Category Archives: relocation

Partial Taking, Cost-to-Cure, and Relocation When Using Eminent Domain

Partial-Taking,-Cost-to-CurHave you heard about the most recent eminent domain case in Nashville? The City of Nashville plans to take a portion of Greyhound’s bus terminal property for their Division Street Extension project with the use of eminent domain.

The City has offered to purchase the portion of property for $870,400. The area of the taking is a parking lot, which appears to include approximately 22 parking stalls with typical landscaping, sidewalks, and lighting. No structures are included in the taking. An article about the project can be found here.  The City’s project can be reviewed at: http://www.nashville.gov/Public-Works/Capital-Projects/Division-Street-Extension.aspx

This property taking offers good examples of the need to analyze each component of the eminent domain taking, both combined and individually. The criteria used in this example is based on the Federal Uniform Relocation Assistance and Real Property Acquisition Policy Act (URA).

Those components include:

  • The value of property taken
  • The damages to the remaining property
  • A cure for the damages
  • Relocation of the business occupant and landlord

Property Value
The property value will be determined by the real property appraiser who will likely consider the three methods of valuation. These include:

  • Comparison of recent sales
  • Replacement value (value of land plus cost to build improvements, including depreciation)
  • Value based on income (income as if the property were leased to a tenant)

Damages
The real property appraiser will also evaluate the damages, if any, that are caused to the remaining portion of the real property. Damages apply only to the real property and not to the business occupying the property. This may include the loss in the property’s value because of having inadequate parking after the taking. The owner is entitled to the value for damages, or, the cost to cure those damages, whichever is less. The amount would be included within the real property purchase offer.

Cost-to-Cure
A cost-to-cure consultant will analyze the damages and prepare possible designs and costs to solve, or cure, the damages to the remaining property.

In this particular case, let’s say the only cure is to construct an elevated parking structure on the remaining property to replace the lost parking. Let’s say it costs $500,000 to construct. The City’s offer to purchase would have to include $500K for damages or cost to cure in their purchase offer for the owner to build the structure without dipping into their own pockets. If that amount were not included in the offer, the property owner would have to argue for that amount with the use of the cost-to-cure documentation and the real property appraiser’s calculation of damages.

Relocation
The property owner (landlord) and the business occupant will be entitled to relocation benefits that may apply for moving personal property and reconfiguring their operations caused by the property taking as long as those items were not paid by the City as part of the cost to cure or elsewhere in the real property purchase.

Let’s say that Greyhound can no longer operate at this location with the loss of parking. This would entitle Greyhound to relocation benefits for moving to a replacement site. If the property is appraised as a non-special use property, relocation benefits would likely cover the costs to move, reinstall, substitute, or abandon personal property such as:

  • Seating, counters, computer systems, phone systems, paging systems, scheduling systems, and other items classified as personal property.

If the real property was appraised as a special use property—in other words, it’s a bus depot and cannot reasonably include another use—many of those items listed as personal property above may be valued with the real property because those items would normally be included in the purchase and sale of a bus depot. As a result, they would then not be eligible for relocation benefits. Instead, they would be valued as part of the real property, which means they may add value to the real property, but will include a depreciated value, or they may add no value with no actual payment for them. This is not a good scenario for the business when this or similar functioning personal property is needed at a replacement property.

For best results, the identification of personal property should be prepared through collaboration among the real property appraiser, a qualified relocation consultant, the tenant, and the property owner. Without this collaboration, chances are strong that someone, including the public agency, will lose and someone will be unjustly compensated.

Now let’s explore a notion and say that because of the nature of this business, it’s determined to be a utility facility. Included in the URA’s definition of a utility facility is any transportation system. The URA goes on to say that a utility facility may be privately, publicly, or cooperatively held. In my opinion, a bus depot should qualify as a transportation system and therefore should qualify as a utility facility within the regulations.

Utility facilities are eligible for relocation benefits in a significantly different manner than a business. According to the URA, relocating a utility facility includes, in part, the displacing public agency acquiring the necessary right of way on a new location, moving, and constructing the replacement facility that has the functional equivalency of the existing facility.

If this Utility Facility notion proves to be correct, Greyhound would be entitled to a new bus depot and property with no out of pocket costs.

Conclusion
In order to get the acquisition and relocation right, the condemning public agency, the property owner, and the tenant, must have qualified people to analyze the issues and facts, and prepare the necessary reports and documentation.

Because these situations are similar to any other buyer/seller scenarios, there is typically a team of specialists representing the public agency and another team representing the property owner and/or tenant. The people within each team need to work together to understand the facts and sort them into the proper categories as briefly described above.

Having the analysis performed by eminent domain experts is the best way for your team to prevail in an acquisition or relocation dispute.

Partial Property Taking: Understanding the Impacts

1When a public entity takes partial property through eminent domain, it’s important to understand the impacts and issues to the remaining property. All too often, the public entity’s proposed cure is flawed, frequently eliminating all but a very small portion of the property’s key needs. The property owner must equip him or herself with experts who understand the pitfalls of partial property taking and will look out for their best interest.

In the case of partial property taking, it’s vital to:

  • Understand the property as it exists before the property taking
  • Understand the property taking
  • Understand the zoning and building codes for the area
  • Understand the State’s proposed cure to the remaining property
  • Identify any missing elements of the agency’s proposed cure
  • Prepare a preliminary design and estimated cost to cure the remaining property, if there are shortcomings in the agency’s proposed cure

As a consultant focused on business and property owners impacted by public agencies taking private property through eminent domain, I have an in-depth understanding of these matters. I apply my extensive experience to help identify the property impacts, provide a reasonable design to solve the impacts, and prepare reasonable costs to construct the necessary changes to the property.

My background includes ownership of a business that performed equipment design/build and installation work, as well as ownership in a general contracting firm that constructed commercial projects,including ownership of a steel fabrication and installation business.

Now, I apply that background to my over 15 years as a consultant working with relocating businesses along with preparing preliminary designs and cost estimates to make remaining properties functional after a partial property taking. This work includes the use of guidelines based on the Federal Uniform Relocation and Acquisition Act.

I use the knowledge gained from this background and apply it to assist my clients who are sometimes private property owners, businesses owners, and frequently public agencies. For those clients, I search for problems created by property takings, develop solutions to those problems, develop the costs for those solutions, and provide those costs and designs to the client and/or representatives of the condemning agency.

My work has included several hundred properties, many of which have been complex takings. Here is an example of a recent case. In my role, I reviewed the impacts and issues to the Company X property in the same light and diligence as with all of my typical private and public agency clients.2

Case Study – Company X – Partial Property Taking

Property as it Exists
The property, as it existed, included two shop buildings of 3,600 square feet each, and two tow yards. Each of the buildings and tow yards had ample access for maneuvering towed and dysfunctional vehicles into and out of each area. The attached drawing, Layout Before Property Taking, shows the maneuvering capabilities for each of the key areas and the uses of the property. Also, noted on the drawing are (5) key elements of the property that relate to the current use, as well as, any likely intended users of these buildings and property, such as an automotive repair shop.

The key elements to this property were as follows:

  • Customer parking adjacent to the office
  • Easy tow vehicle access into the buildings
  • Easy tow vehicle access into the storage yards
  • Convenient parking near shop and office areas
  • Convenient shipping and receiving
  • Convenient parking for work on large vehicles

Property Taking
The property taking was along the northern portion of the entire property. The property line prior to the taking was located sixty-five feet north of the north face of the existing building that was used as an auto body shop. Thirty feet of property was being taken, which placed the new property line thirty feet to the south, which is thirty-five feet north of the building. The driveway entrance was also moved thirty feet south.

Improvements within the area of the property taking included a ten-foot landscape buffer, a paved area used for vehicle maneuvering and parking, a pole sign, and a car canopy.

RC Zoning and Parking Design Requirements
An exhaustive search of the codes was not performed, but key items were found and described here. The RC zoning allowed auto body shops as a permitted use. There were approximately thirty-six permitted uses listed of which only a few uses would have been practical at this location. This zoning had requirements for eight-foot wide sidewalks placed in all walk areas including through parking and driveways. Also required were covers over sidewalks at building faces. Wrecked motor vehicle compounds were no longer a permitted use, of which there were two on this property that were allowed due to grandfathering.

Parking in the RC zoning was not allowed on the street side of the building and parking had to meet ADA, stormwater, and landscaping requirements. The quantity of parking stalls calculated to ¾ of a stall per 600 square feet of building square footage. This equated to nine stalls for the 7,200 square feet when combining the two buildings on the site. A designated loading area of ten feet by forty feet was also required.

State’s Proposed Cure
The State’s proposed cure of $67,000 included relocating the existing Tow Yard #1 to the east of the existing Tow Yard #2 to make room on the west side of the building for replacement parking. The state included costs to provide asphalt pavement for the parking, and crushed rock and fencing for the relocated tow yard. The State did not include any design for this work, only a highlighted aerial photo indicating the shape or footprint of the proposed areas (see attached drawing, State’s Proposed Cure).

The State also included a drawing, State’s Tow Vehicle Maneuvering, which indicated that a tow truck could maneuver a vehicle into the body shop for repairs. This was an important item for the existing auto body shop, as it would have also been for an automotive repair shop, which was also a permitted use.

State’s Missing Elements
The State did not consider all of the issues related to installing new parking and relocating the tow yard. The attached drawing, State Proposed Cure Expanded for Codes, was based on the State’s proposed cure, but with the added missing elements that were necessary to meet current codes, which were required when adding the State’s new elements such as parking or crushed rock for the tow yard. The drawing also pointed out other missing elements needed for this property to properly function under the State’s proposed cure.

Relocating the parking or the tow yard required the addition of impervious surfaces such as asphalt or crushed rock. Adding impervious surfaces or simply adding new parking required code upgrades such as landscaping, sidewalks, a dedicated loading area, the proper number of parking stalls, and handicapped stalls with ADA access between the parking and the building entrances. Including these required items, as shown on the drawing, required more space than the State showed on their drawing. Including the required sidewalks and landscaping on the street side of the building reduced the existing driveway and parking to a width of fourteen feet, leaving only enough width for a one-way driveway, which left the building nearly useless for its intended use, and most permitted uses. The State’s proposed cure eliminated all but a very small portion of the property’s key needs.

The tow vehicle maneuvering, as shown on the State’s drawing, failed to meet the State’s intentions, and the needs of the property in two areas. The first problem was that the State did not include the ten-foot landscape buffer in their drawing, which would eliminate the ability to maneuver this vehicle as they had shown. The second problem was that the State’s drawing showed a need for at least a sixteen-foot wide building entrance door to maneuver a vehicle into the building. At the time, the building currently had twelve-foot wide doors; adding any wider doors would have required structural changes to the building, which would have triggered major code upgrades to the entire building. Those code upgrades would likely have caused the building to be demolished and rebuilt new, for economic purposes.

3The State’s suggestion of relocating the tow yard had three fatal flaws:

  1. The first flaw was that the tow yards were grandfathered in and were no longer a permitted use within the RC Zoning, therefore, relocating the tow yard would not have been allowed. Necessary permits would not have been issued, which would have resulted in the loss of one tow yard.
  2. Secondly, creating a solid surface, such as crushed rock suggested by the State, would have triggered other code upgrades to the site including landscaping and likely sidewalks. Either of those items would again have narrowed the driveway that connected to the proposed relocated tow yard, as well as, connecting to the remaining Tow Yard #2, and would have resulted in no access to either tow yards.
  3. Additionally, this driveway narrowing eliminated the ability for truck traffic to pass by the existing septic system, again preventing access to the tow yards.

Adding the code-required elements to the State’s design for curing the remaining property left the design unworkable for making the remaining property functional after the property taking. Tow truck access to the building would have been eliminated, one tow yard would have been eliminated, the other tow yard would not have been accessible, and critical locations for customer parking would have been completely lost.

Attempts to correct or solve these shortcomings of the State’s design proved unattainable because of the remaining narrow driveway, which could not be expanded. Therefore, an alternative design was prepared and discussed in more detail below.

Alternative Design
Alternative to the State’s design and shown on the attached drawing, Alternative Proposed Cure, depicts a design that replaced the minimum needed functions of the remaining property after the property taking. This design took into consideration the RC zoning and the needs and functions for many of the permitted uses listed for the RC zoning.

This design included the removal of the existing Shop #1 and replacement with a new building located to the east. A circular driveway was included of a standard width to allow reasonable traffic flow for all vehicles and combinations of vehicles. Parking was placed in proper locations and in proper quantities. The remaining site was brought up to current codes as required with sidewalks, ADA access, landscaping, and stormwater systems. (This was a preliminary or basic design, in that an exhaustive review for the best design or a design meeting all required codes had not yet been performed.)

The cost for this project was estimated at $1,118,186. The estimate included work and costs from the beginning to the end of the project including, design, permitting, construction, and taxes.  The costs were prepared from preliminary quotes from various local contractors and vendors, as well as with the use of in-house costs from similar projects.

Conclusion
The State’s design was not complete enough to show how it would cure the needed elements for the remaining property after the property taking.
Expanding that design to include the code required items showed that the State’s design did not cure the elements needed for the remaining property to remain functional in its after condition.

The proposed alternative design took into consideration the necessary elements for meeting current codes and included the minimum needed elements for the remaining property to properly function. Based on this alternative design and estimated costs, the cost to cure the remainder property was estimated at $1,118,186.

I created the alternative design and its estimated costs. It was my expert opinion – now justified – of what would be necessary to cure the functions of the remainder property after the property taking.

If you have any questions regarding partial property taking and would like an opinion regarding understanding the impacts, please don’t hesitate to get in touch.

How Eminent Domain Appraisers Can Benefit from “Cost-to-Cure” Services

How Eminent Domain Appraisers Can Benefit from “Cost-to-Cure” ServicesWhen it comes time to defend your appraisal, are you sure that it will stand up to opposing council? Whether it’s your appraisal or your opinion on the replacement costs for buildings and other improvements for cost-to-cure designs and cost estimates, the opposing council will be ready to poke holes in your case.

As an appraiser, sometimes you are working on an eminent domain case where part of a parcel of property is condemned and the use of the remaining property is impacted. In such cases, a consultant can support your work with customized, reasonably calculated cost-to-cure estimates and designs that follow agency guidelines and eminent domain law.

When the new right-of-way severs a structure or improvements, the consultant will develop a design for removing the portions of the improvements affected by the right-of-way, while renovating the remaining portions to cure the damages caused by the property taking.

An experienced cost-to-cure consultant can assist appraisers and other interested parties by enhancing their appraisals for complex structures, improvements, and cost-to-cure values. The cost-to-cure consultant with the added benefit of relocation expertise on eminent domain projects can help in a number of ways by providing a single source and point of contact with expert knowledge in eminent domain issues including cost-to-cure, replacement costs, separation of relocation costs from cost-to-cure and replacement costs, preliminary design, and commercial construction.

Cost-to-Cure Services are Time and Cost Effective

Benefits of Cost-to-Cure estimates and designs for appraisers include:

  • Quick understanding of the assignment and project issues.
  • Efficient turn around of costs and reports.
  • The ability to speak on most of the issues with knowledge of when to hand additional detailed explanations to other experts.
  • Knowledgeable identification of additional experts that may be necessary for the project.
  • Coordination of those experts for the project for their scope of work and reports.
  • Distinguishing between cost-to-cure issues and relocation issues saves time and offers a comprehensive package to the client that includes cost-to-cure needs and relocation needs.
  • Perform analysis of plans and costs developed by the opposing side to determine their effectiveness and reasonableness.

I support appraisers in Eminent Domain cases with timely and affordable cost reports and designs that are, typically, self-supporting.

If challenged, I stand ready to further support and clarify the cost reports in mediation, deposition, or even trial when necessary.  My status as a recognized specialist in this niche comes from an extensive history of creative solutions, credibility and clarity. The documents that I prepare for appraisers are based on defensible fact and stated in detailed but understandable language and also include design drawings that are approachable for the layman.

When you have a difficult or questionable Eminent Domain matter to appraise, please feel free to give me for a free telephone consultation.  I look forward to hearing from you.

City of St. Louis bid to the National Geospatial-Intelligence Agency: Eminent Domain Recommendations

City of St. Louis bid to the National Geospatial-Intelligence Agency Eminent Domain RecommendationsI have been following the eminent domain case for the City of St. Louis bid to the National Geospatial-Intelligence Agency and have some comments in response to the Paul Berry III Congressional Exploratory Committee statement that was released November 2nd, 2015.

Mr. Berry makes an excellent point of gaining support by the effected property owners and tenants for the NGA project.

To gain that support, I recommend going a few steps further than he suggests. I recommend that the City implement the Federal Uniform Relocation and Acquisition Act (URA). The URA provides guidelines for relocating residents and businesses on federally funded projects and many other projects without federal funding, while using eminent domain to acquire the property.

The URA sets rules and guidelines for the government, as well as for the displaced person to follow, creating fairness and reasonableness for each side during the relocation process. The guidelines make it fairer for the displaced person than many other methods used. However, the URA does not necessarily make the displaced person whole after their relocation, particularly if the guidelines are not properly implemented.

For the City to come closer to this goal of fairness without sacrificing reasonableness and controls, the City could enhance certain parts of the guidelines, as many public agencies and states have successfully done through properly setting up its implementation.

Offering an enhanced version of the URA relocation guidelines for this project will go a long way toward gaining the support of the effected property owners and tenants needed while controlling the process. This would shed a good light of fairness on this project location to enhance the likeliness of the NGA choosing this site.

I am available to assist with recommendations for enhancements to the URA and the proper procedures for its implementation to support Mr. Berry’s recommendation.

Attention Eminent Domain Attorneys: 2 Significant Ways to Build a More Robust Service Offering for your Clients

Attention Eminent Domain Attorneys 2 Significant Ways to Build a More Robust Service Offering for your ClientsThe better that we anticipate the needs of our clients and meet those needs by applying all of the resources available at our disposal, the more successful we – and our clients – will be. There are key ways that an eminent domain attorney can augment their services to better protect the interests of private property and business owners. A more robust service offering will set you apart from other attorneys and demonstrate to your potential clients that you are the best possible attorney to manage their case.

#1 Add Value to your Practice by Including a Business Relocation Consultant on your Team

You can add additional value and benefit to your clients when you team with a business relocation consultant. When brought in early, my services can direct your client along a course that will produce better results and considerable advantage to your clients.

Add expert relocation consultation to your client offering to avoid client disappointment. Consultant services can save your clients significant out of pocket, non-reimbursable money. Federal relocation guidelines don’t automatically guide businesses to the best relocation results. Each business relocation must have some level of analysis performed to distinguish between personal property and real property. It’s essential to determine the proper amounts and best methods for receiving relocation payments from the public agency while following the relocation guidelines.

Preparing appeals, planning relocation logistics, and orchestrating and coordinating the actual move itself toward maximum efficiency and minimum client downtime are examples of how business relocation consultation can add value to your attorney services and your clients.

#2 Enhance your Service Offerings with the Addition of Preplanning Services

You will benefit from offering preplanning services to prospective clients because you will be offering a more complete package than any other attorney. Preplanning services provide you with something to offer the client right away, while other attorneys are in a holding pattern. This offering will increase the chances of securing the client’s business.

Preliminary planning services for vulnerable businesses that are being displaced can result in thousands of dollars in savings and reimbursements for your clients that often otherwise go unclaimed. Preplanning a business relocation while following relocation guidelines based on the Uniform Act can greatly improve the outcome of the relocation. Taking appropriate action can result in improved relocation reimbursements received from the displacing public agency, frequently in amounts of twice or more. In many cases when the business becomes eligible for relocation benefits, the relocation consultation services are eligible for reimbursement within the relocation guidelines.

Preplanning gives a business the opportunity to guide the public agency’s decision-making process as they determine the eligible relocation benefits. Preplanning a business relocation refers to planning before the business has received their notice of eligibility for relocation benefits and before the public agency’s offer has been made on the real property.

Preplanning differs from relocation planning or Move Planning, as it’s described in the Uniform Act relocation guidelines. Relocation Planning is performed after the business has been determined eligible for relocation benefits by the agency but before the business actually moves.

Your extended services will help to ensure fair compensation for your clients’ losses. These services are quite unique within eminent domain industry. By augmenting your professional services to include the expertise of my business relocation consultancy, you can set your practice apart from that of other eminent domain attorneys. If you wish to discuss this further or should you have any questions, or comments, please contact me.

Relocation Assistance Advisory Services

Relocation Assistance Advisory ServicesWhy a Displaced Business Should Be Concerned with Relocation Assistance Advisory Services, and Why a Displacing Public Agency Should Diligently Provide These Services

Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA)

On public projects where a public agency is using eminent domain laws to condemn private property, the agency often elects to, or in many cases is required to, follow the URA. For example, a department of transportation might use eminent domain laws in the case for expanding a highway right of way, or adding a new light rail line.

When the project includes federal funds, the public agency is required to follow the URA. When the URA is used, it provides regulations and guidelines that the public agency must follow when acquiring private property and displacing business and residential tenants for the agency’s project. The URA’s regulations are the rights of the property owners, displaced businesses, and displaced residents to receive from the displacing public agency.

Relocation Assistance Advisory Services

The URA requires a condemning public agency to provide six key relocation advisory services to a displaced business. A list of these services follows – Relocation Advisory Service #1-6. I have also included my comments for each of these services as a relocation consultant working for displaced businesses, as well as, working as a relocation agent for public agencies providing these services.

Relocation Assistance Advisory Services vs. Relocation Consulting Services

Relocation Assistance Advisory Services, not to be confused with Relocation Consulting Services, also known as Move Planning Services, are a required service provided by a condemning public agency to a displaced person or business. Relocation Consulting Services are provided by a private consultant hired by the displaced business to plan and coordinate their relocation. Relocation consulting services are a reimbursable relocation expense eligible to the displaced business within the URA regulations.

Success and Failure of Relocation Assistance Advisory Services

When a public agency fulfills these services properly, they will gain important information that will help the agency prepare for the timely use, implementation, and payment of the relocation benefits provided. This is meant to better assist the displaced business to successfully relocate with minimal downtime and minimal out of pocket expenses.

When the public agency fails to fulfill these services, they find themselves ill prepared to provide the necessary relocation benefits in a timely manner. Delay causes unnecessary damages to the displaced business including excessive downtime and excessive out of pocket expenses. For the public agency, they will likely experience needless relocation payments, and unnecessary expenses for appeals and legal fees. The community may also suffer from a loss of jobs, local tax revenues, and productivity if the displaced business fails to survive the relocation.

Appeal or Tort Claim of Relocation Assistance Advisory Services

A business can appeal most anything related to their relocation benefits. Unfortunately, most of the damages caused by the lack of these Relocation Advisory Services are non-compensable within the URA, leaving little to no recovery of costs or damages from the appeal process. A lack of these services inflicts damages in the way of loss of income, loss of customers, and loss of employees, which are specifically excluded from eligible cost reimbursements. Increased costs for the business are another effect, falling into the capped Reestablishment category of the URA and leaving little if any recovery of costs. In addition to or in place of an appeal, some businesses have had success treating this issue as a Tort claim.

CFR Title 49, §24.205(c) Relocation Assistance Advisory Services

This section of the URA outlines the Services to be provided as follows:

Services to be provided. The advisory program shall include such measures, facilities, and services as may be necessary or appropriate in order to:

  • Determine, for nonresidential (businesses, farm, and nonprofit organizations) displacements, the relocation needs, and preferences of each business (farm and nonprofit organization) to be displaced.
  • Explain the relocation payments and other assistance for which the business may be eligible, the related eligibility requirements, and the procedures for obtaining such assistance.
  • This shall include a personal interview with each business.
  • At a minimum, interviews with displaced business owners and operators should include the following items:

Relocation Advisory Service #1

The Regulation:

  • 24.205(c)(2)(i)(A) The business’s replacement site requirements1, current lease terms2 and other contractual obligations3, and the financial capacity of the business to accomplish the move4.

Comments on replacement sites and financial capacity to relocate:

  1. Replacement site requirements – Changed zoning may mean relocating outside of the business’s customer and/or employee base. Some businesses may have special needs that are not readily found in the market place.
  2. Current lease terms – Leases that are several years old may be very different from what is currently available in the market, causing extra expenses for many years.
  3. Contractual obligations – We often find that the displaced property owner or landlord sold the business that is currently the tenant and is now receiving payments for the sale of the business. This creates a need and desire to continue receiving those payments by providing a replacement property to the tenant. In addition, the business may have a contract to supply products or services that may be disrupted by the relocation.
  4. Financial capacity – Most businesses having to relocate do not have the financial capacity or cash flow to finance their own business relocation. Additionally, the move can drain any available cash and cause a loss of sales or income during the move. Knowing the financial capacity of the displaced business should alert the public agency to be ready to provide available tools within the Relocation Guidelines that will assist the business to minimize downtime and out of pocket costs for the move. This may include advance payments, recommending professional services, and assuring the displaced business understands which relocation costs are eligible and not eligible for reimbursement.

Relocation Advisory Service #2

The Regulation:

  • 24.205(c)(2)(i)(B) Determination of the need for outside specialists in accordance with §24.301(g)(12) that will be required to assist in planning the move, assistance in the actual move, and in the reinstallation of machinery and/or other personal property.

Comments on outside specialists:

Most, but not all, displaced businesses need some level of outside specialist support. The public agency, through their agents and consultants, must recognize early on in the project this need for specialists to help a business successfully relocate in a timely timeframe.

Otherwise, the displaced person can also decide that they need a specialist. A specialist may be needed to deal with the business’s unique needs, or, to help free up time for the business owner and key personnel so they can focus on running the business, while the specialist undertakes the planning and coordination of the business move.

I like to see a displaced business have the opportunity to have one person in charge of planning and coordinating their move who will assist them with making the move as though it had been planned and executed for sound business reasons, rather than eminent domain reasons.

Choosing to use a relocation consultant is similar to choosing the use of a general contractor to work on your house compared to you hiring and managing all of the subcontractors yourself and dealing with issues you’re not used to handling, all while you’re at your office working at your day job. There are good reasons why general contractors exist; they are key to achieving your desired results including quality, timeliness, and budget, particularly when multiple trades or vendors are involved.

Much like a general contractor, a relocation consultant can plan, organize, coordinate, and schedule other experts, contractors, and vendors in a manner that minimizes unnecessary costs and downtime, where the business owner participates as much or as little as they desire while they continue to run their business. An example of avoiding downtime is recognizing equipment that needs code upgrades before it’s disconnected and moved, or, as simple as preparing a layout plan for the new location during the planning stage that will maintain or improve the flow of operations or visual appearance to the customers. Unfortunately, relocation agents working for the government agency just don’t have that much time or budget to dedicate to a single displaced business.

For many reasons, it’s helpful for the relocation consultant to be conversant on eminent domain issues. Particularly because the most displaced businesses are not prepared financially for the move. The relocation consultant can help disseminate between acquisition and relocation issues, and assist with qualifying the business for available funding sources such as the relocation benefits. Additionally, many relocation decisions are based on available finances. During the planning stage of the relocation, the business needs to know what they will have to pay for out of pocket and where relocation benefits will help them. This is where the relocation consultant can to offer critical guidance. This marks an important difference when planning the relocation and can mean the difference between the business moving as-is, with the possibility of being in a worsened business situation, or moving in a manner that helps them continue their business success equal to or better than they experienced at their displacement location.

Relocation Advisory Service #3

The Regulation:

  • 24.205(c)(2)(i)(C) For businesses, an identification and resolution of personalty/realty issues. Every effort must be made to identify and resolve realty/personalty issues prior to, or at the time of, the appraisal of the property.

Comments on personalty and realty issues:

When a fixture is classified as realty, the public agency’s payment for the fixture is made to the owner based on its depreciated value, if it is determined to have value. The depreciated value is usually less than the cost of replacing the item. Additionally, the realty payment often goes to the property owner or the real property mortgage holder rather than the displaced business. Finally, realty is not eligible for relocation benefits, leaving the owner to pay from their own pocket to replace this item at their new location. It’s clearly very important to get this right.

Knowledge of the business, personal property, and the laws that distinguish personalty from realty are key to proper personalty/realty classification. Unfortunately, too often the relocation agent and the appraiser do not collaborate on personalty and realty issues or one is not conversant on the issue, leaving flawed or incomplete appraisal reports. This occurrence creates confusion and debate during the business move causing additional relocation costs, delay, and downtime.

To improve on this issue, appraisers (real property appraisers, and FF&E appraisers) should be accompanied on the appraisal walk-through by a relocation agent (as the URA suggests) who has knowledge on this issue. Discussions between those parties should resolve most personalty/realty issues before they become a relocation problem.

Additionally, the business owner will benefit from having their own relocation consultant who is knowledgeable on these issues and involved prior to and during the appraisal walk-through, particularly when there is equipment and machinery involved. This will enhance the collaboration and understanding among all parties including the business owner, which will improve the relocation planning and process. In addition, the cost for this service is often a reimbursable expense to the displaced business or property owner.

Relocation Advisory Service #4

The Regulation:

  • 24.205(c)(2)(i)(D) An estimate of the time required for the business to vacate the site.

Comments on estimated time to vacate:

A relocation schedule must be prepared to take advantage of the available time to properly plan, prepare, and perform the move. Without a schedule, a business may incur unplanned and unnecessary downtime. Downtime can cause a business to lose employees and customers along with income and profits, none of which are eligible for reimbursement, and any of which can cause business disruption and possibly devastation.

For the public agency, a relocation schedule is a tool to reduce unnecessary relocation costs and missed vacate dates. It will also improve the agency’s success with relocating displaced businesses, and improve the usage of public funds.

At a minimum, the schedule should include three milestones: 1) Notice of Eligibility, 2) Acquire Replacement Property, and 3) Vacate Displacement Property. Including some known tasks between these milestones will produce a basic beginning schedule as shown below (dates and task durations are excluded for clarity).

  • Notice of Eligibility
    1. Plan relocation
    2. Search for replacement site
  • Acquire Replacement Property
    1. Plan relocation
    2. Design and permitting for replacement property improvements
    3. Prepare replacement property to receive relocated personal property
    4. Send change of address notices
    5. Disconnect, move, and reinstall personal property
  • Vacate Displacement Property
    1. Finalize move

This basic schedule will give the business owner a starting point for planning purposes. The public agency’s relocation agent should be cautious of including too much detail for liability reasons. Additional tasks and durations can be added, as they become known by the business owner or the relocation consultant.

This basic schedule may be more than is required by this regulation, however, it is an excellent tool that supports the required task. The schedule also makes a significant improvement to most business relocations and is well worth the small amount of effort invested in its preparation for the benefits it produces.

Relocation Advisory Service #5

The Regulation:

  • 24.205(c)(2)(i)(E) An estimate of the anticipated difficulty in locating a replacement property.

Comments on locating a replacement property:

Planning and finding the perfect replacement property that’s affordable and in the proper location can be challenging in the best of times. Because the displaced business was not likely in the process of planning their move before the notice to vacate was delivered, it’s critical for the business to find the right replacement property more quickly than under normal conditions to allow the needed time to prepare the replacement property for the business and to relocate the business. Otherwise, if the vacate date is too near, the business may incur downtime. However, spending the necessary time to find the right replacement property can be essential to the longevity of the displaced business. There is a fine balance between finding the perfect replacement property and avoiding business downtime. That balance point varies for each business.

The fast-food industry is a good example of the effort that goes into selecting store locations. One prosperous displaced fast-food business couldn’t wait for the normal, long, yet successful process of site selection provided by the franchisor, and there was only a year to go until their vacate date. The franchisee short-circuited the proven franchisor’s process in order to quickly find the replacement property without any assistance of the franchisor. The franchisee leased and successfully prepared the replacement site, opening the doors just in time to vacate the displacement property, avoiding any business downtime.

However, during the first year of operating at the replacement property, the franchisee spent an extraordinary amount of money on advertising in an effort to attract customers to his new location and struggled with poor sales. Within the second year of operating at the replacement property while continuing to advertise, the business closed for lack of cash flow resulting from too few sales.

The project’s vacate date will be fixed and unlikely to change. Early on in the project, the displaced business needs to fully understand the project’s inflexible timeline, the tasks, and challenges facing them. To hasten the property search, the displacee needs to know how relocation benefits may or may not help make a particular property suitable and affordable for their business. It is the displacing public agency’s job and/or challenge to inform the displaced business of these issues to help them avoid downtime, as well as find an affordable replacement property that fits their needs, all while meeting the project’s schedule. This begins with the public agency estimating the difficulty in locating a replacement property.

Relocation Advisory Service #6

The Regulation:

  • 24.205(c)(2)(i)(F) An identification of any advance relocation payments required for the move, and the Agency’s legal capacity to provide them.

Comments on advance relocation payments:

Advance payments are often necessary, as well as critical for a displaced business, which often has shallow pockets. Advance payments are often needed for ordering substitute personal property, ordering materials needed for the reinstallation of personal property, and starting design services. A public agency must recognize the need and be ready to offer advance payments. Otherwise, the business relocation may stall at the beginning of the process, which could cause missing the vacate date and delaying the public project, and can cause an unnecessary hardship on the displaced business.

Conclusion

These six Relocation Assistance Advisory Services are critical to prepare for and to accomplish a successful business relocation. Any shortcomings in their implementation leave a wider opportunity for unnecessary costs and downtime to occur.

The public agency must initiate the inquiries of the business to gain the information necessary to properly provide relocation benefits. It is the business’s responsibility to provide the necessary information to the public agency.

I would be pleased to answer any questions you may have on this matter or other eminent domain and condemnation matters you may want to discuss as they relate to relocation and cost-to-cure. Please contact me either by phone 425-398-5708 or email . I look forward to hearing from you.

 

photo credit Stock Images via FreeDigitalPhotos

6 Benefits of Preplanning your Eminent Domain Relocation

6 Benefits of Preplanning your Eminent Domain Relocation

A wise man once said, “Failing to plan is planning to fail.” That same man, Alan Lakein, also said “Planning is bringing the future into the present so that you can do something about it now.” This wisdom could not be truer and better applied than when it comes to eminent domain relocation preplanning.

Did you know that by time a business has been made eligible for relocation benefits, it’s likely too late to prevail? Unknown to most displaced business owners, it is after the public agency has completed their analysis and has determined the business’ eligibility for relocation benefits, that the business becomes eligible to incur and receive reimbursements for relocation costs incurred.

However, it’s not until this stage that the public agency actually explains the relocation benefits to the business owner. As a result, most businesses don’t begin planning their relocation until the analysis is complete. The problem is that by waiting until the analysis has already taken place, the business is either obliged to plan their relocation around what the public agency has already determined, or they must appeal those decisions. It becomes too late to pre-plan the relocation.  Waiting uses up unnecessary time and resources and concludes with uncertain results. The only option is to attempt to undo what would likely have been prevented with preplanning.

Benefits of Preplanning an Eminent Domain Relocation

Preplanning gives a business the opportunity to guide the public agency’s decision-making process as they determine the eligible relocation benefits. Preplanning a business relocation refers to planning before the business has received their notice of eligibility for relocation benefits and before the public agency’s offer has been made on the real property.

Preplanning differs from relocation planning or Move Planning, as it’s described in the Uniform Act relocation guidelines. Relocation Planning is performed after the business has been determined eligible for relocation benefits by the agency but before the business actually moves.

A few of the many benefits of preplanning business relocation due to eminent domain:

1. Preplanning creates an increased amount of time for evaluating and making critical decisions such as:
a.  Evaluating the best of the potential replacement properties.
b.  Understanding how relocation benefits will and will not assist with making a potential replacement property functional for the business.

2.    Preplanning ensures that your decisions will be made on facts of relocation benefits rather than on misleading information or assumptions on what the relocation benefits do or do not provide to you.
3.    Preplanning relocation establishes time for preparation of plans for minimizing downtime with the use of relocation benefits.
4.    Preplanning grants you more time and knowledge of the process, which opens up more business relocation options.
5.    Proper preplanning sets the stage for your actual relocation, saving you out of pocket expenses because of a rushed move, lack of choices, and excessive key employee time spent on the relocation.
6.    Preplanning allows you to put your best foot forward while working with the public agency representatives. Beginning with their first contact with you, your level of organization and knowledge will be evident which is important since this is the time when information, both proper and improper or misinterpreted, is generally traded. With the right preplanning, you can avoid the misinformation that usually causes the process to derail and veer off in a direction that can be costly to your business.

The preplanning window that opens before the public agency’s analysis has been completed is a pivotal — but fleeting — opportunity for businesses. Preplanning empowers business owners with informed knowledge that will enable them to take positive action. The difference between taking advantage of the preplanning stage and missing that opportunity can be the difference between real business savings of both money and efficiency vs. expensive business hardship and stress. Don’t miss the preplanning window. Avoid being swept up in an overwhelming, inefficient, and expensive relocation tide for you and your business by seizing the window of preplanning opportunity today.

What Business Relocation Consulting can do to Assist Eminent Domain Attorneys

What Business Relocation Consulting can do to Assist Eminent Domain AttorneysAs an eminent domain attorney for owners, you offer important services to your clients. You work to protect the interests of private property and business owners through a process that is complicated and confusing for those who are inexperienced and vulnerable in a relocation situation. Your services help to ensure fair compensation for your clients.

What if there was a way to add additional value and benefit to your clients, and to improve your overall service offerings? A business relocation consultant, when brought in early for preplanning a business location, can steer things in a direction that will produce better results to the business/property owner that you’re working with. Including a business relocation consultant as part of your team can result in considerable advantage to your clients.

Because federal relocation guidelines don’t automatically guide businesses to the best relocation results, each business relocation, must have some level of analysis performed to distinguish between personal property and real property. It’s also essential to determine the proper amounts and best methods for receiving relocation payments from the public agency while following the relocation guidelines. By adding expert relocation consultation to your client offering, your practice can avoid the disappointment of clients who find out how much out of pocket, non-reimbursable money they spent to relocate their business because of a public project taking their property.

You will benefit from offering preplanning services to prospective clients because you will be offering a more complete package than any other attorney. Preplanning services provide you with something to offer the client right away, while other attorneys are in a holding pattern. This offering will increase the chances of securing the client’s business.

Preparing appeals, planning relocation logistics, and orchestrating and coordinating the actual move itself toward maximum efficiency and minimum client downtime are examples of how business relocation consultation can add value to your attorney services and your clients.

Business relocation consultation and preliminary planning services for those businesses that will be displaced by the project can result in thousands and sometimes millions of dollars in cost reimbursements for your clients that often otherwise go unrecognized and unclaimed. Preplanning a business relocation while following relocation guidelines based on the Uniform Act can greatly improve the outcome of the relocation. Taking appropriate action can result in improved relocation reimbursements received from the displacing public agency, frequently in amounts of twice or more. In many cases when the business becomes eligible for relocation benefits, the relocation consultation services are eligible for reimbursement within the relocation guidelines.

These services are quite unique within the eminent domain industry. By augmenting your professional services to include the expertise of my business relocation consultancy, you can set your practice apart from that of other eminent domain attorneys. If you wish to discuss this further or should you have any questions, or comments, please contact me.

photo credit Stock Images via Free Digital Photos

Relocation Advisory Services – What are they? What happens when they’re not properly provided?

Relocation Advisory Services What are they What happens when they’re not properly providedThe Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA), for federally assisted programs, requires condemning public agencies to provide relocation advisory services as described in part 49 CFR 24.205(c).  Find out what can happen to a business while relocating from a public project when the condemning agency stumbles with this requirement, and, hear some solutions.

As a relocation consultant, I’m looking forward to sharing insights on this subject at this seminar:  7th Annual Eminent Domain; Current Developments in Condemnation, Valuation & Challenges, June 5th and 6th 2014, in Portland, OR.

Eminent domain attorneys, appraisers, and public agency representatives should hear this.

The seminar is arranged by The Seminar Group.  Following is the link to the agenda and registration: http://www.theseminargroup.net/seminar.lasso?seminar=14.EMDOR

Martyn Daniel LLC provides relocation consulting, cost-to-cure designs and estimates, and replacement cost estimates within the right-of-way industry for public and private sectors around the U.S.

Eminent Domain, Condemnation, and Uniform Relocation Act Benefits Seminar

I’ll be speaking on the Uniform Relocation Act Benefits at the Second Annual Eminent Domain and Condemnation seminar in Honolulu on August 21, 2013.  You can take home new information from a lineup of talented faculty sharing their latest valuable updates, tips, and information.

Find out more and register at http://www.theseminargroup.net/seminar.lasso?seminar=13.EMDhi#

I hope to see you there.

 

Martyn regularly speaks around the U.S. on eminent domain issues including relocation, cost-to-cure, and replacement costs at gatherings of property/business owners, law firms, and continuing legal education seminars.