Uniform Act Frequently Asked Questions (FAQs)
January 25, 2007
Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (Uniform Act)
Frequently Asked Questions (FAQs) on 49 CFR Part 24, Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally-Assisted Programs; Published in the Federal Register on January 4, 2005
There have been changes to this subpart. A side-by-side comparison of these changes is available.
1. What is the Uniform Act?
It is the short name for the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended. This law was enacted as Public Law 91-646, and brought a minimum standard of performance to all Federally funded projects with regard to the acquisition of real property and the relocation of persons displaced by the acquisition of such property.
2. Has it been amended since passage?
Yes, there have been several amendments over the years, with the most significant taking place as a part of the Surface Transportation and Uniform Relocation Assistance Act of 1987.
3. Where can I find the law and the rules created to carry out the law?
The law is codified in 42 U.S.C. 4601 et seq. The regulation governing the law is found in 49 CFR, Part 24. There may be other laws, regulations, policies and procedures established by agencies that elaborate or expand upon these minimum standards. Links to the basic law and regulation can be found at http://www.fhwa.dot.gov/hep/legreg.htm.
4. Which Federal agencies must abide by the provisions of the Uniform Act?
All acquiring agencies meeting the definition set out in Section (§) 24.2(a)(1)(iii) are required to comply with the Uniform Act and the implementing regulation, 49 CFR Part 24.
5. Does the Uniform Act apply to local agencies or third parties who acquire properties in advance of federal authorization or a federal project designation?
The funding agency will review such acquisitions to determine if the intent of the acquisition was for a federally funded program or project, in which case the provisions of the Uniform Act and the implementing regulation apply.
SUBPART A – GENERAL
There have been changes to this subpart. A side-by-side comparison of these changes is available.
6. Appendix A. The word "should" is used. Does this mean that the appendix provisions are suggestions rather than requirements?
Appendix A is an integral part of the regulation. While it does not impose additional mandatory requirements, it provides important guidance and information concerning the purpose, intent and implementation of many of the provisions in the regulation. "Should," when used in the appendix to describe a mandatory requirement of the regulation, cannot alter or reduce that requirement. When used to provide guidance, it explains how a regulatory provision is to be implemented under most circumstances.
7. §24.2(a)(6). In localities where houses sell for a premium over the list price, can the relocation agent adjust the relocation housing payment to account for this premium?
The regulation does not call for adjusting the asking price, either upward or downward. The regulation does say the comparable must be available. If a comparable is not available for the amount calculated, a new calculation may be in order.
8. §24.2(a)(6)(ix) and appendix A, Subpart A, §24.2(a)(6)(ix). Can the displaced occupant of a public housing unit be offered other public housing units as comparable replacement housing?
Yes. A person displaced from a public housing project may be offered a comparable public housing unit as a replacement dwelling or they may be offered a unit subsidized under another housing program, e.g., Section 8 Housing Choice Voucher. Only if no subsidized housing is available should a subsidized tenant be offered a non-subsidized unit as a comparable. A person who is displaced from subsidized housing and placed in private-market housing will potentially lose the security of affordable housing after the 42-month Uniform Act payment is exhausted. While the Uniform Act replacement housing payment softens the blow of a move, after the payment is exhausted a formerly-subsidized tenant may not be able or eligible to return to subsidized housing, either because no subsidized units are available or because their income exceeds the admission income limits. For this reason, every effort should be made to find another subsidized unit as replacement housing so that the tenant will continue receiving the housing subsidy as long as it is needed.
9. §24.2(a)(8). Can an eligible displaced person ever occupy a non-decent, safe and sanitary (DSS) replacement dwelling and still receive a replacement housing payment?
No, unless one or a very few of the DSS conditions listed in §24.2(a)(8) were waived under §24.7 or §24.2(a)(8), so that the dwelling could then be considered to be DSS. However, all the DSS conditions could not be waived.
10. §24.2(a)(9)(A). Can an eligible displaced person be paid relocation benefits prior to completion of negotiations or acquisition of the property that they occupy?
Yes. Persons who move as a result of the initiation of negotiations are eligible displaced persons entitled to benefits and should be paid promptly. Payments to such persons are eligible for Federal funding or reimbursement at the time that residential occupants move to DSS dwellings adequate to accommodate them or non-residential occupants vacate the property
11. §24.2(a)(15)(iv). What do I look for in determining whether there is a written agreement that meets the definition of initiation of negotiations in order to establish tenant eligibility for relocation payments?
The written agreement must bind the agency to purchase the property from which a tenant would be displaced. That is, both the agency and the property owner are subject to legally enforceable commitments to proceed with the purchase.
SUBPART B – REAL PROPERTY ACQUISITION
There have been changes to this subpart. A side-by-side comparison of these changes is available.
12. Subpart B. The preamble to the revised regulation published January 4, 2005, states that the FHWA decided to retain the term "fair market value" throughout Subpart B except for §24.101(b)(1) and (5). Yet the term "market value" appeared in the final regulation in a number of other places, including §24.102(d) and (j), §24.103(b), and §24.105(c). Which is correct?
The preamble is correct. The FHWA published a technical correction on Monday, May 2, 2005, in the Federal Register (70 FR 22610) that resolved the problem by changing the term to "fair market value" in all parts of the regulation except §24.101(b)(1) through (5).
13. §24.101, §24.108, and Subpart E. If property is acquired through donation, exchange, or some method other than purchase, are the occupants entitled to relocation assistance and payments for vacating the property?
The occupants are eligible as "displaced persons" if they meet the definition of a displaced person [24.2(a)(9)].
14. §24.101(a)(2) and §24.101(b)(1) through (5). If a Federal agency operating in accordance with §24.101(a)(2), or an agency acquiring in accordance with §24.101(b)(1) through (5), will not acquire a property except through amicable negotiation, is the owner entitled to relocation assistance? Are tenants on such properties eligible for relocation assistance?
Owners of such properties are not displaced persons. Tenants of such properties are eligible for relocation assistance and benefits.
15. §24.102(b). Can the required early notice be provided at a public meeting? When is the best time to give this notice?
No. When property is to be acquired, each owner should be notified in such a way that an administrative record exists to attest to the delivery to the owner. There is no assurance when using a public meeting that all affected owners will be present and each owner is due the courtesy of receiving a timely notice of the agency's intent. The notice should be provided as early as possible, when it is known a property interest will be acquired, and no later than when the appraisal or waiver valuation assignments are made.
16. §24.102(c)(2)(ii)(C). Is a §24.7 waiver required to provide a waiver valuation, rather than an appraisal, for properties estimated to be worth over $10,000 and up to $25,000?
No. §24.102(c)(2)(ii)(C) contains its own waiver provision that specifically permits the use of the waiver valuation for these properties provided the Federal funding agency approves the higher threshold beyond $10,000 and the agency agrees to offer the owner the right to have an appraisal prepared.
17. §24.102(c)(2)(ii)(C). If an agency routinely uses waiver valuations on properties with an estimated value of up to $25,000, does it have to offer an owner the option of receiving an appraisal if the property being acquired was estimated to be worth $3,000? How should agencies document that they have offered a property owner the option of having the property appraised and the owner has elected not to have an appraisal prepared?
No, the agency does not need to offer the owner an appraisal if the estimated value is under $10,000. The owner must be offered the option of receiving an appraisal, prior to using the waiver valuation, if the property is estimated to be worth more than $10,000, up to a maximum of $25,000. No set form of documentation is prescribed. However, to be consistent with other property contact requirements in the regulation, the agency should offer the option to have the property appraised to the property owner in writing (when over $10,000), and obtain a written response from the owner. An agency must maintain adequate records, as set out in §24.9(a), in sufficient detail to demonstrate that it offered the owner the option of receiving an appraisal for the property.
18. §24.102(c)(2). What constitutes a knowledgeable person who is qualified to prepare waiver valuations?
The regulation calls for a waiver valuation preparer to have sufficient understanding of the local market. The funding agency may issue further guidance, however, it is expected that the person will be knowledgeable of local real estate sales.
19. §24.102(f). If the waiver valuation preparer makes an $8,000 offer and the owner makes a counter offer for $10,000, can the waiver valuation preparer/negotiator adjust the amount of the waiver valuation?
Yes, if market data supports such a change.
20. §24.102(i). If there is no market data to support an adjustment to the waiver valuation amount, can an administrative settlement be considered, even if the administrative settlement amount is over $10,000?
Yes, if justified and in accordance with the funding agency's approved procedure. Safeguards should be considered when the waiver valuation preparer is the negotiator and recommends an administrative settlement. It is appropriate to have a different agency official approve the administrative settlement. This can be accomplished in a cost effective manner, such as by phone, fax, or email. Administrative settlements may also be used if the funding agency is operating at the $25,000 waiver valuation level. It is not necessary to complete an appraisal in these situations.
21. §24.102(d). Who determines the offer of just compensation for the property to be acquired?
The agency determines the just compensation amount to be offered the property owner in a two-step process. An appraiser researches the real estate market and presents an appraisal of the fair market value. A review appraiser evaluates that appraisal and recommends an amount for an agency official to approve as the agency's estimate of just compensation. For some uncomplicated, low value acquisitions, the agency may determine an appraisal is not required and prepare a waiver valuation that will be the basis upon which an agency official will approve the offer of just compensation.
22. §24.102(d) and §24.102(g). Must all offers by an agency to acquire property be made in writing?
The first time an agency makes an offer to purchase; it must be in writing and be in the full amount approved by the agency as its estimate of just compensation. Subsequent formal offers and notices are also required to be in writing. This does not preclude the use of verbal value discussions during negotiations to arrive at an agreed purchase price for the property, depending upon agency policy and applicable law.
23. §24.102(i) and §24.102(j). What if the owner doesn't agree with the amount offered? Is condemnation the only solution when an agency can't reach agreement on the purchase of property for the project?
The possibility of an administrative settlement should be explored, reference §24.102(i). Agency officials may approve the use of an administrative settlement if it is reasonable, prudent and in the public interest. Agencies may also use other alternative dispute resolution options, such as mediation or arbitration. If all efforts to negotiate/settle fail then the laws of the agency set forth the legal steps the agency must take when they wish to purchase property that an owner does not want to sell.
24. §24.102(f). Can property owners provide their own appraisal to the acquiring agency?
Yes. The agency should consider all relevant information in its negotiations with property owners.
25. §24.102(f). Which agency official is authorized to make the final settlement offer?
This is a matter of agency policy, as well as laws governing the agency. The regulation does not address or require a final settlement offer. The agency is required to consider valuation information and suggested modifications provided by the owner.
26. §24.102(j). When should property owners be paid for their property?
Property owners should be paid as quickly as possible under the applicable laws, on or before the time the owner is required to give up physical possession. This must occur when the property owner transfers title. The agency should work with the property owner to resolve any liens against the property.
27. §24.102(j). When can a property owner be required to turn possession of the property over to an agency?
A property owner may voluntarily turn control of his or her property over to an agency at any mutually agreeable time. An agency may not require a property owner to give them possession until the sale of the property is complete, payment is made and title transferred. In the case of property used for business, residence, or farm, the owner must be given the 90-day notice in writing. In situations where condemnation is necessary, the laws governing the agency set forth the steps the agency must take to gain legal and physical possession. As in negotiated settlements, the 90-day notice on occupied property further governs the physical possession date.
28. §24.102(n). Do the conflict of interest provisions in 49 CFR §24.102 apply to consultants?
Yes. §24.102(n) applies to all acquisitions that are subject to the Uniform Act acquisition requirements, including those undertaken by consultants. The intent of §24.102(n)(2) is to insure appraiser independence and to shield appraisers from inappropriate influence. In the case of an appraiser who is hired by an agency or a consultant, the agency or consultant may not attempt to influence or coerce the appraiser regarding valuation, or any other aspect of an appraisal, review or waiver valuation.
29. §24.102(n)(2). What does conflict of interest mean?
The purpose of this section is to assure the agency has a valid approved appraisal, or, if appropriate, waiver valuation, that represents the fair market value for the needed real property. It is intended to prohibit attempts to coerce the appraiser or review appraiser to meet a certain target or "pre-agreed-on" value to be reported as the approved appraised value to support a contrived determination of just compensation to be offered a property owner. To prevent this, each situation needs to be evaluated on a case-by-case basis. It is critical to prevent inappropriate influence on the valuation process that leads to, and results in, the initial offer of just compensation. To accomplish this, it is necessary for the appraiser and review appraiser's first-line supervisor to be independent of the negotiation process and not function as a negotiator. Conversely, any person functioning as a negotiator is prohibited from being the appraiser or review appraiser's first-line supervisor.
For the FHWA, "functioning as a negotiator" means initiating price negotiations with the property owner. It does not include occasional involvement in subsequent negotiations by senior level personnel. For the FHWA, "supervise or formally evaluate the performance," refers to the first-line supervisor.
When an agency has contracted, or a consultant has subcontracted, with an appraiser, review appraiser, or waiver valuer, there may not be a typical supervisory relationship. Nevertheless,the conflict of interest provision applies. The person who the contract appraiser, review appraiser, or waiver valuer is responsible to on an operational basis may not be the negotiator, or attempt to influence or coerce the appraiser, review appraiser or waiver valuer regarding valuation, or any other aspect of an appraisal, review, or waiver valuation process.
30. §24.102(n)(2). Does the conflict of interest provision preclude an upper level agency manager, director, or other agency administrative settlement official, who technically is the "supervisor" over the appraisal/appraisal review section, from negotiating a claim for an administrative settlement or appeal?
No, as long as the person is not the individual appraiser, review appraiser or waiver valuer's first-line supervisor, or the supervisor is not the person initiating price negotiations with the property owner. There is no restriction against higher-level supervisors being involved in the later stages of negotiation.
31. §24.102(n)(2). Is this waiver, and the exception in §24.102(n)(3), related to the general waiver provision in §24.7?
No. §24.102(n)(2) provides that a person functioning as a negotiator may not supervise or formally evaluate the performance of an appraiser or review appraiser except that, on a federally assisted project, the Federal funding agency may waive the application of this requirement to an acquiring agency if the Federal agency determines it would create a hardship for the agency. This is intended to accommodate a Federal aid recipient with a small staff, where this provision would be unworkable. §24.102(n)(3) provides that an appraiser may be permitted to act as a negotiator if the offer to acquire the property is $10,000 or less. Because of the specific language in §24.102(n), an agency can exercise the waiver described in §24.102(n)(2), or the $10,000 or under exception in §24.102(n)(3), without recourse to the general waiver provision provided for by §24.7.
32. §24.103. What does "consistent" mean with respect to the appraisal criteria and the provisions of Uniform Standards of Professional Appraisal Practice (USPAP)?
The appraisal criteria in §24.103 are considered to be consistent with USPAP. Both are designed and intended to produce accurate valuation information. §24.103 and the rest of the regulation implement the Federal statutory requirements in the Uniform Act that specifically apply to the acquisition of real property for Federal and federally assisted projects. Those statutory requirements, and their implementing regulations, are not exactly the same as the USPAP provisions, but are generally similar and compatible. This subject was carefully considered during the development of the regulation, and is discussed in some detail in appendix A, §24.103(a).
33. §24.103(a). How does the scope of work requirement relate to abbreviated appraisal formats?
The scope of work requirement applies to all appraisal formats. The extent of the scope of work statement depends on the circumstances of each acquisition. Additional scope of work guidance is provided in appendix A §24.103(a). The scope of work statement should consider the five specific requirements in §24.103(a)(2)(i) through (v), and address them as appropriate. A scope of work is not required for a waiver valuation because a waiver valuation is not an appraisal.
34. §24.103(d). Who are qualified appraisers?
Qualified appraisers are those determined by the agency to be capable to perform the appraisal work needed. The regulation requires agencies to establish criteria for determining qualifications and competency. Only those appraisers and review appraisers who meet those requirements should be hired. The regulation lists several standards the agency shall review when determining an appraiser or review appraiser's qualifications.
35. §24.103. Are contract (fee) review appraisers required to have a state certification or license in the same manner as is required of contract (fee) appraisers?
No. However, the FHWA encourages partner agencies to include State certification or licensing as a factor to judge the qualification of the review appraiser. If contract (fee) review appraisers are used, the regulation only requires the agency to match the review appraiser's qualifications with the scope of work of the appraisals he/she reviews. Selection of the appraiser is an agency decision.
36. §24.103(a)(2)(i) and appendix §24.103(a)(1). Does the requirement to include items identified as personal property and real property, as part of an adequate description of the property being appraised, require the appraiser and relocation agent to prepare lists of both real and personal property for residential and commercial property?
The intent of this provision is to avoid situations where an item is included in the appraised value and subsequently also relocated at agency expense. To avoid this, the appraiser and the relocation agent should agree on which questionable items are to be appraised and which are to be relocated. The personal property items included in the appraisal should be listed in the appraisal report. This should be done in all situations, whether the property is residential, commercial, or other use, where there is a question how a particular item is to be handled.
Items of real property being appraised should identify ownership, i.e., tenant-owned or lessor-owned, if applicable. The relocation advisory services interview with business owners should address and resolve these issues.
37. §24.104.Is the review appraiser acting as an appraiser under USPAP? How do USPAP standards apply?
For appraisal review activities related to acquisition performed under the Uniform Act, all of the review appraiser's actions are specified by, and are considered to be part of the appraisal review process required by 49 CFR Part 24. Note that, even though §24.104 does require the review appraiser to comply with §24.103 appraisal requirements when developing an independent approved or recommended value, it also specifically cites this work as being part of the review itself. USPAP is not an appropriate measure of the review appraiser's activities.
Compliance with USPAP standards is not required by this regulation. Appraisal and appraisal review reports are to be prepared in accordance with the Uniform Act regulation, which the FHWA believes is consistent with, but not necessarily identical to, USPAP. The FHWA believes that appraisal reviews performed in compliance §24.104 requirements do comply with USPAP Standard 3.
38. §24.104(a).Can a fee review appraiser approve the appraisal or just recommend it?
A fee review appraiser, or any review appraiser, may recommend an appraisal, as the basis for establishing the amount believed to be just compensation by the agency. However, based upon the language in the Uniform Act, Section 301(3), the approval of the appraisal must be by the agency, that is to say, an in-house approval.
Any review appraiser may also accept the appraisal as meeting all requirements but not select it as recommended. This may be appropriate when there are multiple appraisals, or determine the appraisal to be not acceptable. Only an agency staff employee, including a staff review appraiser, may be authorized by the agency to approve the appraisal as the basis for establishment of the amount believed to be just compensation. Such employee may, if authorized, develop and report the amount believed to be just compensation.
39. §24.104(a).What constitutes a review appraiser's written report? What if there are multiple appraisals? Is a stamp and signature procedure sufficient, and if so, would it raise USPAP issues?
The review appraiser's written report must identify the appraisal reports reviewed, identify any damages or benefits to any remaining property, document the findings and conclusions arrived at during the review of the appraisals, and provide a signed certification that states the parameters of the review and the approved value. If authorized to do so, the review appraiser's certification shall establish the amount believed to be just compensation.
The review appraiser shall identify each appraisal as recommended, accepted, or not accepted. Each appraisal reviewed should be identified in the review appraiser's report. A stamp (recommended, accepted, or not accepted) and a review appraiser's signature would not be sufficient to satisfy §24.104(c) requirements. However, as described in the appendix, for a low value property requiring only a simple appraisal process, the review appraiser's recommendation and/or approval, may be determined to satisfy the requirement for the review appraiser's signed report and certification.
40. §24.103(a)(2)(iii). Is the requirement to verify property sales information by a party involved in the transaction limited to the grantor or grantee?
Sales verification is an essential part of the research underlying the data used to support an appraisal and the degree of inquiry should be commensurate with the scope of work of the appraisal assignment. Verification can be with any party involved in the transaction that has sufficient knowledge of the specific components of the sale to provide insight into the considerations and motivations that lead to the agreed upon sale price at the date of sale.
41. §24.102(f) Can an agency use the Global Settlement method when negotiating the acquisition of property for federal and federal-aid projects? This method as currently defined is the combining of just compensation for acquired real property including incidental acquisition expenses and all relocation benefits in the offer of settlement by the acquiring agency. In most acquiring agencies this settlement offer is made prior to the expenditure of relocation expenses by the property owner or tenant?
The Uniform Act and implementing regulations in 49 CFR Part 24 require that certain incidental expenses and relocation benefits including relocation housing payments be based on actual costs. These costs are not generally available at the time negotiations for the real property are completed by acquiring agencies. In addition, most residential moving costs and many business moving expenses must also be based on actual expenditures. FHWA is requesting proponents of the Global Settlement method to provide an explanation of their proposed use and the perceived advantage/s of using this settlement concept. When we receive supporting information on their proposed methodology we will determine if their proposals can meet current Uniform Act and regulatory provisions.
Until such a determination is completed, the use of Global Settlements on federal and federal-aid projects is not permitted.
SUBPART C – GENERAL RELOCATION REQUIREMENTS
There have been changes to this subpart. A side-by-side comparison of these changes is available.
42. §24.203. How early can the agency give a 90-day notice. Does it have to be written?
The notice must be in writing and can be given at the initiation of negotiations or later, providing at least 90 days advance notice of the specific date possession will be required. When given at the initiation of negotiations it will include an assurance that another notice will be given at least 30 days before the property needs to be vacated. This latter date shall not be any earlier than the date provided in the initial 90-day notice.
43. §24.203. Is there a requirement to give illegal aliens a 90-day notice?
The regulation prohibits Federal participation in relocation payments or relocation advisory services to illegal aliens but does not prohibit notices. Often illegal aliens and legal residents reside together. Giving every resident, legal and illegal, the 90-day notice will assure compliance with the Uniform Act.
44. §24.203 and §24.5. Is an agency required to prepare a relocation brochure?
A relocation brochure is not required; however, each displaced person must be provided a general written description of the agency's relocation program. Brochures are very effective for providing accurate general relocation information in a uniform manner. It is strongly recommended that each agency have brochures available to furnish displaced persons at the initial contact and to the public, as appropriate.
The FHWA relocation brochure http://www.fhwa.dot.gov/realestate/rights/index.html is available for this purpose. Translation of relocation notices and brochures to another language may be appropriate to assist displacees in understanding their rights and benefits. Several Spanish brochures and notices can be found on HUD's website at http://www.hud.gov/offices/cpd/library/relocation/policyandguidance/handbook1378.cfm. Where translation of documents is not practical, the use of a translator is strongly encouraged.
45. §24.203(d) and §24.2(a)(9)(i)(A). Can an agency issue a notice of intent to acquire a parcel in order to establish a date of eligibility for relocation benefits prior to the initiation of negotiations?
Yes. Eligibility for benefits can be established prior to the initiation of negotiations by issuing a notice of intent to acquire to a person who will be displaced by a program or project.
46. §24.203(b). Can an owner of a property to be acquired prevent the agency from contacting the tenants of the property?
An owner may not prevent authorized agency employees from notifying tenants of the benefits they may be eligible to receive under the Uniform Act. The agency should advise the owner that it is better to explain to the tenants the requirements and obligations for the eligibility for benefits and to advise them there is no rush to relocate. In situations where the owner is concerned the tenants will move and there will be loss of rental income, the agency may offer to make a payment to replace lost rent for vacancies occurring due to relocation for a reasonable period of time.
47. §24.203(c). Must the agency restart the 90-day clock if the original comparable replacement dwelling has been sold?
No. The 90-day time period continues to run without interruption. However, if the original comparable dwelling is no longer available, the agency must assure itself that equally comparable dwellings are still available in the same price range. If the agency finds it necessary to initiate eviction actions, its records must contain sufficient documentation to confirm that a comparable replacement dwelling is available for occupancy.
48. §24.204. Can the agency reduce the relocation payment offer if, after 90 days have passed, the displaced person has not acquired replacement housing and the agency locates another comparable dwelling that is available for less than the comparable used for the offer?
Yes. If the displaced person has made little or no effort to acquire a replacement dwelling, it would be permissible, after a reasonable period of time, to reduce the offer if a less-expensive, comparable dwelling becomes available. If an agency elects to lower a payment offer, it should document the files with the rationale and make every effort to avoid acting in a coercive manner.
49. §24.205. How does a Federal funding agency insure that an agency is engaged in relocation planning and providing the advisory services described in this section? How does an agency demonstrate compliance?
The regulations do not prescribe any particular form of monitoring or recordkeeping. §24.4(b) requires that Federal agencies shall monitor compliance with the regulation, and, if necessary, apply sanctions in accordance with applicable program regulations. Compliance with all aspects of the Uniform Act should be part of a Federal agency's overall program management and oversight functions. §24.9 requires that agencies maintain adequate records in sufficient detail to demonstrate compliance.
50. §24.205. Does lack of cooperation on the part of the displacee relieve the agency of its obligation to provide required relocation advisory assistance?
The agency must provide notices and advisory services to all displacees. All contacts and efforts to contact a displacee must be documented in the agency files. The agency is not relieved of its responsibility regardless of displacee cooperation. In some cases, the relocation agent should seek advice early in process from legal counsel.
51. §24.205(c)(2)(i). When should an agency conduct the interview with owners of businesses and provide the other advisory services? How can agency compliance be documented?
General information can be included in a relocation plan, survey or study, §24.205(a), or in an environmental document. Interviews with business owners and early advisory services are an important part of relocation planning, and are intended to facilitate the successful reestablishment of the business. Interviews should be conducted with enough lead-time to maximize the likelihood that information obtained from the interviews can assist in the successful relocation of the business. An agency can conduct more than one interview with a business. The timing of the business interview(s) and planning may depend on the nature of the business and kind of issues involved in its relocation. While no particular documentation is prescribed, an agency must maintain adequate records in sufficient detail to demonstrate compliance.
52. §24.205(c)(2)(ii)(E). Since agencies are required to provide transportation for displaced persons, what is an agency to do in a rural area where there is no public transportation, and agents are prohibited by agency policy from using a company car for anyone who is not an agency employee? [Private insurance doesn't cover the passenger if there were an accident in their privately owned vehicle.]
The agency needs to assess the needs of the displaced person and develop viable alternatives to meet the needs identified. The agency may need to rent a car for the displaced person, hire someone to take them around (possibly a local realtor), etc. In a rural setting, it may be even more critical to assist a displaced person who has no means of transportation. If the person has their own transportation, the agency may pay for their mileage costs.
53. §24.206. What changes were made in the eviction for cause provision?
A person who is a lawful occupant on the date of initiation of negotiation is presumed to be entitled to relocation benefits, and can only be denied benefits if the person has been evicted under applicable local law prior to the initiation of negotiations, or is evicted "for serious or repeated violation of material terms" of a lease or occupancy agreement, and in either case the eviction is not undertaken to evade Uniform Act obligations. The appendix A clarifies that a failure or refusal to move for a project cannot be considered to be a "serious or repeated violation of material terms" of a lease or agreement for purposes of this section.
54. §24.208. Is there any background or clarification on how I can best stay within the law when my project displaces someone who may not be in the United States legally?
The background and tips for success in this are found in the comprehensive discussion at http://www.fhwa.dot.gov/realestate/illegaqa.htm.
55. §24.208. How should payments be computed if some members of a displaced family are present lawfully but others are present unlawfully?
There are two different computation methods, one for moving expenses and one for replacement housing payments (RHP). For moving expenses, the payment is to be based on the proportion of lawful occupants to the total number of occupants. For example, if four out of five members of a family to be displaced are lawfully present, the proportion of lawful occupants is 80 percent and that percentage is to be applied against the moving expenses payment that otherwise would have been received.
For the RHP, the unlawful occupants are not counted as a part of the family and its size is reduced accordingly. Thus a family of five, one of whom is a person not lawfully present in the U.S., would be counted as a family of four. The comparable for the family would reflect the makeup of the remaining four persons and the RHP would be computed accordingly.
A "pro rata" approach to an RHP calculation disregarding alien status for comparability determination and applying a percentage to the RHP amount based upon the number of legal household members divided by the total number of household members is not permitted (consistent with Public Law 105-117).
- The "pro rata" approach may result in a higher RHP eligibility than the displaced persons would otherwise be eligible to receive.
- The "pro rata" approach of providing a percentage of the calculated eligibility is contrary to the requirements of the Uniform Act and 49 CFR Part 24.
Example:
Household of seven (including one illegal alien individually occupying one bedroom.)
Displacement dwelling - 4 BR unit, with rent/utilities of $1200/month
Housing requirements for all lawful occupants (six) is a 3 BR unit
Comparable dwelling
3 BR unit with rent/utilities of $1300/month
Calculation of RHP under regulations (illegal alien excluded)
$1300 (comparable) - $1200 (displacement unit) = $100 RHP x 42 months = $4,200 RHP
56. §24.208. If a person who is a member of a family being displaced is not eligible for and does not receive Uniform Act benefits because he or she is in not lawfully in the United States, is that person's income excluded from the computation of family income?
No. The person's income is still counted unless the agency is certain that the ineligible person will not continue to reside with the family. To exclude the ineligible person's income would result in a windfall by providing a higher relocation payment. This is an example of a payment that the illegal alien provision is trying to avoid.
SUBPART D – PAYMENT FOR MOVING AND RELATED EXPENSES
There have been changes to this subpart. A side-by-side comparison of these changes is available.
57. §24.301. When a business is relocating, for which expenses related to the purchase or lease of a replacement site, can the owner be reimbursed?
A business owner is entitled to compensation for actual reasonable expenses incurred in searching for a replacement site, up to $2,500, including, but not limited to, the expenses described in §24.301(g)(17). These expenses could include costs for the time spent negotiating the purchase or the lease of a replacement site.
In addition, an owner can also be compensated for professional services performed prior to the purchase or lease, to determine the suitability of the replacement site for the business, if the agency determines that they are actual, reasonable and necessary. These services include such things as soil tests or marketing studies, but do not include fees or commissions directly related to the purchase or lease, as covered in §24.303(b).
In other words, reimbursement can be provided for time spent negotiating the purchase or lease as part of the $2,500 searching expenses, and for professional fees to determine the suitability of the site, but cannot be provided for fees or commissions directly related to the purchase or lease.
58. §24.301(d). If a project is not impacting the entire business but only a portion of the business's personal property, is the business eligible for a move payment based on direct loss of tangible personal property or substitute personal property? These options are not listed under §24.301(e), personal property moves.
Yes. While the regulation does not list the tangible personal property or substitute personal property options, they are always available at the agency's option when it makes sense to use them.
59. §24.301(e). What is covered by the "personal property only" moving provision in this section?
This section covers personal property that must be moved for a Federal or federally assisted project, and is owned by a person who is not displaced from a dwelling, business, farm or nonprofit organization. This includes personal property in a mini-storage facility that is being acquired, or personal property located on vacant land that is being acquired.
60. §24.301(g)(3) and §24.304(a)(1). Are costs incurred in complying with OSHA and other code requirements at the replacement location considered eligible costs in situations where the business was not subject to the requirement at the displacement property because of a grandfathered provision?
Modifications to personal property mandated by Federal, State or local law, code, or ordinance that are necessary to reassemble or reinstall the personal property or adapt it to the replacement structure, the replacement site, or the utilities at the replacement site are eligible for reimbursement under §24.301(g)(3). The modifications authorized by this subsection must be clearly and directly associated with the reinstallation of the personal property and cannot be for general repairs or upgrading of equipment or facility. Finally, expenditures for authorized modifications must be reasonable and necessary.
Costs for repairs, modifications, or improvements to the replacement real property due to the requirements of laws, codes, or ordinances can only be paid under §24.304(a)(1) and are limited to the $10,000 maximum payment under this subsection. Any costs in excess of $10,000 are ineligible.
61. §24.301(g)(3). Can the costs of pits, pads, and foundations necessary for the installation of machinery or equipment in the replacement business site be reimbursed as a moving cost?
The costs of pits, pads, and foundations can be reimbursed as an eligible moving cost if they are necessary for the reinstallation of equipment or machinery or the installation of substitute items that are necessary for the business operation. Normally, pits, pads, and foundations only add value to a property for a particular business operation and would not generally enhance real property. In the case where the pits, pads and foundations are ascribed a contributory value, then that value may be deducted from the cost of the newly constructed pit, pads and foundations.
62. §24.301(g)(3). Are the costs incurred for site preparation for installing underground tanks eligible moving expenses?
Underground tanks are generally considered realty and purchased as part of the real estate. If under state law, the underground tanks are personal property and will be moved and used at the replacement site, then they can be considered an eligible moving expense.
63. §24.301(g)(11). Are there any limitations on the costs that can be reimbursed for licenses, permits, or certifications required of the displaced person at the replacement location?
The costs must be actual, reasonable, and necessary. The licenses, permits, or certification requirements necessary to operate the particular business being relocated are eligible for payment as moving expenses. Occupancy permits, licenses and such fees paid for the replacement real property, which were formerly eligible as reestablishment expenses, can now be reimbursed as moving expenses. Reimbursement of actual, reasonable, and necessary costs may be limited to those amounts that are for the remaining useful life of the licenses, etc., at the site acquired.
64. §24.301(g)(14). What changes were made to the provision that covers actual direct loss of tangible personal property?
The wording was revised to clarify that current estimated cost to move and reconnecting an item "as is" at the replacement site will not include upgrades for code requirements. If the equipment is in storage or not being used at the acquired site the estimated cost to move it cannot include storage or cost to reconnect. The intent of the revision of the actual direct loss of tangible personal property provision is to insure the payment is based on the lesser of the fair market value "in place, as is" or the estimated cost to "move and reconnect, as is." The fair market value in place, as is, is based on the current fair market value of the item at the displacement site. The payment shall consist of the lesser of A. or B., as shown in this example:
A. Calculate the amount for the continued use of an item, in place, as is, at the displacement site, and subtract the (net) proceeds from the sale:
| Current fair market value of the equipment in place, as is, installed and fully operational | $10,000 |
| Subtract the proceeds from the sale | - 7,000 |
| $ 3,000 |
B. The wording in §24.301(g)(14)(ii) was revised to clarify that current estimated cost to move and reconnecting an item "as is" at the replacement site will not include upgrades for code requirements. If the equipment is in storage or not being used at the acquired site the estimated cost to move cannot include storage. Calculate the estimated cost to move and reconnect the item, as is, with no upgrades:
Current estimated cost to move and reconnect, as is with no upgrades for code requirements $ 2,500
Payment is the lesser of A. or B., in this case $2,500.
65. §24.301(g)(14). What is the difference between actual direct loss and substitute personal property?
Actual direct loss is intended to be used by businesses, farms and non-profits that are either going out of business or elect not to move a particular piece of equipment. The payment for substitute personal property is intended to pay for an item that will not be moved, but will be promptly replaced at the replacement site. The payment is the lesser of lesser of A. or B., as shown in this example:
| A. Cost of a substitute item | $10,000 |
| Add the cost of installation | + 1,000 |
| $11,000 | |
| Subtract the proceeds of sale or trade-in | - 2,500 |
| $ 8,500 |
B. Cost to move and reinstall the replaced item with no allowance for storage $12,500.
Payment is the lesser of A. or B. above, in this case $8,500.
66. §24.301(g)(17). How early can search costs be incurred by a displaced business and still be reimbursable? Could they be incurred prior to authorization or award of a grant for the project or program? Can search expenses ever exceed $2,500?
While searching costs may be incurred by the displaced business at any time after there is a reasonable expectation that the business will be displaced, the agency cannot reimburse the displaced business for any searching costs incurred until the displaced business qualifies as a displaced business as defined in §24.2(a)(9).
In unusual circumstances search expenses over $2,500 may be reimbursed when the agency verifies that the expenses are justified and obtains a waiver from the funding agency, per §24.7.
67. §24.301(g)(17)(vi). Is a business or farm displacee entitled to payment for time spent negotiating the lease of a replacement site under actual, reasonable moving and related costs? Or does that provision apply only to displacees who purchase a replacement property?
The benefit applies to leases as well as purchases. The list in §24.301(g)(17) provides examples of qualifying costs; it is not an all-inclusive list.
68. §24.301(g)(18). What is low value/high bulk and when should I use it?
Low value/high bulk is an eligible moving expense for certain types of personal property encountered with nonresidential properties. Low value/high bulk materials are items of personal property owned by a displaced business, farm or non-profit organization that the agency determines would cost more to move than replace. Some examples of low value/high bulk materials include but are not limited to stockpiled sand, gravel, metals, etc.
Low value/high bulk may also be applied to personal property only moves in §24.301(e).
The application of the low value/high bulk provision is at the agency's discretion. The agency should only use this provision if it is willing to accept ownership and the ultimate cleanup costs of the material. If the agency opts to offer this provision to the displaced business, the agency makes the decision on whether the material is to be moved to the new location. If the agency determines that the cost to move is disproportionate to the property's value, the moving cost payment shall not exceed the lesser of the value of the property or the cost to move it. It may be in the agency's best interest to have the owner remove it, since the material will have to be removed as a project expense otherwise. Generally, if the agency requires the material to be moved by the owner, then this provision should not be used.
69. §24.301(i). Can the agency withhold payment for a move solely because the displaced person does not provide advance written notice to the agency of the date of the proposed move?
Yes. However, the records of the agency should provide documentation of the advice provided to the displaced person concerning the responsibility to provide notice and the necessity for the notice. Advance notice allows the agency to monitor the move and make reasonable and timely inspection of the personal property at both the displacement and replacement sites. If the displaced business provides verifiable records, bills, and receipts documenting actual expenses incurred and identifies the personal property moved, withholding payment is inappropriate. A displaced person has the right to appeal a decision to withhold payment under §24.10
70. §24.301(d)(2). Should a moving cost estimate prepared by an agency employee be based on the costs charged by a professional moving firm or on the actual costs a displaced person may incur? Is it permissible to negotiate with the owner of a business the amount to be paid to him/her for a self-move?
The moving cost estimate for a non-residential self-move prepared by a qualified agency employee should be based on the cost that would be charged by a professional moving firm. If the estimate includes profit, overhead, or other additional costs that the business will not actually incur, it is permissible for the agency to negotiate a payment for an amount that would reflect the actual costs the business would incur in the move. This procedure does not preclude the owner from electing to make an actual cost, documented self-move.
71. §24.301(g)(4). Is storage of personal property an entitlement of every displaced person? Who determines if an agency should pay for the storage of personal property, the terms of such storage, and the length of time for storage payment?
The agency determines if the storage of personal property is a reasonable and necessary moving expense for a displaced person. The determination should be based on the needs of the displaced person, the nature of the business, the plans for permanent relocation, the amount of time available for the relocation process, and whether storage will facilitate relocation. It is the agency's responsibility to set the terms for storage.
72. §24.302. When a new fixed residential moving cost schedule is published how does the effective date affect moves being processed?
Unless the agency selects an earlier date to begin operating under the new schedule than the effective date published in the Federal Register, the date of the move is the operative date. The newly published moving cost schedule applies even if the initiation of negotiation occurred prior to the effective date of the new schedule. The key is the date of the actual move.
73. §24.302. Is the fixed moving payment the only coverage for a seasonal residence?
No. The occupant of a seasonal residence could receive actual moving expenses in accordance with §24.301. Persons owning or renting seasonal residences are generally not eligible for any relocation payments other than for moving expenses.
74. §24.303. Can a displaced business obtain reimbursement for professional services to determine the suitability of more than one site?
Yes. If, as a result of the professional services performed, one or more sites are found to be unsuitable for the business. An agency may also agree to provide reimbursement for multiple site assessments. In all cases the agency must determine that the cost of such additional professional services are actual reasonable and necessary. If professional services indicate that a particular replacement site would be suitable, but an owner simply changes his/her mind and decides not to move to that site, additional professional services to assess other sites should normally not be considered reasonable and necessary.
75. §24.303(c). What are some examples of impact fees or one-time assessments?
Actual and reasonable impact fees for anticipated heavy utility usageare eligible for payment as a related moving expense. In the past these fees were eligible as a reestablishment expense and limited to $10,000. Examples include (a) water and sewer tap fees for a laundromat business which requires a larger service tap than a typical business, (b) a fee to provide 3-phase electrical service required by the displaced business when replacement sites available were served by single phase transformers, or (c) other one-time charges or fees a utility requires to finance infrastructure necessary to provide increased usage.
The intent is to reimburse a business for impact fees for anticipated heavy utility usage when the move requires the business to move to a new location where impact fees for anticipated heavy utility usageare being charged. If suitable replacement sites or properties are available where impact fees for anticipated heavy utility usageare not being charged, reimbursement is at the agency's discretion, based on what is reasonable and necessary. Potential eligibility of impact feesfor anticipated heavy utility usageis an important advisory service. The regulation limits impact fees or one-time assessments for anticipated heavy utility usage to utilities, i.e., water, sewer, gas, and electric. Impact fees for other major infrastructure such as roads, fire stations, regional drainage improvements and parks, for example, are not eligible.
76. §24.304. Is new construction at the replacement site eligible for reimbursement as a reestablishment expense?
The cost of constructing a new business building on the vacant replacement property is a capital expenditure and is generally ineligible for reimbursement as a reestablishment expense. In those rare instances when a business cannot relocate without construction of a replacement structure, an agency may request a waiver of §304(b)(1) under the provisions of §24.7. An example of such an instance would be in a rural area where there are no suitable buildings available and the construction of a replacement structure will enable the business to remain a viable commercial operation. If a waiver is granted, the cost of constructing the new building will be considered an eligible reestablishment expense subject to the $10,000 statutory limit on such payment.
77. §24.304. What reestablishment expense costs are eligible for reimbursement if a displaced business occupies a shell structure?
Basically all of the costs listed under §24.304(a) are eligible if considered actual, reasonable and necessary for the operation of the business. In markets where existing and new buildings are available for rental (and sometimes for purchase), the buildings or the various units available within the buildings often have only the basic amenities such as heat, light, and water, and sewer available. These buildings or units are shells. The cost of the building (shell) is not an eligible expense because the shell is considered a capital real estate improvement (a capital asset). However, this determination does not preclude the consideration by an agency of certain modifications to an existing replacement business building. Eligible improvements or modifications up to the amount of $10,000 may include the addition of necessary facilities such as bathrooms, room partitions, built-in display cases and similar items, if required by Federal, State or local codes, ordinances, or simply considered reasonable and necessary for the operation of the business.
78. §24.304. If the nature, character, or type of business established after displacement is different from the business displaced by acquisition, would it be eligible for a reestablishment payment?
Yes. A change in a displaced business does not affect eligibility for actual, reasonable, and necessary reestablishment expenses incurred in reestablishing a business. In some instances, it is not economically feasible to relocate a particular business operation and a change in the nature, character, or type of business may be the most practical solution for the business operator. Expenditures of funds for reestablishing the business must be reviewed for acceptability. Costs of new or used equipment purchased to serve the changed business operation are not eligible for reimbursement as reestablishment expenses. Similarly, general repairs or improvements to the replacement property made to the structure because of the personal choice of the business operator are ineligible. The costs of utility upgrades and necessary and reasonable modifications to the real property to accommodate the changed business may be eligible when properly supported. All reestablishment payments are limited by the $10,000 statutory maximum.
79. §24.304. Is a business operation that consists solely of leasing real estate to others at the displacement site eligible for the reestablishment payment?
Yes. The business of leasing real estate to others is considered to be a small business for the purposes of the regulations for the Uniform Act. The owner of the business is eligible for reimbursement of the actual, reasonable, and necessary expenses for the reestablishment of a rental property. The agency should provide the same advisory services to real estate leasing operations as performed for other businesses including providing information on suitable replacement properties. It is the agency's responsibility to determine if the expenses to be reimbursed under reestablishment are reasonable and necessary.
80. §24.305(e). If the net income of a displaced business is very low in one or both years prior to displacement, can the payment be based upon a different period?
Yes. Average annual net earnings may be based upon a different time period when the agency determines it to be more equitable.
81. §24.305(e). If a business experienced a loss in one of the two years, should the amount of the loss be offset against the net income from the other year, or should the income be considered as zero for the year in which the loss was incurred?
If a loss of net income occurs in one year and a gain in the other year, the income of the year in which the loss was incurred should be computed as zero when determining the average net income for the 2-year period.
82. §24.305(e). If a business has been in operation for only a short period of time (e.g., six months) prior to displacement, what method is used for determining the amount of the fixed payment?
The fixed payment would be based on the net earnings of the business at the displacement site for the actual period of operation projected to an annual rate. The existing net earnings income data should be extrapolated and used to project what the net earnings could be if the business was in business for a full two years. If the business is seasonal, this fact should be taken into account in the computations. Paragraph (a)(6) of this section requires that the business contribute materially to the income of the displaced person during the 2 taxable years prior to displacement. This does not meanthat the business needed to be in existence for a minimum of 2 years prior to displacement, only that the business contributes materially to the income of the displaced person during that 2-year period.
83. §24.305. Is it permissible to combine different types of moves on the same parcel?
It is permissible except for §24.305, fixed payment of moving expense – nonresidential. If a fixed payment for moving expense – nonresidential payment is selected, then all other types of moves are ineligible. Otherwise, there is no restriction on combining the various types of moves. For example, when moving from a dwelling, the displacee may elect to use a commercial mover to move the heavy items (such as pianos, appliances and dressers) and request a self-move based on receipted bills or use the fixed residential moving costs schedule found at §24.302, to move the remaining items. If the displacee elects to use a combination of the fixed residential moving costs schedule and a commercial mover for personal property within the dwelling, an agency adjustment to the actual room count used for the fixed schedule may be required to offset the items moved by the commercial mover. When these two moving cost methods are combined, the fixed residential moving cost schedule typically includes the cost for utility service transfer fees.
The same is true for a nonresidential move (business, farm or nonprofit organization). For example, a business owner may want to use company employees to move items of personal property in the office area and a commercial mover to move the heavy equipment requiring special disconnection and reconnection expertise. For the office area, the company could submit for payment the lower of two bids or estimates from a commercial mover or actual cost based on receipted bills.
SUBPART E – REPLACEMENT HOUSING PAYMENTS – GENERAL
There have been changes to this subpart. A side-by-side comparison of these changes is available.
84. §24.2(a)(6). Can a replacement housing payment computation be based upon a comparable property that may have a minor decent, safe, and sanitary (DSS) deficiency?
If the availability of comparable replacement properties is limited, the agency may base a replacement housing payment on an available property having minor DSS deficiencies, provided the deficiencies can be easily corrected for a nominal amount.
Use of non-DSS properties with minor deficiencies should be limited to unusual situations. The payment computation must reflect the cost to correct the deficiencies supported by contractor bids or estimates. If such housing is used to meet the "make available" requirement, the housing must be available and DSS at the time of the move.
In cases where a displacee moves to a non-DSS replacement dwelling when comparable DSS housing is available, the displacee must bring the replacement up to DSS standards within 12 months in order to receive a replacement housing payment.
85. 49 CFR 24.2(a)(8)(iv). If it is "culturally" a part of the lifestyle for six children to share a bedroom, would it be acceptable to base the computation of the replacement housing payment on a dwelling that would require the six children to share a bedroom?
No. The comparable must reflect appropriate local housing codes or, in the absence of local codes, the policy of the displacing agency.
86. §24.2(a)(6)(viii)(C). How does the change in part of the definition of comparable replacement dwelling change the treatment of "less than 90-day occupants" or "subsequent occupants"?
Displaced persons failing to meet the length of occupancy requirements continue to be eligible for relocation benefits under last resort housing. What has changed is how the benefit is calculated. Benefits for low-income tenants will still be calculated using the 30% of income rule contained in §24.402(b)(2). For others who are not low income, the calculation will be rent-to-rent. The reason for the change is to ensure consistent treatment of displacees. Across an agency's programs, the net effect of the change in the 30% rule is expected to be a reduction in financial liability. However, with respect to some individual displacees who do not meet the length of occupancy requirements, the calculation of benefits may result in a higher payment than in the past. Agencies may wish to consider using loss-of-rent agreements to limit and manage financial liability when they believe that there is substantial risk that a subsequent occupant situation will occur.
Under the last resort housing provision §24.404(c) and the downpayment assistance provision §24.402(c)(1), the less than 90-day occupant or subsequent occupant rental assistance can be converted to a downpayment to purchase at the discretion of the agency on a case-by-case basis. However, the payment to a displaced homeowner shall not exceed the amount the owner would receive under §24.401(b) if he or she met the 180-day occupancy requirement. The agency shall apply this discretion in a uniform and consistent manner. If you require further clarification on the less than 90-day occupants or subsequent occupants, please contact your funding agency.
87. §24.2(a)(8)(vii). How should the replacement housing payment be computed and paid when accommodations need to be provided for a displaced person with disabilities?
The regulation permits sufficient flexibility for each agency to develop procedures for accommodating the needs of a displaced person with disabilities. The replacement housing payment computation may: (1) be based on a dwelling designed for physically disabled persons, (2) include the estimated costs of any needed modifications, or (3) contain provisions for the adjustment to reflect the actual cost of modifications to the replacement housing payment computation.
Arrangements for modifications to the replacement dwelling purchased by the displaced person may be made by either the individual or by the agency, and the agency shall provide reimbursement for the actual reasonable costs paid for such modifications. The agency could also elect to obtain bids or to contract directly for needed modifications.
Rental replacement housing should be provided in the same manner, with the consent of the landlord, or the rental assistance payment could be increased to appropriately compensate the landlord for any necessary modifications or accommodations necessary for the replacement property to be considered DSS. If a financial hardship would be created for the displaced person, the agency could provide an advance replacement housing payment for the needed modifications.
88. §24.401(c). If the replacement property purchased by the displaced person is a part of a property that contains another dwelling unit and/or space used for non-residential purposes or is located on a tract which is significantly larger than typical for residential purposes, must there be an adjustment to the purchase price of the replacement property to reflect the cost of the replacement dwelling for the replacement housing payment computation?
When the residential replacement property contains another dwelling unit and/or space used for non-residential (commercial/industrial) purposes, an adjustment to the price of the property shall be made to reflect the cost of the replacement dwelling and a typical dwelling site.
When the replacement residential property does not contain another dwelling unit or space used for non-residential purposes, but is significantly larger than a typical residential site, an adjustment to the price of the property may be appropriate.
In determining the need for an adjustment, the agency shall apply its policy uniformly to persons in like circumstances. The agency should be aware that the land in excess of a typical site might have a different unit value than land valued for residential use on a typical site.
89. §24.2(a)(20). Is a displaced person who holds a life estate in the displacement property an owner or a tenant?
A displaced person who holds a life estate is considered to be an owner. A person who holds a life estate has the right to occupy the property for life. A life estate may have been created and retained by a person who conveyed the remainder interest to another person; or the life estate may have been granted by another person. It makes no difference how the life estate was created. However, the replacement housing payment may depend upon the distribution of the acquisition payment in accordance with state law. Each agency should develop procedures in accordance with applicable law. The replacement housing payment computation should be sufficient to enable the displaced person to relocate as an owner with an interest at least equivalent to the interest held prior to the acquisition of the property by the agency. The payment computation will be based on the total amount of the acquisition payment for a dwelling comparable to the acquired dwelling. As an alternative, the agency may acquire a dwelling and provide a life estate to the displaced person. All such agreements should clearly establish the responsibilities and rights of each party.
90. §24.401(c). How much money must an owner-occupant with a partial interest in the acquired property spend in order to receive the maximum computed supplemental payment?
The owner-occupant with a partial interest must spend his/her share of the acquisition payment plus the computed supplemental payment in order to receive the maximum payment.
91. §24.401(c)(2). When an owner-occupant retains the displacement dwelling and moves it to the remainder or to a previously owned tract of land is the historical cost or the current fair market value of the replacement site used as the "acquisition cost" for the RHP computation?
The acquisition cost will be based on the current fair market value of the replacement site for residential use as determined by the agency. If an agency uses the buildable lot procedure in accordance with §24.403(a)(3), the value of the buildable remainder will have been added to the acquisition cost of the displacement dwelling for purposes of computing the replacement housing payment.
92. §24.401(d)(3). If the interest rate charged for a new mortgage exceeds the prevailing interest rate because the displaced person is a poor credit risk or for other similar reasons, may the actual rate be utilized when determining the amount of the mortgage interest differential payment?
The interest rate for a new mortgage should generally not exceed the current range of prevailing mortgage interest rates of lending institutions in the area of the replacement dwelling. If the displaced person's unique circumstances require payment of a higher interest rate and the agency determines that the additional cost could prevent the displaced person from obtaining comparable housing, the higher rate may be used as the basis for determination of the mortgage interest differential. The file should contain justification for the rate used. The agency must exercise reasonable, consistent latitude in these decisions and the computation of the payments.
93. §24.401. Are reverse mortgages eligible for increased interest payments, and is the cost to create such a loan on a replacement property eligible for payment of incidental costs?
A reverse mortgage, such as a Federal Housing Administration (FHA) home equity conversion mortgage (HECM) is a first mortgage lien. A property owner who has an HECM is entitled to be placed in similar circumstances. Therefore, payments to enable an in-kind replacement, including costs to create another HECM, are eligible expenses.
The agency may be required to supplement the equity position on the replacement home to the degree necessary for a comparable reverse mortgage to be written to provide the same monthly payment that the displacee was receiving at the displacement dwelling. Or the agency may be required to supplement the equity position to provide a similar "net available cash" position. Agency procedures should be developed to address how a reverse mortgage will be handled should one be encountered. To date very few reverse mortgages have been written.
94. §24.401(d) and in appendix A. How is the mortgage interest differential payment (MIDP) computed in instances where the displaced homeowner has a combination of several types mortgages on their acquired residence?
The current method for payment of increased costs for replacement home mortgages is to provide a lump-sum payment at the origination of the new mortgage that will enable displaced home owners to borrow a reduced amount so their monthly mortgage payment on the replacement home will remain the same as that at the acquired residence.
New loans with differing characteristics are currently available from mortgage companies. The relocation agent should work with the displacee to determine what is the best mortgage replacement available at the replacement dwelling. This may mean advising the displacee to consider a fixed rate mortgage at the replacement dwelling, especially in times of rising interest rates.
The FHWA is developing guidance on MIDP for variable rate mortgages. An important component of the calculation will depend on the mortgagee's selection of the replacement mortgage.
95. §24.401(e). Can the agency limit the reimbursement for all incidental expenses to those that would have been incurred incident to the purchase of a comparable replacement dwelling?
No. However, the incidental expenses of owner-occupants are limited to the expenses that would have been necessary for purchase of a comparable replacement dwelling for owner's or mortgagee's evidence of title, state revenue or documentary stamps, and sales or transfer taxes. Participation in incidental expenses should be limited to those that are actual, reasonable, and necessary and required by the mortgagee or necessary for the protection of the owner.
In accordance with §24.402(c)(2), tenants are eligible to receive reimbursement for incidental expenses related to the purchase of a replacement dwelling to the extent that the total payment, downpayment plus closing costs, does not exceed the amount of the computed rental assistance payment.
96. §24.401(e). Which of the incidental expenses for purchase of a replacement dwelling can be limited to what would be required to obtain a new mortgage in the same amount as the remaining balance of the mortgage on the acquired dwelling?
Incidental costs that can be limited are those additional costs incurred for a new mortgage that is greater than the remaining balance on the acquired dwelling. Examples include mortgage guarantee insurance premiums, loan origination or loan assumption fees, and purchaser's points. When there was no mortgage on the acquired dwelling, there is no requirement to reimburse mortgage costs on the replacement dwelling.
97. §24.401(e). Can a lump-sum payment for mortgage guarantee insurance be included as an incidental expense?
Yes. Required lump-sum payments for mortgage guarantee insurance may be included as part of the mortgage interest differential payment (MIDP), if they are necessary for the displacee to obtain financing. For those paid to an owner-occupant, any payment made should be based upon the computed replacement mortgage for MIDP purposes or the new mortgage, whichever amount is less. Payments to tenants may be made if the computed rental assistance payment is sufficient to cover this expense.
98. §24.401(f). If an owner occupant of at least 180 days elects to rent a replacement dwelling, do you consider the owner's income in the calculation of the replacement housing payment?
No. The income of an owner who elects to rent a replacement dwelling is not considered in the calculation of a rent supplement for a 180-day owner. The income test is not appropriate to use for an owner who goes from an owner to a tenant status. The amount of the rental assistance payment is based on a determination of market rent for the acquired dwelling compared to a comparable rental dwelling available on the market. There is no income test for owners, and it was not the intent of this subpart to impose such as test.
99. §24.402(c). What are the limitations on the payment of incidental expenses for a tenant who elects to purchase a replacement dwelling?
All incidental expenses actually incurred by a tenant for the purchase of a replacement dwelling and which are customarily paid by the buyer, can be included in the computation of down payment assistance to the extent the total payment does not exceed the amount of the computed rental assistance.
100. §24.402(c)(2). Are loan origination fees incurred by a tenant in the purchase of a replacement dwelling eligible for reimbursement as incidental expenses?
Yes. §24.401(e)(3) and §24.401(e)(9) provide for payment of loan origination fees and other similar costs the agency determines to be incidental to the purchase. The total payment for a tenant may not exceed the amount computed under §24.402(c).
101. §24.2(a)(6) and appendix A, §24.2(a)(6)(ix). Can a person receiving government housing assistance before displacement, be offered a replacement dwelling that reflects similar government housing assistance and conditions?
Yes. In the case of a person receiving government housing assistance a comparable replacement dwelling may include a dwelling that reflects similar government housing assistance. A public housing unit may qualify as a comparable replacement dwelling only for a person displaced from a public housing unit. A privately owned dwelling unit with a housing subsidy tied to the unit may qualify as a comparable replacement dwelling only for a person displaced from a similarly subsidized unit or public housing. In such cases any requirements of the government housing assistance program, related to the size of the replacement dwelling would apply. Further, nothing prevents any fully informed displaced person not previously receiving government housing assistance from accepting such assistance. Additional details are provided in appendix A, §24.2(a)(6)(ix). If a person is no longer eligible for government housing assistance, a comparable replacement dwelling from the private market should be made available.
102. §24.402(c). Is a displaced person whose rental assistance payment is determined to be zero, eligible for a downpayment assistance payment for the purchase of a replacement home?
Yes. Any eligible displaced person whose rental assistance payment is determine to be zero may qualify for downpayment assistance of up to $5,250 at the agency's discretion. One of the objectives of the Uniform Act is to provide assistance to displaced tenants in order to become homeowners. The regulation provides that any rental assistance payment that is calculated to be less than $5,250, and is to be used for downpayment assistance, may be increased to any amount not to exceed $5,250 as a downpayment, at the agency's discretion. If the agency elects to provide the maximum payment of $5,250 as a downpayment, the agency must apply this policy in a uniform and consistent manner, so that eligible displaced persons in like circumstances are treated equally. The full amount of the downpayment assistance must be applied towards the purchase price of the replacement dwelling and related incidental expenses. The agency must also provide relocation advisory services in compliance with §24.205(c)(iv) to minimize hardships to such persons in adjusting to relocation.
103. §24.402(b)(2)(ii). What is excluded from household income when calculating the replacement housing payment for low-income tenants?
Household income does not include income received or earned by dependent children or full-time students under 18 years old, §24.2(a)(14). However, full-time students over 18 may be assumed to be a dependent, unless the person demonstrates otherwise.It also does not include benefits that are not considered income by Federal law, such as food stamps, or the Women Infants and Children (WIC) program. For a more detailed list of income exclusions, see Federally Mandated Exclusions from Income under Real Estate Topics of Special Interest on http://www.fhwa.dot.gov/realestate.
104. §24.402(c). Can an occupant using HUD Section 8 housing, whose Uniform Act rental supplement is computed to be zero (based on returning to HUD Section 8 housing) elect to purchase in the private sector and qualify for a down payment up to $5,250?
Yes, provided the agency decided to use the option provided in this section to increase any downpayment assistance up to $5,250 to support a tenant purchasing a replacement property. Appendix A contains the conditions the agency should consider to assure its policy regarding providing this additional benefit is applied uniformly.
105. §24.403(a)(6). In addition to advanced relocation payments, can the agency deduct rent due from the displacee if it does not create a situation that would prevent the displacee from relocating?
No. Relocation payments are separate from other obligations, and, even if the displacee had been a tenant of the agency, the use of relocation funds to satisfy those obligations is not permitted.
106. §24.403(a)(2). Can an alternative procedure which would enable the displaced person to replace a major exterior attribute be utilized for determining the replacement housing payment in cases where the comparable replacement dwelling site lacks a major exterior attribute of the displacement dwelling?
No. §24.403(a)(2) requires that the value of major attributes be subtracted from the acquisition price of the displacement dwelling for purposes of computing the replacement housing payment if the comparable replacement dwelling site lacks such major exterior attribute. The agency should always attempt to locate a comparable dwelling with the attribute before selecting a dwelling without the attribute.
107. §24.403(a)(5). What is the intent of the paragraph regarding multiple occupants of one displacement dwelling?
In general, all of the occupants of a single dwelling unit should be considered one family for purposes of payment calculations. However, two or more occupants of a dwelling may maintain separate households within that dwelling. If they do, they have separate entitlement to relocation payments. The agency is responsible for determining the number of households in a dwelling based on the use of the dwelling, the relationship of the occupants, and any other information that may be obtained. The payment computation for each household should be based on the part of the dwelling that the household occupies and the space that is shared with others. An attempt should be made to locate similar comparable DSS living facilities. The record should be sufficiently documented to support the decision reached.
108. §24.403(c). Will the purchase and occupancy of a motor home or a boat meet the requirement for purchase of a replacement dwelling?
A motor home or a boat capable of providing living accommodations may be considered a replacement dwelling if (a) the motor home or boat is purchased and occupied as the primary place of residence; (b) the motor home or boat is located on a purchased or leased site and connected to all necessary utilities for functioning as a housing unit on the date of the agency's inspection, and (c) the dwelling, as sited, meets all local, State, and Federal requirements for a DSS dwelling. It should be noted that the regulations of some local jurisdictions would not permit the consideration of these vehicles as DSS dwellings.
A motor home or a boat designed to provide living accommodations may also meet the requirement of a rental replacement dwelling if it is occupied as the primary place of residence and qualifies under (b) and (c) above.
109. Appendix A, §24.404(b). How do you relocate a partial owner-occupant who cannot afford to finance a replacement dwelling? Can a direct loan under the provision of §24.404(c) be provided?
If an agency determines that the relocation of a partial owner-occupant should be as an owner, the agency may provide a direct loan, lien or other financial assistance under §24.404(c) if other financing is not available to the person, in addition to the computed replacement housing payment. A partial owner-occupant who cannot afford to purchase comparable replacement housing may be relocated as a tenant and provided a rental assistance payment in accordance with §24.402.
110. §24.404(c)(iv). Can a direct loan as provided for in this section be used as a substitute for a replacement housing payment?
No. A direct loan would be provided in addition to any replacement housing payment computed for the displaced person. A direct loan may be provided under housing of last resort if financing is not otherwise available to the displaced person. It cannot be used as a substitute for a replacement housing payment.
111. §24.404(c). Are there other ways to assist displaced persons to purchase and occupy replacement housing other than the ones listed in §24.404(c)?
Yes. The agency has many options for assisting people to become owners of replacement dwellings. A first mortgage or a lien can be placed on a property that would become due and payable if the displaced person ceased to occupy the property or conveyed or sold the property to someone else. A life estate, based on the displaced person's life, could be offered in a property owned or purchased by an agency. The displaced person would have the right to occupy the property until death when the full ownership of the property would revert to the agency for other uses or sale. The agency could also "buy down" the interest or the mortgage of a property with a financing agency to make the payments affordable for the displaced person. Or the agency could initiate mortgage financing for a displaced person and then sell the mortgage to a person or institution who would become the new mortgagee. Several agencies have also assisted displaced persons in establishing credit at credit unions that then financed the mortgages for them.
It is recommended that agencies use the provisions of housing of last resort to maximize housing opportunities in a cost efficient manner.
SUBPART F - MOBILE HOMES
There have been changes to this subpart. A side-by-side comparison of these changes is available.
112. §24.502. If a displaced owner-occupant of a mobile home is a partial owner of the mobile home site, what payments would he or she be entitled to receive?
The displaced person would be treated as an owner in accordance with the guidance in appendix A, §24.404(b). If the mobile home is acquired or cannot be relocated, the owner would be eligible for a replacement housing payment to purchase a mobile home. He/she would also receive a replacement housing payment based upon the difference between the asking price of a comparable mobile home site and the acquisition price of the site (as improved for a mobile home) from which he/she is displaced. If there is no mobile home site available for purchase within his/her financial means as a partial owner, then he/she could receive a rental assistance payment sufficient to rent a comparable mobile home site.
113. §24.502. Is a mobile home owner-occupant who leases or rents his/her site at the displacement location eligible for a down payment for a replacement site?
The owner of a mobile home, who rents the site from which he/she is displaced, may either rent a replacement site and receive a rental assistance payment in accordance with §24.402(b) or purchase a replacement site and receive down payment assistance in accordance with §24.402(c).
114. §24.502(d). Does the revised regulation change the treatment of mobile home owner-occupants who elect not to move their mobile homes when they are determined to be personal property?
The revised regulation reorganized and rewrote the provisions that apply to owner-occupants who elect not to move their mobile homes when determined to be personal property. The regulation establishes that an owner-occupant who elects not to relocate his/her mobile home is not entitled to a replacement housing payment for the purchase of a replacement dwelling. However, the owner-occupant, as a displaced person, is entitled to moving costs to relocate the mobile home and their personal property to a replacement site. The regulation allows such an owner to claim moving expenses under §24.301. If the mobile home is not moved by the owner, it may be sold on site, traded in on a replacement mobile home, or an agency could choose to purchase and dispose of it at its salvage value. The net benefit to the displaced person is expected to be similar to those available in the past.
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