Whiteco Metrocom Wants Millions For Its Former Eyesore Signs On Speedway--The City, Understandably, Wants To Pay Less.
By David Devine
IN 1970, LIFE MAGAZINE published a picture of Speedway looking east from Country Club Road. Over a headline that proclaimed: "Look down, look down that loathsome road," the photograph was a sea of signs. Above it all loomed a billboard of a smiling woman.
The impression that article left--that Speedway was America's ugliest street--lasted for years. So when, two decades later, city officials decided to widen and beautify Speedway around Country Club Road, at a cost of tens of millions of dollars, there weren't many complaints.
Part of the widening process required the purchase of seven billboards--not all of the enormous signs which towered over the area, but it was a reduction.
Now, however, almost three years after the last of those billboards was removed, disagreements over how much the city should pay for the Speedway Seven continues. The difference in opinion could amount to millions in taxpayer dollars.
Whiteco Metrocom, Inc., owner of the seven billboards, has asked for more than $3 million from the city. This amount is for the signs only--since the city had already purchased the property on which the billboards were located.
Marvin Kirchler, of Whiteco, says this figure was based on a court decision of several years ago. In that case the city had acquired two billboards while building an overpass in another area of town. The Arizona Court of Appeals ruled Whiteco was entitled to the value of the remaining leases on the billboards.
In the Speedway case, some of the billboards had 10-year leases with two 10-year options, according to Kirchler. He says his company calculated the value of the leases on each billboard, added them together and determined the total worth of the seven to be $3.2 million.
John Updike, of the city's Real Estate Division, says the city has used two standard methods of appraisal to determine a value between $400,000 and $500,000. But a third method, he says, is being looked at which might result in a substantially lower value. This calculation would show, according to Updike, just how much less profit Whiteco would make from the 426 billboards it had remaining after the Speedway signs were removed.
But to determine this last estimate of value, the city needed to know something about Whiteco's business. So, as part of the on-going condemnation case which will set a value on the signs, city officials asked several sensitive questions of the company--including how many of Whiteco's billboards actually had paid advertising on them each month for the last five years. City officials also requested the company's gross income from billboard advertising from 1990 to 1995.
The city wants this information to determine if, in fact, Whiteco has lost any revenue because of the removal of the seven billboards. It's possible the company could have simply transferred the advertisements from Speedway to other billboards which were vacant or being used by non-paying customers. If that had occurred, officials reasoned, the value of the Speedway billboards would be considerably less than even the city's appraisal of worth.
This information was first requested as part of the court case in January of last year. In May, John Iurino, Whiteco's attorney, wrote to Richard Davis, who is representing the city, saying he'd try to provide the information by June 5. But it didn't appear by then.
Finally in September, Whiteco answered some of the city's questions but refused to answer others. Whiteco objected, according to Iurino, because gathering such information would be burdensome and would not reasonably lead to admissible evidence in the court case. In addition, Iurino stated, "The information sought by the city is private, proprietary, financial information." Instead, he offered to provide financial data "if an appropriate confidentiality agreement is executed."
This response was not satisfactory to Davis, so again he requested the information and explained why he needed it in detail. Based on this, he was told the information would be provided immediately. But it was not delivered.
Having no other option, since this information was critical in trying to save taxpayers a large amount of money, the city filed a motion in Superior Court asking that Whiteco be compelled to provide the figures. In late November, Judge Lina S. Rodriguez ruled the information should be supplied within 30 days. But still Whiteco did not comply.
At the end of the 30 days, Iurino wrote to Davis, "My client is gathering the requested information, and I will have it to you shortly." But the information was not produced.
Thus, on January 30, Rodriguez was asked to impose sanctions against Whiteco. These sanctions, if granted, would prohibit the company from entering evidence of value about the billboards. In essence, the company would be penalized for not supplying the requested information by having to accept any value the city could prove is reasonable.
This, apparently, got Whiteco's attention. Because they were asking for between six and eight times what the city was offering, being able to present evidence of value at a trial is very important to Whiteco. So recently, Iurino said the figures would be supplied by February 16. In fact they were, but with the requirement that the city not disclose the information to the public.
The trial to decide the value of the Speedway Seven is scheduled for early April. Both sides in the case have indicated they'd like to see it settled before then. But the wide difference in values may make that impossible.
There are some indications Whiteco would be willing to settle for much less than $3.2 million, perhaps something in the range of $700,000 to $800,000.
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