Tag Archives: Business

Please join me at The Eminent Domain and Land Valuation Litigation Conference in San Diego

Please join me for The Eminent Domain and Land Valuation Litigation conference is taking place January 26-28 in San Diego. I’m looking forward to participating in a full range of cutting-edge issues. My own session, alongside Jill Gelineau and Kelly Walsh from Schwabe Williamson & Wyatt P.C, is entitled Lessons Learned and How to Appeal Under the Uniform Relocation Act and will take place on January 26th at 2:15pm.

For more information, please click here.
There is also a coupon to attend in-person: CY009MK at check out. (Save $150.)

Join Me for Easements and Rights of Way in Montana

easements-and-right-of-wayWhen easements and rights of way are condemned causing an occupant to move or modify the use of personal property, state and federal procedures apply. Learn more about who is eligible for relocation benefits and the top 5 categories of relocation benefits within state regulations and Federal Uniform Act. Find out what you can do as an eminent domain attorney, appraiser, or right-of-way professional that will improve the results of your work.

Please join me The Seminar Group’s upcoming seminar on Easements and Right of Way, Friday, November 18, 2016,  Missoula, MT.  You can register here.

What an Accomplished Eminent Domain Attorney Can’t Live Without

Why can’t one very accomplished eminent domain attorney from Portland live without business relocation services?

When I first encounter an established attorney and I explain my services to them, they naturally feel resistant to the thought of adding new elements to their already successful practice. I was reminded of this common reluctance a few weeks ago when Jill Gelineau, a highly recognized eminent domain attorney with Schwabe, Williamson and Wyatt in Portland, introduced me at the Eminent Domain CLE.

Jill described how when she first met me, she had been successfully practicing eminent domain law for more than 22 years and was sceptical of the need for my services. She went on to say that now, after working with me for 7-8 years, I’ve become indispensable to her cases and she doesn’t know how she ever practiced without me.

A Common Theme
If you’re like many attorneys, you may feel that you have a good understanding of the Uniform Act and its relocation guidelines, and the displacing public agency is likely being very cooperative at this time, in the early stages of the process. As such, you may not see the need for my services. This has been a common theme among many eminent domain attorneys—who are now steady clients.

Your knowledge of the URA and the relocation guidelines is certainly necessary. My work is not meant to replace your knowledge, but instead to enhance it with firsthand experience foreseeing relocation costs that will be incurred, fitting the costs into the URA’s reimbursable categories, and anticipating possible denials of claims to pre-empt denials and gain their approval for reimbursement. These are some aspects of the expertise that I bring to the table.

What an Accomplished Eminent Domain Attorney Can’t Live WithoutConnecting the Dots
Here are several ways that my eminent domain business relocation services can help your practice.

My intimate knowledge of the Uniform Act (URA) and its relocation guidelines are an important part of the relocation process. My role is to connect the dots between all of the relocation issues and the Uniform Act requirements. My work can enhance your knowledge with firsthand experience in using the URA and its processes as a tool for relocation planning.

Planning a relocation before costs are incurred, foreseeing and estimating relocation costs that will be incurred, and estimating their eligibility and non-eligibility for reimbursement based on the URA, are some of the ingredients to a successful relocation. This work is paramount for the owner’s decision making and to develop a relocation plan, which often helps to improve operations at a new location.

Many of my fees for business relocation work are eligible reimbursable costs to the business, unlike attorney fees.

Improved Results
Having worked with attorney Jill Gelineau at Schwabe, Williamson and Wyatt now for 7-8 years and so many other attorneys across the country, I can tell you that while your practice may certainly be successful right now, there is always room for continuous improvement.

As a Business Relocation Consultant I can work alongside your efforts as part of your eminent domain team and enable you to offer unique services that will set you apart from the competition. The partnership can bolster your firm’s equity and potential clients will take notice of the added value. Most practitioners do not provide these services, but the benefits to your clients are extensive. My services allow you to form a more complete package to your clients than any other attorney.

Eminent Domain: When Tenants and Landlords Should Work Together

Eminent Domain When Tenants and Landlords Should Work TogetherThe 202 Loop South Mountain Freeway project in Phoenix, Arizona, provides a poignant example of how Business Relocation Planning Services can help to improve the situation for both landlords and tenants who are being displaced by eminent domain.

The Loop 202 freeway, also known as the South Mountain Freeway, is part of a new freeway system being constructed in Phoenix. Businesses being displaced by the project include industries with very specific relocation demands such as cold storage, truck repair, truck services, manufacturing, and warehousing. I recently drove the North end of 59th and saw that the effected businesses were still in place.  This presented a good opportunity for pre-planning services for their eventual relocation. My article, 6 Benefits of Preplanning your Eminent Domain Relocation, will offer some insights into these services and the value that they bring to an eminent domain team.  The article explains that by the time a business has been made eligible for relocation benefits, it’s often times more difficult to prevail in non-standard or complex relocation situations.

I soon learned that the owners of many of the properties in question lease their buildings and properties to unrelated third party tenants. As a result, the owners were not encouraging their tenants to move. Naturally, the landlords want their tenants to remain for as long as possible. This is a common situation and follows the standard practice of dealing with landlord/tenant situations.  However, there are some alternatives to the standard practice that can be of substantial benefit to both parties.

When landlords and tenants work together, there are many advantages for both parties. I have extensive experience working with both sides of the fence—with both the displaced businesses and also with the displacing public agencies—and many times cooperation between the landlord and the tenant can benefit both parties.  This is often related to the method of treatment of fixtures and working with the displacing public agency.

I have encountered situations where, following the standard practice, each party made separate plans with no attempt to explore strategic cooperation. This can make a difference of millions of dollars. In one instance, this led to lost rent for the landlord and loss of tenant relocation benefits of more than $2.5 million dollars. Strategic planning and cooperation between the two parties could have brought additional rental income to the landlord and maintained the tenant’s eligibility for the $2.5 million in relocation benefits.

Tenants are typically obligated to pay their rent through the end of the lease term or until the time of the actual property taking, whichever occurs first.  Long-term and month-to-month tenants will lose their relocation benefits if they move prior to the agency’s real property purchase offer to the property owner, which encourages the tenants to stay at least until that time.

The landlords will have less leverage to hold on to month-to-month tenants after the State has made its offer. It’s far more strategic for the landlord and tenant to have a plan in place before the time of the offer.

I’ve had excellent results obtaining improved relocation benefits or cost-to-cure payments for landlords and tenants who work together. I specialize in conducting preliminary relocation planning services for businesses that will be displaced by a public project.  Utilizing our preplanning services for business relocation while following relocation guidelines based on the Uniform Act nearly always improves the outcome of the relocation.

Attorneys may wonder how this scenario applies to them and to their clients. Attorneys who have extended these services to their owner or tenant clients have found that they are able to recover more funds for the real property acquisition and relocation of their clients.  They have also been able to improve client acquisitions and client satisfaction.

photo credit: Jeroen van Oostrom via FreeDigitalPhotos.net

 

Make Way for the California Bullet Train: Relocation Preplanning

Make Way for the California Bullet Train Relocation PreplanningHave you heard about the new California Bullet Train? The California High-Speed Rail Authority is acquiring thousands of acres of land in the Central Valley of California to make way for the new train.

Its an area with high unemployment rates and for some owners, the financial opportunity to settle and move on is a welcome one. But for many others, its a challenging time and an emotional process. Some of the local Fresno business owners are finding the initial offers to be extremely low and nowhere near the replacement value.

Relocation preplanning is of the utmost importance in this situation. The businesses being displaced by the train will become eligible to incur and receive reimbursements for relocation costs, but only after the public agency has completed their analysis. At that time, they determine each business eligibility for relocation benefits.

Theres a big problem with this; its not until the public agency has completed their analysis that they actually explain the relocation benefits to the business owners. As a result, most businesses dont begin planning their relocation until the analysis is complete. By that time, the businesses are usually either obliged to plan their relocation around what the public agency has already determined, or they have to appeal those decisions.

From the point of view of a well-trained eye, it appears that the people in the path of the high-speed rail are in a perfect position to preplan their relocation. It seems that only a few property owners have been contacted by the public agency so far, but that the rail path is well defined.

The law in California allows owners to charge the state up to $5,000 for their own property appraisal after receiving the state’s initial offer. If the business owners wait for the states offer, it becomes too late to pre-plan the relocation. Waiting uses up unnecessary time and resources and the results of waiting are uncertain. When you wait, the only remaining option is to attempt to undo what would likely have been prevented with preplanning.

Preplanning creates an increased amount of time for evaluating and making critical decisions. It gives business owners a chance to properly evaluate potential replacement properties, and understand how relocation benefits will and will not assist with making a potential replacement property functional for the business.

During an eminent domain process like the California bullet train, there can be a lot of misleading information or assumptions made about what the relocation benefits will and will not provide. 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. It will help you ensure that your decisions will be made based on the actual facts of the relocation benefits. Preplanning grants more time and knowledge of the process, which opens up more business relocation options.

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. Its the best way to formulate a plan and make use of relocation benefits to minimize business downtime.

Most importantly, preplanning gives a business the opportunity to guide the public agencys 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 agencys offer has been made on the real property.

For businesses and individuals located in the path of the train line who have not yet been contacted, the preplanning window is open and now is the time to act. This is a 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.

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Eminent Domain and the Bryn Mawr Breakfast Club

Eminent Domain and the Bryn Mawr Breakfast ClubThe people of Chicago have been wondering what’s going to happen to the Bryn Mawr Breakfast Club restaurant?

Bryn Mawr is the historic district in Chicago, Illinois that’s on the lakefront of the Edgewater neighborhood far north of the city. Northeastern Illinois University has acquired land along Bryn Mawr Avenue that includes the building that houses the Bryn Mawr Breakfast Club. The land was acquired by eminent domain.

Apparently the owner was aware that NEIU had an interest in the land but the idea seemed far off and he signed a lease anyways. The restaurant quickly became very popular with locals. Then, in August 2014, NEIU began the eminent domain proceedings with the intention to build student housing.

Many problems occur in cases of eminent domain because relocation benefits are not always offered. That appears to be the case for the Bryn Mawr Breakfast Club. Kitchen equipment, furniture, and decorations can be moved, but any upgrades that the owners made to the property may be a lost investment.

Ideally, the owners would be able to find a new location that was previously housed by a restaurant with an existing commercial kitchen. However, if such a replacement property is unavailable, a new kitchen installation could cost $30-$40k.

If federal funds were used in this project, or if state law required relocation benefits to be offered when using eminent domain, NEIU would be required to follow the federal Uniform Relocation and Acquisition Policy Act (URA). The URA provides regulations that offer a fair and equitable treatment of persons displaced. It includes regulations that allow certain relocation costs to be reimbursed to the tenant. Unfortunately, under many projects, as with NEIU’s project, relocation costs go unpaid and the business tenants end up baring a disproportionate amount of the burden of a project that benefits the public.

In the absence of providing required relocation benefits, such as with the URA, and to reduce the burden placed on business tenants, a relocation package should be negotiated where the business occupant will be entitled to relocation benefits for moving personal property and reconfiguring their operations because of the property taking. It’s valuable to have qualified people analyze the issues and facts, and prepare the necessary reports and documentation.

Professionals should be brought in who understand the facts so that they can perform a proper analysis and sort items into the proper categories in hopes that the business can prevail in an acquisition or relocation dispute.

Source

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.

Eminent Domain and Taxes

Eminent Domain and TaxesAs the tax season begins, it’s a good time to remind you and your clients that relocation payments from federal funded projects that use eminent domain to acquire private property are not considered income, and acquisition payments are treated as a capital gain, which can be deferred by a 1033 exchange.

The Federal Uniform Relocation and Acquisition Act (URA) states that relocation payments are not considered income on a federally funded project. My clients and their tax preparers frequently report weak support regarding this URA statement. Because this frequently causes inconsistent treatment of payments by tax preparers, I’ve been prompted to research the issue, not as a tax person but as a relocation consultant, in order to find support for the tax preparer when dealing with relocation payments, and to assist my clients with relocation planning decisions.

My article, Eminent Domain Acquisition Payments, Relocation Payments, and Taxes, outlines the results of my research in more detail here. See here. Involuntary Conversions.

Once it is understood how to handle the relocation payments, sometimes the next hurdle is to identify relocation payments or separate relocation payments from acquisition payments. This dilemma can occur when a dispute resolution process or trial is used to settle a case where fixtures are included, or when a case is a combination of acquisition and relocation issues. These processes often lump things together making it difficult to identify whether the resulting payment was part of relocation or acquisition. They can also inadvertently limit ongoing relocation benefits.

If you are in the process of preparing for a dispute resolution or trial, I can assist you by preparing language to include in a settlement agreement, preparing clarifying check-sheets, and providing other materials to help identify relocation payments. I can also assist you with preserving rights to ongoing relocation benefits.

Buyer Beware: Permanent Fixtures v. Personal Property and Why it Matters

Buyer-Beware-Permanent-FixtThe analysis and classification of property plays a critical role in the success of your eminent domain case. An analysis must be performed to define between personal property (including trade fixtures), permanent fixtures, and other forms of property. The real property offer that a displacing public agency makes depends on this analysis, but it’s dangerous to assume that their analysis is, by its nature, automatically accurate. Misclassification can cost a displaced business millions of dollars in out of pocket expenses. A close examination of the analysis should be performed to weigh the benefits and drawbacks of the classifications that have been made.

I recently worked with a business that would have been $4.5m out of pocket had they accepted the offer from the displacing agency. It came down to the issue of permanent fixtures vs. trade fixtures (personal property). The displacing agency made an offer of $4m for items that the agency classified as permanent fixtures. In order for the displaced business to reestablish its operations, the business would, in fact, have had to buy these “fixtures” back from the agency at salvage value, estimated by the agency at $500k. By my estimation, the relocation costs would have cost $8m in reinstallation at the new location. The result would have been $4.5m out of pocket, all because of the acceptance of the property analysis.

Defining Fixtures:

Permanent fixtures are typically equipment that cannot be moved and therefore becomes part of the real property. They will be purchased as real property, and are not eligible for relocation benefits.

Trade fixtures are typically items used in the business trade, which can be easily detached, thereby, converting to personal property when detached, which then are eligible for relocation benefits. The definitions and criteria used for classifying permanent fixtures and trade fixtures will be discussed at another time in the future.

Understanding the Advantages and Disadvantages of Classifying Items as Fixtures

Example 1: Case Study – COMPANY X & AGENCY Z

I was asked to evaluate Agency Z’s real property acquisition offer, which included a personal property and fixture analysis for COMPANY X. There were three areas of concern:

#1: Permanent Fixture v. Personal Property

#2: Installation Classified as Fixture v. Reinstallation of Personal Property

#3: Infrastructure Classified as a Fixture v. Reinstallation of Personal Property

#1: Permanent Fixture v. Personal Property – AGENCY Z classified many items as permanent fixtures, which are typically classified as personal property. It was in COMPANY X’s interest to re-classify some or all items as personal property.

Value: AGENCY Z valued approximately $4.2m of the items as permanent fixtures, which could, or should, have been classified as personal property.

Adverse effects of a permanent fixture classification:

Permanent fixtures are not eligible for relocation benefits; therefore if COMPANY X desired to relocate an item classified as a permanent fixture, the costs for moving, reconnecting, and/or modifying, were not reimbursable and would have been COMPANY X’s responsibility.

The permanent fixture classification of items is not good when:

  • The item will be needed at the replacement property
  • Code upgrades are needed for the item’s reinstallation
  • Significant infrastructure is needed for the item’s reinstallation such as, plumbing, footings, venting, power, etc.

Positive effects of a permanent fixture classification:

Fixtures can be abandoned and paid out for the amount of the fixtures Value in Use, which can potentially be greater than abandoning the same item if it were classified as personal property.

When abandoning an item as personal property, the amount received is the lesser of; the Value in Use, or, the estimated cost to move and reinstall.

When abandoning an item classified as a fixture, the amount received is the appraised “Value in Use”, or also called “Value in Place”.

In other words, reimbursements for abandoning an item as a fixture will always be equal to, or better than, abandoning the same item when it is classified as personal property.

Fixtures are good when:

  • The fixture is not needed at the replacement property
  • The business is closing
  • The item’s Value in Use is greater than the cost to buy it at salvage value plus its reinstallation cost (not common)

Changing items classified as permanent fixtures to a classification of personal property:

In the case of COMPANY X, these items included machinery and equipment, which was installed for the business of treating customer products. These items were not installed for operating the real property, as would a permanent fixture.

#2: Installation Classified as Fixture v. Reinstallation of Personal Property – AGENCY Z classified the installation as a fixture for items they classified as personal property. Typically, the installation of personal property items is not classified as a fixture or personal property. Installation is simply part of relocating and reinstalling the personal property.

Value: AGENCY Z had valued approximately $1m installation of personal property as a fixture.

Negative effects: (same as above)

Positive effects: (same as above)

#3: Infrastructure Classified as a Fixture v. Reinstallation of Personal Property – AGENCY Z had classified the infrastructure items as fixtures, such as: plumbing and electrical.

Value: Electrical $195k; Plumbing $739k

Negative effects of infrastructure as a fixture:

Most replacement buildings would not have had the level of infrastructure needed to support COMPANY X’s equipment needs for plumbing and electrical. If the plumbing and electrical had costs exceeding AGENCY Z’s fixture value, COMPANY X would have have had to pay the extras out of their own pocket.

Positive effects of infrastructure as a fixture:

If COMPANY X happened to locate a replacement building that included most of their needed plumbing and electrical (which was doubtful), then AGENCY Z’s infrastrucure value and payment may have put money in COMPANY X’s pocket.

If COMPANY X chose to go out of busines, then having the infrastructure catagorized as a fixture would have been good for COMPANY X.

Example 2: Heat Treating Furnace

A very specific example of the pitfalls of accepting an offer from the displacing agency can be illustrated with this heat treating furnace as one particular item owned by this business. In this case, the agency offered to purchase this item as a permanent fixture at $66k and made it eligible for purchase by the owner from the agency for $8.5k.

However, permanent fixtures, as this furnace was classified by the agency, are not eligible to receive reimbursements for moving and reinstalling. The cost to move and reinstall a furnace like this is estimated at $140k, as shown in the Relocation Cost Analysis spreadsheet below.

For the business to have opened shop at another location using the agency’s valuation the business would have had to purchase this furnace for $8.5k and then spend $140k to move and reinstall it.  They would have received $66k from the agency but would have been out of pocket $82.5k.

Reclassifying a furnace like this from a permanent fixture to personal property allowed relocation benefits to pay for the full relocation costs of $140k with no out of pocket expenses for the business.

Buyer Beware Permanent Fixtures v Personal Property and Why it Matters

As these examples illustrate, it’s critical to understand the advantages and disadvantages of classifying items as fixtures. It’s potentially extremely expensive and detrimental to a displaced business to assume that an analysis is automatically correct. If you are at risk of having your property taken by eminent domain, scrutinize the analysis of fixtures v. personal property to weigh the benefits and drawbacks of the classifications that have been made in your case. If you have any questions regarding the question of fixtures, personal property, relocation, or other areas of eminent domain, get in touch and I’d be happy to discuss the matter with you.

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.