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Real Estate Acquisition Guide For Local Public Agencies

Glossary

(Fixed Residential Moving Cost) Schedule This schedule is used to calculate the amount of reimbursement that displaced persons may be eligible to receive if they decide to move their own personal property. ; We (FHWA) periodically update and distribute this schedule. ; A copy can be found on our web site at: http://www.fhwa.dot.gov/real_estate/ in the section Relocation Assistance.

30-Day Notice This is a notice that may be given to a person who will be required to move a residence, business or personal property as a result of your agency's project. ; It informs the person that he or she must move the residence, business or personal property 30 days from the date of the notice. ; This notice can only be given after you give a 90-day notice.

Access Control Power of Government to restrict/control a property owner's right to create entrances and exits on a public road. ; After a roadway is designed, built, and in use, there will be instances in which someone will request permission to create a driveway or entrance onto the roadway. ; These requests require consideration of local access control regulations, potential impacts to the roadway, and safety and capacity (ability of roadway to carry the additional traffic), that a new entrance will create. ; You should consult with your SDOT and/or your local engineering staff when considering a request.

Acquisition The process of obtaining right-of-way necessary to construct or support your project.

Actual Moving Expenses The costs that are paid to disconnect, move and reinstall personal property. ; These costs are usually associated with the move of a business. ; A complete list of costs eligible for Federal reimbursement can be found in 49 CFR 24 301 and 303.

Actual Direct Loss of Tangible Personal Property Businesses and farms which move as a result of having their real estate acquired sometimes elect not to move some of their personal property. ; They may be eligible to receive a payment for this personal property. ; See 49 CFR 24.301(g)(14) for a complete explanation of how an Actual Direct Loss of Tangible Personal Property payment is calculated.

After Appraisal Part of the appraisal of a property from which only a portion of that property is acquired for the planned project. ; This type of acquisition is often referred to as a "partial acquisition." That portion which is valued "after" the acquisition is sometimes referred to as the "remainder" or "remaining parcel." The After Value takes into account the effects of the partial acquisition and any effects (negative or positive) that it may have on the value of the remainder.

Alternate Dispute Resolution (ADR) A range of different forums and processes which can be utilized to resolve a dispute. ; We focus on two forms of ADR in this guide which might be used to negotiate a settlement: administrative settlements and mediation.

Approaches to Value (Cost, Income Capitalization & Sales Comparison) Cost, Income Capitalization and Sales Comparison are the three approaches an appraiser can use to estimate the value of a property. ; The Cost approach estimates the value of a property by adding the value of the land plus estimated cost to construct/replace the improvement and then subtracting the estimated amount of depreciation from the current structure. ;The Income Capitalization approach estimates a property's capacity to generate income over a period of time and then converts that income into an estimate of the present value of the property. ; The Sales Comparison approach estimates the value of a property by comparing similar properties which have sold recently (comparables) and then making adjustments to the sale price of the comparables to account for differing characteristics.

Approved Appraisal - An appraisal must be approved by an official of your agency before it can be used as the basis for offering a property owner your agency's estimate of just compensation. ; The approval process involves having the appraisal reviewed by either a knowledgeable agency official who can then approve the appraisal, or a contract review appraiser who cannot approve the appraisal but can recommend approval to an agency official.

Before Appraisal Part of the appraisal of an affected property which estimates the value of the property as it is before the acquisition. ; Law and regulations typically require that this estimate of value cannot include any increase or decrease in the value of the property which results from the planned or anticipated project.

Cost of Substitute Personal Property (Relocation Assistance) In some instances a business or farm owner who has to move his or her personal property as a result of your project may decide to replace some items of personal property instead of moving them. ; The property owner may receive some reimbursement for replacing these items of personal property at the site to which he or she moves. ; An explanation of how to calculate the reimbursement a property owner is eligible to receive can be found at 49 CFR 24.301(g)(16).

Cost (appraisal approach) Cost, Income Capitalization and Sales Comparison are the three approaches an appraiser can use to estimate the value of a property. ; The Cost approach estimates the value of a property by adding the value of the land plus estimated cost to construct/replace the improvement and then subtracting the estimated amount of depreciation from the current structure.

Damages In some instances when your agency acquires a part of a person's property, the acquisition, planned use, or construction may cause a loss in value of the remaining property (damages may also extend to adjoining properties in which the property owner has an interest). ; Normally, the value of the damage is based on a before and after appraisal or on the cost to cure. ; An owner is entitled to payment of damages and receives this payment as a part of the payment of just compensation.

Disconnect Costs When a business or farm owner has to move his personal property as a result of your project he may be eligible to receive reimbursement for the cost to disconnect, dismantle and remove his personal property. ; See 49 CFR 24.301(g)(3) for a list of federally reimbursable disconnect costs.

Encroachments A situation which usually occurs when items such as a house, sign or well are discovered to be on your agency's property (right-of-way, etc.) illegally or without permission.

Fair Market Value - The price which a willing buyer will pay a willing seller for a piece of real estate. ; The above definition is only a general definition. ; You should note that the exact definition of fair market value depends on where (the jurisdiction) the property being bought or sold is located, on state/local case law and on other state/local legal issues.

Federally Assisted Project A federally assisted project is one which receives Federal reimbursement or payment of some project expenses such as planning, construction, right-of-way acquisition, and property management. ; As a local public agency you usually receive Federal financial assistance from your State Department of Transportation and in some instances directly from the Federal government.

Functionally equivalentTerm used to describe how the replacement dwelling offered to a displaced person is to compare to the displacement dwelling in regard to performing the same function, and providing the same utility. ; While it need not possess every feature of the displacement dwelling, the principal features must be present.

Highest and Best Use The legal use (or development/redevelopment) of a property which makes it most valuable to a buyer or the market.

Incidental Expenses (settlement expenses) This is a reimbursement for some settlement expenses that a residential property owner may receive after he or she buys a dwelling to replace the one that your agency acquired. ; A complete list of eligible expenses can be found at 49 CFR 24.401(e)(1-9).

Increased Mortgage Interest Costs This is a payment that a residential property owner may be eligible to receive to offset the increased cost of getting a mortgage on a dwelling to replace the dwelling that your agency acquired. ; An explanation of how to determine if a property owner is eligible to receive this reimbursement and how to calculate the payment can be found at 49 CFR 24.401(d).

Just Compensation The payment (to a property owner) your agency must make in order to acquire property for a federally funded or federally assisted project. ; The payment includes the value of the real estate acquired and any damages caused to the remainder of the property by the acquisition and/or construction.

Lease A lease is an agreement between a landlord, property owner or property manager and a tenant. ; The agreement covers issues such as rental amount and length of time the lease is in effect. ; The rental amount may include or exclude property taxes, garbage pickup fees, utility costs, property maintenance and other expenses.

Local Public Agency Coordinator A number of State Departments of Transportation have appointed someone to act as a contact and coordinator for activities carried out by local public agencies in their State. ; The coordinator is a focal point for information on applicable laws, rules, regulations, policies and procedures which a local public agency must follow when using Federal funds in any part of a project.

Minimum Qualifications of Appraisers The criteria that an agency uses to determine which appraisers or review appraisers are qualified based on experience, State licenses or State certifications to perform specific appraisal and review assignments. ; This list is created by your agency or can be obtained from your State Department of Transportation. ; Additional information on minimum qualifications of appraisers can be found at 49 CFR 24.103(d) - Qualifications of appraisers and review appraisers.

Minimum Standards A set of requirements which specifies what information must be included in an appraisal report and the formats which are acceptable to use for preparing the appraisal report. ; Additional information on minimum standards can be found in 49 CFR 24.103(a) - Appraisal requirements.

Mobile home The term mobile home includes manufactured homes and recreational vehicles used as residences (See Appendix A, § 24.2(a)(17)).

Negotiation This is the primary method for acquiring property for your project. ; It involves explaining items such as details of construction, your agency's offer of just compensation and what just compensation is. ; A property owner must have these details in order to consider your agency's offer. ; The negotiation process involves listening to the property owner and determining the best way (negotiated settlement/administrative settlement) to reach an agreement for the sale of property. ; You should contact your LPA coordinator or SDOT to determine how the administrative settlement (negotiated settlement) approval process works.

NEPA - National Environmental Policy Act of 1969 (NEPA)NEPA applies to all Federal agencies and most of the activities they manage, regulate or fund that affect the environment. ; It requires all agencies to disclose and consider the environmental implications of their proposed actions. ; In most instances Federal aid for local public agency projects is given out by the State (or your SDOT). ; If your project will use any Federal funds you will have to comply with NEPA requirements. ; Information on NEPA and Federal Aid project requirements can be found in the regulations at 23 CFR 771.

Personal Property In general refers to property that can be moved. ; It is not permanently attached to, or a part of, the real estate. ; For example, if your agency purchases a strip of property and that strip has a dog house on it, in most cases the dog house would be personal property. ; An example of business personal property may be desks and chairs. ; If you need information or assistance in determining what makes up personal property under your State and local laws you should contact your LPA coordinator or legal counsel.

Personalty Refers to items which are determined to be personal property.

Preferred Alignment As part of the planning process, an agency identifies a number of project possibilities including no-build and several alternate alignments and then determines which of the possibilities appears to be most feasible. ; This is usually the agency's preferred alignment. ; If your agency will use any Federal funds in its project, then it must follow NEPA process requirements in order to determine which alternative will be used by your agency.

Realty Refers to items which are determined to be real property.

Reestablishment Expenses A business, farm or non-profit organization may be eligible to receive reimbursement for some of its expenses related to relocating and reestablishing when it is required to move for a federally-aided project. ; A list of expenses which are reimbursable can be found at 49 CFR 24.304.

Regulatory (Federal Aid program) ; This refers to the regulations which tell how the Federal aid highway program is administered. ; The primary regulations for right-of-way real property acquisition, relocation, appraisal, property management, junkyard control, outdoor advertising and property management are 23 CFR 710, 750, 751 and 49 CFR 24.

Relocation Planning A process for federally aided projects and programs which involve identifying and considering the potential impact created by displacing residences, farms, businesses and non-profit organizations and planning methods to minimize that impact. ; Information on relocation planning requirements can be found at 49 CFR 24.205.

Statutory (Federal Aid program) This refers to the laws passed by Congress which govern real estate acquisition activities for Federal and federally assisted programs and projects. ; The primary statute governing Federal and federally assisted real estate acquisition activities is the Uniform Act.

Stipulated (Legal) Settlement In instances in which condemnation proceedings have begun, parties can still negotiate, and in some instances, can agree to a settlement before their case is heard. ; In order to conclude the negotiation, the parties present the Judge or presiding authority their agreement to settle (which is called a stipulated settlement).

Uneconomic remnant The term uneconomic remnant means a parcel of real property in which the owner is left with an interest after the partial acquisition of the owner's property, and which the Agency has determined has little or no value or utility to the owner.

Utility relocation The term utility relocation means the adjustment of a utility facility required by the program or project undertaken by the displacing Agency. ; It includes removing and reinstalling the facility, including necessary temporary facilities; acquiring necessary right-of-way on a new location; moving, rearranging or changing the type of existing facilities; and taking any necessary safety and protective measures. ; It shall also mean constructing a replacement facility that has the functional equivalency of the existing facility and is necessary for the continued operation of the utility service, the project economy, or sequence of project construction.

Waiver valuationThe term waiver valuation means the valuation process used and the product produced when the Agency determines that an appraisal is not required, pursuant to 49 CFR 24.102(c)(2) appraisal waiver provisions.

Website (Environmental Justice) ; http://www.fhwa.dot.gov/environment/environmental_justice/

Website (Office of Real Estate Services) http://www.fhwa.dot.gov/real_estate/

Updated: 09/05/2014
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