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Eligibility for Reestablishment and Moving Expenses

We have received several questions regarding the eligibility of displace small businesses to receive reestablishment expenses and moving payments under certain circumstances. Specifically the questions are as follows:

1. Is a displaced small business eligible for reestablishment expenses when the nature, character and/or type of business established is different from the business acquired (e.g., change from a beauty salon to a shop renting formal wear)?
2. If costs due to Federal, State or local law, code or ordinance requirements at the replacements site exceed the $10,000 reestablishment expense limit in 49 CFR 24.304(a)(1), can the excess cost be reimbursed as moving and related under subsection 24.303(a)?
3. What reimbursement limitations, if any, should be placed on modifications to personal property at the replacement site that any required by Federal, State or local law, code or ordinance?
4. Is new construction at thr replacement site eligible for reimbursement as a reestablishment expense?

We offer the following policy guidance to assist you in your determinations of eligibility for reestablishment expense?

1. Change in the nature of the business

It is our position that the intent of Congress in providing the reestablishment payment was to assure that a small business owner is given the opportunity to continue in business and relocate successfully. Therefore, a change in the nature or type of business conducted at the replacement site does not affect eligility for those actual, reasonable and necessary reestablishment expenses incurred by the small business operator.

2. Costs required by Federal, State or local law, code or ordinance - Real Property

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 49 CFR 24.304(a)(1) and are limited to the $10,000 maximum payment allowed under this subsection. Costs in excess of this limit cannot be reimbursed as a moving expense payment under subsection 24.303(a).

3. Costs required by Federal, State or local law, code or ordinance - Personal Property

Modifications to personal property mandated by Federal, State or local law, code or ordinance which are necessary to reassemble or reinstall the presonal property or adapt it to the replacement structure, the replacement site, or the utilities at the replacement site are eligible for reiembursement under subsection 24.303(a)(3). The modifications authorized by this subsectionm must be clearly and directly associated with the reinstallation of the personal property and cannot be for general repairs or upgrading of equipement because of the personal choice of the business owner. Finally, the expenditures for authorized modifications must be reasonable and necessary.

4. Costs of new construction

The cost of constructing a new replacement building for the displaced small business, farm or nonprofit organization is considered a capital expenditure and is ineligible for reimbursement under the provisions of subsection 24.304(b)(1).

We suggest that the Division offices review their respective State right-of-way manuals to assures that the procedures relating to reestablishment and moving expenses are in accord with this memorandum and provide consistent treatment of displaced small business. We believe the information provided in this memorandum will alleviate the concerns raised by several Division offices. We are interested in receiving any comments addressing concerns or inadequacies experienced with the Uniform Act, especially as we contemplate reauthorization and have an opportunity to inform Congress of our concerns.