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Acquisition, Relocation and Displacement Requirements For Grant Administrators

2. Acquisition and Relocation - overview. Whenever Federal funding, such as CDBG, is used in a project involving the acquisition, rehabilitation or demolition of real property, a Federal law known as the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) may apply. . Overview - continued.

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Acquisition, Relocation and Displacement Requirements For Grant Administrators

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    1. 1 Acquisition, Relocation and Displacement Requirements For Grant Administrators

    2. 2 Acquisition and Relocation - overview Whenever Federal funding, such as CDBG, is used in a project involving the acquisition, rehabilitation or demolition of real property, a Federal law known as the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA) may apply. “Persons” includes individuals, families, businesses, non-profit organizations and farms. There are additional protections when a project involves demolition of housing or conversion of lower-income housing.“Persons” includes individuals, families, businesses, non-profit organizations and farms. There are additional protections when a project involves demolition of housing or conversion of lower-income housing.

    3. Overview - continued The purpose of the URA is to provide uniform, fair and equitable treatment for persons whose real property is acquired or who are displaced as a result of a CDBG-funded program or activity. 3

    4. 4 URA Statutory and Regulatory Requirements Establishes minimum standards for federally funded programs and projects that require acquisition, rehabilitation or demolition of real property and displace persons from their homes, businesses or farms URA provisions apply government-wide and impact programs administered by 18 Federal agencies, including HUD Government-wide regulations implementing URA are at 49 CFR Part 24 It is important to be aware of the URA requirements because they may arise unexpectedly in a particular project and can considerably impact the economics and financial viability of the project.It is important to be aware of the URA requirements because they may arise unexpectedly in a particular project and can considerably impact the economics and financial viability of the project.

    5. 5 URA Statutory and Regulatory Requirements - continued URA Final Rule published January 4, 2005 made significant changes Expanded business advisory services and relocation payments Adopted HUD income limits for determining low-income persons Revised replacement housing payments Prohibits asking persons to “waive” their payments Revised DSS standards in line with local codes HUD Handbook 1378 is still being updated to reflect the changes made by the Final Rule. According to CPD Notice 05-02, recipients must rely on the text of the Final Rule and should contact their state program or HUD Regional Relocation Specialist for assistance if necessary. In addition, check www.hud.gov/relocation or www.hud.gov/offices/adm/hudclips to determine if changes to the Handbook have been issued. The Handbook appendices are a useful tool that contains sample letters, flowcharts and other practical information.HUD Handbook 1378 is still being updated to reflect the changes made by the Final Rule. According to CPD Notice 05-02, recipients must rely on the text of the Final Rule and should contact their state program or HUD Regional Relocation Specialist for assistance if necessary. In addition, check www.hud.gov/relocation or www.hud.gov/offices/adm/hudclips to determine if changes to the Handbook have been issued. The Handbook appendices are a useful tool that contains sample letters, flowcharts and other practical information.

    6. 6 URA/HUD Regulatory Requirements Regulations implementing the URA requirements with respect to the state CDBG program are at 24 CFR 570.606 Clarifies the responsibilities of the State and of the local CDBG recipient Provides that local recipient may provide “optional relocation assistance” if the state permits it and there is a written policy Requires that there be an appeals procedure in place The state must ensure compliance and require local recipients to certify they will comply with all requirements URA requirements can clearly add considerable expense to the project and so must be taken into account early in the planning process. It is essential to understand all of the steps that must be followed in acquiring property. Effective planning is key. Also, remember that some states may have relocation and displacement requirements in addition to the Federal requirements covered here.URA requirements can clearly add considerable expense to the project and so must be taken into account early in the planning process. It is essential to understand all of the steps that must be followed in acquiring property. Effective planning is key. Also, remember that some states may have relocation and displacement requirements in addition to the Federal requirements covered here.

    7. 7 Section 104(d) Statutory Requirements Section 104(d) of the Housing and Community Development Act of 1974 Applies to demolition of any housing or conversion of low-income housing to non-housing purposes or increased rents (over the FMR) Provides relocation assistance to low-income tenants (non-low-income persons are protected by the URA) Requires one-for-one replacement of low-income housing

    8. 8 Section 104(d) Regulatory Requirements Regulations at 24 CFR Part 42 require: Residential anti-displacement and relocation assistance plan Relocation assistance for displaced low-income tenants One-for-one replacement of low-income units (when replacement is not required, submission to HUD) Public disclosure before committing funds to demolition/conversion

    9. 9 URA Acquisition Requirements: Voluntary vs. Involuntary What makes a transaction “voluntary”? For agencies with eminent domain authority: If no specific site is needed and any of several properties could be acquired for project purposes The property is not part of an intended, planned or designated project area where other properties will be acquired within specific time limits, and NOW LET’S TALK ABOUT HOW AND WHEN TO APPLY THESE REQUIREMENTS IN A PROJECT WHERE ACQUISITION TAKES PLACE. The Uniform Act prescribes different treatment for the two different types of acquisition. The distinction between the two is whether or not the purchase is subject to the threat of eminent domain—the ability of the government to take the property through condemnation. Let’s talk about the two types of acquisition…NOW LET’S TALK ABOUT HOW AND WHEN TO APPLY THESE REQUIREMENTS IN A PROJECT WHERE ACQUISITION TAKES PLACE. The Uniform Act prescribes different treatment for the two different types of acquisition. The distinction between the two is whether or not the purchase is subject to the threat of eminent domain—the ability of the government to take the property through condemnation. Let’s talk about the two types of acquisition…

    10. Voluntary Transactions continued The agency informs the owner in writing of the property’s market value; and The agency also informs the owner in writing that the property will not be acquired through condemnation, if negotiations do not reach an amicable agreement Displaced tenants are provided relocation assistance

    11. 11 Voluntary vs. Involuntary Acquisition continued For agencies without eminent domain authority, acquisition is voluntary if: The agency notifies the owner in writing of the property’s market value; The agency notifies the owner prior to making an offer, that it will not acquire property if an amicable settlement cannot be reached If tenants are displaced, the tenants are provided relocation assistance (owners are not) In order for the acquisition to be termed “voluntary”, ALL of the following 4 requirements must be met: 1. There is no specific property or site that needs to be acquired. 2. The property being acquired is not a part of a designated area where all or substantially all of the property within the area is to be acquired within specific time limits. 3. The agency will inform the owner – in writing- that the agency will not acquire the property if negotiations fail to result in an amicable agreement. 4. The agency will inform the owner – in writing - of what it believes to be the market value of the property. Otherwise, a transaction is Involuntary (even if the seller is willing to sell). Willingness or cooperation of the seller does not determine “voluntary” Owners of a voluntarily acquired property are not eligible for relocation payments. Tenants cannot waive their relocation rights, and must be informed in writing of their potential eligibility for relocation assistance. In order for the acquisition to be termed “voluntary”, ALL of the following 4 requirements must be met: 1. There is no specific property or site that needs to be acquired. 2. The property being acquired is not a part of a designated area where all or substantially all of the property within the area is to be acquired within specific time limits. 3. The agency will inform the owner – in writing- that the agency will not acquire the property if negotiations fail to result in an amicable agreement. 4. The agency will inform the owner – in writing - of what it believes to be the market value of the property. Otherwise, a transaction is Involuntary (even if the seller is willing to sell). Willingness or cooperation of the seller does not determine “voluntary” Owners of a voluntarily acquired property are not eligible for relocation payments. Tenants cannot waive their relocation rights, and must be informed in writing of their potential eligibility for relocation assistance.

    12. 12 Eminent Domain The government’s ability to take property for public use with compensation to the property owner In fiscal years 2006, 2007 and 2008 the Appropriations Acts have prohibited the use of CDBG or other federal funding in conjunction with the use of eminent domain for certain economic development projects Eminent Domain is a term that figures significantly into any discussion of Acquisition and Relocation. In general, recipients cannot use CDBG funds to enter into an involuntary purchase if the purchase will benefit a private party. Property acquired through Eminent Domain must be for projects that have a public benefit. Based on the requirements of the appropriations acts, certain projects have been categorized as serving an otherwise eligible public use and are therefore eligible for Federal funding even though their development may involve property taken through Eminent Domain. These include road and transit projects, communications, etc. A state or local CDBG recipient must carefully evaluate the facts of any project proposed to use federal funding from the applicable fiscal years where exercise of Eminent Domain is involved. Eminent Domain is: [read slide]Eminent Domain is a term that figures significantly into any discussion of Acquisition and Relocation. In general, recipients cannot use CDBG funds to enter into an involuntary purchase if the purchase will benefit a private party. Property acquired through Eminent Domain must be for projects that have a public benefit. Based on the requirements of the appropriations acts, certain projects have been categorized as serving an otherwise eligible public use and are therefore eligible for Federal funding even though their development may involve property taken through Eminent Domain. These include road and transit projects, communications, etc. A state or local CDBG recipient must carefully evaluate the facts of any project proposed to use federal funding from the applicable fiscal years where exercise of Eminent Domain is involved. Eminent Domain is: [read slide]

    13. 13 Involuntary Acquisition: Required Steps Notify owner of the agency’s intentions to acquire the property and their protections under the URA Appraise the property and invite the owner to accompany the appraiser Review the appraisal Establish just compensation for the property Provide owner with written offer and summary statement for property to be acquired Note there MAY BE other state laws and this slide might be modified There are several steps in the involuntary acquisition process Note there MAY BE other state laws and this slide might be modified There are several steps in the involuntary acquisition process

    14. Required Steps continued Negotiate with owner for purchase of the property If negotiations are successful, complete the sale and reimburse property owner for related incidental expenses If negotiations are unsuccessful, consider an administrative settlement to complete the sale If negotiations are still unsuccessful, the agency may acquire the property through use of eminent domain

    15. 15 Cost Considerations of URA and Section 104(d) What is cost impact of the proposed project? Acquisition, rehabilitation and/or demolition is hard cost for property Cost of residential displacement Cost of non-residential displacement Availability of one-for-one replacement housing resources in the community Needs to be considered upfront when planning the project If the building you acquired was occupied, you may have to make relocation payments to the owners and occupants. Uniform Act relocation requirements apply to involuntary acquisition of owner-occupied properties and all tenants, both without regard to income. Low income occupants [less than 80% of the county or state non-metro median income] are covered by Section 104 (d)… which we’ll talk about a bit laterIf the building you acquired was occupied, you may have to make relocation payments to the owners and occupants. Uniform Act relocation requirements apply to involuntary acquisition of owner-occupied properties and all tenants, both without regard to income. Low income occupants [less than 80% of the county or state non-metro median income] are covered by Section 104 (d)… which we’ll talk about a bit later

    16. 16 What are the Costs of Displacement? Uniform Relocation Act (URA) Moving costs Relocation advisory services Replacement housing payments (residents) 42 months for tenants Price differential and expenses for owner Reestablishment costs (non-residential) Court costs (if using eminent domain)

    17. 17 Costs of Displacement - continued Section 104(d) Relocation advisory services Moving costs and security deposits Replacement housing payments for 60 months

    18. 18 Relocation Owners or tenants of homes or businesses who are displaced as a result of a federally-funded activity may be entitled to relocation payments as prescribed under the URA and the regulations at 49 CFR Part 24 and 24 CFR 570.606

    19. 19 Relocation - continued In some instances, a property may be acquired, but the occupant is not considered to be displaced and is therefore not eligible for relocation payments. These include the following circumstances: Voluntary acquisition (owner-occupants only) Date of occupancy begins after acquisition Temporary displacement/occupant retains occupancy rights Occupancy is unlawful

    20. 20 Who is Displaced, Who is Not Displaced? Under URA, a displaced person is one who is required to move as a direct result of federally funded acquisition, demolition or rehabilitation Under CDBG regulations, a tenant can also be “economically displaced” and eligible for relocation assistance under the URA CDBG regulations are at 24 CFR 606(a)(2)(D)CDBG regulations are at 24 CFR 606(a)(2)(D)

    21. Who is Displaced, Who is Not Displaced? Persons who are not displaced under URA: Those who move temporarily and can return Unlawful occupants Those evicted for cause (unrelated to project) Owner-occupants subject to voluntary acquisition

    22. 22 Who is Displaced, Who is Not Displaced - continued Under Section 104(d) a low-income tenant is considered displaced due to demolition or conversion of a low-income unit Qualified displaced tenants may select relocation assistance payments based on either the URA or Section 104(d)

    23. Who is Displaced, Who is Not Displaced - continued Those who are not displaced under 104(d): Those evicted for cause Those who received a “move in” notice before occupancy

    24. 24 Relocation Steps Minimum displacement policy Determine resource needs On-site survey of occupants Relocation notices General information notice Move in notice (HUD recommended) Notice of eligibility (with HUD Brochure) Notice of non-displacement (may require temporary relocation notice 90-day notice 30-day notice to move The following steps need to be taken in a relocation project: The UGLG needs to have adopted a policy to minimize displacement as a result of the project. This is a part of the Statement of Assurances signed by the UGLG as a part of the CDBG funding process. Determine the resources needed for the project: Assess the total cost of the activity before you begin Survey occupants at the project site so you have as much information as possible of their relocation needs. Determine resource needs prior to the Initiation of Negotiations Provide HUD Informational brochures “When a Public Agency Acquires Your Home” (or business) to all parties The following steps need to be taken in a relocation project: The UGLG needs to have adopted a policy to minimize displacement as a result of the project. This is a part of the Statement of Assurances signed by the UGLG as a part of the CDBG funding process. Determine the resources needed for the project: Assess the total cost of the activity before you begin Survey occupants at the project site so you have as much information as possible of their relocation needs. Determine resource needs prior to the Initiation of Negotiations Provide HUD Informational brochures “When a Public Agency Acquires Your Home” (or business) to all parties

    25. 25 Relocation Steps - continued Relocation Notices 49 CFR 24.203 (a) Rights under the process Conditions of eligibility Relocation payments Provide HUD Information Brochures owners tenants businesses Owners and tenants must be fully informed about their rights and eligibility for payments under the Uniform Act. Owners and tenants must be fully informed about their rights and eligibility for payments under the Uniform Act.

    26. 26 Relocation Steps - continued Notice of Nondisplacement 90-Day Notice After Notification of Relocation Eligibility 49 CFR 24.203 (c) 30-Day Notice Temporary relocation 30 days prior to move deadline ALWAYS send notices to tenants as soon as you know of a potential project (acquisition or rehab) involving a tenant. If occupants are not going to be displaced, they must receive a Notice of Non-Displacement. If not, and they move, they may be deemed to be displaced and eligible for relocation payments even if displacement was not going to occur. 90-day notice: No lawful occupant is required to move unless he/she has received at least 90 days written notice of the earliest day by which he/she must move Acquisition date or availability of comparable – whichever is later Not necessary for unlawful occupant 30-day notice: Notice to occupant of the specific required move date Recommended for temporary relocation -- may be longer or shorter for temp relocation depending on circumstances of displacementALWAYS send notices to tenants as soon as you know of a potential project (acquisition or rehab) involving a tenant. If occupants are not going to be displaced, they must receive a Notice of Non-Displacement. If not, and they move, they may be deemed to be displaced and eligible for relocation payments even if displacement was not going to occur. 90-day notice: No lawful occupant is required to move unless he/she has received at least 90 days written notice of the earliest day by which he/she must move Acquisition date or availability of comparable – whichever is later Not necessary for unlawful occupant 30-day notice: Notice to occupant of the specific required move date Recommended for temporary relocation -- may be longer or shorter for temp relocation depending on circumstances of displacement

    27. 27 Relocation Steps - continued Notice of Intent To Acquire (49 CFR 24.203 (d)) Establishes eligibility for relocation assistance Comparable replacement dwelling At least one must be made available Choice of three is preferable Notice of Intent to Acquire: Establishes the occupant’s eligibility for relocation assistance Deliver prior to the initiation of negotiations Comparable dwelling: An occupant cannot be required to move until at least one comparable has been identified MUST be: Decent, Safe, Sanitary Functionally equivalent to displacement unit Adequate in size to accommodate occupants In a location not less desirable than displacement location Currently available on the private market Affordable for displacee Must allow occupant sufficient time to view and purchase/rent property Relocation funds must be available to allow purchase/rental of unit Notice of Intent to Acquire: Establishes the occupant’s eligibility for relocation assistance Deliver prior to the initiation of negotiations Comparable dwelling: An occupant cannot be required to move until at least one comparable has been identified MUST be: Decent, Safe, Sanitary Functionally equivalent to displacement unit Adequate in size to accommodate occupants In a location not less desirable than displacement location Currently available on the private market Affordable for displacee Must allow occupant sufficient time to view and purchase/rent property Relocation funds must be available to allow purchase/rental of unit

    28. 28 Relocation Steps – continued Residential Relocation Determine resource needs On-site survey of residents Issue notices Provide relocation advisory services 49 CFR 24.205 (c) Provide comparable housing referrals in writing Referrals must be available Advisory Services must be provided to displacees: Determine needs and preferences for residential and nonresidential displacees – ALL persons affected by the project Identify and resolve issues prior to purchase whenever possible Provide current and continuing information regarding comparable replacement housing and non-housing properties Offer to provide transportation to view comparable sites Explain relocation payments for which owners and occupants may be eligible Information must be offered in writing, and in a format that is available and easily understandableAdvisory Services must be provided to displacees: Determine needs and preferences for residential and nonresidential displacees – ALL persons affected by the project Identify and resolve issues prior to purchase whenever possible Provide current and continuing information regarding comparable replacement housing and non-housing properties Offer to provide transportation to view comparable sites Explain relocation payments for which owners and occupants may be eligible Information must be offered in writing, and in a format that is available and easily understandable

    29. 29 Relocation Steps – continued Residential Relocation Determine replacement housing payment Determine moving cost estimates Provide transportation to inspect replacement housing options Inspect all replacement units (must occupy within one year) Determine the replacement housing payment… we’ll review that calculation in a minute All replacement housing units must be inspected and determined to be decent, safe and sanitary prior to issuing payment. Relocation payments must be claimed within 18 months of displacement (tenants) or final acquisition payment (owners) Determine the replacement housing payment… we’ll review that calculation in a minute All replacement housing units must be inspected and determined to be decent, safe and sanitary prior to issuing payment. Relocation payments must be claimed within 18 months of displacement (tenants) or final acquisition payment (owners)

    30. 30 Relocation Steps – continued Residential Relocation Determine actual moving cost payment Actual, reasonable and necessary moving expenses, or Fixed payment schedule, or Combination of both (e.g. actual cost for move of a piano, fixed payment for balance of move) Determine actual replacement housing payment Relocation claims must be filed within 18 months (by owners and tenants) Note: HUD grantees are prohibited from making lump sum relocation payments under 42 USC Section 3537 except for: moving expenses or downpayments and related costs, other payments must be made in installments (see Handbook 1378, Chapter 3, 3-7D for guidance).Note: HUD grantees are prohibited from making lump sum relocation payments under 42 USC Section 3537 except for: moving expenses or downpayments and related costs, other payments must be made in installments (see Handbook 1378, Chapter 3, 3-7D for guidance).

    31. 31 Relocation Steps – continued Business Relocation Relocation Planning: Is the business moving or going out of business? On-site survey of occupants Issue notices Provide relocation advisory services Determine business moving and related expenses [49 CFR 24.303 ] or provide fixed payment [49 CFR 24.305]

    32. Relocation Steps – continued Business Relocation Determine reestablishment payments for small businesses [49 CFR 24.304 ] Assist business to file claim Determine final relocation/reestablishment payments

    33. 33 Relocation Payments Aliens not lawfully present in the U.S. are not eligible for URA relocation payments [49 CFR 208] unless they can demonstrate an exceptional and unusual hardship to a spouse, parent or child who is a citizen or lawfully present There is no similar provision related to Section 104(d) Some miscellaneous notes on relocation payments… Some miscellaneous notes on relocation payments…

    34. Relocation Payments continued URA Relocation payments are not considered income [49 CFR 209] but may affect the rent or eligibility for a person who seeks Section 8 or public housing assistance after a cash payment is made Local government recipient may not request or suggest that the displacee waive rights under the URA

    35. 35 URA Replacement Housing Payments (owners) 180-day homeowner-occupants Owned at least 180 days prior to initiation of negotiations Purchase a replacement unit within one year Maximum: not more than $22,500 replacement housing payment Must be exceeded if necessary under Last Resort Housing Payment is difference between acquired and the lesser of replacement dwelling (or comparable) plus expenses 49 CFR 24.401 Calculating Replacement housing payments… Relocation benefits are dependent upon the number of days of lawful occupancy of the building. 180 day occupant and 90-day occupant Definition of a 180-day occupant Calculating Replacement housing payments… Relocation benefits are dependent upon the number of days of lawful occupancy of the building. 180 day occupant and 90-day occupant Definition of a 180-day occupant

    36. 36 URA Replacement Housing Payments - continued 90-day occupants 49 CFR 24.402 All occupants > 90 days (owners or tenants) Owners 90-179 days are treated like tenants Purchase or rent a replacement unit in one year Maximum: $5,250 replacement housing payment (must be exceeded under Last Resort Housing) Payment is difference between base monthly rental of the displacement dwelling and the lesser of replacement dwelling or comparable rental Can be used for downpayment assistance Must occupy dwelling within one year They must occupy the replacement dwelling within one year. This time limit can be extended if necessary because of an inability to locate suitable replacement housing. They must occupy the replacement dwelling within one year. This time limit can be extended if necessary because of an inability to locate suitable replacement housing.

    37. 37 Replacement Housing Assistance Payment (tenants) Maximum: not more than $5,250 in rental assistance Must be exceeded if necessary under Last Resort Housing Difference between base monthly rental unit rent and the lesser of replacement unit rent or comparable (plus utilities) Payment is the difference, not the whole amount, the local recipient must compensate for additional cost of the unit they are relocated to, not the entire cost of the unit. Payment is the difference, not the whole amount, the local recipient must compensate for additional cost of the unit they are relocated to, not the entire cost of the unit.

    38. 38 Replacement Housing Assistance Payment (tenants) - continued Is the displaced person low-income? X 42 months Can be used for downpayment on any form of homeownership

    39. 39 URA Replacement Housing Assistance Payment < 90-day occupant (owner or tenant) Difference between base monthly rental and the lesser of replacement unit rent or comparable (plus utilities) x 42 months Is the person low-income? X 42 if not low-income Same calculation for downpayment/purchase assistance

    40. Relocation Assistance Payment 90-day occupant Downpayment Assistance Up to $5,250 Must be used for purchase of a replacement dwelling The relocation payment may be used for downpayment assistance for purchase of a home. The relocation payment may be used for downpayment assistance for purchase of a home.

    41. 41 Section 104(d) Replacement Housing Payment (low-income tenants) Use the Part 5 definition of income to calculate Total Tenant Payment (TTP) 60 months x TTP and the difference between rent and utilities at the replacement unit (may provide a voucher, in lieu of cash payment, if available Section 104 d of the HCD Act is not part of URA but also addresses displacement and relocation, specifically with respect to HUD programs. if you eliminate a vacant occupiable unit or a occupied unit which rents or would rent at or below the FMR then you have to replace the unit. Note cannot circumvent URA or 104(d) by splitting funds or projects Section 104 d of the HCD Act is not part of URA but also addresses displacement and relocation, specifically with respect to HUD programs. if you eliminate a vacant occupiable unit or a occupied unit which rents or would rent at or below the FMR then you have to replace the unit. Note cannot circumvent URA or 104(d) by splitting funds or projects

    42. Section 104(d) Replacement Housing Payment (low-income tenants) Same calculation determines downpayment assistance, but can only be used for purchase of an interest in Cooperative Housing or a Mutual Housing Association Displaced tenant can choose to accept assistance calculated under URA instead

    43. 43 Resources HUD Real Estate Acquisition and Relocation website http://www.hud.gov/relocation Federal Highway Administration www.fhwa.dot.gov International Right of Way Association www.irwaonline.org Section 104 (d) of Housing and Community Development Act

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