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NONCONFORMING SIGNS of nonconforming signs by starting the amortization period When a community amends or replaces its sign regula- with the date of sign installation.The problem with such an tions,some signs that conformed to the old regulations,but approach is that few communities have an adequate record that do not conform to the new ones,will undoubtedly re- of when signs were installed to use that as the basis of ad- main in the community.Such signs are usually called non- ministration of a regulatory provision.A simpler and safer conforming signs. approach is simply to have the amortization period begin There are two basic policy choices for regulating noncon- with the effective date of the new sign regulation.As with forming signs—require that,when they are replaced, they other dates in regulations, it is administratively simpler to be replaced with conforming signs,or set a specific date by use a"date certain"(such as the next July 1 or January 1) which they must be replaced with conforming signs.The lat- rather than"ten days from the date of adoption,"a stipula- ter approach is often called"amortization"of signs because tion that requires someone to document the adoption date it is based on the economic and business principle that a busi- of a five-year-old regulation in order to begin enforcing the ness, on its books and in practice, "writes off"(amortizes) amortization provision. the cost of the sign over some period of time. For tax pur- In communities that lack the legal authority or the poses, most signs can now be amortized in three years, al- political support for a provision amortizing nonconforming though for businesses with separate, nontax accounting signs,local sign regulations should contain a number of pro- systems, a five-year or 10-year period may be a more visions requiring or encouraging sign owners to eliminate realistic sign amortization period.Local regulations that re- nonconforming signs under certain circumstances. Al- quire the replacement of signs by a specified date generally though some nonconforming signs will be replaced in the or- base that date on a realistic financial amortization period. dinary course of business, others will be diligently The amortization of signs is not an available policy option maintained by their owners,who may place great value on everywhere. Statutes in several states expressly prohibit the special status of their nonconforming signs. local regulations that require the removal of certain types of Incentives used by communities to eliminate old signs signs,or of any signs,because of changes to regulations.In include: some other states,the courts are hostile to such regulations, A bonus in the size of new signs as an incentive to remove viewing them as unconstitutional takings. (See,generally, nonconforming signs by a specified date; Chapter 2 of this report.)However, in other states, amor- tization is a viable option that has been sustained by the An offer by the local government to accomplish the courts. physical removal of the sign without charge to the In a state that allows amortization, a local government merchant; that has the necessary political support to adopt an amor- Nominal cash compensation for early removal of old tization provision for signs has one basic question. to signs; and answer—how long to make the amortization period. The three-year amortization period allowed under the Ac- A prohibition on the installation of any new signs on a celerated Cost Recovery System under the Internal Revenue zone lot while a nonconforming sign remains in use. Code(Section 168)is probably the realistic minimum amor- tization period that should be considered.Since most small Regulatory requirements for the removal of old signs businesses keep only one set of books for both tax and include: general purposes,most will write off signs over three years. A requirement that the nonconforming sign be removed Going to court and claiming damages for a taking of prop- if there is a change in certificate of occupancy or business erty that has been fully written off the books puts the busi- license on the premises; ness in a difficult legal-position. Other considerations that might affect the choice of amor- A requirement that it be removed if a building permit is tization period are common lease and finance terms. Five issued for any construction, sign-related or not, on the years is a typical basic sign-lease period; such leases premises; sometimes have a five-year renewal option. If a sign is A prohibition on any modifications to the sign or its financed separately, the term of the loan is unlikely to be message, allowing only routine maintenance; and more than three years and is almost certain to be five or less. Thus, a five-year amortization period is consistent with A requirement that a master sign permit allowing new typical sign financing techniques. signs include a removal date for any nonconforming For reasons discussed in the next few paragraphs,the most signs. important thing about a sign amortization period is to have one.Even if it is necessary politically to agree to a 10-year The model ordinance includes an optional amortization or 15-year amortization period,such a provision is far bet- provision but also includes other incentives and re- ter than the alternative of having no limit to the life of non- quirements for the removal of old signs that can be used ei- conforming signs. ther in conjunction with or in lieu of an amortization Some communities attempt to accelerate the elimination requirement. 16