SUBPART D - PAYMENTS FOR MOVING AND RELATED EXPENSES

Non-Regulatory Supplement

OPI: HEPR

1. ELIGIBILITY OF SEASONAL RESIDENCES (49 CFR 24.302). Persons owning or renting seasonal residences are generally not eligible for any relocation payments other than a fixed moving cost payment. A seasonal residence can be distinguished from a domicile in that a domicile is the place of a person's fixed, permanent home and principal establishment and to which place the person, when absent, has full intention of returning.

2. RESIDENTIAL MOVES (49 CFR 24.301 AND 24.302). Residential moves are to be reimbursed on the basis of actual costs incurred or on the basis of the Fixed Residential Moving Cost Schedule (Schedule).

   An actual cost move may be carried out via a commercial mover or by the displaced person in a self-move supported by receipts for actual, reasonable, and necessary costs incurred. In a self-move, the displaced person may also be paid for his/her time spent in moving. The hourly rate of the displaced person's time should be reasonable and generally should not exceed rates paid to unskilled packers and movers of local moving firms. Displaced persons may not move themselves and then collect the cost of a commercial move. For residential self-moves, the Uniform Act allows the use of the Schedule, which provides appropriate and adequate reimbursement for an occupant's move from a dwelling without requiring staff to expend time securing moving cost estimates for each move. In using the moving cost schedule, the actual room count may be supplemented by additional rooms representing the reasonable count of room equivalents of personal property found in attics, basements, hallways, and elsewhere. Displaced persons may also elect to use a combination move, utilize a commercial mover for heavy or bulky items (such as a piano or large stack of firewood), and then use a self move for household items.

3. DETERMINATION OF REAL PROPERTY VERSUS PERSONAL PROPERTY (49 CFR 24.301(d)). All payments for moving and related expenses for displaced businesses relate to the moving of personal property. Neither the Uniform Act nor the implementing regulations provide payment for moving real property. The Uniform Act places the determination of real property under State law when the acquiring agency is a State agency receiving Federal financial assistance. Federal and State laws require that those items considered real property under State law must be appraised and acquired as part of the real estate being acquired, while items considered personal property under State law must be moved in accordance with the Uniform Act. The determination of real property versus personal property is required during the appraisal stage (see 24.103(a)(2)(i)).

4. ELIGIBILITY OF SITE PREPARATION COSTS FOR REINSTALLING UNDERGROUND STORAGE TANKS - NONRESIDENTIAL MOVES (49 CFR 24.301(g)(3)). Underground storage tanks are normally considered realty, are paid for as part of the real estate, and are not moved. However, if under State law, tanks are considered to be personal property, site-preparation costs necessary for the reinstallation of tanks may be considered as an eligible installation expense, as long as the site preparation does not constitute an improvement to the realty as described at 49 CFR 24.301(h)(10).

5. "PLANT LAYOUT" AS AN ELIGIBLE EXPENSE - NONRESIDENTIAL MOVES (49 CFR 24.301(g)(12)). "Plant layout" is an eligible expense with regard to both a move into a newly constructed building or into a preexisting building. These expenses are limited to rudimentary items, such as indicating the locations in the replacement building to which personal property is to be moved, and are related to "planning the move of personal property" from the displacement site to the replacement site. The final decision of whether to hire a move cost planner rests with the funding agency. Eligible expenses do not include architectural- or engineering-type drawings, concepts, or considerations at the replacement site, nor do they include plans, drawings, layouts, or other material related to the site acquired by the acquiring agency. Further, such expenses are not to be considered as "professional services" under the provisions of 49 CFR 24.303(b).

6. SEARCH EXPENSES INCURRED PRIOR TO PROJECT AUTHORIZATION (49 CFR 24.301(g)(17)). Searching costs may be incurred by a displaced business at any time; however, the displacing agency cannot reimburse the displaced business for any costs incurred until such time as the displaced business qualifies as a displaced person as defined in 49 CFR 24.2(9).

7. "TIME SPENT SEARCHING" REIMBURSEMENT (49 CFR 24.301(g)(17)(iii)). The phrase "time spent searching based on reasonable salary earnings" refers to the time of the displaced business or farm operation owner and to that of an employee of such displaced person; it does not refer to an agent, such as a real estate broker, although the (actual, reasonable) fee charged by such a person for professional services rendered is an eligible cost item under 49 CFR 24.301(g)(17)(iv).

8. WITHHOLDING PAYMENT FOR FAILURE TO PROVIDE NOTIFICATION OF MOVE TO DISPLACING AGENCY BY DISPLACED PERSON (49 CFR 24.301(i)). The decision to withhold payment should be left up to the displacing agency. Payment could be withheld if the displaced person does not provide notice to the acquiring agency of the date of the proposed move. However, the displacing agency should have its records well documented that it advised the displaced person of his or her responsibility and necessity for notification, so that the agency can monitor the move and make reasonable and timely inspection of the personal property at both the displacement and replacement sites. If the displaced business can produce verifiable records, bills, and receipts documenting actual expenses incurred and identifying the personal property moved, it may prove difficult to withhold any payment, based on the fact that the agency was not notified of the move date.

9. AGENCY PREPARED MOVING COST ESTIMATES - NONRESIDENTIAL MOVES (49 CFR 24.301(d)(2)). When a qualified agency employee prepares a moving cost estimate for a nonresidential move, the estimate should be based upon costs charged by a professional moving firm. If the displaced person elects to make a self-move, the displacing agency may approve a moving payment in an amount not to exceed the lower of two acceptable bids or estimates. However, at the agency's discretion, a payment for a low cost or uncomplicated move may be based on a single bid or estimate. If the estimate includes profit, overhead, or other additional costs that the displaced person would not actually incur, it would be appropriate for the agency to negotiate a payment at a lesser amount that would reflect actual expenses incurred in making a self-move.

10. UNIFORM ACT STANDARDS FOR DISPLACED BUSINESSES (49 CFR 24.304). The Uniform Act does not require that displaced businesses be made whole. Being made whole is not the Uniform Act's standard for businesses. Congress intended different standards for residences and businesses. Businesses enjoy substantially fewer benefits under the Act than do homeowners and tenants of residential property.

    Reimbursement of reestablishment expenses is intended to be used to mitigate the high incidence of small business failures caused by Federally funded displacement. Eligibility for such payment is restricted to nonprofit organizations, farms, and small businesses. While the 1987 amendments to the Uniform Act provided some additional benefits for businesses, these amendments do not require businesses to be protected to the same extent as homeowners and tenants.

11. NECESSITY AS THE TEST FOR REESTABLISHMENT EXPENSES (49 CFR 24.304). The test for reestablishment expenses is not a comparative standard. Therefore, it does not match the amenities or characteristics of the replacement site against the displacement site. Instead, the test is one of necessity, i.e., is the expense necessary to reestablish the displaced business?

12. REESTABLISHMENT EXPENSES PAYMENT ELIGIBILITY - LEASING OF SPACE (49 CFR 24.304). A business whose sole activity at the site is providing space at the site to others is eligible for a Reestablishment Expenses payment. However, when a lessee subleases space, the lessee generally will not be eligible for a Reestablishment Expenses payment for the purpose of leasing space. There are two reasons for this. First, as encountered in Federal-aid highway projects, the subleasing of space typically is not a business but merely an expedient to defray the costs of space in excess of the business' needs. Secondly, the space involved in the sublease could be all or a part of the larger space leased out by the prime lessor. In most cases, the prime lessor may be eligible for a Reestablishment Expenses payment for leasing the same space. Paying the lessee for subleasing then could constitute a second or duplicate payment for leasing the same space. However, each situation must be evaluated individually by the displacing agency.

13. IMPACT FEES (49 CFR 24.303(c)). Impact fees are a one-time, up-front utility assessment which may be reimbursed if the cost is actual, reasonable, and necessary. Impact fees undoubtedly have an effect on fair-market value considerations for both "developed" and "undeveloped" business properties, the cost of which will be reflected in the resale value of the property.

14. CONFIRMING LOSS OF PATRONAGE FOR BUSINESSES AND NONPROFIT ORGANIZATIONS - FIXED MOVING PAYMENTS (49 CFR 24.305(a)(2) and 305(d)). Displaced persons may elect to accept a fixed moving payment as early as an actual cost move could have been authorized. The agency is not expected to confirm that a substantial loss of patronage has occurred; that is the operative assumption. Neither is the agency expected to engage in an involved rebuttal of that assumption. Only if it is clear from the facts available at the time that a substantial loss of patronage will not occur should the agency make such a determination. There are certain characteristics for which the agency may look to determine if it should question the presumption of loss. For example, how dependent is the business on walk-in patronage and how dependent is this walk-in patronage on the particular location of the business? How much business is conducted through other means, such as telephone, mail, or electronically? Does the business provide a professional or personal service with a high likelihood of client loyalty and retention? Will a new location substantially impact existing customers or customer access in general?

15. COMPENSATION USED IN COMPUTING AVERAGE ANNUAL NET EARNINGS (49 CFR 24.305(e)). The FHWA has taken the position that the intent of Congress, with respect to net income as evidenced by the language in the House Committee Report that accompanied the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, is to include "any compensation paid to the owner, his spouse, or his dependents." The legislation and the committee report are both silent on including compensation to the officers of a corporation as part of the net income. It is FHWA policy that when a corporation is displaced, only compensation paid to the principal owner, spouse, or children of the principal owner of the corporation should be included as a part of the net income of the business.

16. COMPUTING AVERAGE ANNUAL NET EARNINGS FOR BUSINESSES WITH A NET LOSS (49 CFR 24.305(e)). When a business suffers a net loss for any of the years under consideration in the computation of average annual net earnings, the actual net loss figure should be considered as zero for the negative year. The minimum payment will not be less than $1,000 in accordance with 49 CFR 24.305(a).

17. COMPUTING AVERAGE ANNUAL NET EARNINGS FOR START-UP BUSINESSES (49 CFR 24.305(e)). If a business has been in operation for only a short time period (e.g., six months) prior to displacement, the "In Lieu" 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 (In Lieu Payment = Net Earnings/Months X 12).