Condemnation/Relocation Benefits of Tenants

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Summer 2010 In Brief
by Angela Samec

When a unit of government (i.e. a state, county or city) takes real property, certain rules must be followed with respect to occupants of that real property.  Minnesota has adopted the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 as controlling law with regards to relocation rights.  See Minnesota Statutes Section 117.52.

Displaced tenants have a variety of rights, including the right to: (i) a general information notice regarding the displacement.; (ii) advisory services as to the displaced tenant’s rights; (iii)advisory services as to relocation opportunities; (iv) notices to vacate cannot require less than ninety (90) days to vacate; (v) claim preparation assistance; (vi) expeditious payments; and (vii) have appeals heard by non-related/disinterested party.

Moving Cost Reimbursement:
Business owners or tenants may be paid on the basis of actual reasonable moving costs and related expenses or, under certain circumstances, may receive a fixed payment.  Actual reasonable moving expenses may be paid when the move is performed by a professional mover or if you move yourself.  Related expenses such as personal property losses, reestablishment costs, and expenses in finding a replacement site, also may be reimbursable.  Or you may be eligible to receive a fixed payment from $1,000 to $20,000.  This payment is based on the annual net earnings of the business. To qualify for a fixed payment, certain conditions must be met.  To assure eligibility and prompt payment for moving expenses, you must provide the acquiring agency with advance written notice of the approximate date of the planned move and an inventory of the items to be moved.  Failure to do this could jeopardize your claim.  The acquiring agency has the right to inspect the personal property at the displacement and replacement sites and to monitor the move.

Direct Loss of Tangible Physical Property:
Displaced businesses may be eligible for a payment for the actual direct loss of tangible personal property that is incurred as a result of the move or discontinuance of the operation.  This payment will be based on the value of the item for continued use at the displacement site less the proceeds from its sale or the estimated cost of moving the item, whichever is the lesser.

Reestablishment Expenses:
A small business may be eligible for payment not to exceed $10,000 for expenses actually incurred in relocating and reestablishing the business at a replacement site.  To qualify, the business must not have more than five hundred (500) employees working at the site being affected who will be displaced by a program or project.  Reestablishment expenses are varied and include items that the acquiring agency considers essential for the reestablishment of the business.

Searching Expenses for Replacement Property:
Displaced businesses are entitled to reimbursement for actual reasonable expenses incurred in searching for replacement property, not to exceed $2,500, as the acquiring agency determines to be reasonable.  Expenses may include transportation, meals, and lodging when away from home; the reasonable value of the time spent during the search; fees paid to real estate agents, brokers or consultants; and other expenses determined to be reasonable and necessary by the acquiring agency.

Fixed Payment:
Displaced businesses may be eligible for a fixed payment in lieu of actual moving and related expenses, and actual reestablishment expenses. For a business to be eligible for a fixed payment, the acquiring agency must determine the following: (i) the business owns or rents personal property which must be moved in connection with such displacement and for which an expense would be incurred in such move and, the business vacates or relocates from its displacement site; (ii) the business cannot be relocated without a substantial loss of its existing patronage; (ii) it is not part of a business having more than three (3) other establishments engaged in the same or similar activity not being acquired; and (iv) the business must have contributed materially to the income of the displaced person during the two (2) taxable years prior to displacement.

Outdoor Advertising Devices:
Owners of outdoor advertising devices (personal property)being displaced are only eligible for the lesser of: (i) the depreciated reproduction cost of the sign (as determined by the acquiring agency) less the proceeds from its sale (or salvage value) or (ii) the estimated cost of moving the sign, but with no allowance for storage.

Ineligible Expenses:
A displaced person is not entitled to payment for the following: (i) the cost of moving any structure or other real property improvement in which the displaced person reserved ownership.; (ii) interest in a loan to cover moving expenses; (iii)loss of goodwill; (iv) loss of profits; (v) loss of trained employees; (vi)any additional operating expenses of a business incurred because of operating in new location; (vii) personal injury; (viii) any legal fee or other cost for preparing a claim for a relocation payment or for representing the claimant before the agency; (ix) physical changes to the real property at the replacement location of a business; (x) costs for storage of personal property on real property already owned or leased by the displaced person; and (xi) refundable security and utility deposits.

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