Category Archives: business relocation

TriMet – Light Rail – Oregon Business Relocation Benefits & Compensation in Eminent Domain

Abbreviated Eminent Domain Business Relocation Regulations – State of Oregon and Trimet

For an owner planning a business relocation in eminent domain, you will need to have a good understanding of the applicable relocation regulations and compensation for your business relocation.

An abbreviated list of Oregon and Trimet’s relocation benefits for relocation compensation is attached below.  This list can be used as a cheat sheet for your relocation planning.  This will help you understand what you are entitled to for relocation cost reimbursements, or compensation, while planning the relocation of your business that is being displaced by a public project and where the relocation regulations are based on the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.  This is also known as the Uniform Relocation Act, the Uniform Act, or more simply the URA.

Oregon and Trimet’s relocation regulations are based on the Uniform Relocation Act.

How to Begin Planning Your Business Relocation in Eminent Domain

The guide above will help you get started with planning your business relocation in eminent domain and it includes a list of my recommended best practices for the relocation process. Please follow this link to How to Begin Planning Your Oregon Business Relocation in Eminent Domain.

Eminent Domain and Business Relocation Questions and Answers

If you have questions, feel free to contact me for answers while planning your relocation.

You can contact me at 425-398-5708 or . There’s no obligation for your contact, it will simply be a good productive conversation. Business owners and their representatives, attorneys, appraisers, and public agency representatives are all welcome to call.

Below are links to Oregon’s eminent domain and relocation laws and policies along with links to the Federal Uniform Act.  These links will provide you with a full description and eligibility requirements for relocation benefits and payments when eminent domain is used for the acquisition of private property and relocation of the occupants.

EMINENT DOMAIN; PUBLIC ACQUISITION OF PROPERTY – Oregon

Chapter 35 — Eminent Domain; Public Acquisition of Property

Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970

United States Code Title 42 USC Chapter 61

Code of Federal Regulations Title 49 CFR Part 24

Oregon and Trimet Eminent Domain Business Relocation Benefits and Compensation Regulations – Abbreviated

Oregon and Trimet Eminent Domain Business Relocation Regulations – Abbreviated

Colorado Business Relocation Benefits & Compensation Regulations in Eminent Domain

Abbreviated Eminent Domain Business Relocation Regulations – State of Colorado

For an owner planning a business relocation in eminent domain, you will need to have a good understanding of the applicable relocation regulations and compensation for your business relocation.

An abbreviated list of Colorado’s relocation benefits for relocation compensation is attached below.  This list can be used as a cheat sheet for your relocation planning.  This will help you understand what you are entitled to for relocation cost reimbursements, or compensation, while planning the relocation of your business that is being displaced by a public project and where the relocation regulations are based on the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.  This is also known as the Uniform Relocation Act, the Uniform Act, or more simply the URA.

Colorado’s relocation regulations are based on the federal Uniform Relocation Act.  However, the state has enhanced the Reestablishment limited category to $50,000.  The Uniform Relocation Act has a maximum of $25,000 for this one category.  To comply with the Uniform Relocation Act regulations, a public agency cannot diminish any of the benefits within the Act, however, it is allowed to enhance the benefits.

Planning Your Business Relocation in Eminent Domain

For your use, I have provided a guide to help you get started with planning your business relocation in eminent domain and includes a list of my recommended best practices for the relocation process. Please follow this link to How to Begin Planning Your Business Relocation in Eminent Domain.

Questions and Answers on Eminent Domain and Business Relocations

If you have questions, feel free to contact me for answers while planning your relocation.

You can contact me at 425-398-5708 or . There’s no obligation for your contact, it will simply be a good productive conversation.

Business owners and their representatives, attorneys, appraisers, and public agency representatives are all welcome to call.

Below are links to Colorado’s eminent domain and relocation laws and policies along with links to the Federal Uniform Act.  These links will provide you with a full description and eligibility requirements for relocation benefits and payments when eminent domain is used for the acquisition of private property and relocation of the occupants.

Colorado Business Relocation Benefits and Compensation Regulations in Eminent Domain, Abbreviated

Colorado Business Relocation Benefits and Compensation in Eminent Domain, Abbreviated

References:

Colorado Relocation Assistance and Real Property Acquisition Policies

Colorado Revised Code CRS 24-56-101

Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970

United States Code Title 42 USC Chapter 61

Code of Federal Regulations Title 49 CFR Part 24

Federal Uniform Relocation Act – Business Relocation Benefits

A business owner should know the summary below for planning their relocation. It’s an abbreviated version of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA), also referred to as the Uniform Act. This is for your convenience as a quick reference while planning your business relocation and understanding your benefits and compensation of relocation costs, or otherwise working with the Uniform Act. Many of the relocation benefits have requirements and/or conditions for the business to qualify or be eligible for the benefit and its compensation.

If you need assistance with getting started on planning your business relocation in eminent domain, please see my post How to Begin Planning Your Business Relocation in Eminent Domain .

Also, please feel free to contact me with eminent domain business relocation questions at 425-398-5708 or

The full version of the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) can be viewed at Uniform Relocation Act. 49 CFR Part 24.

Indiana Eminent Domain Relocation Benefits & Compensation


Eminent Domain – Indiana

Indiana Includes Relocation Benefits in Its Eminent Domain and Condemnation Laws

In Indiana, relocation benefits in eminent domain follow the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.  This is also known as the Uniform Relocation Act, the Uniform Act, or more simply the URA.  These regulations are followed when the State or any other public agency uses eminent domain to purchase new right-of-way for a public project and for the relocation of those occupying the property.  These regulations must be followed when state or federal funds are included in the project. Reference: Indiana Code Title 32 Article 24 (IC 32-24).

About The Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA)

The URA describes the types of costs that are eligible for reimbursement, known as relocation benefits, which are available to those being displaced while relocating from real property being purchased or those otherwise impacted by the new right-of-way for the public project. The URA is required to be followed on projects that include federal funding.  It’s listed relocation benefits are minimum requirements where a state or local agency can enhance the level of benefits, but not reduce them.  Non-federally funded projects may not be required to follow the URA, but many states, as Indiana, choose these guidelines or some version of them for their state and local agencies to follow, while others do not. 

You can find the URA described in full within the United States Code (Title 42 USC Chapter 61) and the Code of Federal Regulations (Tile 49 CFR Part 24). However, reading through the URA regulations can be a bit daunting, so I’ve prepared a brief summary of the URA business relocation benefits to help you. The summary is attached below. Please understand that my summary of listed benefits is abbreviated for your convenience as a quick reference. Many of the relocation benefits have requirements, and/or conditions for the business to qualify or be eligible for the benefit.

Relocation Assistance Advisory Services

The displacing public agency will provide what is called Relocation Assistance Advisory Services to each displaced person. Many property owners and business owners choose to self-plan and perform their relocation using the recommendations provided by the condemning public agency’s designated acquisition agent and relocation agent.  This may be a desirable approach for you if you are not too concerned with the amount of money you will receive for your property acquisition or for your business relocation.  Also, if your property or business is uncomplicated, at times, simple issues only need simple solutions. This method is focused more on simplicity and works well for small businesses such as an insurance or real estate office having only a few employees. If your business is more complex, you may need a more in-depth analysis of your relocation needs and reimbursable relocation benefits. For a more complex business relocation, you may consider assistance from an eminent domain relocation consultant.

Eminent Domain and Relocation Consultant

Business Relocation:

An eminent domain relocation consultant, referred to as a move planner within the URA,  can help you gain an understanding of the relocation issues and how to begin with putting your best foot forward when facing an eminent domain relocation and communicating with the condemning public agency.  Once engaged, the consultant’s fees are generally covered by the relocation benefits within the Uniform Act. The consultant should be skilled with: educating you on how relocation benefits within the URA will help you, and where they will not; they should quickly grasp your business situation and its operations; and be fully versed on construction related activities necessary for relocating your business.  These and other skills are necessary so that the consultant can fully inform you, and help you with your critical decision making on your relocation matters, while allowing you to focus more on your business operations.

To find such a consultant, I suggest an internet search of: Eminent Domain Relocation Benefits, Indiana. However, your search will show several eminent domain attorneys listed who talk about relocation benefits. When an attorney is part of the relocation team, their work is usually at a higher legal level and is hopefully based on the relocation consultant’s work. Usually the two will work together on your situation. If your internet search is not successful for you, feel free to call me to discuss your business relocation.

Eminent Domain and Real Property Acquisition:

Eminent Domain Attorney:

If you are a property owner facing eminent domain and potential condemnation, I encourage you to talk with an attorney who regularly practices in eminent domain in your state.  You can find such an attorney by searching the internet for: Eminent Domain Attorney, Indiana.  If that’s not a successful search for you, feel free to call me for some suggestions on who to contact. We regularly work with eminent domain attorneys around the country.

How to Begin Planning Your Business Relocation in Eminent Domain

Eminent domain and business relocations can be rewarding to the business owner by bringing new opportunities to the business with the use of relocation benefits or compensation provided by the public project and its displacing public agency. Unfortunately, too many businesses not only miss key and multiple opportunities, but some even fail to survive, as reported in a federal study in 2005. In my experience, the failures occur because the relocation process and relocation regulations must be understood and closely followed by the business and condemning public agency for the business to receive proper reimbursements of relocation expenses, and those regulations are frequently improperly followed.  Several factors will influence the level of success a business experiences with relocating while following the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA), these include:

Factors Affecting the Level of Success for Business Relocations in Eminent Domain

Several key factors will influence the level of success a business experiences with relocating while following the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) and the State Relocation Regulations. A few of those include:

  • The particular circumstances of the real property being condemned
  • The circumstances of the business type being displaced
  • The condemning public agency’s approach to relocation
  • The ability to soften or overcome those factors listed above
  • The business owner’s approach to relocating their business.

For this discussion, I’ll focus on the business’s most controllable part of the process, the business owner and their approach to relocating while following the URA or state regulations.

Best Practices for Eminent Domain Business Relocation Planning

For the best relocation outcome, the business owner will want to use the proper approach to the relocation process.  There is a cause and effect science to the relocation process, which we want to control to create the best results. It starts with the business owner’s approach to the relocation. Below is a list of best practices that I recommend while advising business owners through their relocations in eminent domain.

  1. Work with the displacing public agency as much as reasonably possible.  Take advantage of the services they offer you.
  2. Educate yourself on your relocation benefits (see my Indiana Eminent Domain Relocation Compensation Regulations cheat sheet below), determine how best to use them for your situation, know how to qualify for them, and how to not lose them.
  3. Avoid these common mistakes listed below and my Top-10 business relocation mistakes when relocating within eminent domain:
    1. Denying that your business can be relocated.
    2. Denying that a certain item or items you own cannot be relocated.
    3. Not gaining ownership or control of fixtures used in your business
    4. Complaining about the public agency, project, or circumstances that interfere with properly planning your business relocation for its best outcome.
    5. Assuming that you can relocate using normal business best practices and expect to receive proper relocation reimbursements.  You must follow the details of the Uniform Act, no matter how seemingly nonsensical they appear.
  4. Start planning early, start before the displacing public agency starts for you (read more on preplanning your eminent domain relocation). Continue your preplanning into relocation planning for developing an actual relocation plan report. You can use my 11-Step Business Relocation Planning as a guide for you. Start your planning with:
    1. Updating your lease to reflect any improvements you have made to the real property and your right to remove your improvements and trade fixtures.
    2. You will want a current inventory of equipment and other personal property that is owned or controlled by your business. If you are using landlord owned fixtures in your business, this is a good time to consider negotiating a purchase of those items to give you the right to remove them and the right to relocation compensation for those items.
  1. Begin searching for a replacement property as soon as you feel or know that your business will be displaced. However, don’t incur costs or move until you have received a Relocation Benefits Eligibility Letter from the displacing public agency.
  2. Dedicate the time necessary for you and/or key employees to organize, plan, and perform the relocation tasks necessary for the duration of the relocation process, while not sacrificing the necessary time for ongoing business operations.
  3. File relocation claims with the displacing public agency as you incur an obligation to the costs.  File claims early and often.
  4. Relocation claims should be well described and supported.  Don’t dump unorganized costs onto the public agency’s relocation agent and expect them to arrive at the best reimbursement for you. No shoe box relocation claim submittals.
  5. Request any public agency claim denials for relocation benefits to be in writing.  Verbal denials from the public agency’s relocation agent are a frequent cause of misinformation and misunderstanding of benefits causing an unnecessary loss of eligible relocation compensation.
  6. If your business is more complicated than a small insurance or real estate office, or, you feel that you are not being properly treated by the displacing public agency, consider talking with an eminent domain relocation consultant.

This summary of best practices will hopefully get you started on the right foot with your business relocation.  Business relocation planning within eminent domain is one of my favorite services I provide and my favorite topic for conversation.  Please feel free to call me to discuss your situation.

Questions and Answers on Eminent Domain and Business Relocations

If you have questions, feel free to contact me for answers while planning your relocation, which may include but not limited to:

  • What do you do next, starting from the point where you are in your relocation process?
  • How do you apply the best practices to your specific business relocation planning?
  • What are your eligible relocation benefits and compensation?
  • How and when do you become eligible for relocation benefits and compensation?
  • How do you prevent a loss of your relocation benefits and compensation?
  • How can you get out of a pickle in your current relocation situation?
  • What do I need to know about the Uniform Relocation Act, relocation advisory services, relocation assistance, and relocation planning?
  • When and why would I want an eminent domain relocation consultant for planning my move? Also, see FAQ of Martyn Daniel.

You can contact me at 425-398-5708 or . There’s no obligation for your contact, it will simply be a good productive conversation. Business owners and their representatives, attorneys, appraisers, and public agency representatives are all welcome to call.

References:

Indiana Department of Transportation (INDOT)

Indiana Code IC 32-24

Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970

United States Code Title 42 USC Chapter 61

Code of Federal Regulations Title 49 CFR Part 24

Indiana Projects

Below is a partial list and links to projects where the Indiana State Department of Transportation (INDOT) will likely be purchasing private property for a project’s new right-of-way under eminent domain and making business relocation payments for business displacements caused by the projects while following the federal Uniform Relocation and Acquisition Act (URA).

I-69 section 6 Project

Mid-States Corridor

If you are aware of other projects or familiar with current events on the above projects, please let us know. We would be pleased to update and share information.

Indiana Eminent Domain Relocation Benefits and Compensation Regulations, Abbreviated

State of Indiana
Indiana Eminent Domain Relocation Compensation Regulations, Abbreviated

ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Palm Springs, CA 2019

You know, every chance that I get, I love to spread the word about the potential benefits for a business going through a complicated relocation. Many folks think that a business relocation is a road to potential ruin and failure, but I’m here to tell you that it doesn’t have to be that way. I’m excited to announce that I will be speaking about my absolute favorite topic of Complicated Relocation Issues, and another topic about Navigating Cultural Conflicts in Mass Relocations.

This will be at the ALI-CLE Eminent Domain and Land Valuation Litigation conference Thursday-Saturday, January 24-26, 2019, in Palm Springs, California.

You may or may not be aware that businesses relocating for public projects receive relocation benefits, which are described in the Federal Uniform Relocation and Acquisition Act (URA). But even with those benefits, many businesses can suffer from huge financial losses, or possibly even failure.

An older Federal Highway Administration study found that business failure rates on multiple projects sampled were between 8% and 25%. Another project showed that 60% of businesses failed. And in another, failure rates were as high as 80%. That’s right, 80% of the relocated businesses failed!

It does not have to be this way. I believe that business failures should be few and far between on these projects. In my experience with over several hundred business relocations, I’ve found that a 99% survival rate can be achieved, with a majority of relocated businesses actually improving their situations and benefiting from the move.

This starts with the proper planning of the relocation and finding all of the opportunities for the business that could come from this move. Usually, those opportunities aren’t immediately recognized by a business and you will need a trained and experienced eye, along with key planning, to find them.

I’ve developed a system that focuses on 11 key steps necessary for properly planning a business relocation. These steps provide what’s necessary to meet the requirements described by the uniform act for the business to receive proper relocation cost reimbursements.

Whether I am working for a business or a public agency, I always follow this system to achieve the best possible results for everyone involved in the project.

If you are an eminent domain attorney, an appraiser, right-of-way professional, or even a displaced business, I invite you to come to the conference. There, I will explain my 11-step system to you in more detail so you can be a part of a needed solution to the business relocation failures.

I hope you will join me in Palm Springs. I look forward to seeing you there!

11-Step Business Relocation Plan – Eminent Domain

Many businesses think that a business relocation is a road to potential ruin and failure, but I’m here to tell you that it doesn’t have to be that way.

You may or may not be aware that businesses relocating for public projects receive relocation benefits, which as described in the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA), also referred to as the Uniform Act. But even with those benefits, many businesses can suffer from huge financial losses, or possibly even failure. An older federal highway study found that business failure rates on multiple projects samples were as high as 16%. another study showed that 60% of businesses failed. And in one sample failure rates were as high as 80%. That’s right, 80% of the relocated businesses failed!

It does not have to be this way. I believe that business failures should be few and far between on these projects. In my experience with over 700 business relocations, I’ve found that a 99% survival rate can be achieved, with a majority of relocated businesses actually improving their situations and benefiting from the move. This starts with the proper planning of the relocation and finding all of the opportunities for the business that could come from this move. Usually, those opportunities aren’t immediately recognized by a business and you will need a trained and experienced eye, along with key planning, to find them. I’ve developed a system that focuses on 11 key steps necessary for properly planning a business relocation. These steps provide what’s necessary to meet the requirements described by the uniform act for the business to receive proper relocation cost reimbursements. Whether I am working for a business or a public agency, I always follow this system to achieve the best possible results for everyone involved in the project.

If you are an eminent domain attorney, an appraiser, right-of-way professional, or even a displaced business, I invite you to follow this system. Feel free to contact me if you need further explanation of my 11-step system to you in more detail so you can be a part of a needed solution of business relocation failures. I hope you will have a successful experience with the relocation you are preparing.

6 Benefits of Preplanning your Eminent Domain Relocation

6 Benefits of Preplanning your Eminent Domain Relocation

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

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

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

Benefits of Preplanning an Eminent Domain Relocation

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

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

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

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

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

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

Eminent Domain Acquisition Payments, Relocation Payments, and Taxes

For certain situations, the case of  Karen Y. Nielsen v. Commissioner of Internal Revenue provides some answers for understanding 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 and relocate the occupants.

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 clear and simple. However, the key is to separate real property acquisition payments from relocation payments. When possible, it will be helpful to work with the public agency making the payments to clarify the type of payment being made.  However, it may not be clear between the two types of payments, particularly when there was a settlement in mediation or court.

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.  The typical test for fixtures is the three-part test known as the Teaff method. 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, or permanent) The 3-part Teaff test may be needed to determine this fixture classification.

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.  See my abbreviated version of the URA relocation benefits for a full but abbreviated list of eligible reimbursable relocation costs. (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 the methods for separating personal and real property in more detail with you as a displaced person, your tax advisor, legal counsel, or your displacing public agency.

If you are searching for guidance on the proper handling of these tax matters, please feel free to contact me.  I’ll put you in touch with tax advisors who have worked in these situations and who I’ve discussed these matters with.

Eminent Domain and Severance Damages

Eminent domain is the power of the government to take private property for public use.  The government is obligated to pay the property owner appropriate monetary compensation for their property, in a process called condemnation.  When invoked, eminent domain often takes entire properties, but there are some occasions in which only part of the property is taken (condemned).  For many projects, eminent domain is used only to condemn parts of properties.

Reasons include:

New road construction Road widening Parks Utilities. In this case, the condemning authority must pay not only the value of the part of the property that is taken, but must also pay for the impact on the rest of the property caused by the loss of the portion.  This is known as severance damages.

Effects of Partial Loss on Property Values. There are many ways in which the loss of a portion of property can affect the value of the remaining property.

Some of these losses are:

Loss of frontage road or easement, Nonconformity with zoning ordinances after loss of available parking space, Loss of architectural and natural beauty.  When a road widening or improvement project requires the condemnation of the front of a residential property, there are many ways in which the remaining property may be decreased in value.  Setback from the road (which is likely to be busier following widening) is reduced, which will affect the resale value of the house.  Old-growth trees may have to be removed, along with hedges or fences that blocked the road from the front of the house.

Likewise, the value of a business may also suffer from a partial taking.  It may lose parking spaces, aesthetic arbors, benches, outside dining areas, even part of the building as a result of the partial taking.  All of these may impact the viability of a business, and should be included as part of severance damages.

Partial Loss and Possible Non-Viability –  If the property is not considered viable for its current use following the condemnation, then a cure must be part of the eminent domain settlement.  Examples of non-viable properties are businesses with too few parking spaces, or structures where part of the building must be torn down as part of the condemnation.  In these cases, the condemning authority and the property owner can both present cures to make the property viable again after the condemnation, such as rebuilding or modifying a house, rearranging parking spaces, creating a patio area on top of a restaurant to compensate for one lost out front, etc.

In some cases, once the partial taking is affected, the remaining property may violate zoning ordinances.  For example, a house may no longer have a legal setback from the widened road.  This will depreciate the remaining property further, increasing compensation, and in some cases it may mean that the condemning authority must compensate the property owner for the full property.  In other cases, the zoning authority may grant a variance for that property which may restore some of the value.