Tag Archives: Eminent Domain

15 Things Guaranteed To Accelerate your Eminent Domain Practice

15 Things Guaranteed To Accelerate your Eminent Domain PracticeBuilding your eminent domain practice and accelerating your firm’s growth is within reach. There are ways to add value and benefit to your clients by augmenting the services that you currently have on offer, helping you and your practice to stand out from the crowd. Including a variety of specialized services will build your business reputation, set you apart from the competition, and quickly accelerate your business. Here are 15 examples that can add value to your practice and start pushing your business forward today:

1. Liaise with an expert who can follow relocation guidelines based on the Uniform Act with intimate knowledge.

2. Avoid client disappointment by adding a seasoned relocation consultation to your client offering. Their expertise will work to guide the process so that your clients are able to avoid much of the potentially extensive out of pocket, non-reimbursable money they would otherwise need to spend to relocate their business because of a public project taking their property.

3. Steer the direction of your clients’ case from an early stage to produce better results to the business/property owner that you’re working with.

4. Perform a thorough analysis to differentiate between personal property and real property. Because federal relocation guidelines don’t automatically guide businesses to the best relocation results, each business relocation should have an analysis performed to make the distinction between personal and real property.

5. Determine the proper amounts and best methods for receiving relocation payments from the public agency while following the relocation guidelines.

6. Make cost-to-cure services a part of your client offering.

7. Add preliminary planning services to your service offering. For those businesses that will be displaced by a project, preplanning can result in thousands and sometimes millions of dollars in cost reimbursements for your clients that often otherwise go unrecognized and unclaimed.

8. Provide services that can be extended to your clients right away to break out of the usual holding pattern. Preplanning services provide you with something to offer the client right away, while other attorneys have to wait to get the ball rolling. This offering will increase the chances of securing the client’s business.

9. Improve efficiency preparing appeals, planning relocation logistics, and orchestrating and coordinating the actual move toward maximum efficiency and minimum client downtime.

10. Increase the amount of time for evaluating and making critical decisions. This can be accomplished through preplanning.

11. Extend replacement property evaluation or feasibility services to your clients to outline the best of the potential replacement properties.

12. Guide your clients through the process of determining relocation benefits that will and will not assist them with making a potential replacement property functional for the business.

13. Pre-plan relocations to establish time for preparation of plans that will minimize downtime with the use of relocation benefits.

14. Save your client out of pocket expenses because of a rushed move, lack of choices, and excessive key employee time spent on the relocation. Proper preplanning sets the stage for the actual relocation, saving your clients thousands of dollars, helping to build your trusted relationship.

15. Put your client’s best foot forward while working with the public agency representatives. Teaming with a preplanning specialist will demonstrate to the public agency your high level of organization and knowledge. 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 client’s business.

The 15 important items on this list can all be achieved by liaising with a relocation consultant. Including an expert on your team who specializes in the services outlined here can be of extreme benefit to your clients, and certainly to you and the way that you structure your practice. Offering preplanning services to prospective clients creates a more complete package than what other attorneys, appraisers, and other eminent domain professionals offer.

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 by email. I look forward to hearing from you.

photo credit Twobee via Free Digital Photos

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.

Eminent Domain Fact Delivery has Impact on Judge’s Decision

Eminent Domain Fact Delivery has Impact on Judge's DecisionI recently read this article, Caltrans’ Highway 101 Overpass Condemnation Case Ends in a Slip Decision by Brand Kuhn. This is an eminent domain lawsuit that I have been following for several years.

In cases of eminent domain, I can’t stress enough the importance of how the case is presented. The way that the facts are delivered makes a significant impact on the judge’s decision.

As an analogy, eminent domain trials are a lot like the reality competition shows that are so popular on television these days, like The Amazing Race and Dancing With the Stars. Two very talented competing teams go up against one another and apply their knowledge, skills, and resources to put on their best performance. After 20 days of performing – in this case the performance is the trial – the judge or jury scores the two teams based on the performances that they gave.

The scores are the result of how well the story was told while meeting specific criteria and facts in an eminent domain case. Protecting the client’s interests – requires the most compelling case possible; to produce the best results, the value of engaging expert eminent domain representatives to be part of your team to present cannot be underestimated.

Take a moment to read Brad’s article if you have any questions on this matter or other eminent domain and condemnation matters you want to discuss, please let me know.

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

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.

Just Compensation and Relocation Payments for Fixtures and Personal Property within Eminent Domain and the Uniform Act (URA)

There have been many disappointed businesses owners when finding how much out of pocket, non-reimbursable money they spent to relocate their business due to a public project taking their property. The federal relocation guidelines don’t automatically guide the business to the best relocation results. To achieve the best results, each business relocation small and large, must have some level of analysis performed to distinguish between personal property and real property, as well as, to determine the proper amounts and best methods for receiving relocation payments from the public agency while following the relocation guidelines.

To emphasize this, recently while planning a business relocation, our personal property analysis determined that a refrigeration unit was improperly classified by the public agency’s appraiser as a non-moveable fixture. The appraiser also determined that it added no value to the property so it contributed no funds to the just compensation, so it had zero value. Furthermore, because the unit was classified as real property, there were no relocation benefits available for it.

We analyzed the refrigeration unit and were able to successfully demonstrate to the public agency that the unit was actually a moveable trade fixture, therefore considered personal property and entitled to relocation benefits. Further analysis demonstrated the cost to substitute the unit with a new unit was slightly less than the estimated $1 million to move and reinstall the existing unit.

This analysis resulted in the business receiving a new refrigeration unit at the replacement property with no out of pocket costs for the business, and very importantly, no downtime for the business, which would have occurred had they relocated the existing unit.

There are four possible methods of receiving compensation for a piece of equipment or personal property depending on its classification and the needs for the item, they are:

As Real Property
1. Payment within just compensation when the item is classified as real property because it’s a non-movable fixture

As Personal Property within the relocation benefits when the item is classified as a movable fixture or personal property, which includes choices of payments as follows:
2. As abandoned personal property
3. As relocated personal property
4. As substituted personal property

A basic comparison of how acquisition and relocation proceeds related to fixtures and personal property are described and calculated as follows:

As Real Property (non-movable fixture):

Let’s say an air compressor was determined to be a non-movable fixture, therefore it is real property, and it has an appraised value of $5,000. (Often, the value can be zero when the item does not contribute to the value of the property)

Non-movable fixtures are purchased as real property by condemning agencies. Within the real property acquisition payment the property owner would receive the $5,000 for the air compressor in our example. Payments for real property are subject to capital gains tax, although the tax can be deferred with a 1033 exchange. Currently the capital gains tax rate for most businesses is at 15%. If the tax is not deferred and the compressor has been fully depreciated, the property owner would be subject to capital gains tax of $750, for a net of $4,250. (This should be reviewed by your tax advisor.)

Side notes:
• Non-movable fixture payments typically are paid to the real property owner, not the tenant, which may have purchased and installed the fixture.
• Fixtures on occasion will include foundations, electrical and plumbing infrastructure. Receiving additional compensation for these items as non-movable fixtures will eliminate the ability to receive cost reimbursements for these items when reinstalling the personal property that the foundations or infrastructure serve.

As Personal Property and/or Movable Fixture:

Let’s say the same air compressor described above was determined to be a movable trade fixture, therefore personal property. The business has three choices in dealing with the air compressor:

• Abandon
• Relocate/Move
• Substitute

Abandon
When the item of personal property is not needed at their replacement location, or the business does not relocate, the business may want to receive a payment for abandonment of the personal property.

The federal relocation guidelines’ payment formula for abandoning personal property is the lessor of the value-in-use or the estimated cost to relocate the item.

If the cost to relocate the air compressor is estimated at $10,000 then the lessor value is the value-in-use of $5,000. The business would then receive the $5,000 as part of their relocation benefits which is non-taxable.

Relocate/Move
When the personal property item is needed at the replacement location, then an analysis should include the costs for relocating the item including disconnecting, moving, foundations, reconnecting, and modification if necessary. The actual cost to relocate the compressor will be paid to the business, which in this case is $10,000. This payment is non-taxable.

Substitute
When the function of the personal property is needed at the replacement location, there may be a desire to analyze the substitution costs for the item.

The federal relocation guidelines’ payment formula for substituting personal property is the lessor of the estimated cost to move/relocate the item or the actual cost to substitute the item.

Let’s say the relocation cost of $10,000 includes costs to disconnect and modify the compressor to fit the location which will not be incurred when substituting the unit, and we find we can buy and install a new compressor that will fit the new location without modification for $9,000. The owner can then receive a substitution payment of $9,000 and enjoy the benefits of a new compressor at the replacement location. This payment is non-taxable.

Conclusion
This information will clarify the dollars at stake and emphasize the need to analyze the best method to receive payments for an asset. Based on our example of the air compressor are the following results:

  • Non-Movable Fixture – Payment resulting in $4,250, or $0 if the item does not contribute value
    • This payment will likely be paid to the real property owner.
    • If the compressor is needed at the replacement location the business will have to spend $5,999 to replace it
  • Abandonment of Personal Property  – Payment of $5,000 (non-taxable)
    • The business receives value for an item no longer needed.
  • Relocation/moving  – Payment of $10,000 (non-taxable)
    • The compressor continues to function as it did at the acquired property with no out of pocket expenses for the business.
  • Substitution – Payment of $9,000 (non-taxable)
    • The function of the compressor is replaced with a new compressor with no out of pocket expenses for the business.

Each business relocation and its payments are different because of the different types of personal property the business has and the future plans of the business, requiring separate analysis for each business.

This explanation should clarify an often overlooked and important monetary issue that will occur during relocation of the business and the acquisition of the property.

If you wish to discuss this further or should you have any questions, or comments, please contact me…..

Martyn Daniel

Eminent Domain Acquisition Payments, Relocation Payments, and Taxes

The case of  Karen Y. Nielsen v. Commissioner of Internal Revenue provides the answers we need to understand how income taxes apply to eminent domain acquisition and relocation payments.  As an eminent domain relocation consultant, not a tax advisor, I’ve prepared the analysis below based on the information from this case.  This analysis and suggestions are for a typical acquisition of private property and relocation of a resident, business, non-profit, or farm located within a public project using eminent domain and federal funds to acquire property.

This case indicates that:

  • The acquisition payments made for just compensation of real property may be taxable as a capital gain or deferred by use of IRC section 1033.
  • Relocation payments are not considered income and not taxable.

That seems very clear and simple. However, the key is to separate real property acquisition payments from relocation payments. It will be important to work with the public agency making the payments to clarify the type of payment being made.

Moreover, it’s important to identify and properly classify movable fixtures (personal property) from non-movable fixtures (real property). It’s preferable to do this before the move and before relocation payments are made.  I’ve spent a great deal of time making these distinctions for relocation planning purposes by analyzing the characteristics of installed equipment to compare them to various states’ methods for distinguishing between personal property and real property.  Now, as we see, this task is equally important for tax planning within the relocation planning.

Below are my suggestions for recognizing and separating acquisition payments from relocation payments.

Acquisition Payments (Just Compensation) – Payments for the items listed below appear to be taxable as a capital gain but may be deferred by use of IRC 1033:

  • Real property including; land, buildings, and other improvements including; driveways, utilities, well, septic system, landscaping, etc.
  • Fixtures (non-movable)

Relocation Payments – Payments or reimbursements made for the items below should be non-taxable to the displaced resident or business. The items listed are major categories within the Federal Uniform Relocation and Acquisition Act, which are eligible for reimbursement or payment.  (Another time, I’ll expand on these categories and their sub-categories in more detail)

 Resident (homeowner or tenant)

  • Moving and reinstallation of personal property, storage, and other moving related costs
  • Replacement Housing Payment or Price Differential payment
    • Amount by which the cost of the comparable replacement dwelling exceeds the acquisition amount of the displacement dwelling
  • Increased interest on the replacement dwelling
  • Expenses incidental to the purchase of the replacement dwelling
  • Other remedies within the Housing of Last Resort

Business or Farm (property/business owner, landlord business, business tenant, non-profit, farm)

  • Fixed Payment, also known as the In-Lieu Payment
  • Moving Costs including 16 line items of eligible reimbursable costs
  • Reestablishment Costs Including 7 line items of eligible reimbursable costs
  • Related Eligible Expenses including 3 line items of eligible reimbursable costs

Separating eminent domain payments by the categories described above will help you plan your tax obligations. This work will also help you properly plan your relocation and help you receive proper and timely relocation payments, when prepared before you move.

The above discussion is my opinion as an eminent domain and relocation consultant.  I recommend consulting a tax advisor prior to relying on this information for tax purposes.  I would be pleased to discuss these matters in more detail with you as a displaced person, your tax advisor, legal counsel, or your displacing public agency.

Facing Eminent Domain and Relocation? Get the Best Help from Those that Get the Best Results

I had the great pleasure and experience with presenting a unique and customized approach to the eminent domain relocation process to the law firm, Sever/Storey, an eminent domain law firm for landowners. This energetic and collaborative group of attorneys quickly recognized how this unique relocation approach would benefit their landowner and business clients. Throughout my interaction with them, they clearly demonstrated their talent, energy, and commitment to provide the best and most complete service to their clients, which will undoubtedly provide the best results for their clients. If you are facing eminent domain or condemnation in Indiana, Illinois, Ohio, or North Carolina, you need to call Sever/Story at 888-318-3761.

Note: Martyn regularly speaks in many parts of the U.S. on relocation issues related to eminent domain, condemnation, and right-of-way to owners, businesses, and attorneys in group and private settings, as well as, to other professionals at continuing legal education seminars. Martyn can be reached at 425-398-5708.

Are Eminent Domain Relocation Payments a 1033 Tax Exchange or Not Considered Income?

Every year thousands of tax filers, and likely, their tax preparers, are dealing with tax issues on relocation payments received for relocating a business or household from public projects where the government agency is using eminent domain and condemnation. As an eminent domain relocation consultant, my clients frequently bring up tax issues related to relocation payments, or reimbursements. Based on their comments, some tax preparers treat relocation payments as a 1033 exchange; some treat them as non-income; while others treat them as ordinary income.

Answers to tax issues related to relocation payments have been eluding me for 15 years. A few years back I called the IRS for answers. After nearly an hour on the phone with the agent grasping for answers, but not finding any, I heard a sneeze and a click. I was “accidently” disconnected. More recently, I quizzed nearly everyone I know working in the eminent domain field for a connection to someone that knows, only to find leads to dead ends. Now, I’m broadening my search for answers by posting this on my website. Hopefully you or someone you know and trust will offer answers to some long-sought after questions.

Below are quotes from the Federal Uniform Relocation and Acquisition Act (URA) and the IRS, which cause me and others to ask more questions. I included an example of a project raising specific tax questions, and lastly are some common questions I’ve heard over many years from many clients.

All relocation programs for public projects using federal funding are based on the (URA) and include the following language, “No relocation payment received by a displaced person under this part shall be considered as income for the purpose of the Internal Revenue Code of 1954, which has been redesignated as the Internal Revenue Code of 1986 (Title 2, U.S. Code).” This leads to the IRS code which states, “42 USC § 4636 – PAYMENTS NOT TO BE CONSIDERED AS INCOME FOR REVENUE PURPOSES OR FOR ELIGIBILITY FOR ASSISTANCE UNDER SOCIAL SECURITY ACT OR OTHER FEDERAL LAW.” The language in these two items would lead one to believe that relocation payments are not income and therefore non-taxable.

Following is a brief, common, and recent example of a situation that further complicates this issue. On a public project using eminent domain and following the URA, we argued that certain pieces of equipment should be reclassified as personal property and eligible for relocation payments, which includes an optional payment for abandonment of the personal property. The public agency had earlier classified these items as immovable fixtures, which would leave the items ineligible for relocation payments, but eligible for lesser payments based on their depreciated real property value.

To emphasize the magnitude of this tax issue on a business, this client received a payment from the public agency for abandoning several million dollars’ worth of the reclassified personal property. Abandoning personal property is part of the relocation benefits program; therefore, these payments along with payments made for relocating other personal property are considered relocation payments. Taking the language from the URA and IRS at face value, one could believe these payments are not considered as income, thus non-taxable. Is that a reasonable belief?

The tax issues for relocation payments raises some common concerns and questions, such as; treating relocation payments as a 1033 exchange leaves the possibility of a taxable event in the future, which seems contrary to the IRS code mentioned above. In addition, personal property does not seem to fit within the scope of the 1033 exchange. For tax purposes, should payments for abandoned personal property be treated different from relocated personal property, even though both payments are considered relocation payments and presumably non-taxable?

We spend a lot of time analyzing and planning to improve the outcome of our client’s relocation efforts, however, tax planning has been a missing component within those efforts. Unfortunately, I do not have the needed tax answers, and I would like to point these clients to someone who knows.

For Eminent domain relocation payments and taxes, please see our follow-up posting at

http://eminentdomainandbusinessrelocationconsulting.com/?p=1696

Relocation Assistance Programs are Not Limited as Suggested

A statement mentioned in this article, http://peekskill.patch.com/articles/crossroad-tenants-speak-out-against-eminent-domain , regarding business relocation cost reimbursements being limited to $25,000 is a misconception. Any statement that says a business or resident is limited to some total dollar figure for relocation reimbursements is always a misstatement or a misunderstanding, which I regularly have to dispel.

As a relocation consultant for businesses and residents, who lives and breathes eminent domain and Relocation Assistance Programs around the U.S, I will clarify this misconception that there is a maximum amount of eligible relocation cost reimbursements for relocating a business. If a state or local public agency’s relocation program closely follows the Federal Relocation Assistance Program, which most do, it contains only two categories having a maximum amount of relocation cost reimbursements, or a cap. The remaining eligible categories are uncapped, so they have no dollar limits.

While using relocation programs that are based on the Federal Relocation Assistance Program along with its capped and uncapped eligible reimbursement categories, seldom have I seen small business relocation reimbursements total under $50,000, in fact they are often between $100,000 and $200,000. Larger, more industrial types of businesses can reach into the millions of dollars in relocation cost reimbursements. Reimbursements mostly depend on what the business has at the old location and how the business sets up at the new location.

Businesses, as well as, residents can do better than most people think when facing eminent domain and relocation. However, many otherwise eligible relocation cost reimbursements are too often overlooked and go unreimbursed. Many more costs can be eligible for reimbursement and can be paid with proper planning, proper understanding of the Relocation Assistance Program, and with well-prepared relocation claims. So, don’t be discouraged by false statements that businesses are limited to relocation reimbursements of $25,000, $50,000, or any limiting figure.

Martyn Daniel