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Questions and Answers - Participation in State Required Relocation Payments

Office of Real Estate Services
Questions and Answers - Relocation Payments, January 2001

Question
1. The Right-of-Way and Real Estate Regulation, 23 CFR 710.203(12/99) States that Federal funds may be used for any project related costs for acquisition which are required under State laws. A separate reference is made to payments associated with displacement from acquired property under the Uniform Act Regulation at 49 CFR Part 24.

Does this mean that Federal funds can participate only in payments required under State law for acquisition, but not for relocation assistance? If so, why? Some States have laws that provide for relocation payments exceeding the benefits provided under the Uniform Act as well as laws that provide additional payments in acquisition. Is there any way that the States can streamline their accounting work efforts and be reimbursed for both acquisition and relocation costs required under State laws?

Answer:
Yes, the Right-of-Way and Real Estate regulation allows participation in relocation payments required by State laws. The States accounting efforts can be streamlined. The issue in 23 CFR 710.203 is fiscal and related to participation in costs incurred as a result of project activities. It includes the costs of the many activities necessary to provide the real property necessary for a project. This fiscal participation is based on a broader concept than requirements of the Uniform Act. The programmatic requirements of the Uniform Act are for the provision of certain levels of payment to individuals affected by acquisition and relocation activities, but do not address the source of these payments. Every State must provide assurances of compliance with the Uniform Act. However, some States also have State laws providing for benefits in addition to those required under the Uniform Act.

Participation in the payment of both acquisition and relocation costs does not change the level of payments being made to property owners and displaced persons. As in the past, these persons will still receive the benefits available under the Uniform Act plus any additional benefits provided by State law. The sole change is in the billing for a parcel. Instead of billing only the required costs under 49 CFR Part 24 to federal-aid funds and the State mandated additional costs to State only funds, all costs can be billed to federal-aid. It is a State=s decision to use federal-aid in this manner. A change in billing activities does not increase the amount or availability of Federal funds. It only affects how a State elects to use the funds available from all its sources.

For these reasons, we consider the issue of FHWA reimbursement for States legally mandated costs for acquisition and relocation to be a Title 23 issue and not a Uniform Act issue. If a State must pay relocation benefits exceeding the limits in the Uniform Act, the cost is considered a legitimate project expense under Title 23 and is eligible for FHWA reimbursement. This position is in keeping with the TEA 21 provisions for increased participation in the costs incurred by State Transportation Departments in advancing highway projects.

Question
2. Are there any studies of the adequacy of relocation benefits under the Uniform Act that might result in a recommendation to increase benefit levels?

Answer:
The Office of Real Estate Services currently is conducting a national research study of the adequacy of business relocation payments and services. This may lead to recommendations for an increase in the benefits provided under the Uniform Act.

The Uniform Act dates from 1970 and even though one major update was made in 1987, the relocation cost limits do not necessarily bear any relationship to the costs actually experienced by displaced businesses and others who relocate. Because of this, several State legislatures have either updated their relocation laws or enacted new laws to enhance the benefits provided to businesses. Other States are considering similar action.

Updated: 09/05/2014
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