more than 50% any possible damage to the structure itself, and therefore, effectively guarantee the perpetual life of a nonconforming billboard. However, "[a] zoning ordinance must always be considered in light of its underlying policy." Frank's Nursery Sales, Inc. v. City of Roseville, 295 N.W.2d 604, 609 (Minn. 1980).
Because appellant's ordinance refers to both value and damage of the "sign and/or structure," the replacement cost approach to fair market value would better effectuate the policy behind the ordinance. However, if the income approach is used and income potential is included in calculating fair market value, the storm's effect on income potential must also be considered in determining whether the damage is 50% or more of the value.
Consistent with this opinion, the district court, in such proceedings as it deems appropriate, should determine the fair market value of respondent's sign and/or structure and whether the damage to the sign and/or structure is 50% or more of that value.
Reversed and remanded.