Can a Pennsylvania township charge a license fee for billboards?

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When townships issue licenses for building, development, and sign-posting activities, they are permitted by Pennsylvania law to charge license fees. Such license fees are considered to be compensation to the township for costs expended in the regulation of the activity in question. Taxes, by contrast, produce much higher revenue than what is expended by the governmental authority in supervising the taxing program.

A Pennsylvania billboard operator recently objected to a Pennsylvania township’s annual billboard license fee, claiming that the fee collected for inspecting and regulating the billboards in the township was in excess of the actual costs.

After the zoning hearing board and the county court upheld the license fee, the billboard owner appealed to the Pennsylvania Commonwealth Court. The court first observed that it must generally defer to the findings of fact issued by a zoning hearing board. However, the court noted that the board’s acceptance of the township’s cost estimates was not supported by fact. Those cost estimates included a charge for the use of the township building offices by employees. The court observed that the cost of running the building was inevitable and was not tied to the inspection of billboards. Further, the court noted that while the employees mentioned logs kept by the township inspectors, the logs were not received or reviewed by the board. Finally, the court stated that where a governmental entity charges substantially more than what the private sector would for a service, the government’s charge is unreasonable.

If you are paying a license fee to a township, you are entitled to be billed for no more than the township’s actual cost of regulating the licensed activity. If you think you are overpaying, consider bringing an action before the appropriate township hearing body.

If you are responsible for the establishment of licensing fees for your township, be aware that you may be held to the cost standards established in the private sector, and that, in any event, you can be called upon to justify the township’s costs and expenses.