Tag Archives: Right of Way

Is Your Business Facing Relocation Due to Eminent Domain? Avoid Downtime By…

When a business must move because of a public project displacing it using eminent domain, often there is insufficient time allowed to properly plan, prepare, and perform the move. Typically, a business would never choose or plan to move under the conditions that are dictated by these public projects.

Business downtime can be an unfortunate result of relocating under those conditions. Downtime for many businesses such as those shown in the above photos data centers, metal recycle and metal shredding, dentist, and ready-mix concrete plant, along with other many other business, can cause the displaced business to default on delivery contracts, encounter losses in sales, loss of employees, loss of customers, and allow competitors to encroach on its market share.

There is a solution found within the Uniform Relocation Act (URA). The URA provides the regulations that will likely be followed by the condemning public agency for displacing the business. The URA has a method of claiming relocation cost reimbursements described in a category called Substitution of Personal Property. This category includes some amount of reimbursement for the business to install new, or substituted, equipment at the replacement property. This can result in the continuation of operations at the displacement site while installing modern equipment at the replacement site, thereby eliminating downtime while also improving future operations. The amount of reimbursement will be equal to or less than the estimated cost to move and install the existing equipment.

This category has specific rules which must be followed in order to qualify for the cost reimbursement. Some of the rules may seem non-applicable or even nonsensical. Don’t fall into the trap, as some have, of thinking you can skip any of the rules and still qualify by simply following prudent business practices while relocating your business. It won’t work and you will risk losing the entire reimbursement. I recently saw a substitution claim missing some of the required components causing an agency to deny several million dollars of what could have otherwise been eligible substitution reimbursements.

Substitution is often an integral tool to a successful business relocation. My work, when planning business relocations always considers substitution, nearly always uses it to some extent, and sometimes for most or all of the equipment.

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 related to 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.

Until recently, answers to tax issues related to relocation payments have been eluding me for 20 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.

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 re-designated 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 successfully 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, and only eligible for smaller payments, which were based on their depreciated real property value.  The relocation payments received for these items reclassified to personal property where significantly higher.

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 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 would 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. I have recently discussed these matters with tax advisors with experience in these situations and found that handling them is somewhat specific to the situation, therefore, if you contact me, I would be happy to refer you to them.

EMINENT DOMAIN AND BUSINESS RELOCATION WORKSHOP OFFERED FOR CITIZENS AFFECTED BY THE PORTLAND-MILWAUKIE LIGHT RAIL AND COLUMBIA RIVER CROSSING PROJECTS

Eminent Domain Consultant Spearheads FREE Workshop
Featuring Land Use Attorney Guest Speakers

Bothell, WA – June 7, 2011 Martyn L. Daniel of Martyn Daniel LLC, Bothell, WA, Eminent Domain and Business Relocation Consultant will present a free 2-hour workshop on June 14th, 2011 from 6:30 pm to 8:30 pm at the Milwaukie Center, Milwaukie, OR.  Daniel will discuss the rights and reimbursement benefits for those citizens affected by the Portland-Milwaukie Light Rail and Columbia River Crossing projects.

Special guest speakers will include prominent Lake Oswego, OR Land Use and Eminent Domain Attorneys, Neil N. Olsen and Jim Zupancic of Zupancic Rathbone Law Group whose topics will review the legal rights of those affected by the TriMet mega-transportation plan.

The Portland-Milwaukie Light Rail Project will create a light rail alignment that travels 7.3 miles, connecting Portland State University in downtown Portland, inner Southeast Portland, Milwaukie and north Clackamas County. A number of private and commercial properties will be purchased.

In a DJC Oregon article (4/26) authored by Zupancic and Olsen titled, Portland-Milwaukie light-rail ‘mega project’ moves forward the attorneys state, “Armed with more than $200 million in property acquisition money, TriMet will acquire by agreement or condemnation more than 200 properties or parts of properties for the project’s right-of-way and other purposes. These acquisitions or takings will displace approximately 20 homeowners and more than 60 businesses.”

The attorneys further state, “As the project moves forward, and property acquisitions and takings continue, business owners will not only be wrestling with TriMet over the correct valuation of their real property, but also be facing fundamental challenges to the continued viability of their businesses.”

Martyn Daniel adds, “I’ve received a number of citizen questions regarding valuation of property and how to ensure that relocation claims will be approved that we decided to combine our efforts to spread some light on the impending eminent domain process.”

The public is invited to attend this free event.

Topics will include:

  • Do you know your rights as a business or property owner?
  • Do you have concerns regarding relocation reimbursements and property takings?
  • Did you know that relocation benefits may be available to you?
  • Did you know how to find hidden and often overlooked relocation costs?
  • Learn how to turn denied claims into approved claims.
  • Will you know how to analyze your property offer?
  • Do you know how to respond to your property offer?
  • What can you do if you do not agree with the offer you have received?

 

Registration is required by June 12th, 2011. A Question and Answer session will be offered at the end of the workshop.

To register, visit www.EminentDomainWorkshop.com or call Martyn Daniel directly at 425 398 5708.

Contact:  Martyn L. Daniel

19027 100th Ave NE
Bothell WA 98011
Phone: 425 398 5708

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Will My Business Have the Necessary Support to Plan My Eminent Domain Relocation?

eminent domain moving van

 

 

When a business must relocate due to eminent domain, help from the agency is available but there are limitations to that assistance which business owners need to know.

When faced with eminent domain, an agent is assigned to each relocating business.

 

The agent’s services include:

  1. An explanation of eligible reimbursement categories for relocation costs
  2. Answering questions
  3. Obtaining moving bids
  4. Submitting relocation reimbursement claims

 

It is important to note that the agent is not required to plan for the move.  Planning the details of the move is the responsibility of the business owner.

And that can be a problem.

A business owner must maintain his business operations before the move occurs. It is important that the operation continues to produce goods and services to minimize unprofitable down-time. No business owner wants to lose much needed revenue before and during the relocation negotiation process. Employees and other operational expenses still need to be paid.

But the inevitable will occur…the business will need to relocate to make way for whatever improvement is to be in the space the business now occupies.

So planning a proper move is vital to a seamless relocation.

A business owner must find a new location for the business; however, other than providing real estate listings, the agent does not assist with this vital aspect of the eminent domain process.

One major obstacle that business owners face is that they are not typically versed in construction details.  A business owner may find a good location for the business but the building may not be turnkey.  If for example, machinery must be moved, special considerations must be made to ensure that the new location can house the machines.

How will a business owner know if the new site needs major upgrades to accommodate relocating machinery and/or office equipment?

Hiring an attorney will certainly help the business owner understand his legal rights but will these individuals have construction knowledge?  Will they know if a business owner needs additional plumbing to accommodate special equipment?  Will an attorney recognize that a relocating business owner has an opportunity to replace older equipment with updated equipment and can use relocation benefits to make this positive change?

An agent will submit a relocation claim to the agency for reimbursement but the business owner is responsible for recognizing the opportunity for any upgrades and must also plan for a seamless transition.

No two businesses are the same. Every business is unique so a ‘one size fits all’ approach to relocation will not work.  Unfortunately, the agent does not have the time to spend with each business owner to plan individual moves. But more importantly, it is not just about relocating from one space to another…it is about making the move to the new location better than the last.

Many relocating businesses often have the opportunity to make improvements that might have been planned on paper but never initiated at the original site due to lack of space, time or available funding. So relocating to a new site can often mean a fresh start and a chance to make key strategic improvements to the overall business plan.

But again, even improvement planning is the responsibility of the business owner.  The agent is only responsible for ensuring that the right-of-way is cleared and that the owner has the information available to act on the move.

In the case of the Trimet eminent domain case in Portland to make way for light rail, the agent ensures that each business owner receives an Acquisition and Relocation brochure. This is a rather informative document which offers an explanation of terms such as ‘valuation’, ‘just compensation’, and ‘condemnation’.  Again, the document is simply an explanation of what the business owner is required to know but it is a ‘one size fits all’ brochure. And because each business is unique in its service or product, its culture, its size, and its needs, a personalized review of every business is needed but not a requirement by the agent. (Incidentally, an agent may be assigned to more than one business.  If an owner has ever tried to reach other government agencies, such as the IRS for example, to ask questions, all any representative can really do is reiterate IRS rules and code.)

In some cases, if a relocation agent cannot respond to a business owner’s question, the agent has to take the owner’s question to the headquarters to further clarify the question.  For a busy owner trying to keep the business going before the relocation transpires, any time delays could have a negative impact on the operations.

If your business must be relocated due to eminent domain, think about the best use of your time as the business owner.  Will you have the support you need to make the best move possible for you and your business? Think about putting a team in place to help you find the best location for your business.

If you are faced with eminent domain, begin to plan early.  Draw up a list of locations you feel may be ideal for your business. Think about what you want to accomplish…do you want a larger facility or do you want to add a warehouse or a work area?  Will you have equipment which needs to be moved and will that equipment fit in the new location?

 

 

 

 

 

City Prepares to Seize Willet’s Point Properties – Following URA Guidelines?

Willet's Point RedevelopmentA February 11th, 2011 article in The Epoch Times entitled, City Prepares to Seize Willet’s Point Properties,  reported on 9 Queens, NY business owners who gathered at a press conference expressing concern that their properties would be taken by the City to make way for the Willet’s Point Redevelopment Project.

“The eminent domain law gives the city the power to force owners into selling private land to the city for public use. Property owners will not be left completely in the lurch, however, as they will be compensated with a fair market value determined by a judge. The EDC has also provided career training and relocation to some owners who have willingly sold their properties.

The crux of the matter remains whether the redevelopment of Willets Point is in the interest of the public, as mandated by the eminent domain law.

The city plans to replace the mishmash of auto recycling and repair shops with housing developments, retailspace, a hotel, and parkland.”

I find it very interesting that relocation benefits are only being offered to the cooperative property owners.  Most public projects using eminent domain will offer relocation benefits by following the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA).

The URA provides relocation benefits and guidelines to all eligible property owners and tenants within the public project’s area and makes no distinction between those that are cooperative and non-cooperative.  Those guidelines, in part, spell out how both sides will address relocation costs and the rights and responsibilities of each side.

Businesses can successfully relocate and have actually improved their businesses when relocating under these guidelines.  Without them, a business is left with incurring significant relocation costs which they often cannot afford.  Many would say this is an unfair burden to put onto a business owner while the general public is benefiting from their losses.  That’s why these URA guidelines where developed in 1970.

Having helped several hundred businesses relocate from projects using eminent domain, my experience has revealed that the public agencies that follow the URA have had better success with clearing their needed right of way in a timely and equitable fashion for all.

It would be interesting to see if the Economic Development Corp. would find more cooperation and improved success for their project if they adopted these relocation guidelines.

North Tarrant Express and Eminent Domain

TxDOT’s filing of eminent domain on the North Tarrant Express may be the positive aspect this project needs for right of way acquisition. 

Eminent domain provides a set of rules that the property owners, tenants, and the public agency (TxDOT) have to follow. These rules make the acquisition process smoother and often more fair for the property owner and tenants.

Eminent domain regulations spell-out how fair market value is determined for the properties and what relocation benefits are available to the tenants.

Even with regulations in place, there can still be significant differences in the interpretation of these rules. Typically, these obstacles involve the disparity in property values and relocation costs.  However, eminent domain regulations are in place to help all parties involved to reach bilateral goals resulting in a quicker and fairer outcome.

Martyn Daniel has helped hundreds of businesses successfully relocate; often to more prosperous locations.  Martyn offers one-on-one consulting services, group workshops and online seminars for clients who need the relevant facts to make an educated decision. 

To schedule a free 15-minute no obligation call with Martyn, please click here for an appointment https://my.timedriver.com/F8VSS .

Eminent Domain Condemnation

What Property and Business Owners Need to Know About Eminent Domain or Condemnation

Property Owners:

When a public agency is taking your property for a new right-of-way or other public use, with the use of Eminent Domain or Condemnation, you have the right to receive the fair market value for your property.

Eminent domain is the law that gives the public agency the right to take your property for public use.

Condemnation is the action taken by the public agency to force you to sell your property by taking you to court where issues such as property value will be determined.

A real property appraiser will evaluate the fair market value.  The government agency condemning your property will hire an appraiser to help them determine the fair market value, which will be the basis of their offer to purchase your property. 

The property owner can also hire their own appraiser to do the same.

Any differences (which are common) between the two appraisers’ evaluations of fair market value can be negotiated between the two parties, mediated, or taken to court.

Business Owners:

Business owners located on property being taken by use of Eminent Domain, have the right to relocation benefits, if the condemning public agency is using federal funds in the project, or they have elected to pay relocation benefits.

Usually relocation benefits follow the relocation guidelines of the Federal Highway Administration (FHWA), Federal Transit Authority (FTA) or the Federal Aviation Administration (FAA).  The relocation guidelines are very similar among the three federal agencies. 

Often, your state or local public agency has adopted one of the Federal Agency guidelines to use on their projects.

The public agency will provide a relocation agent to work with you on determining your eligible relocation benefits.

As part of your relocation benefits, you have the right to hire a professional to help you plan your relocation.

Martyn Daniel has helped hundreds of businesses successfully relocate while following eminent domain relocation guidelines, with the use of his consulting services, coaching services, and group workshops, to provide each business with the knowledge to make educated decisions.

Eminent Domain Step-by-Step Process

Eminent Domain

The Step-by-Step Process

This is a brief and typical step-by-step eminent domain process for a commercial property with business tenants:

Acquisition

  1. The public agency determines the properties they need for their project.  This may be the entire property, known as a full take or they may need only a portion of the property, known as a partial take.
  2. The property owner is contacted by the agency to let them know of the agency’s intent to purchase the property.
  3. The agency contacts the property owner to schedule a time for a walk-through of the property with the agency’s appraiser.
  4. The agency relocation agent contacts the tenants that occupy the property to gather business information and describe the relocation benefits.
  5. The agency appraiser and relocation agent walk the property to gather information to formulate the value and to differentiate between real property and personal property.
  6. The agency makes an offer to the property owner based on their appraisal and the agency’s determination of the property’s fair market value.
  7. The property owner either accepts the agency’s offer or begins negotiations by providing a counteroffer with their reasoning for a different value.
  8. The agency reviews property owner’s counteroffer.
  9. If a settlement on the property is not reached, mediation is scheduled and the agency files condemnation.
  10. Early possession and use of the property is requested by the agency.
  11. When possession and use is granted, the agency releases funds to the property owner based on the agency’s original offer.
  12. A court date is set to hear the condemnation case.
  13. If mediation does not settle the case, the agency makes a final offer 30 days before trial.  Legal fees are awarded to the property owner if the court settlement is 10% over the agency’s final 30 day offer.
  14. The court determines the fair market value of the property.
  15. The agency submits any increased amounts to the court for the property owner.
  16. The property title is transferred from the property owner to the public agency.

 

Relocation

  1. Relocation eligibility begins at the time of the offer to the property owner.  Shortly after the offer is made to the property owner, the tenants are notified of their relocation eligibility and given a date when they must vacate.
  2. The agency’s relocation agent acquires moving bids for each tenant.
  3. Each tenant finds their new location.
  4. The tenants relocate to their new location.
  5. The agency pays costs they determine are eligible to the business.

 These are the main steps of the eminent domain process.  Each of them can have many important parts to them that will have an influence on the success of your property sale or business relocation.

 Martyn would be happy to answers your questions with a one-on-one conversation, email, or with one of his Eminent Domain Workshops.

Right of Way

 

What You Need to Know about Right-of-Way

Right of way is real estate owned by the government.  When the government needs your property for a new or expanding project, their right of way will adjust to accommodate their project by taking your property.  The government has the right to purchase your property with the use of eminent domain to acquire their needed right of way.

 The engineers designing the government project determine the right of way needed. As a property owner, you should be invited to offer your input on the design concepts at local public meetings.  The intentions of these meetings are to take in community questions and comments for design considerations, as well as, fulfilling a requirement for preparing the environmental impact statement, which is a necessary part of the eminent domain process.  However, when asking participants in my recent eminent domain workshop on their experience with these meetings, they all replied that they attended every meeting offered, and none of their input was incorporated into the design.  Nonetheless, you will want to attend these public meetings to at least become better informed about the project and how the new right of way will affect you or your property.